The great transformations of Indian states

PATRICK HELLER

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INDIA is by all accounts and measures undergoing a great transformation, and a highly compressed one at that. The ‘Great Transformation’ is of course the title of Polanyi’s famous book, and specifically refers to the rise of a market economy in 19th century Europe.1 Polanyi argued that the rise of a self-regulating market economy was socially catastrophic. The more the market became self-contained and self-regulating, the more it threatened to unravel society, most notably by transforming land and labour into commodities. Polanyi then went on to show how by the end of the 19th century the ravages of market society were reigned in when a countermovement ‘re-embedded’ the market in society by subjecting it to regulation, providing protection for labour and land, and in general building the edifice of the modern welfare state.

The Great Transformation in India (the theme of a recently edited volume) is of course different.2 The pattern of capitalist transformation defies the paradigm: the acceleration of growth has not, as in all previous cases, been preceded by a wholesale transformation of the agrarian sector; the service sector, rather than industry, is the leading sector; job creation has been relatively weak and narrowly concentrated; and all of this is unfolding in the context of a world economy which is much more integrated and competitive than in the 19th century. But the deep tensions and dislocations that Polanyi (and before him Marx and Weber) saw as accompanying the rise of a market society are clearly present.

 

The signs are clear: transformation of traditional social structures, including the ways in which labour and land are increasingly being commodified; increasing dependence on market forces for access to work and consumption; accelerated urbanization; and increased opportunity for social mobility but also increased vulnerability as traditional mechanisms of material and cultural security are eroded. The parallels with the European past and indeed the Chinese present will only be too familiar to sociologists and historians, but the question that we should be asking ourselves is how the countermovement, or more generally the process of managing (or failing to do so) the social problems associated with the great transformation will take shape? Here, India will be unique both compared to Europe and China (to which it is all to often superficially compared) because the process will be managed in the context of a mass democracy and will take shape largely at the state level.

For far too long, the literature on development has tended to focus on India as a single, unitary nation state. There is however a tradition of recognizing that Indian states are developmentally quite different, and in fact have followed developmental trajectories ranging from the social democracy of Kerala, to the agrarian capitalism of Punjab and the state-assisted industrialization of Gujarat. Dreze and Sen have of course documented large divergences in social development across states, and Harriss, Kohli, Singh and Heller have identified and sought to explain the existence of distinct state-level regimes (characterized largely in terms of their record in reducing poverty) that run the full gamut from elite domination, to populist and redistributive.

Most recently, Yadav and Palshikar have proposed that state politics represents an ‘autonomous domain’ and that over the last two decades ‘state politics have broken free of the logic of national politics’.3 If one starts from this claim and then throws in the observation that economic transformation will if anything exacerbate differences, then it becomes clear we should be talking not of an Indian great transformation but many great transformations.

 

The hyper growth of the past three decades has had dramatic effects. First, it has accelerated the process of agrarian transformation and the related dynamic of urbanization. Second, it is rapidly transforming India’s class structure, which is becoming more polarized. Third, even as economic opportunities have expanded, the distribution of opportunities across social groups and regions has become more pronounced. Coterminous with all these dynamics tied to an intensification of the capitalist economy has been the ‘second democratic upsurge’, which marks the entry of the masses into politics. Taken together these forces are a prescription for increased conflict. Even as some have become more politically included, they are becoming more socially or economically excluded, especially in relative terms. Heightened expectations associated with growth, expanded opportunity and urbanization run up against increasing inequality.

 

It was, of course, precisely such tensions that laid the basis for the rise of sociology as a discipline. Europe’s capitalist transformation produced accelerated growth and increased social conflict. Revisionist modernization narratives often elide the fact that Europe’s transition to capitalism came by way of repeated insurrections, mass migrations, colonization, two world wars and fascist interludes. In the current period, China is an obvious point of comparison. As the economy has ramped up, so have social tensions.

But India is different from China and Europe on two critical counts. If many of the struggles that accompanied European industrialization were specifically organized around demands for political inclusion, India has to manage these tensions after having already empowered the popular sectors (workers, peasants, the informal sector) with the right to vote. Unlike China, the Indian state cannot simply dictate solutions from above.

Second, China and Europe largely managed the transition under the conditions of a unified nation and powerful, cohesive states with a full range of macro-economic tools. India is, of course, unified as a nation, polity and economy, but the actual point where economic policy is managed (the Centre) is not the same point where political and social responses to economic change will be played out, nor where social policy is developed (the states). This makes for a potentially complex picture. If we are to make any sense of how these great transformations will unfold, there are three dimensions that will be critical: inequality, democracy and state capacity.

Inequality will matter because it, in effect, sets the stage for how the impact of growth will be experienced, and thus profoundly shape political responses. Democracy, and specifically the configuration of democratic forces that reign in each state, will by definition be the stage of contention and set the parameters for the social response. State capacity will in turn determine just how effectively social and political responses to economic transformation can be implemented.

 

Inequality in India takes many forms and will profoundly impact the social character of growth. In the most general sense, existing degrees and sources of inequality will give form to the distributional character of economic growth. There has been much talk of the need for ‘inclusive growth’ but this is a term that needs unpacking. Sen has emphasized that growth is only a means, and that the key to development (if we think of it as a process that enhances the capacity of individuals ‘to live the life they value’) is having the basic capabilities to take advantage of new market opportunities. This includes basic endowments such as education and good health, as well as the ability to proactively make use of civic and political rights.

But focusing on individual capabilities and their maldistribution is not enough. As sociologists have long argued, privileged social groups will work hard to actively reproduce their privileges of status and wealth, and will generally do so through various strategies of excluding other groups. The list of such privileged groupings is extraordinarily diverse in India and varies dramatically across states.

Traditional political economy perspectives of course focus on class dynamics, but in India class interacts with a range of regionally specific social hierarchies that have produced a truly bewildering set of inequalities. This includes not only variations in the nature of social hierarchies – strong to weak caste structures, the varying degree to which adivasis, minority ethnic groups and women suffer from social exclusions – but also differences in urban-rural inequalities and the degree of informalization of the economy. The nature of the categories and mechanisms through which inequality is produced and reproduced also varies depending on the degree to which underlying material distributions and institutional settings have been inflected with these inequality dynamics.

In some states, highly unequal land distribution still matters, while in others entire institutions are controlled by a dominant group. Depending on what assets – cultural, social, economic – different groups with different positions in the social hierarchy posses, the impact of economic growth will vary dramatically. In some instances it will help dissolve barriers of exclusion, as Kapur et al. found for Dalits in UP.4 In others, exclusions will be hardened, as elite groups successfully hoard opportunities.

 

In sum, in making sense of inequalities, we need better sociological maps of state-level systems of inequality, as well as a better understanding of the mechanisms through which inequality is produced. A case in point is the series of careful empirical studies demonstrating that contrary to claims that the market is dissolving social inequalities, modern firms in India are in fact still discriminating along caste and religious lines.5

 

The actual configuration of democracy in each state will also have a significant independent effect on mediating the impact of growth. Some time ago I argued that across India it is possible to identify degrees of democracy.6 By this I meant that while the formal and institutional characteristics of democracy in India are uniform, the ability with which citizens can actually put their rights to use varies dramatically. This variability is most pronounced across groups, with subordinate groups generally less able to translate their civic and political rights into substantive gains.

The literature in comparative politics and sociology has demonstrated repeatedly that the degree and effectiveness of redistribution (and more broadly the comprehensiveness of the welfare state) can be tied to patterns of class politics and specifically points to three dynamics: the degree of working class formation, the possibility of pro-welfarist alliances with middle classes and independent peasantries, and the presence of encompassing, left-of-centre political parties. The convergence of all three factors explains the Scandinavian cases as well as the extent to which different European countries successfully embedded their capitalist economies.7 Of course, given the pattern of growth in the developing world, working class formation has not been as strong, and party systems have been more likely to spawn populist or clientelistic rather than programmatic parties.

Yet as soon as one examines state-level patterns in India, some interesting configurations emerge. Kohli has shown that in the 1980s the CPM in West Bengal was able to build a lower class coalition based primarily on tenant farmers that did secure significant pro-poor reforms.8 In Kerala, a long history of lower class mobilization, institutionalized lower class (and lower caste) power and translated directly into comprehensive reforms of land, labour markets and social protection. And Harriss has shown how various coalitions of classes and castes have combined to produce a range of different political economies across India.9

 

Explaining the relationship between these coalitions and different distributional outcomes, including social development, institutional reforms and labour protection, is a challenging task. But underlying such analysis is a central question. When do class-distributive issues prevail over identity or more fragmented issues? This matters because class-distributive politics have time and again been shown to be much more favourable to expanding social rights. The traditional answer in the comparative literature points to patterns of class formation (or their absence). Within India, the prototypical case is Kerala, where an alliance of poor tenants, landless labourers and proto-proletarians in the 1930s-1940s provided the social basis for a programmatic party (the CPI, and the later the CPM) which then played a key role in pushing through redistributive reforms. But in making such arguments, we have to remember, pace Przeworski,10 that classes are not given, but that they are the effects of political struggles.

 

Whether or not political interests are organized in support of substantive, broad-based reform or short-term patronage is a result of concrete political struggles, the parameters of which can be highly fluid. Most observers point to how, across India, electoral politics have often mitigated against the formation of the class coalitions that might underwrite social development by mobilizing identities that cut against the logic of broad-based reform. But this pattern is hardly as general or immutable as it is often made out to be. For example, in explaining the contrast between the identity-based party formations of UP and the more encompassing and multi-caste lower class politics of Tamil Nadu, Ahuja points to differences in the sequencing of social and political mobilization.11

The influence of the Dravidian movement at the founding moments of the party system during the 1920s and 1930s underscored an emphasis on social equality and allowed parties to make cross-ethnic appeals. This set the stage for far more inclusive social policies. Something akin to a ‘post-caste politics’ also appears to be now emerging in Bihar. More broadly, we need to come to terms with the fact that variance in democratic regimes refers not only to the party system but also to how social movements and local civil societies shape political and social issues. Clearly then, the politics of social and redistributive reform will be played out on the increasingly autonomous stage of state politics.

 

Finally, we have to turn to the question of institutions, and in particular the capacity of the state to implement political decisions. Building a welfare state calls for enormous capacities. This is true in three respects. First, the state must have the capacity to implement big, complex, interventions that requires effective organization. Second, the state must command sufficient authority: it must get its agents (doctors, nurses, teachers, engineers) to do their work, and its citizens to comply with its laws, injunctions and advice. Third, the state must be able to mediate and manage contradictory interests.

The welfare state is a very delicate compromise, balancing profits and consumption, current social expenditure over future growth, labour protection and socially useful regulation with market flexibility, and social protection with global competitiveness. Economists generally see these as zero-sum conflicts, but the success of European social democracy and East Asian developmental states belies this.

And here again, as we peer below the national level, the case of India offers a wide range of lessons. If the commanding heights of the Indian state display significant capacity, quite the opposite seems to be true of the everyday state. Many official institutions at the Centre enjoy usable autonomy from particularistic interests and are capable of highly institutionalized action, but that capacity deteriorates the more the state directly engages with society. The deterioration is so pronounced that by the time one reaches the local state (the municipality and the village panchayat) the state has almost no developmental capacity. This has earned the Indian state the evocative label of a ‘flailing’ state, that is one in which the head (national and some state institutions) is highly competent and knows what it is doing, but ‘that this head is no longer reliably connected via nerves and sinews to its own limbs’.12

 

While such a metaphor no doubt exaggerates the coherence and effectiveness of the Centre, it does highlight the extent to which the same national policies that are successful in one state, often flounder in another. Rates of teacher and doctor absenteeism are high in India, underscoring the general problem of state authority, but the variance across states is what is most striking. The roll-out of the National Rural Employment Guarantee Scheme, though still in its early stages, holds some interesting lessons. In some states the rate of uptake by those below the poverty line (BPL) has been extremely good, in others abysmally low. The implementation of Panchayati Raj is also instructive here. Some states have made much progress in building genuine institutions of local democratic governance, while others have actively preserved the status quo.

Where states have been able to make local government more viable and more accountable, this will no doubt significantly contribute to expanding state capacity. (Though we generally think of welfare states as centralized states, the success of many welfare programmes, including those in Scandinavia, has been built on the strength of local government). NREGA and Panchayati Raj, not to mention JNURM and a host of other schemes, are all programmes initiated by the Centre that all have the common goal of strengthening public action to equalize opportunities in a rapidly changing economy. Yet the success of these programmes will depend almost entirely on state-level dynamics, including the capacity of state institutions to effectively manage them. As was true of land reform and so many other past efforts by the Centre, if these programmes fail, they will fail on the shoals of state politics.

 

Given this equation, it is somewhat alarming to realize how little we know about state-level and sub-state level capacities. How good are local-level bureaucracies? What is the actual institutional surface area of the state, that is, where exactly and in what way can individuals engage with the local state? Most of the literature assumes that the state touches down in the form of command-and-control bureaucracies, organized vertically as line department silos. The problem is that silos are not very accountable other than to their patrons, don’t talk to each other and don’t readily lend themselves to coordination.

But is this really the case in all states and districts? Are there not some cases where strong ministers or district collectors can integrate department interventions, or where reforms from above and/or below succeed in making state institutions more accountable? Why were the Rajiv Gandhi missions created by Digvijay Singh in Madhya Pradesh so successful in promoting rural education? Where and how has the transparency movement that started in Rajasthan and spread to the Centre been successful? Why do so many large infrastructural projects fail, but others such as the Delhi Metro succeed?

 

Though we have learned much from comparing Indian states, there is also much more to learn. As India’s economy surges forward, its economic and social impacts will vary dramatically. Because India is a highly decentralized polity, the great transformations will be played out at the state level. How market forces are to be managed in order to produce the most inclusive and just path of development will to a large degree depend on existing levels and systems of inequality, the quality of democracy, and the capacity of the state to take up and see through social reforms. Making sense of these possibilities calls for more state-level comparative analyses.

 

Footnotes:

1. Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Times. Beacon Press, New York, 2001.

2. Sanjay Ruparelia, Sanjay Reddy, John Harriss and Stuart Corbridge (eds). Understanding India’s New Political Economy. Routledge, Oxfordshire, 2011.

3. Yogendra Yadav and Suhas Palshikar, ‘Ten Theses on State Politics in India’, Seminar 591, November 2008, pp. 14-22.

4. Devesh Kapur, Chandra Bhan Prasad, Lant Pritchett and D. Shyam Babu, ‘Rethinking Inequality: Dalits in Uttar Pradesh in the Market Reform Era’, Economic and Political Weekly 45(35), 28 August 2010, pp. 39-49.

5. See special issue of Economic and Political Weekly, 13 October 2007.

6. Patrick Heller, ‘Degrees of Democracy: Some Comparative Lessons from India’, World Politics 52, July 2000, pp. 484-519.

7. Gosta Esping-Andersen, The Three Worlds of Welfare Capitalism. Princeton University Press, Princeton, N.J., 1990.

8. Atul Kohli, The State and Poverty in India: The Politics of Reform. Cambridge University Press, Cambridge (Cambridgeshire), New York, 1987.

9. John Harriss, Do Political Regimes Matter? Poverty Reduction and Regime Difference Across India, pp. 204-232, in Peter Houtzager and Mick Moore (eds.), Changing Paths: International Development and the New Politics of Inclusion. University of Michigan Press, Ann Arbor, 2003.

10. Adam Przeworski, Capitalism and Social Democracy. Cambridge University Press, Cambridge, New York, Paris, 1985.

11. Amit Ahuja, Between Parties and Movements: Patterns of Dalit Politics in India, Conference Paper for ‘Six Decades of Indian Democracy: Achievements, Failures, Promises, Challenges’, 6-7 May 2010, Brown University.

12. Lant Prichett, Is India a Flailing State? Detours on the Four Land Highway to Modernization. Paper for Conference ‘Six Decades of Indian Democracy: Achievements, Failures, Promises, Challenges’, 6-7 May 2010, Brown University, p. 4.

 

References:

Ashwini Deshpande and Katherine Newman, ‘Where the Path Leads: The Role of Caste in Post-University Employment Expectations’, Economic and Political Weekly, 13 October 2007.

Surinder S. Jodhka and Katherine Newman, ‘In the Name of Globalisation: Meritocracy, Productivity and the Hidden Language of Caste’, Economic and Political Weekly, 13 October 2007.

S. Madheswaran and Paul Attewell, ‘Caste Discrimination in the Indian Urban Labour Market: Evidence From the National Sample Survey’, Economic and Political Weekly, 13 October 2007.

Dietrich Rueschemeyer, Evelyne Huber and John D. Stephens, Capitalist Development and Democracy. University of Chicago Press, Chicago, 1992.

Richard Sandbrook, Marc Edelman, Patrick Heller and Judith Teichman, Social Democracy in the Global Periphery: Origins, Challenges, Prospects. Cambridge University Press, Cambridge, 2007.

Prerna Singh, The More, the Merrier? The Creation of New States and Social Development in India. Paper for Conference ‘Six Decades of Indian Democracy: Achievements, Failures, Promises, Challenges’, 6-7 May 2010, Brown University.

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