Dr Ambedkar’s economic vision

His views on inequality, increasing agricultural production and the government’s responsibility to provide basic services to its citizens are relevant today

Dr Bhim Rao Ambedkar is widely perceived as the architect of the Indian Constitution and as a messiah of the Dalits. But one aspect of his personality – his economic vision – still remains hidden from the common man. Few are aware of his concept of development and the kind of land reforms he advocated. He was among the first generation of modern Indians to have formally studied economics and built a career on it. Of course, India has an ancient tradition of studying economics. Classic works such as Arthashastra, Shukraniti and Thirakkural were born of this tradition. But a study of economic theory that was geared to the needs of a career began in the middle of the 19th century, when Dr Ambedkar, C.N. Vakil, P.N. Bannerjee, D.R. Gadgil, P.N. Mathai and Radhakamal Mukherjee, among others, went overseas to get formal training in the discipline.

Dr Ambedkar’s PhD thesis was on the ‘Evolution of Public Finance in British India’ while his DSc dissertation was titled ‘Problems of the Rupee’. Later, both these studies were published as books. While pursuing his MA, he studied ancient Indian commerce and for his MSc, he researched the ‘Decentralization of Imperial Finance in British India’. Decades ago, Dr Ambedkar had worked out solutions to many of the economic problems plaguing India till our day. Let us begin with inequality and unemployment – the two biggest economic challenges confronting the nation.

Economic inequality

India is moving on the fast lane to economic growth and is all set to emerge as a world economic power (“It already has”, insists American President Barack Obama). According to the figures released by the International Comparison Program (ICP), an initiative of the World Bank, if purchasing power is used as the criterion, India has already become the third biggest economy of the world.

But this is only half the picture. The other half is the massive inequality, grinding poverty and even starvation that dominates the Indian economic landscape. The World Ultra Wealth Report 2013-14 compiled and released by Wealth-X and UBS contains a list of the world’s super-rich. India ranks No 6 in the list of the top-ten nations. According to the report, there are 30 billionaires in Mumbai alone. The number of billionaires in India is growing at a fast pace but the rate of growth in the number of the poor is many times faster.

The Indian economy is growing, no doubt, but so is economic inequality and unemployment. The report of the National Sample Survey (NSS) 68th round reveals that unemployment has increased between June 2010 and June 2012. In this period, unemployment grew at the rate of 10.2 per cent per annum. In January 2012, the number of the fully unemployed was 1.08 crores, up from 98 lakhs two years earlier. Besides NSS, several other surveys conducted by the government and non-governmental organizations indicate that the army of the unemployed is growing at an alarming pace.

According to the annual economic survey published by the Ministry of Finance, from 1991 to 2008, on an average, 1.27 lakh workers were absorbed in the organized sector per year. In the same period, 64 lakh workers were pushed into the unorganized sector. The NSS 66th round had revealed that while employment grew at the rate of 0.8 per cent per annum from 2004-05 to 2009-10, the population grew by 1.5 per cent per annum.

India, thus, has been caught in the whirlpool of an economic growth that is neither reducing inequality nor generating jobs. This aspect of the Indian economic model could not escape the keen eye of Dr Ambedkar in the initial days of Independence, when the country was scripting its political and economic future. Hinting at it, on 25 November 1949 he warned, “On the 26th of January 1950, we are going to enter into a life of contradictions. In politics we will have equality and in social and economic life, we will have inequality. In politics we will be recognizing the principle of one man, one vote, and one vote, one value. In our social and economic life, we shall, by reason of our social and economic structure, continue to deny the principle of one man, one value. We must remove this contradiction at the earliest possible moment or else those who suffer from inequality will blow up the structure of political democracy.”

Farming sector’s surplus labour

According to a recent Agriculture Census Report, the average size of operational holdings in India is falling. In 2005-06, an average operational holding measured 1.23 hectares, which fell to 1.15 hectares in 2010-11. The total arable land in the country has been constant at 140 million hectares for the last 40 years, while the number of farmers has doubled from 7 to 14 crores. Every five years, one crore farmers are added to the country’s peasantry. The shrinking of the average land holding is the inevitable result, and this is affecting productivity. It may be mentioned here that while the share of agriculture and allied activities in the GDP was only 14.1 per cent in 2011-12, it employed 58.2 per cent of the country’s workforce. Economic growth can be given a push only by accommodating the surplus labour from the farming sector in either infrastructure building or manufacturing sectors.

About a century ago, in his monograph ‘Small holdings in India and their remedies’ (1918), Dr Ambedkar had suggested a way to deal with this very problem. He believed that agriculture should be given the status of an industry, and to increase its productivity, capital and capital goods should be pumped into the sector. The surplus labour working the farms should be shifted into other sectors of the economy.

Public services

Dr Ambedkar had recorded in his book States and Minorities his views on the kind of economy post-Independence India should build. He believed that it was the prime duty of every democracy to fulfil the essential needs of all its citizens. Dr Ambedkar was a staunch opponent of imperialism and capitalism. He wanted to do away with the political, social, economic and educational inequalities in a logical and phased manner. He had raised the issues of abolition of privy purses, and nationalization of banks, insurance companies and coal mining, much before these measures were actually implemented. In fact, going a step further, he had even advocated nationalisation of farmland. He was a great proponent of the public sector, which Pandit Nehru also wanted to use as a tool to propel the Indian economy on the road to self-sufficiency and growth.

Talking of liberty Dr Ambedkar said, “Constitutional experts think that the mere award of fundamental rights would ensure protection of liberty. They believe that if the government does not interfere in personal, social and economic affairs, the person’s liberty is protected. But what is needed is that while continuing with minimum government interference, real liberties should be enhanced.”

Incidentally, the social sector, or the social services sector, contributes directly to human development. The sector includes education, health and family welfare, water supply and hygiene, social security, and nutrition.

Over the past 15 years, the share of the social sector in the budget of the central governments has been around 30 per cent, which is 2 per cent of the GDP. Comparatively less developed nations of the world ­– grouped under the banner of Organization for Economic Cooperation and Development (OECD) ­– spend more than 15 per cent of their GDP on the social sector.

Under the Washington agreement, based on the directives of the World Bank and the IMF, expenditure on social security is being consistently curtailed. Spending on the social sector is being blamed for the burgeoning fiscal deficit of the government. The government is gradually withdrawing from its fundamental duty of providing basic facilities to all citizens. In this context, Dr Ambedkar’s firm view that securing the access of the common man to the basic services was a sacred duty of the government assumes great significance and relevance.

Today, more than 83 crore people are surviving on less than Rs20 a day. Corporates are taking over education, health, water and power sectors. The 100 richest individuals control assets valued at a quarter of India’s GDP. The people on the margins are being deprived of their water, forests and land.

Given this situation, a poem of Kamalsingh Baliram Ramteke, published in Dr Ambedkar’s newspaper Janata on 21 June 1941 comes to mind.

Janata ka hathiyar uthao,

Swamiyon ke atyacharon aur darindagi ko hatao,

Jago kamgaron. Jago kisanon. Hindustan hamara hai,

Manavta mazdooron ko milegi,

Yah hamara janmasiddha adhikar hai

(Pick up the weapon called the people

End the atrocities and barbarities of the owners,

Awaken, O’ workers; awaken, O’ farmers; Hindustan belongs to us,

Workers are the inheritors of humanity,

This is our birthright)

MILESTONES: Ambedkar as economist

Ambedkar was the first Indian political leader with formal training in economics, with research papers published in noted academic journals. His specialization was monetary economics. Below are some milestones in his evolution as an economist:

  • 1913-16: Columbia University, New York. Half of his total courses were in economics.
  • 1918-20: Professor of Political Economy, Sydenham College of Commerce and Economics, Bombay.
  • 1918: In the premier issue of Journal of Indian Economics, he reviewed a book by Bertrand Russell. Also, in the new Journal of the Indian Economic Society he published ‘Small Holdings in India and Their Remedies’.
  • 1920: In July he returned to London, to continue his interrupted study of economics at the London School of Economics.
  • 1922: Ambedkar seriously pursued doing further research in economics at the University of Bonn, Germany. He even sent the university a handwritten letter and CV in German, but the whole project didn’t work out.
  • 1923: His Ph.D. thesis at the University of London, ‘The Problem of the Rupee’, was challenged on political grounds, but was resubmitted and finally accepted. It was soon published in London.
  • 1925: He published his London School of Economics M.A. thesis as ‘The Evolution of Provincial Finance in British India’; it had an introduction by his Columbia University professor, Seligman.
  • 1925: In December, Ambedkar was called to give evidence before the Royal Commission on Indian Currency and Finance.
  • 1926:The Governor of Bombay nominated him as a member of the Bombay Legislative Council; he took his duties seriously, and between 1927 and 1939, he delivered several speeches on economic matters.
  • 1927: On 8 June, he was formally awarded the Ph.D. degree from Columbia University.

Dr. Ambedkar published three scholarly books on economics:

(i)   Administration and Finance of the East India Company (his 1915 – Columbia MA Thesis)

(ii)  The Problem of the Rupee: Its Origin and Its Solution (his1923 – LSE D.Sc. Thesis)

(iii) The Evolution of Provincial Finance in British India (his 1924 – Columbia PhD Thesis)

 

Published in the December 2014 issue of the Forward Press magazine


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