The Role of Caste in Economic Transformation

What is the issue?

Caste, which is mostly confined to politics, could be a structural factor that impedes economic transformation in India

Caste shapes policy outcomes and is central to economic transformation itself.
Through its rigid social control and networks, caste facilitates economic mobility for some and erects barriers for others by mounting disadvantages on them.
Caste also shapes the ownership pattern of land and capital and simultaneously regulates access to political, social, and economic capital.
Social inequalities have mounted barriers for economic transition.
Even the relative success in South India is being attributed to the ‘Vaishya vacuum’ — an absence of traditional merchant castes.

The caste impedes the economic transformation in India through
- Ownership and land inequality related to productivity failure within the farm sector
- Elite bias in higher education and historical neglect of mass education
- Caste-based entry barriers and exclusive networks in the modern sector

Land ownership- Land defines social status and pride and works as a source of inheritance, family lineage and speculative capital.
India has one of the highest land inequalities in the world today.
During the colonial era, the British inscribed caste in land governance categories where some castes were assigned land ownership at the expense of others.
They made an artificial distinction between cultivators (who belong to certain castes) and the labourers (lower caste subjects who cultivated granted/gifted lands like Panchami) thereby institutionalising caste within the land revenue bureaucracy.
Even the subsequent land reform that took place after India’s independence largely excluded Dalits and lower castes
Productivity- Though India has seen surplus food production from Green Revolution, the productivity was not uniform
Only some castes benefitted out of it and they tightened their social control over others in rural India.
Post the economic reforms of the 1990s, even those who made surplus in farm sectors could not transform their status from cultivators to capitalist entrepreneurs, except a few castes.

Neglect of education- The recent agitations by Jats in Haryana and Punjab, Marathas in Maharashtra and Patels in Gujarat, demanding caste based reservation in higher education and jobs exemplify this new trend.
The Indian education system has been suffering from an elite bias since colonial times.
Although the Indian Constitution guaranteed free and compulsory education under its directive principles, it was hardly translated into practice.
Hence, inequality in access to education got translated into inequality in other economic domains including wage differentials.
India’s turn toward service growth is arguably an outcome of this historic elite bias in education.

The Global South which succeeded in achieving inclusive growth had land reforms combined with human capital, invested in infrastructure and began industrialisation in the rural sector.
Chinese and other East Asian countries invested in education and their success in manufacturing is a direct outcome of the investment in human capital.
China taking over India in manufacturing is due to this neglect in human capital formation.

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