What is remarkable about India’s wonderful economic reforms is that they had to be imposed upon us. The eight-plus per cent growth rate and sustained reduction in poverty are not the result of electoral demand. They came about because the state had no means of continuing in the old manner. Though India is functionally democratic, political debate here has never risen above the episodic. The general elections before the reforms was about Bofors; the one after was about Babri. Both tabloid stories and ultimately irrelevant. The reforms were legislated on the side, and they wouldn’t really have been if we hadn’t run out of money two decades ago. How long would we then have continued? Till failure had been achieved—as it was in 1991.
There was no conviction in the old manner. (Michel Camdessus, then IMF boss, was taken aback when India did not even have to be squeezed before surrendering to conditions that would turn its economy around.) It’s just that here things are allowed to unravel till they can no longer unravel. For good policy, for progress and for change, India has been, and remains, at the mercy of the enlightened leader who must ignore and often defy the electorate. Narasimha Rao had to bribe his way through that crucial term—producing the splendid newspaper headline—‘Bees karod mein bika Jharkhand Mukti Morcha’—and Indians rewarded him for pulling their economy out of the toilet by sending him home in shame.
The Asian Age reported in 1996 that America had coerced Narasimha Rao into appointing Manmohan Singh finance minister. This was reported as a matter of disgrace arising from a loss of sovereignty. Even if the story is true, what is wrong with such loss of sovereignty if it leads to benefit? That the reforms and Manmohan Singh were thrust upon us is no bad thing and, given the confessional and tribal nature of our democracy, it is unlikely we would have chosen wisely ourselves. Like Dr B.R. Ambedkar before him, Manmohan has actually never won a Lok Sabha election (South Delhi rejected him in 1999).
It is a reflection of the quality of its electorate that independent India’s finest leader must lie on oath and claim he is a resident of Assam in order to be prime minister. We are fortunate that Sonia Gandhi has imposed him over us on sufferance. His austere, intellectual and uncharismatic style of leadership is absolutely suitable for crafting and pushing through true structural reform (RTI, RTE, NREGA) while we are all occupied with today’s tabloid stories.
The second important fact about the reforms is that the Bania has demonstrated his superior ability to raise and manage capital in a free market. The list of big firms founded, built or taken over during this period, including by those who are first-generation millionaires, is dominated by those owned by the tiny Vaishya community: Bharti Airtel, Zee, Sesa, Sterlite, Kotak Mahindra, Gujarat Ambuja, Sun Pharma, Suzlon, Torrent, Essar, Adani, Videocon...we could go on. It is the Bania who has produced growth and created jobs in a free market. Meanwhile, the Banias earlier accused of having benefited from regulation have, after being unshackled, become global giants: I’m talking of the Ambanis and the Birlas.
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The data after a generation of life under reforms will dishearten those who reject caste. The list of Sensex firms features only one owned by a member of the peasant caste, who are together more than 50 per cent of India’s population. And, unsurprisingly, that firm (DLF) is about the control of land. This insolubility of caste in a modern age has also touched Muslims. The only world-class Muslim-owned firm to rise in our time (Wipro) is run by a Gujarati from the very small Shia Khoja community, converts from the Lohana trading caste. Our non-trading communities need something more than open markets to be competitive. While information technology has produced a variation on the theme of Bania dominance, the all-Brahmin clique that founded and runs Infosys has reinforced the other cliche, about knowledge in India.
And so, on to the third important fact about the reforms. The expansion of middle-class numbers produced by the reforms is seen as the big achievement by India in these last 20 years. How has this expansion come about? It has happened through the expansion of society, by more communities entering the middle class. This is actually where the big change is being registered. It is coming about through the inclusion of the peasant castes, the largest social and cultural grouping in India, into the urban middle class, and into that culture with which readers of Outlook are familiar.
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Caste iron Mayawati, garlanded in notes. (Photograph by Nirala Tripathi)
What most urban Indians know as middle-class culture is the culture of three communities. Independent India chose not to do the census by caste, but the British census before independence is revealing. It told us that India’s Brahmin population was about six per cent, though the community’s power and projection in urban India was disproportionate. Three small castes, all put together perhaps less than 10 per cent of the population, dominate the urban middle classes: Brahmin, Bania and Kayasth. Into their culture the intermediate communities—Yadav, Patel, Gowda, Reddy, Singh, Patil—who Mandal told us account for more than half the population must assimilate to benefit from the economy’s expansion.
How well have they been able to do this? Not very well. Nasscom says the big three software firms—TCS, Infosys, Wipro—reject 90 per cent of applicants, even though their expectation is quite basic. This is to an extent a recent phenomenon, because the number of graduates has shot up while the great missionary schools are in decline, but the indifferent quality of the Indian graduate is not news. As anyone who runs an urban business knows, the standard of the average Indian graduate is poor. For now, this does not slow an economy that can afford to reject large numbers of applicants. But this won’t continue for long. Given that economic expansion on the industrial side is being driven by the genius of a mercantile community limited in size and restricted by geography, and that on the knowledge-economy side the supply of quality footsoldiers is limited, the next 20 years in the age of reforms will need something more than the wisdom of the leader. It will need societal change. There is little indication that it’s happening in India.
The writer is the Director of Hill Road Media
