KP Kannan’s book is an empirical study on India analysing the socio-eco-nomic developments of the Indian economy since the onset of the liberalization process. Kannan, through empirics, questions the validity of the mainstream economic concept of trickle-down economics in the context of the Indian economy. He also analyses another question, which has recently drawn the attention of many social scientists. It is to empirically check whether, in the Indian context, there is any significant correlation between the social status of an individual identified by caste, religion, work status with their economic prosperity. Based on his findings, Kannan argues that the ‘success’ story of India’s growing economy has left out a major section (more than three-fourths) of the Indian population, who are the Aam-Aadmi or the ‘common man’. He also finds that, in India, people belonging to SC/ST and Muslims are the worst sufferers, and, mainly those associated with the informal economy. It thus opens up a space for further debate and discussion, not only among the policymakers but also among the progressive political organizations, to determine the future agenda of the Indian economy.
Based on the NSSO surveys of Employment-Unemployment and Consumption Expenditure, Kannan, using the latter, classified each sample household as belonging to ‘extremely poor’, ‘poor’, ‘marginal’, ‘vulnerable’, ‘middle income’, and ‘high income’ group depending on their monthly per capita expenditures. The results based on the survey done in 2004-05 show that around three-quarter of the Indian population is poor and vulnerable, which implies that this vulnerable group is subsisting on an average per capita expenditure below USD 2 per day. Among them, the two social groups which are at the bottom are the SC/ST and the Muslims, followed by the OBCs. The top layer comprises the ‘Others’. Kannan, not surprisingly, finds a strong correlation between no or low level of education and, their ‘informal’ work status, and therefore, poverty and vulnerability. In his State-wise analysis, the scenario is very similar to the all-India situation. The author reports, as of 2005, there is only one State in India, Punjab, where the majority is neither poor nor vulnerable. Through an econometric analysis of all the Indian States, Kannan finds that the low social status and low level of education impacts significantly on poverty and vulnerability individually rather than as an interacting force. No Indian was an exception to the relationship between informal work status and poverty and vulnerability. The regional inequality in poverty and vulnerability is overwhelmed by social inequality across majority of States. In these States, an overwhelming ratio of adults with low levels of education in three social groups—SC/ST, Muslims and OBC—are also poor and vulnerable.
Furthermore, the author finds that in all communities and across social groups there is a class of better-offs in contemporary India, which, nonetheless, varies with social identity. These findings bring forth the importance of an interdisciplinary approach in social science to understand the social trends in the Indian context. One theoretical framework which has helped to better understand the complicated relationship between class, race and gender in the western world is the ‘intersectionality’ theory—the term first coined in 1989 by Kimberle Crenshaw (Crenshaw, 1989). Kannan, in this study, does not analyse gender in detail, which, if included in the analysis, could have made it a more exciting read. The analysis also needs an update beyond 2004-05 as more recent NSSO surveys are available which will help the readers to get a flavour of the more recent trends.
One of the critical factors, as put forward by Kannan, why this neoliberal high-growth period has failed to alleviate poverty is because it did not create enough jobs for the Indian working population. Using the ASI data spanning from 1981-82 to 2004-05 for the organized manufacturing sector in India, he finds that the phenomenon of jobless growth is going on for almost the entire period of study, although the process is not uniform across industries. According to him, the high growth in the organized manufacturing sector has been due to an increase in labour productivity, which has profound implications for the distribution of the gross surplus between capital and labour. Further analysis shows that the share of wages declined during the study period as well as there was a slowdown in the rate of growth in real wages of the Indian working class, except those of the paid supervisory workers and managerial staff, who benefitted from this neoliberal process in terms of salaries, wages and perks. In the era of liberalization, the Indian working class had lost out in terms of both additional employment as well as real wages. The findings of this study are in congruence with the international experience, especially the Asian countries. According to ILO (International Institute for Labour Studies and ILO, 2011), since the early 1990s ‘the wage share—the share of domestic income that goes to labour—has declined in almost three-quarters of the 69 countries’. The report also notes that ‘the drop in the wages is more pronounced in emerging and developing countries than in advanced ones’, especially the Asian countries, where the wage share since 1994 has declined by roughly 20 percentage points.
The bargaining power of workers in a developing economy is also correlated with the type of employment, in particular, whether the worker is in a formal or informal sector. Kannan finds, based on the NSS 2004-05 survey, that 86.3 per cent of the Indian workforce is employed in the informal economy, where ‘informality’ is defined by the lack of any employment and social security benefits provided by the employer. The study finds that nearly 80 per cent of India’s informal workforce is poor and vulnerable. Even within the organized sector, there has been a substantial increase in the level of informal employment over these years. While analysing the employment distribution between formal and informal sectors in India, Kannan introduces some numbers on gender. Not surprisingly, based on the NFHS-3 data, he finds that women along with their men from the top social group experience the least incidence of poverty while women from the bottom layer experience the most. One crucial paradox in the study and the explanation for which seems to be inadequate is that the wage rates in the informal sector of the female workers belonging to SC/ST, Muslim and OBC category are higher than those of the ‘Other’.
Given the high level of informal employment in India, Kannan rightly makes a strong case for social security benefits in the unorganized or informal sector based on the two categories of basic social security and contingent social security. Given the lack of such social security measures, he portrays the importance of the NREGS scheme which is a ‘rights-based’ programme for ensuring basic social security in India. However, since labour is in the concurrent list of the Indian Constitution, both the Centre and the State governments have the power to legislate on this subject. Given a strong history of the labour movement, Kerala is in the forefront among the Indian States, to evolve a model of social security for informal sector workers. Tamil Nadu also provides substantial coverage and social security benefits to the informal sector workers. An interesting observation made by the author is the conspicuous absence of any statutory provisioning of social security for informal workers in the State of West Bengal, in spite of more than three decades of pro-worker government in that State.
Thus, Kannan debunks the entire campaign of the inclusivity of the high growth process in post-liberalization India. He shows that there was some marginal improvement in the social conditions of the populace during the UPA-I government (2004-2009), although that too was skewed in favour of urban India. Therefore, in totality, the neoliberal period has, thus, led to growing divergence and inequality in India. This growing divergence in various categories based on region, social, and wealth is a cause for concern and should attract the urgent attention of policymakers.
This book, therefore, provides empirical evidence to substantiate some of the major concerns related to the socio-economic development of the Indian economy like poverty, unemployment, and inequality that have aggravated with the high growth experience of the Indian economy since the 1990s. Despite these concerns, there are also opportunities for the policymakers and progressive political parties which are worth mentioning.
This book brings out an essential point that economic empowerment is not a sufficient condition to ensure social empowerment. It is a necessary condition, though not a sufficient one. Hence, these diversities within a class based on various social identities need to be an integrative part of any progressive socio-political movement for a better future. Another critical area which deserves more attention is gender. Even in this depressing scenario, there have been new forms of union movements emerging, especially among the self-employed women in India. The increasing level of female employment is characteristic of the neoliberal era, which is a significant change (Smith, 2016). Notwithstanding the risks of entrenching gender division among workers through various exploitative measures, an increase in female employment and their unionization has a potentially liberating effect. South Korea’s experience, in this context, deserves particular attention (Mikyoung, 2003).
Crenshaw, K., 1989. ‘Demarginalizing The Intersection Of Race And Sex: A Black Feminist Critique Of Antidiscrimination Doctrine, Feminist Theory And Antiracist Politics’. University of Chicago Legal Forum, 1989(1), pp. 139-167.
International Institute for Labour Studies and ILO, 2011. World of Work Report 2011: Making Markets Work for Jobs, Geneva: The International Institute for Labour Studies.
Mikyoung, K., 2003. ‘South Korean Women Workers’ Labor Resistance in the Era of Export-Oriented Industrialization, 1970-1980’. Development and Society, 32(1), pp. 77-101.’
Smith, J., 2016. Imperialism in the Twenty-first Century: Globalization, Super-Exploitation, and Capitalism’s Final Crisis. 1st ed. New York: Monthly Review Press.
Shouvik Chakraborty is Research Assistant Professor at the Political Economy Research Institute, University of Massachusetts, Amherst, USA.
An interesting observation made by the author is the conspicuous absence of any statutory provisioning of social security for informal workers in the State of West Bengal, in spite of more than three decades of pro-worker government in that State.
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