New Deal For Dalits?

Market alone can tide over India’s regressive caste system. Nehruvian socialism, which made the state the biggest economic power, has only cemented the social status quo, and yet frustrated all castes while strangulating the Scheduled Castes and Tribes’ entrepreneurial zeal. The Narendra Modi government seems to have read the flaw right; it is taking corrective measures without noise.

After independence, it was widely expected that India would overcome its various socio-economic and political challenges once the stifling grip of foreign rule was over. And among these challenges, the caste question was the most trenchant one, which needed immediate attention from the policy makers. The question remains: How to create a post-caste society where caste ceases to be the defining factor of social, political and economic interaction among individuals?

But in the Nehruvian path, which India followed, the caste considerations were brushed aside in the name of ‘scientific’ and ‘rational’ approach to create a ‘socialistic pattern of society’. Under this approach, caste was not to be talked about or considered in policy making apart from the constitutionally mandated reservation system for the Scheduled Castes and Tribes. It was presumed that if caste was not talked about in public, somehow the caste system and resultant problems would fade away in oblivion. What happened was the exact opposite. Not only was caste inequality strengthened under the Nehruvian ‘Idea of India’, but it also ended up being a major factor in the demise of the Nehruvian system with furious eruption of caste politics in 1980s.

To understand what happened, we need to clearly understand castes, which without doubt is a complex system rooted in political economy juxtaposed with religious strands. Mind you, caste is less religious and more social. It divides labourers (not labour) in opaque compartments according to their respective professions, which are arranged in a graded hierarchy. The central point in casteism has been the denial of economic freedom — the freedom to choose one’s profession — which is determined by birth. It is often enforced by violence — both internal (like ostracising) and external wherein castes ensured compliance and conformity by each other, especially by castes lower in the hierarchy. When seen in such a manner, casteism becomes very clear from the point of view of policy making and socio-political action.

The solution to the problem lies in providing economic freedom and creating a system of individual liberty and protecting individual rights. A system based on the market impersonalises the economic transaction between parties. It means that, over time, the caste of the economic agents ceases to matter. Consequently, the scope of caste discrimination too is greatly diminished while cost of discrimination increases. Only a system based on the market can supersede the system based on birth like what happened in Europe and Japan.

But the policies under the Nehruvian era were in the diametrically opposite direction. India adopted a system where state was to occupy the proverbial commanding height in the economy. Private entrepreneurship was seen with suspicion and economic freedom was suppressed under the infamous license-quota raj. If someone wanted to start even a small business or open a shop, he had to wade through a complex web of rules and regulations, which were designed not to facilitate entrepreneurs, but to control them. This meant that power was increasingly concentrated in the hands of bureaucrats and politicians who mostly came from forward/dominant castes, reflecting the socio-economic order of the day.

It was particularly debilitating for the Dalits who lacked social capital to brave the obstacles or economic resources to bribe their way through them or the right connections via caste networks to circumvent the system altogether. It made sure that even under the ‘New India’, the doors of economic and resultant social mobility were closed to them.

It was also this system that enabled the already-established castes to leapfrog into the modern economy. The system not only limited competition to those with the right social connections in politics and bureaucracy, but also made the socialist state a vehicle of accumulation for forward castes. This further strengthened the British legacy of absorbing the forward castes into the modern economy due to their higher social capital and advantage in education and relegating Dalits to stick to not so flattering traditional professions. Dalits stayed where they were while forward/dominant castes abandoned their traditional professions for new opportunities in newly emerging industrial and urban centers.

Besides suppressing entrepreneurship, the top-down model of industrialisation through Five Years Plans re-enforced the process. Instead of building manufacturing units on a mass scale, which could have provided jobs to millions of unskilled and semi-skilled masses, India went for heavy industrialisation with imported technology. And these industrial wonders sat like an island in remote corners of the country with hardly any forward and backward linkages with the sea of destitute humanity surrounding them. A chance at employment in them required a level of education and modern technical knowhow. And there is no guessing who would be getting employment in these temples of modern India. Certainly not the Dalits whose educational statistics were as abysmal as it can be imagined. And the much-touted land reforms too gave the land to tenants, OBCs, and not to the tillers who were largely landless Dalit labourers.

Thus, the socio-economic distance between forward castes and Dalits was now overlaid with the urban-rural divide as well as with the divide between high-productivity (modern) and low-productivity (traditional) sectors of the economy. This process did more to exaggerate the caste inequalities than any other in the recent times. Instead of anything real, what was offered to Dalits in the Nehruvian consensus was patronage in the form of fancy welfare schemes (on paper), reservations and token representation in legislative bodies. And it is a testimony to the ‘Nehruvian consensus’ that the condition of Dalits still remains one of poverty and powerlessness.

But the new government has been quietly charting a new Dalit agenda in the almost one year that it has been in power. Without doubt it is upending the ‘Idea of India’ of bleeding heart liberals who forever want to play Samaritans to Dalits. In the last few months, the NDA government has taken three major decisions with the potential to transform the entire socio-economic landscape. The announcement of Micro Units Development and Refinance Agency (MUDRA) in Budget 2015 reflects the clear thinking of the government with respect to what is contemptuously called the non-formal sector. This sector boosts of 57.7 million micro manufacturing, trading, and service businesses, which generate maximum jobs for Indians. What’s more, most of these enterprises belong to Scheduled Castes, Scheduled Tribes and Other Backward Classes. Among them, Dalit entrepreneurship has been a rapidly growing segment in recent times.

Lack of social capital and access to institutionalised finance are among the major problems faced by Dalit entrepreneurs. It, therefore, becomes incumbent upon the state to support Dalit entrepreneurs in the start-up phase especially when most of these fields are new to them. In this regard, it is a welcome sign that government has its focus at the right place.

In another landmark scheme, Ministry of Social Justice and Empowerment has launched the Venture Capital Fund for Scheduled Castes to promote entrepreneurship among Dalit community by providing them with easy access to capital at a concessional rate. It has a fund of Rs 200 crore, which can be supplemented every year. It will be run by the National Scheduled Castes Finance and Development Corporation (NSFDC), which is already involved in promoting Dalit entrepreneurship.

India faces the formidable challenge of pulling millions out of poverty and simultaneously ensuring sustainable growth and protecting environment. For this, the government has launched the Green Business Scheme to provide financial assistance to Dalits living under double the poverty line for undertaking business initiatives to combat climate change and to promote protected cultivation to support sustainable livelihoods of poor people. The scheme has been launched under National Scheduled Castes Finance & Development Corporation (NSFDC).

Some of the stated indicative projects under the scheme are solar pumps and other instruments run on solar energy, e-rickshaw, polyhouse etc. It provides loans at a concessional rate of interest and support on undertaking energy saving projects. It can tap a huge potential if used in synchronisation with the Venture Capital Fund for Dalit entrepreneurs and MUDRA and if expanded to other forms of renewable energy like biomass etc.

It can help fill the energy deficit in poor or remote areas and also spawn an entire gamut of mini industries of maintenance associated with these projects, which can expand the job horizon and income generation for people with minimal training.

It has been argued that the sweeping mandate for the Modi-led BJP was a vote of an aspiring India. And Dalits are no exception to this trend. In fact, a phenomenon of the last year is the shift of Dalit votes to the BJP — election after election. One of the major reasons driving this change is the emergence of Dalit middle and neo-middle class and ever strengthening discourse of Dalit capitalism. Since the BJP is seen as a pro-business party championing good governance, it is no surprise that it has attracted Dalits in such a large number who are fed up with same old rhetoric and welfarist promises.

India has a brilliant opportunity to free affirmative action from reservations in employment, with which it has been hyphenated, and to instead focus on capacity building among Dalit communities to enable them to forge ahead up the economic ladder. Social mobility and political empowerment will follow. One of the famous lines of Kanshiram in public meetings was about converting Dalits from “beggars to givers”, from “those who seek jobs to those who are job givers.” And it seems that finally his wish has found resonance with the government of the day.