The Dominant Proprietary Classes Let us now look at the domin: thing that strikes one res} the plurality and heterogeneity of make this comparable to the division of the bourgeoisie in industrially advanced countries into different, largely comple- \dership of sme of the top business families fia, was‘ Teasonably strong atthe time of fe govemment policy of ¢n- ing industrialization, quantitative ddiiestic markets, and of ‘running a large public sector_providing capital goods, intermediate products and infrastructural facilities for_private industry, often at artificially low prices, +, Since the mid-fifties, the government as created several public lending institutions, foans from which form the predominant source of | The Domninant Proprietary Classes e industrially advanced countries)! 45ven the ostensibly adverse government policy of an elaborate scheme of industrial and import licences has been allowed to be tumed to the advantage of the industrial and commerical interests ‘they were designed to cont richer industrialists, having acity creation and shelt profits. In cases wherd licensing regutations trave beer dire aimed at them, the pig industrial houses have offen Tre violated these regulations, created unlicensed, cay for example, in 46 units of the Birla group alon - duced far in excess of the quantity permitted. Over the last decades there has not been a single case of any such company being prosecuted for such violations? on the cont repeatedly the Government ‘unauthorized capacity creat many of the regul watered down, Similarly, the major potential threat of converting loans from public financial institutions into equity in the private companies has now been diluted. But feven in cases whert these financial institutions hive held substantial equities, by and large they have played a passive role, not interfering with the family control of the business houses in spite of many cases of indifferent management. cffthe contenlling interest of the public financial i ‘in companies has been used more ofteft to take over ‘sick’ \of marginal units saddled with large losses. Thus the govern- catinted from Réserve Bank data that in large private sector companies ios ass formation declined from ported to have challenged: ‘If thee is & ‘he market, wil not alow your Heating ‘epulationt to come in ‘you penalize me for ts, will not pay the fine, Plene come and ares me." 41Conflicts in the Dominant Coalition of (and the attendant delays and waste by) the public profes- sionals who use the popular socialist slogans in consolidating those powers, Large industrial conglomerates have, of course, their ways of manocuvering through the maze of controls and manipulating it to their advantage in pre-empting com- of helping the ‘small man’, battalions of bureaucrats wield the weapons. of monopoly control, foreign exchange regula and credit, and. input rati of businessmen who do not have the clout or the money th these dispensers suspicious. often identifies money- greed and dishonesty, malig Sh Wade 6. ay fegitimacy to the exercise of controls by: the bureaucrats (who, as we have already noted, largely come from the literati castes). Going beyond controls and regulations, it is also plain to see that each step in the phenomenal expan- sion of the public sector, (heralded, no doubt, with a lot of leftist drum-beating), each dramatic act of state take-over for nationalization of industry, has been used largely to expand the job prospects and security of the professionals and white-collar workers. The same goes for expansion of jobs in the military hierarchy with the galloping defence spending since the early sixties. It should also be noted that the very mode of operation that the regulatory bureaucracy ‘uses in its dealings with industrialists and traders tends to divide them and reduce the probability of class-based chal- lenges to its policy. actions. It often deals with members of the latter group on an individual basis, using selective fayours, granting individualized petitions for exteptions and special 58 trade, and distributic Conflicts in the Dominant Coalition parating out the Modis, the Swaraj Pauls, the for special treatment, and thereby somewhat more difficult for Chambers of Commerce to close their ranks against particular administrative policies. The bureaucracy impinges somewhat less on the interest of rich farmers, sf though in matters of administered prices, procurement, | restrictions on grain moverients and of credit and fertilizers, it has numer- ous powers to exercige and favours to dispense. But the fiat of the bureaucrat, even from the State capital or district headquarters, gets somewhat weaker as it reaches the distant villages where the local rich farmers have things more under their control. The fate? of the massive amount of land redistributive legislation in most States — and of the genuine attempts by some well-meaning bureaucrats to implement them — bears ample testimony to the limits of bureauc power in the private domain of rich farmers. But even het is interesting to note occasional cases (as, for exampk Karnataka under Devraj Urs) where civil servants (largely Goming from upper-caste families no longer o belonging to “backward castes’ to neutralize the rich farmers belonging to dominant middle castes and carry out some redistributive land reforms. the lst 36 year ess than 0.6 pet cent of the total cu ly teen dtibuted among the landless.eget Conflicts in the Dominant Coalition lower rates to 207 and 166 respectively. As for the net barter terms of trade between the agricultural and the industrial sector, they do not show much of a frend, taking the last three decades as a whole, There is no #tatistically significant time trend in, for example, the inde of wholesale prices of agricultural relative to manufactured products (presented in Table 12), which may be taken as a very crude proxy of the terms of trade over the period 1950-51 to 1981-82 (a weak — statistically not very significant — decline for the, agricultural sector since 1973-74 may be discemed if one uses a dummy variable for the latter period; this possibly indicates the effects of the intemational rise in the price of petroleum and petro-chemical products like fertilizers). In any case, the net barter terms of trade are not necessarily 4 good index of changes in the intersectoral distribution of income. Studies of intersectoral resource flows* indicate that through the fifties and the sixties the net resource flows, both on private capital account and on government account, have been from non-agriculture into'agriculture and not the other way round; but in the last decade there have been increasing net outflows from agriculture in the form of the financial savings of agricultural households. which reflects partly an expansion of financial institutions into the rural areas and partly a slowdown in investment in physical farm assets. These financial outflows, of coke, do not represent unrequited transfers, an¢ in any case, jwithout further infor- mation on flows on government account in the last decade, the direction of the overall net fiow cannot be determined. Meanwhile the government tax structuré remains lopsided in its impact on the non-agricultural sector with relatively insignificant taxation of agricultural income and wealth. ) and Mody (1983). and agricultural income tax as proportion of total tax sevenes of Central and State Governments declined from 7 percent in 1951-52 1 S per cent in 1964-65 to I per cent in 1980-21, 56 Conflicts in the Dominant Coalition ver the basis of the grievances, the perceived inequities ite the rural household, creased incidence and in different parts of India ‘be interpreted as an index of increasing the urban classes — more a flexing of lasses, particularly in industry s resent the licence-giving powers fo urban than in ura India,Conflicts in the Dominant Coalition industrial capitalist class, in the public sector deciles of the popul: sharp and open i « between the ti the other. One of the leaders and ideologues of the latter, 54 Conflicts in the Dominant Coalition Sharad Joshi of Maharashtra, has described the pri ian polities today as that of Bharat . ide vs. fhe-city, and even borrowi thetoric of the infernational dependency literature, has pointed attention tol what he calls the problem of ‘unequal ‘exchange’ between India’s metropolitan capitalist industrial economy and the vast agricultural periphery of producers. The persistent theme in the speeches and writ of Charan Singh, the Jat Prime Minister a few years b has been on the stranglehold of ‘urban lobbies’ and the ‘parasitic intelligentsia’ (his way of describing the profes- sionals), The recent public focus has been on agricultural prices and the ‘terms of trade’ between the agricultural and the industrial sectors' (since the bulk of the marketed surplus of agricultural products is under the control of rich farmers often concentrated in a few States, largely the terms of trade faced by them, not by the majority of farmers who do not have much to sell in the market). All the political parties in India have taken up the burning cause of ‘remuner- ative’ prices for farm products, although the hard evidence suggests? that the administered purchase price has been ‘well above the weighted-average cost of production (including the seventies the 1970-71 as 100) 104 for wheat and ae mid-seventies for rice, and 1 June 1980, while to 240 for rice and 170 for wire ¢ free-market wholesale prices ro: soqoitng lager and nrer shares ofthe market for processed 3 the private mils of Nocth India. Pee States Pune, Hesyana and Uttar Pradesh) account of wheat purchases by the Government; four States (Andhra Pradetn, Punib and Haryana) for 60 percent of tice purchases; and two States (ita Pradesh and Maharasbea) for mort of suareane purchases. * See, for example, Subbesso (1982), 55The Dominant Proprietary Classes fortunes of private has continued to this day,.even though the proportion In a country where the overwhelming or drop-outs at the primary education enjoy a high scarcity value for the profession. By managing \ ie from absentee ‘adore has now been Poe | by the new rentier elements inthe 70 similar social status groups Brahmins and éther,upper castes are dispropor- tionately represented among’ the administrators, engineers,” educators, and so forth? ‘as they were in the old rentier class. For the underprivileged social groups, education offers the quickest route of upward mobility, @ passport to the prospect of a secure job’ in the bureaucracy and the * See, for example, the results of «sil sample murey by Tas (1969). 52 and-not L ‘The Dominant Proprietary Classes professions. No wonder that some of the bitterest caste rious parts of urban India in recent years have the issues of reservation of seats in medical and engineering schools and of jobs in the Government for lower castes. 33The Dominant Proprietary Classes of Bhumihar and Yadav landowners, and more often than not ‘the Bhumihars and Rajputs will it the Chamar poor peasants than wit of the class of rich farmers. While th purpose it is important to point out that on matters of state policies affecting common class interests of rich farmers, these diverse and often hostile social groups have made common cause: in agitating for higher farm product prices for in frustrating land ceilings legislation, they are usually ‘on the same side even if they may be f ifferent political forums. A major economic issue that to jobs in the public bureaucracy wire vation of jobs for ‘backward’ castes! have excited passions ‘on both sides. One should also keep in mind that the divisions of caste ferent meanings at different levels of aggregation: farmer refers to a jari, the relatively small group within which he will find food and marriage transactions acceptable. But in order to cultivate the outside world of politics and bureaucracy and to be effective in channelling the bureaucratic allocation of various subsidies and inputs in their favour, the farmers of one jati have to form alliances with other /atis of similar occupation, possibly sharing a larger caste group name. These aggregative ‘castes are then more like uneasy political coalitions, held together more by pragmatic class interest than by ascriptive homogeneity: two farmers belonging to the same caste in this, larger sense may not accept food from each other, but will pull together for higher prices or lower taxes. Electoral politics ‘has clearly strengthened these larger of patriarchal and. patrimonial ties arp also useful tools of class hegemony for the rich farmers, Who can exercise their economic and cultural domination eyen without well-knit 50 es the professi white-cotar workers smoke woman Marxist practice of subm: ‘and thus treating them a an ‘auxiliary class’ can be-hi misleading. Ta “his T8453" hhotebook critique of He ‘bureaucracy as just another class (as, 01 which has shaped some of-later Marxi question, is sharply at variance with Marx’s owe experience fof the Prussian bureaucracy, which he refers to as ‘that omni all-meddling parasitic body’. A r has a fairly long tradition of powerful bureaucratic ( tunctanaeiek The patrimonial buesveras of Moga India {such as foudars of subada/s) Wiad substantial power, and British rule continued this tradition of a strong Gil Service. * Heras inthe subsequent pages Ihave kept a conceptual distinction between ‘bureaucracy (which I inci among the* The.Dominant Proprietary Classes , tionately to the rich farmers. On state policies affecting agriculture there are no, serious conflicts of interests between rich farmers. and family*farmers; the conflicts are potentially more antagonistic between rich farmers and poor peasants and wage labourers, ss of tenurial rights, minimum ‘wages and even agricultural prices (since the majority of dbourers are _net buyers of foodgrains and wages t Jag behind prices), but given their organ- izational disarray and the numerical preponderance of rich and family farmers. taken together, even the leftist parties in India usually follow a imulti-class agrarian mobilization iateibes mainly against industrial monopoly capital in the urban sector and the phaittom feudal class in the rural Except in localized pockets of North and Centr the class of landlords which is uninterested in profitable. cultivation, but primarily involved in usury and speculation, enjoying the status value of large landed estates and the social power of domination over a retinue of bonded labourers = the class usually described in the Indian literature as ‘semifeudal’ ~ has largely disappeared. In most parts of the country, agrarian capitalism is sprouting, and in the better irrigated regions it may event be described as thriving. Of course, many of the families f capitalist landlords and rich farmers have also branchéd out into money-lending, trading, transport, and other business and services. This Kind of portfolio diversification’ has made these families less susceptible to the vagaries of agricultural production, apart from strengthening their urban political and economic ‘connections. Any potential conflict of interests in producer versus mercantile profits (arising, for example, from a govern- ment price or procurement ) is intemally managed within the occupationally diversified family or the co- operative society (for agricultural credit, marketing and _ the implementation of a piece of redistrit The Dominant Proprietary Classes agro-processing) that these richer families often dominate. In the case of some commerical crops, the interests of rich farmers sometimes clash with those of specialized traders and commission agents, but this conflict belongs more to the arena of agriculture-industry cont ‘We have talked about the class interests of fermers and their alliance propensities on the basis of those interests. But in the complex hierarchical rural society of India these interests are often overlaid with various kinds of social and cultural divisions. Social anthropologists emphasize the dominance of the diffusing effects of the cross-cutting cleavages of caste and ethnicity, hindering the process of class formation. There is 2 large, polemical and ethnographi- rich literature on this question in India. | shall not go ‘a discussion of this here, but my own prejudices make fined to - that to take the class interest of the m rich farmers as seriqusly circumscribing the scope and nature of state policy is |a meaningful way of approaching the problem, even though caste divisiveness and factional rivalries afflict the articulation and organization of these interests in varying degrees in different parts of the country. In particular, let us consider the domain of class interests for ‘our present purposes. When local landlords use their social and economic dominance in 2 village (0 effectively frustrate legislation, their class interest clearly constrains state action in that localized context, even if their kinship and territori affinities keep them far from being integrated into any well _ It has action virtually impossible even in a localized area Pradesh, Rajput and Jat landowners, even in the same are likely to vote on opposite sides; in Bihar the same is true 49The Dominant Proprietary Classes farmers. The immediate Post-Independence land reforms ‘cteleratEI™the already OTR CESS OF the transfer of land from non-cultivating, a often _uoper-caste. landiords (who had been moving ihto the professions and Services for several decades) to |terprising rich farmers often belonging to the middle , and in some cases the erstwhile lords now foun Profitable to convert emselves into big farmers with the we of rece labourers ¢ Gossrament has assured for these rice _suy rt for fa is beral provision of Power, fertilizers, diese! it tional domain of the State Govern (i ich farmers being more oj of agricultural wicome and wealth ification OF the class of rich farmers is, of Of cultivated area and 75. On account of land 8 mple, 73 per cent of aij ‘ural households owned more than Rs 20,000 in assets, while 46 of Tich farmers defined in this way at the aggregative level. On the basis of retabulati ‘est 16 per cent of all rural households primarily from agricultural occupatiors se of bei Were rich farmers i labour. Since the extent Topulated West Bengal than in, say, large pasts of North o Cinta! India, the albindia proportion for tich farmer 1p {his sense may be somewhat lower. But I doubt if, tor owe the class of rich farmers as the nt 2 Serious constraint on the policy actions of the state, the ‘orthodox Marxist definition based on the criterion Stenificance. Except in localized pockets, the expl oor Peasants and agricultural wage labourers are lulorganized and often locked into dyadic and client ‘elitionships with the rich farmers, their employer-reditons class interests — in agitations for lower taxes, higher prices, Ta etter subsidies. The intermediate class of primarily * See Barahan (1982), 41The Dominant Proprietary Classes there is also some fragmentary evidence pointing to growing ancillarization (in engineering industries, for example). ‘Subcontracting and ancillarization not merely help large ‘companies avoid excise taxes and Isbou they also line up for them numerically strong vertical alliances that may units, and the expansion in their number indicates some Tengtheriing of the ‘tail’ of distribution of firms in many industries. To the extent the generation or acquisition of new technology is strongly related to scale economies, the longttailed market structure in many industries may be a factor slowing down technological progress in the private sector. In contrast to many Latin’ American countries, where major focus of analysis of the stineture is on the role of international capital (primarily embodied in trans- national corporations) and its interaction with relatively weiik local bourgeoisic, a rérsarkable feature of development is the relative uinimportance of foreign c and foreign firms. CMIE (1983) has estimated that in 198: only about 10 per cent of total value added in the factory sector of mining and manufacturing Was accounted for by foreign firms’ (eyén taking into consideration only very large firms with sales exceeding Rs 0 yn, the foreign firms accounted for less than 13 per cent of their value Vite Fhama Products long t Shaw Wace: Inn 1 Indian Naan! Diet Co cone by Mates Ben Alyy asena Tannen Ente electrical and vehicle indstry groups t nega ffm ie didnot, indicating general he in the number ffs. + ciSuety ratn th FERA (Fain Exchare Replaon Ac) wal cing sls thove units which have dite thee foreign ines sn a thee foreign shareholding in recent 4a _ with the onset of the regime of import-subst The Dominant Proprietary Classes added). While their average presence is low, the foreign have high market shares in a very about 50 per cent or more in industries producing cigarettes, soap and detergents, typewriters, electrodes, glycerine, explosives, batteries and ‘pulbs. OF the top 25 indust sted in Table ‘Ashok Leyland, and Dunlop. Some of these large foreign have retained their pre-eminence for several decades Wantage in marketing organization ry, while most other colonial firms declined. In the newer eae industries, foreign firms have only a mpnor role. After Independence many of the foreign branch-cbmpanies (mainly in plantations, mines r 1d off to Indian businessmen; then, tion, foreign Companies set up manufacturing subsidiaries to protect ket shares (especially in chemicals and pharma- ~ but since the mid-sixties the government licensing yy and regulations on foreign share-holding have seriously ‘couraged foreign investment. New foreign private direct vestment has been tninimal: in spite of a significant increase foreign collaboration agreements in recent years, the over whelming proportion of such agreements do not involve any foreign participation in equity capital. Most technology imports have now been through outright purchase arrange ments, after the decline of the importance of licensing fgreements induced.by the government policy of controls on royalties and of regulations aimed at reducing the depen dence of local producers on the technology suppliers ‘From the industrial bourgeoisie let me now turn to numeri- cally the most important proprietary class, that of rich and services) were cnt invol any foreen share of equity capital. * pes (1983) ce 1977-80 865 percent of technology ingot 4sThe Dominant Proprietary Classes ment not merely finances private industry, it also acts as the risk-absorber of the last resort and a charitable hospital where the private sector can dump its sick uni productive capital in This concentration of assets may not have diminished in recent years, as even the pretence of government control over OF less given up since the and also there has been a spate of company take-overs in recent years. On account of the problems of pricing assets, valuing stocks and computing for depreciation, sales volume may be a more reliable indicator than assets of the economic importance of s. (In any case the top business houses now through management, not majority owner- ship.) Table 15 suggests that their = 25 a proportion of net domestic product in the private orgpnized sector at current prices grew about one and a half times over the seventies. While the private industrial pyramjd remains concentrated at the top, over the last decade or so there have been some dramatic changes in the composition of the list of top busine houses. While the supremacy of the Hirls and the Tatas remain unchallenged (115 companies controlled by them” accouriting for neatly 40 per cent of all sales of the top 20 industrial houses), the fastest growing bi fOUpS are somewhat lower down in the Ts his windfall profits trom tracing premiaTetching import entitlements into industrial _capital”_and Whose Textile Industries Ltd, with sales multiplying 33 “Justone“GecadG, is set to become the largest textile unit in the country, and by the end of 1982 is the sixth largest ‘artong all private industrial companies, yielding precedence only to’ such vintage ventures as Telco, Tata Steel, ITC, DCM, and Hindusthan Lever); the Modis (whose sal well-diversified group of industries mul 42 many years); Nanda’ (the automotive tycoon whose sales ied sixfold in nine years); aiid so on. Some of these up-coming companies have also been the quicket in taking advantage of the,recent easing of restrictions oi foreign collab- orations and in forging links with transnational companik Another feature of the changingorganization of industrial capital is the substantial expansion of small-scale industries and 2 possibly increased incidencetof subcontracting and ancillarization. Even though the evidence for the factory sector (shown in Table 16) from the Annual Survey of Industries suggests that in 1978-79 the officially defined small-scale sector (plant and machinery up to Rs | million) accounted for only 7.5 per cent of productive capital and 14.5 per cent of valuetétided, looking afactory starting dates it is found that of all factories between 1966 and 1978 nearly half was in the small-scale sector, accounting for 30 per cent of productive capital and 25 per cent of value added. The share of individual proprietors and private partnerships in the. total stock of capital within privately owned enterprises in the factory sector steadily rose over the seventies. While the coverage of small-scale units of the Annual Survey of Industries has been inci and variable, and while many of the registered sm are fictitious entities to take advantage of the exemptions (from regulations and taxes) and benefits these units enjoy, there is no doubt that there has been a remarkable growth in, the number and activity of small units (for examp! ‘textiles with powerlooms, leather products, ete.), particularly ‘where there have been serious re \s on the output of the large-scale uni number of products in Februrary 1971 fo 844 by August 1981). Many of the small units are actually ‘owned by large business houses; tat JK. Helene Cuts, + analcale it, owned by te Sarghanla groups sa nis Uke Dental Product of Ida The Dominant Proprietary Classes