Inequality in India: A Historical Perspective

1. Inequality in India:A Historical Perspective Kunal Sen IDPM and BWPI, University of Manchester

2. Outline of Presentation • Inequality in Mughal India (1600-1757) • Inequality in British India (1757-1947) • Inequality in Independent India (1947-) • Globalisation and Inequality • Social Structure and Inequality • Conjectures on the Future Path of Inequality

3. Mughal India, 1600-1757(source: Osamo Saito, The Economic History Review Lecture 2012)

4. “The Great Mughal Consumes Everything” • An economy based on the extraction of vast revenues from the countryside to the centre for redistribution down to the chain of military and civilian officials of the regime, each with his own retinue of retainers to be supported. • “The Mughal empire was an insatiable Leviathian, defined …by its unlimited appetite for resources” (T. Roychaudhuri). • But (not so) surprisingly commerce was promoted. • Payment of land tax in cash. • Lower taxation of cash crops. • Very high inequalities.

5. Class differentials in per capita household income 5

6. British India

7. Inequality, British India • Slight decline in Gini from 0.35 to nearly 0.30 (Atkinson). • Two counteracting forces. • One, deindustrialisation, leading to wage stagnation and rise in rural poverty. • Two, with rise of commerce, size of the middle groups increased – lower level officials, commercial elites – bankers and money lenders, middle to rich peasants. • (source: T. Roy, AEHR, 2007). • This was unlike Mughal India where a few hundred families of mansabdar (military officer) rank had access to one third of the gross produce of the land, persisted in the early years of British India.

9. Independent India

10. Inequality in India, 1950-

11. Inequality in China, 1981-

14. Globalisation and Inequality in India • The first period of globalisation, 1780-1914 (Findlay and O’Rourke) • Ratio of Trade to Income increased from 1-2 per cent in 1800 to 20 per cent in 1914 for India. • International flow of capital also higher than pre or post colonial period. • Inequality did not show an increase or decrease in this period. • Trade collapsed in the inter-war period, and then after Independence, India disengaged with the world economy, to an inward looking economy. • Second period of globalisation, 1985 onwards, as India liberalised its trade and investment regime. • No clear sign of inequality increasing or decreasing in this second period too.

15. Social Structure and Inequality in India • The caste system – a system of elaborately stratified social hierarchy –implied a hereditary caste hierarchy that prescribed individuals’ occupations. • Provided by the jajmani system, which is a system of hereditary patron-client relationships between the jajman (the patron) -- usually, landed proprietors from the upper and middle castes – and the kamins or balutedars (the clients) – usually, unfree agricultural labourers from the low castes, who were expected to provide labour and other specialised services to the landed upper and middle castes. • Significant endogamy within castes and religions. • Perhaps the most distinct example of inequality of opportunity. • Radical affirmative action programmes since Independence, and significant political mobilisation and empowerment of the Dalits (SCs) since the 1980s.

16. Social Structure and Inequality(from Clark and Landes 2012)

18. Conjectures on Future Path of Inequality in India • Slow increase in inequality of outcomes (particularly around regional inequality), as some regions take advantage of globalisation more than others. • But inequality of opportunity may decrease, again very slowly (due to persistence of endogamy, and weak provision of education to the disadvantaged), as economic change allows socially disadvantaged castes to move out of their caste-determined occupations (agricultural labourers) in rural areas, and as India urbanises.