Dalits & economic liberalisation

The Hindu, September 05, 2000
By Pratap Bhanu Mehta

THE EMERGING rumblings of discontent over economic liberalisation call for a rethinking of the relationship between it and the empowerment of Dalits. Often the relationship between the two process is characterised negatively. It is argued that historically the upper castes have secured their dominance through the state. Now that the upper castes see it slipping from their control, they are calling for a rolling back of the state.

Social privilege will now be structured by access to the market rather than to the state; and the upper castes have great advantages in the market. The call for rolling back the state just at the moment when the Backward Castes are gaining significant access to it is nothing but an upper caste ruse to reinstate their power through the market. As an explanation for the necessity of liberalisation much of this argument is beside the point. There is, however, a grain of truth to this argument that needs to be taken seriously.

Unless the newly-mobilised Dalit castes can be given access to the gains of the market economy, their prospects for social advancement remain dim. The gains of the market economy can be legitimised only to the extent that Dalits are part of these gains and, Dalits can in the long run socially and economically empower themselves only if they acquire the capacities to navigate a market economy successfully. The state has limited resources and most wealth in society will be generated outside it. Access to political power can ensure that the state is not complicit in reproducing social inequity.

But state power will not, by itself, enhance Dalit and Backward Caste representation in all those walks of life that will be at the cutting edge of the new economy. The process of economic liberalisation must be shown to yield direct gains for Dalits, in a way that can make them allies rather than opponents of liberalisation.

The process of economic liberalisation is at a critical juncture. The public sector is undergoing a massive disinvestment. The Government hopes to generate Rs. 10,000 crores in the 2000-2001 financial year alone, very little of which will go directly for Dalit welfare.

Revenues generated by this process will not be put to any productive use by the state. Given the pressures of our fiscal deficit and temptations of populism and patronage, these gains will be swallowed up. The revenue from disinvestment needs to be earmarked for social purposes. We need a political consensus that will commit this revenue to Dalit and Backward Caste welfare.

This spending could have three components: first, some of it could be used for general investment in primary education and health in rural areas, especially where there is a large concentration of Dalits. Second, it would provide money for Dalits in the form of scholarships and grants, which could be redeemed at suitable qualifying private institutions, which could include not only private colleges, professional institutes, but also computer institutes.

For instance, training for the information technology sector is in private hands and weaker sections need to be given access to them. This would have several advantages. Dalits would not remain confined to second-rate state institutions. Many private institutions which at the moment do not admit Dalits will have an incentive to do because these students would come with their own funding.

Third, some of these resources could be used to set up an entrepreneurship fund for qualifying Dalits. Many states have such funds for qualifying women entrepreneurs. These funds could take the form of low interest loans, matching grants etc. These will ensure that Dalits have some resources to draw upon which will allow them to be entrepreneurs and business leaders.

Economists would argue that, in theory, earmarking funds from disinvestment is not an optimal use of these monies. But in practice there are three arguments for earmarking funds. One is that in the absence of such earmarking the state is not very likely to use these funds for productive purposes any way. Second, the rationale for economic liberalisation is that it will generate more wealth than the state dominance of the economy allowed. But the gains from this wealth have to be shared, not by expropriating the wealthy, but by using this wealth to generate opportunities for the weaker sections of society.

In the last decade or so, the state has not been able to send any firm signals about how the latter part of this bargain is going to be kept. Suggesting that disinvestment proceeds will be used only for important social purposes that benefit those who have least access to the market economy will send an important signal.

Third, such gestures will help consolidate political support for reforms. Of course imaginative ways will have to be found to administer these funds; and they will by no means be sufficient to address most of the real deprivations that Dalits face. But this use of disinvestment funds is likely to be better than any of the alternatives.

The approach outlined above will have several benefits. It will prevent the state from squandering the resources on itself; it will represent a concerted effort to give Dalits independent standing in the private economy; it could potentially mobilise this important sector on behalf of privatisation and thereby diffuse criticisms from the Left.

And finally such a scheme would in the long run produce more lasting social gain than Mandal did. It would actively encourage Dalit initiative rather than merely coopt it into the state. It would give society renewable assets such as schools. It would give Dalits wider representation in different sectors of the economy.

One of the chief limitations of the discourse of social justice in India has been the fact that it has focussed only on the state. This focus has given this discourse a zero-sum character. One group wins at the expense of the other. Unlike goods distributed by the state the market's allocations are not, under right conditions, zero-sum in character. If participation in wealth-generating market activity can be widely diffused across different castes, the zero-sum character of political competition may also get dissipated.

By moving to a new discourse, that demands not just state resources, but wider participation in the market, Dalits might revolutionise our understanding of social justice. Without the market, growth cannot be achieved; and without Dalit participation in the market, equity cannot be achieved.

Let us forge a virtuous cycle, where liberalisation is seen as a means of Dalit empowerment; and Dalit empowerment is seen as saving us all from the excesses of the state. Dalits now feel that they have most stake in the liberal constitutional values that their upper caste peers are so intent on betraying. It is desirable that they acquire a stake in the private economy as well.

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