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CLASS, NATIONALITY AND THE

DEVELOPMENT PROCESS IN
KERALAM (SINCE 1970)

Thesis submitted to Jawaharlal Nehru University


for the award of the degree of

DOCTOR OF PHILOSOPHY

GILBERT SEBASTIAN

Centre for Political Studies


School of Social Sciences
Jawaharlal Nehru University
New Delhi - 110 067
India
2007
CLASS, NATIONALITY AND THE DEVELOPMENT
PROCESS IN KERALAM (SINCE 1970)

CONTENTS Pages

Chapter 1: Critique of the 1 Kerala Moder and Setting out on a 1-33


New Agenda of Research

Chapter II: Conceptualising Class and Nationality in India 34-93

Chapter III: Facets of Dependency and Articulations of the 94-152


National question in Keralam

Chapter IV: Implications of the Neo-liberal Reforms in Keralam 153-209

Chapter V: A Structural-Locational Analysis of Classes and Social 210-320


Groups in Keralam

Chapter VI: Subalternity and Political Discourse: Class as a 231-413


Relational Process of Becoming in Keralam

Chapter VII: Conclusion: Class, Nationality and the Task of Social 414-440
Transformation in Keralam

Bibliography 441-483

APPENDICES

Appendix - 1: The Caste Composition of Kerala Society - An 484-485


Introduction

Appendix - 2 : Statistical Tables 486-505


Abbreviations
ADB Asian Development Bank
AGMS Adivasi Gothra Mahasabha
A ICC All India Congress Committee
ALH Agricultural Labour Households
CDS Centre for Development Studies
CHR Cardamom Hill Reserves
CIDA Canadian International Development Agency
CPI Communist Party of India
CPIAL Consumer Price Index for Agricultural Labourers
CPI(M)/CPM Communist Party of India (Marxist)
CRZ Coastal Regulatory Zone
DANIDA Danish International· Development Agency
EEC European Economic Community
ECLA Economic Commission for Latin America
ESIC Employees' State Insurance Corporation
FDI Foreign Direct Investment
FII Foreign Institutional Investment
FMR Female-Male Ratio
FRBM Fiscal Responsibility and Budget Management BiiVAct
GDI Gender Development Index
GOP Gross Domestic Product
HOI Human Development Index
HDR Human Development Report
IDRF India Development and Relief Fund
IMF International Monetary Fund
IMR Infant Mortality Rate
fPC Indian Penal Code
KIRTADS Kerala Institute for Research Training and Development
Studies of SC and ST
KMML Kerala Minerals and Metals Limited
KLltA Kerala Land Reform (Amendment) Act (KLRA), 1969
KMS Kerala Migration Study
KREML Kerala Rare Earths and Minerals Limited
KSEB Kerala State Electricity Board
KSRTC Kerala State Road Transport Corporation
LDCs Less Developed Countries
LDF Left Democratic Front
LIB OR London Inter-Bank Offered Rate
NAC National Advisory Council
NCAER National Council for Applied Economic Research
NCEUS National Commission for Enterprises in the
Unorganised Sector
NGOs Non-Governmental Organisations
NICs Newly Industrialised Countries
NSSO National Sample Survey Organisation
NTPC National Thermal Power Corporation
OBC Other Backward Classes
OECD Organisation for Economic Cooperation and
Development
OPEC Organisation of Petroleum Exporting Countries
PESA Provision for Extension to Tribal Areas Act, 1995-96
PQLI Physical Quality of Life Index

v
RLH Rural Labour Households
RCT Rational Choice Theory
ROC Regional Dominant Classes
RLE Rural Labour Enquiry
RLH Rural Labour Households
RSS Rashtriya Swayamsevak Sangh
SAP Structural Adjustment Programme
sc Scheduled Caste(s)
SOP State Domestic Product
SMS South Asia Migration Study
SNCL Second National Commission on Labour
SSA Social Structures of Accumulation
ST Scheduled Tribe(s)
TAMA There Are Many Alternatives
TINA There Is No Alternative
lNC Transnational Corporation
UDF United Democratic Front
UNCTAO United Nations Conference on Trade and Development
UNOP United Nations Development Programme
VAT Value Added Tax
VHP Vishwa Hindu Parishad
WPR Work Participation Rate
WTO World Trade Organisation

vi
Glossary

A.bkan"lobby Lobby of liquor contractors


A.diyalar Bonded labour who suffered aspects of slavery as well
A.dvasi.J Indigenous people
Antarjjanam Brahmin women confined to their homes
Do/its Untouchables or outcastes in the traditional caste order
Desom, Kara, Tbara, f\.Tadu Pre-colonial social/territorial collectivities in Keralam
Ganja Cannabi.J saliva, an intoxicant herb
fa/ Water
fameen Land
/at~e.al Forest
fenmi Feudal landlord in traditional Keralam
Jenmom Ownership rW1t over land by the Jenmi
Kanam Tht> highest category of tenancy in traditional Keralam
Kaya/land Polder paddy land
Keraleeyar The people of Keralam
The smaller erstwhile princely state, presently in Central
Kochi Keralam
Kudikidappukar Hutment dwellers on the property of the landlord
Kudiyin"ppu A kind of tenancy in traditional Keralam.
Polisa pallom Lease holding in which rent is _I>aid p_robably as interest
Pana patlom Lease hold~ in which rent is_Eaid in cash
Panku pattom Lease holding in which rent is_Eaid as share of the crop
Pattom Lease holding/Rent
Ramjanmabhoomi The birthplace oflord Ram; Vaishnava god with Aryan lineage
Those castes that come under the four-fold varna/caste
Savama system, i.e. excluding the Dalits
The erstwhile princely state, which is presently in southern
Thiruvithamkoor Keralam.
Lowest kind of tenancy which is insecure and vulnerable to
Vemmpattam evictions.

vii
List of Tables

Table 3.1 Annual growth ofNet Value Added by manufacturing in 102


factory sector
Table 3.2 Sectorwise Growth in Kerala ( 1962/63 to 1985/86) 107
(In Percentages)
Taqle 3.3 Annual growth rates ofNet Domestic Product (NDP) 108

Table 3.4 Sectoral contribution to total NDP growth in Keralam 109

Table 4.1 FDI in India, China & Brazil (US $ in crores) 167

Table4.2: WPI of Selected Commodities in Indil! 187

Table 4.3 Growth Rates of Employment (Percentage change per 184


annum)
Table 5.1 Comparative Picture of Categories of Workers by 223
Percentages 1991 & 2001

Table 5.2 Cropping Pattern in Keralam ( 1990-91 to 2003-04) 226


(area in 00 ha)
Table 5.3 The long-term trend in the number and area of landholdings 250
in Keralam
Table 5.4 Average area oflandholdings in Keralam (in acres) 251

Table 5.5 Decadal population growth rates ofSTs and total 265
population in Keralam and all-India, 1991-2001
Table 5.6 271

I
I Table 5.7
Percentage of Agricultural Labour and Poverty level among
SCs and STs in Keralam and India.
Participation of Dalits in different Sectors of the Kerala 273
Economy during 1961-1991.

Table 5.8 Percentage Share of usual occupational pattern of the 275


members of Rural Labour Households by Social
Categories 1999-200 I
Table 5.9 Percentage Distribution within Social Categories with & 276
without Cultivated Land, of Agricultural Labour
Households in Keralam and India during 1999-2001

Table 5.10 Percentage Distribution within Social Categories with & 276
without Cultivated Land, of Agricultural Labour
Households in Keralam and India during 1977-78

Table 5.11 Social Category-wise Percentage distribution of Rural 276


Labour Households with and without Cultivated Land as
Proportion of all Agricultural Labour Households in
Keralam and in India during 1999-2001
Table A. I Rural Landlessness, Proportion of Agricultural Labourers 486
and Agricultural Wages in Indian states

Table A.2 District-Wise Details of Landless Tribals and Those Who 487
own less than 1 Acre of Land In Keralam

Table A.3 Total Population & Scheduled Tribe Population in Keralam 488
& India, Censuses 1971 & 1981
I

Table A.4 Total Population to Scheduled Tribe Population in 489


KeraJam, districtwise, Censuses 1991 & 2001
Table A.S Tribal Population as Percentage of Total Scheduled Tribes 490

Table A.6 Recent Scams ofNotoriety in India 491

M_ur.~er ru:td Suicide Rates in Indian states 492


TableA.7
State-Wise Average Size of Land Cultivated and 493
Table A.7X Percentage Distribution of Estimated Number of Rural
Labour Households with Cultiv~ted Land by Size of
Land Cultivated- 1999-2001
State-wise Average Size of Land Cultivated and percentage 494
TableA.7Y: distribution of stimated number of ruraJ labour households
with cultivated land by size ofland cultivated- 1999-2001
Scheduled castes house holds

Table A.8: State-Wise Average Size of Land Cultivated and 495


Percentage Distribution of Estimated Number of Rural
I
Labour Households with Cultivated Land by Size of Land
Cultivated- 1999-2001 Scheduled Tribes House Holds

Table A.9: State-Wise Average Size of Land Cultivated and 496


Percentage Distribution of Estimated Number of Rural
Labour Households with Cultivated Land by Size of Land
Cultivated - 1999-2001 other Backward Classes House
Holds Average Size of Percentage of Households by Size of
Land

Table A.ll: State-Wise Average Size of Land Cultivated and 497


Percentage Distribution of Estimated Number of Rural
Labour Households with Cultivated Land by Size of Land
Cultivated - 1977-78 scheduled Castes House Holds
Percentage of Households by Size of Land

Table A.12: State-Wise Average Size of Land Cultivated and 498


Percentage Distribution of Estimated Number of Rural
Labour Households with Cultivated Land by Size of Land
Cultivated - 1977-78 Scheduled Tribes House Holds
Percentage of Households by Size of Land
Table A.IO: State-Wise Average Size of Land Cultivated and 499
Percentage distribution of estimated number of rural labour
households with cultivated land by size of land cultivated -
1977-78 all classes households Percentage of households by
size of land

Table A.l3: State-Wise average number of members per household in 500


all rural labour households by usual occupation: 1999-200 l
I
Percentage to all

Table_A.l4: State-Wise Average Number of Members per Household in 501


Scheduled Castes Rural Labour Households by usual
Occupation : 1999-2001

Table A.l5: State-Wise Average Number of Members per Household in 502


Scheduled Tribes Rural Labour Households by usual
Occupation : 1999-200 I

Table A.16: State-Wise Average Number of Members per Household in 503


Other Backward Classes Rural Lab~ur Households by usual
Occupation: 1999-200 I.

State-Wise Estimated Number of Agricultural and Non- 504


Table A.l7: Agricultural Labourers in all Rural Labour Households (In
Percentage)-1977-78 and 1999-2000.

. Table A.l8:
State-Wise Estimated Number of Agricultural and Non- 505
Agricultural Labourers in Scheduled Tribes Agricultural
Labour Households (In Percentage) - 1977-78 and 1999-
12001
J
KERALA
CHAPTER I

INTRODUCTION

Critique of the 'Kerala Model' and Settin.g ·out on a


New Ag·enda of Research

'Place Consciousness'

On the 'Kerala Model'

Dreze and Sen on the 'Kerala experience'

A Critique of Dreze and Sen's Perceptions on the 'Kerala


experience'

Objectives of the Study

Contextualising the Study

A Note on the Method


CHAPTER I
INTRODUCTION

Critique of the 'Kerala Model' and Setting out on a


New Agenda of Research
'You are not interestetf in tf~n~efopment
(]Jut tf~n~efopment is interestetf in yoJL tJ
Keralam, 2 the state on the south-western coast of India has baffled scholars in being
distinguished by many superlatives of the highest and the lowest orders, concerning both
positive and negative features. Thus paradoxes have been noticed of high human
development characterised by high literacy, low birth rate, low--death rate, low infant
mortality rate co-habiting with low economic development in the commodity producing
sectors, the highest unemployment in the country, very high rates of suicide, alcoholism,
etc. This study is an exercise in understanding the political economy of Keralam. Unlike
economic analyses that focus on one or the other sector of the economy, namely,
agriculture, industry or services, this study uses the political economy analysis to
understand the broad linkages that shape the national formation and class and social
group formations within Keralam. And in this sense, it is a study of the social and
political bases of the economy. Before we set out on a Kerala-specific analysis, we would
like to highlight the contemporary importance of the multi-disciplinary field of 'Area
Studies'.

"Place Consciousness'

·Place consciousness is the "radical other" of global capitalism', says the Duke University
historian, Arif Dirlik. 3 "Global capitalism relentlessly displaces people and abandons
places ,because it views local communities, cities and even nations as inconveniences in
the path of progress ..... Place consciousness, on the other hand, encourages us to come
together around common, local experiences and organise around our hopes for the future

Gangadin Lohar 2005: "Aphorisms of Gangadin Lohar", www.arkitectindia.com.


The native Malayalam diction, 'Keralam' in the noun form and 'Kerala' in the adjective form
are preferred to the colonial/anglicised diction, 'Kerala' for both. In fact, most of the
historically conscious scholars use the term 'Keralam' in the noun form in place of 'Kerala'.
Expressions such as 'Kerala studies' are retained where 'Kerala' is used in the adjective form.
Although the term, 'Keralam' apparently owes its origin to the Sanskrit language, it had long
become naturalised in the Malayalam language. Going by the principle of 'place
consciousness' that we advocate later in this chapter, we would hold that places should better
be known by their native names, i.e., as they are designated in popular consciousness. The
usage, 'Keralam' further acknowleges Keralam as a national formation both in terms of
language/culture and political economy within the multi-national country that India is.
As quoted in Grace Lee Boggs 2000, p. 19.
of our communities and cities. While global capitalism doesn't give a damn about the
people or the natural environment of any particular place because it can always move to
other people and other places, place-based civic activism is concerned about the health
and safety of people and places ..... Place based civic activism is also unique in the way
that it links issues. "4

The reference here is to little localities. But this idea would be eminently applicable to the
case of nationalities in the peripheral countries of the world. Given the 'shrinkage' of
space in a world of International Communication Technologies and advanced means of
transportation, sense of community identity needs to broaden to the level of countries and
nationalities, in the interest of a common humanity, as sites of resistance against the
aggressive self-expansion of global monopoly capital, which has scant regard for human
welfare. Indeed, this is to argue for infusing a new sense of geography into our academic
endeavours towards developing a synthetic approach linking issues, informed by a sense
of concern for the 'territorial community' constituting a nationality, as against the
approach of studying issues in isolation.

Of the two major components of the production process, namely, capital and labour,
globalisation is supposed to entail the unhindered flow of capital, primarily and little of
labour. 5 Thus the most numerous category of unskilled labour from the peripheral
countries are not allowed entry into metropolitan countries. Although the skilled labour is
welcomed into metropolitan countries, it may often be to the disadvantage of the
peripheral countries. The case ofKeralam has been rather exceptional in having massive
outflows of human labour, much before the globalisation policies initiated since early
1990s. This could be considered a fall-out of the oil shocks of 1973 that created
employment avenues in the oil-rich Persian Gulf countries, although the OECD countries6
were net losers in this process.

On the 'Kerala Model'

The theorisation or rather the coinage depicting the achievements in social security and
development as the 'Kerala model' is traced back to a 1975 United Nations (UN)-Centre
for Development Studies (CDS) study. 7 The study had recommended the Kerala

As quoted in Grace Lee Boggs 2000, p. 19.


More on this in Chapter IV.
6
OECD countries are the leading industrial e<;onomies in Europe, plus the US, Japan, Canada,
Australia and New Zealand; 24 countries in total.
United Nations (UN)-Centre for Development Studies (CDS) 1975: Poverty, Unemployment
and Development Policy, Department of Economic and Social Affairs, United Nations, New
York.

2
trajectory of development as less burdensome than the communist path. 8 Morris and
McAlpin had estimated the highest PQLI (Physical Quality of Life Index)- at 70- for
Keralam. Low birth rate (20 per 1000), low death rate (6 per 1000), low infant mortality
rate (21 per I 000) and high literacy rate (91 %) are the major components of PQLI. 9

The birth rate in the state has further declined to 16.70 per 1000 population during 2004
as against the all-India average of24.80 per 1000. The Total fertility rate (per woman) has
come down to 1.99 in the state as against 3.30 at the country level in 2004. During 2004,
the death rate in Keralam was still at 6.3 as against the all-India average of 8. Life
expectancy at birth in the state during 2004 is 71 years (71.67 for male and 75 for female)
vis-a-vi~ 64.80 years at the country level (64.10 for male and 65.80 for female). 10 Infant
mortality rate (IMR) during 2003 in Keralam was just 11 per 1000 live births as against
the all-India figure of 60 per 1000} 1 This marks a significant further decline of IMR in
the state. Going by Census 2001, the proportion of literates in the population in Keralam
is 90.9 per cent (94.2 per cent for males and 87.9 per cent for females). This is quite
impressive considering the fact that the corresponding figure for the country as a whole
was only 65.2 per cent (75.6 per cent for males and 54.0 per cent for females). 12

A major popularizer of the Kerala model was the nobel laureate, Amanya Sen. 13 There
have been other positive features of Keralam that have also been pointed out. These
include: a female/male ratio (FMR) favourable to women {I 040/1 000), 14 culturdl
attainments like greater learning time and wider reading habit, land reforms, universal

However, K.N. Raj who was part of the team has disowned the coinage (K.N. Raj 1994: "Has
there been a "Kerala Model"?", International Conference on Kera/a Studies (ICKS) -
0
Abstracts, AKG Centre, Thiruvananthapuram, vol. I, pp. 12-13).
M. Mohandas 1994: "Paradox of High Poverty and High PQLI in Kerala - Facts and
fallacies", International Conference on Kera/a Studies (ICKS) - Abstracts, AKG Centre,
Thiruvananthapuram, vol. 2, pp. 5-6; & B.A. Prakash 1994: 'Introduction', in B.A. Prakash
(ed.) 1994: Kera/a's Economy: Performance. Problems, Prospects, Sage Publications, New
Delhi, Thousand Oaks, London.
10
Government of Kerala 2006: Economic Review 2005, State Planning Board,
Thiruvananthapuram, p. 516; as cited from Directorate of Health Services data, pp. 516, 518.
ll
Ibid, pp. 516-18; as cited from SRS Bulletin, April 2005 and Economic Survey 2004-05.
~~
Ibid, p. 33; as cited from Census of India 200 I.
l)
Eg: Dreze, Jean & Amartya Sen 1989: Hunger and Public Action, Clarendon Press, Oxford.
14
This follows the Census of India 1991: Indio. Provisional Population Totals. Paper I of 1991,
whereby the corresponding figure for all-India was only 929. Even as early as in 1951,
Keralam had a better sex ratio at 1,028 as against 946 at the all-India level. Over the period,
1951-1991, the sex ratio of Keralam improved from 1,028 to 1,040 but at all-India level. it
declined further from 946 to 929.
The emerging scenario as it relates to juvenile sex ratio (0-6 age group) in the state is low at
958 in 1991 and 963 in 2001 (Government of Kerala 2006: Economic Review 2005, p. 510-
11 ). Details in Chapter V.

3
education without gender disparity, prevention of child labour, health care and other
social security network like houses for homeless, nutritional security, etc. 15

The most conspicuous and vocal school on Kerala studies has, perhaps, been the
proponents of "the Kerala model of development". 16 Dreze and Sen have been foremost
among scholars instrumental in popularising the positive achievements of the 'Kerala
experience' and probably, setting forth the most credible defence of it. Therefore, a
critical evaluation of their positions is very much in order and by engaging in it, we hope
to anchor into our work.

Dreze and Sen on the 'Kerala experience'

Dreze and Sen argue that on the positive side, "Kerala has (I) comparatively low levels of
basic gender inequality (reflected, for instance, in a high female-male ratio), (2) relatively
equitable educational opportunities (indeed, near-universal literacy, especially among the
young), (3) extensive social security arrangements (e.g. broad-based entitlements to
homestead land, old-age pensions and the 'public distribution system), (4) limited
incidence of caste oppression (e.g. few violent crimes against scheduled castes), 17 and (5)
low rural-urban disparities." 18

The following points that Dreze and Sen stress as common to the failure of Uttar Pradesh
and the success of Keralam almost converge with the first three points in the passage
above: (I) The role of basic education (and. particularly of female literacy) in promoting
basic capabilities; (2) the favourable position and informed agency of women crucial to a
wide range of social achievements; (3) the access to public utilities; (4) the role of public
action in a wide sense, involving the State and the public at large. 19 They recommend that
··there is no reason why Uttar Pradesh-and other states of India where basic deprivations

I~
M.A. Oommen 1996: "Working towards a Sustainable Kerala!India", Presidenlial Address in
International Conference on "Kerala's Development Experience: National and Global
Dimensions", Institute of Social Sciences, 8-11 December, New Delhi.
IO
UN-CDS ,1975; John Ratcliffe 1978: "Social Justice and Demographic Transition: Lessons
from India's Kerala State", International Journal of Health Services, vol. 8, no. I, pp. 123-44;
P.G.K. Panikar & C.R. Soman 1984: Health Status of Kerala: The Paradox of Economic
Backwardness and Health, Centre for Development Studies, Trivandrum; Franke, Richard &
Barbara Chasin 1994: Kerala: Development through Radical Reform, Promila, New Delhi in
collaboration with Institute for Food and Development Policy, San Fransisco; Jean Dreze &
Amartya Sen 1989: Hunger and Public Action, Clarendon Press, Oxford; Robin Jeffrey 1992:
Politics, Women and Well Being: How Kerala Became a Model, Oxford University Press,
Delhi; Amartya Sen 1994: "D.T. Lakadawala Memorial Lecture", Institute of Social Sciences,
New Delhi.
17
On violent crimes against Scheduled Castes, see National Crime Records Bureau (NCRB)
1999: Crime in India 1997, Government of India, New Delhi, chapter 7.
IS
Jean Dreze & Amartya Sen 2002: India Development and Participation, Oxford University
I<>
Press, Oxford, first published 1996, p. 354.
Ibid, pp. 90-94.

4
remain endemic-should not be able to emulate many of Kerala's achievements, based on
determined and reasoned political activism". 20

In a comparative perspective, the following figures for 1999 as provided by Dreze and
Sen for Kerala, China and India could be insightful. Keralam has had a population of 31
million within a total population of998 million for all-India, and 1,254 million for China.
The average GOP growih rate in Keralam during 1980-90 has been 2.3 per cent per year
and 5.1 per cent for 1990-99. The corresponding figures for all-India was 3. 7 and 4.1 and
for China, 8.6 and 9.6.2 1

Adult literacy rate in Keralam for those aged above 15 has been 83 per cent for female
and 93 per cent for male in 1999. The corresponding figures for India as a whole were
only 44 and 72; and for China, 75 and 91, respectively. Life expectancy at birth in
Keralam was 76 for females and 70 for males (during 1993-97) and 64 for females and 62
for males for all-India in 1999 and 72 for females and 68 for males for China in 1999.
Crude death rate per one thousand was 6 in Keralam during 1997-9, and the
corresponding rates for 1999, were 9 for all-India 7 for China. Infant mortality rate per
1000 live births in Keralam was 14 during 1997-9, and in 1999, a whopping 71 for all-
India and 30 for China. As for female-male ratio, there were I 06 women for I 00 men in
Keralam in 1999 and the corresponding figure for all-India was only 93 and for China 94.
Total fertility rate in Keralam was 1.8 during 1996-98 and in 1999, 3.1 for all-India and
1.9 for China. 22 Birth-rate during 1997-99 per 1000 persons in Keralam was 18.1 as
compared to 26.6 all-India during these years. 23

Dreze & Sen 2002, p. 94.


Sources for India and China: World Development Indicators 2001; United Nations Population
Division 1999; Human Development Report 1994: p. 146; World Development Indicators
2000: tables 1.4 and 2.10; Human Development Report 2001: table 7; World Development
Report 2000-1: Tables I, 3, II, 13.
Sources for India and China: World Development Indicators 200 I; United Nations Population
Division 1999; Human Development Report 1994: p. 146; World Development Indicators
2000: tables 1.4 aild 2.1 0; Human Development Report 200 I: table 7; World Development
Report 2000-1: Tables I, 3, II, 13.
For data on Keralam and other Indian states:
i) Life expectancy, 1993-97: Unpublished Sample Registration System (SRS) estimates
supplied by the Office of the Registrar General, to be published in Sample Registration
System; partly published in Government of India 200 I: Economic Survey 2000-20() I, Ministry
of Finance, New Delhi, p. S- I 16.
ii) Infant mortality, 1997-99: Three-year average based on SRS data presented in Government
of India 1999: Compendium of India's Fertility and Mortality Indicators 1971-1997, Office of
the Registrar General, New Delhi, Table I; and Sample Registration Bulletin, April 200 I;
Figures as provided in Table I. Dreze & Sen 2002, Table A.2: 'India in Comparative
Perspective'.
iii) Death rate and birth rate, 1997-99: Three-year averages based on SRS data presented in
Government of India 1999a: Compendium of India's Fertility and Mortality Indicators 1971-
1997, Oflice of the Registrar General, New Delhi, Table I; Government of India 2000h:
Sample Registration System 1998, Oflice of the Registrar General, New Delhi, pp. 31 and 63
and Sample Registration Bulletin April 2001: Table I.

5
Apart from the indicators of birth rate, mortality rates of both infants and adults, and
literacy rate which constitute the crux of the PQLI approach in which Keralam fares well.
there are also certain other indicators where the state is doing well. Some of them are
given below: As for the access to certain crucial public services, the proportion of villages
with medical facilities in 1981 in Keralam was 96 per cent as compared to the abysmal
aii-Indi~n average of 14 per cent. The proportion of population receiving subsidised food
grains from the PDS in 1993-94 was 80 per cent in rural Keralam vis-a-vis 27 per cent in
rural India as a whole. Per-capita consumption of food grains in rural areas in 1993-94
\

was 54.1 kg. per year as compared to 10.6 kg. per year in rural India as a whole. The
proportion of rural households-having access to safe drinking water in 1991 was 71 per
cent in Keralam, as compared to 64 per cent at all-India level. The proportion of
households with-electricity connection in-1998-99 was 72 per cent in Keralam and was 60
per cent at all-India leve1. 24

Indicators concerning media and politics also show the state in a better light. The
proportion of households subscribing to a daily newspaper in rural Keralam was the
highest in the country at 26 per cent as compared to only 4 per cent at the all-India level.
The proportion of households that have ever made use of a telephone in 1998 in rural
Keralam was 81 per cent as compared to 29 per cent in rural India as a whole. The voter
turnout in 1999 was 70 per cent {70 per cent female and 71 per cent male) in Keralam as
compared to 60 per cent all-India (56 per cent female and 64 per cent male). 25 Another

iv) Total fertility rate, 1996-98: Three-year average based on SRS data presented in
Government of India 1999a: Compendium of India's Fertility and Mortality Indicators 1971-
1997, Otlice of the Registrar General, New Delhi, Table I and Government of India 2000h:
Sample Registration System 1998, Office of the Registrar General, New Delhi, p. 46; cited in
Dreze & Sen 2002, Table A.2: India in Comparative Perspective.
Death rate and birth rate, 1997-99; cited in Dreze & Sen 2002, Table A3, Part 2: 'Mortality
and Fertility'.
(i} Proportion of villages with medical facilities, 1981: Calculated from the District Census
Handbooks of the 1981 Census.
(ii} The reach of PDS, 1993-94: Special tabulation of National Sample Survey data (SO'h
round) by Alessandro Tarozzi, Princeton University.
(iii} Access to safe drinking water, 1991: Sundaram, K. & Tendulkar, S. 1994: 'Poverty in
India: An Assessment and Analysis', mimeo, Delhi School of Economics; based on 1991
Census data.
(iv) Electrification, 1998-99: International Institute of Population Sciences 2000a: National
Family Health Survey 1998-99, (NFHS-2), liPS, Mumbai, Table 2.12, p. 38.
25
Cited in Dreze & Sen 2002: Table A.3, Part 9: Other Public Services.
(i) Newspaper subscription, 1998: NSSO 1999: 'Travel and Use of Mass Media and Financial
Services by Indian Households', Report 450, Statement 13.
(ii) Calculated from NSSO 1999: 'Travel and Use of Mass Media and Financial Services by
Indian Households', Report 450, Statement II, p. 33.
(iii) Voter turnout, 1.999: Calculated from Election Commission of India 2000: Statistical
Report on General Elections, 1999to the JJ'h Lok Sabha. Vol. 1: National and State Abstracts
and Detailed Results, ECI, New Delhi, pp. 8, 19-24 and 93.
Cited in Dreze & Sen 2002: Table A.3, Pan 10: Media and Politics.

6
projected achievement of Keralam over the last fifty years has been the fastest rate of
poverty reduction among all major states. 26

Dreze and Sen say, "The significance of Kerala's experience is often underestimated in
international discussions." 27 One reason for this absence from international comparisons
is that Keralam is not an independent country. "Yet Kerala, with its 32 million people, has
a larger population than most countries in the world (even Canada), including many from
which comparative lessons are often drawn for India, such as Sri Lanka (19 million) or
Malay~ia (23 milllion), not to speak of tiny Costa Rica or Singapore (less than 4 million
each)..... To achieve as much as Kerala has done for a population of its size is no mean
record in world history."28

. preze and Sen f~rther defend the importance of the Kerala experience in the following
words: "Some rejoinders take the form of a wholesale dismissal of the basic approach
underlying that experience. This often consists of highlighting some particular aspect of
development in terms of which Kerala does not fare particularly well, and presenting this
' --
as evidence of the 'failure' of Kerala's approach. One common version of this line of
reasoning turns on the fact that Kerala has a high suicide rate." 29 They argue, "Indeed,
many countries with high suicide rates (e.g. the Scandinavian countries) are doing
extremely well in terms of overall social opportunities, and it would be quite odd to take
their high suicide rates as a severe indictment of their development record." 30 They
concede that it is quite possible that social problems like educated unemployment
contribute to high suicide rate in the state. But these social problems do not detract us
fro~ recognising Kerala's achievements in fundamental fields such as health and
education, just as, say, Finland's high suicide rate does not detract us from its success in
guaranteeing extensive social opportunities to its citizens. Some counties combine high
suicide rates with high levels of self-reported happiness (Denmark and Finland are two
examples). Lower tolerance for suppressed distress is attributed as one of the reasons. 31

Dreze and Sen do not, however, consider Keralam as quite a model on grounds that it is,
quite misleading as it would imply an all-round success, and that it can, somehow be
emulated elsewhere irrespective of historical and social situations. According to them,
"the rhetoric of 'Kerala model' is more convenient for 'debunking' purposes than for

Dreze & Sen 2002, p. 99.


Ibid, p. 97.
Ibid, p. 97.
Ibid, p. 97. We would say that if Dreze & Sen choose to primarily examine the PQLI
indicators, it should not be considered inappropriate for other scholars to use alternative
indicators in keeping with their research questions.
JO
Dreze & Sen 2002, p. 98.
ll
Dreze & Sen 2002, p. 98.

7
identifying what there is to learn from Kerala's experience" and they call for a 'balanced'
interpretation of Kerala's experience, taking into account its developmental failures
also. 32 Thus Dreze and Sen recognise the relatively low rates of domestic economic
growth in the state. 33 They note that "while domeslic produclion has grown rather slowly,
per capila incomes have risen quite fast, mainly due to substantial remittances from
abroad (principally the Gulf states) as well as from other parts of India." More than slow
growth and the high unemployme.nt in the economy resulting therefrom, whether the
Kerala experience is replicable is a more legitimate kind of objection, argue Dreze and
Sen. 34

Now, what are the factors that D~eze and Sen identify as the factors that could have gone
behind the making of the 'positive features of the Kerala experience'? "Kerala has been
fortunate with its past1'; they argue. 35 Much of what the present Kerala has come to
constitute were formerly, the princely states ofTravancore (Thiruvithamkoor) and Cochin
(Kochi) which were "formally outside British India", 36 making it possible for them to
follow a relatively independent policy orientation. With regard to education for instance,
"Kerala has also been fortunate in having strong social movements that concentrated on
educational advancement - along with general emancipation - of the lower castes .... "37
The state has also profited from a tradition of openness to the world. The extensive
educational efforts of Christian missionaries, particularly in the nineteenth century was a
related factor that helped the people of the state. According to them, Keralam has also
benefited from the matrilineal tradition of property inheritance of the Nairs. 38

Much of Kerala's great achievements are results of post-independence public policies, as


V.K. Ramachandran notes, "In fact, ill the fifties Kerala's adult literacy rate was around
50 per cent compared with over 90 per cent now, its life expectancy at birth was 44 years
vis-a-vis 74 now, and its birth rate was 32 as opposed to 18 now. >:3 9 The Malabar region.
which was directly under the Raj, was much behind Travancore and Cochin in terms of
literacy, life exp.ectancy, etc. "But by the eighties, Malabar had 'caught up' with the rest
of Kel'ala to such an extent that it could no longer be seen in divergent terms .... So there

32
Ibid, p. 98.
Ibid, pp. 98-9; cited from Joseph Tharamangalam 1998: "The perils of Social Development
without Economic Growth: The Development Debacle of Kerala, India", Bulletin of
Concerned Asian Scholars (BCAS), Vol.30, No.I, Jan.-March, pp.23-34.
Ibid, p. 99; see alsop. 94 on 'replicability'.
Ibid, p. 99.
.'6
Ibid, p. 99.
.n
Ibid, p. 100.
)8
)Q
Ibid, p. I 00.
V.K. Ramachandran 1996: 'Kerala's Development Achievements', in Dreze & Sen 1996
(eds.): Indian Development: Selected Regional Perspectives, OUP, Oxford & Delhi; cited in
Dreze and Sen 2002, p. 101.

8
is a lesson here that is not imprisoned in the fixity of history", they argue. 40 We might
usefully add here that not very long ago in 1950s and ·60s, Keralam was considered to be
a ·problem state', a far cry from the projections of a 'model state' now. This is to further
underline the importance of the social and political movements and the public policies in
response to them. "Other parts of India can indeed learn a lot from Kerala's experience on
what can be done here and now by determined public action", they contend. 41 It is in this
sense that Keralam becomes a guiding light for the other states in the country, to be
critically appropriated, according to Dreze and Sen, rather than as a template capable of
being replicated elsewhere.

A Critique of Dreze a·nd Sen's Perceptions on the 'Kerala


experience'-

We would argue that in their preocc~pation with a non-revolutionary alternative, Dreze


and Sen have given undue importance to the 'Kerala experience'. Dreze and Sen make
their selective focus on literature like that of V.K. Rarnachandran 42 which portrays
Keralam in a better light.

It needs to be recognised that often, the arguments presented by Dreze and Sen are quite
ideologically inclined. For instance, they argue, "Indeed, it is a remarkable fact that no
substantial famine has. ever occurred in a democratic country where the government
tolerates opposition, accepts the electoral process, and can be publicly criticized.'"' 3
Elsewhere, Sen thinks that these have been helpful in averting a famine in India althou~h

it has not helped in alleviating chronic poverty. Sen cites estimates that the famine in
China during 1958-61 took a toll of almost 3 crore lives. He also sincerely admits that
owing to poverty and high mortality rate, more than 3 crore people in India lose their
lives every 8 years. 44 In his insightful critical evaluation of Amartya Sen's contributions to
Development Economics, M. Kunhaman is quite right in pointing out, "It was not the
unprecedented agricultural growth and poverty alleviation within a brief span of time that
attracted the attention of Sen but the famine that is said to have occurred between 1958-

Dreze and Sen 2002, p. 100-101.


Ibid, p. I 0 I. "Public a<;tion" is interpreted "to include policy and governance, on the one side,
and cooperation, disagreement and public protest, on the other" (Dreze and Sen 2002, p. v).
The diverse aspects and roles of public action (collaborative and adversarial) are discussed in
Dreze & Sen 1989: Hunger and Public Action, Clarendon Press, Oxford.
Ramachandran 1996.
Dreze and Sen 2002, p. 133.
As cited in M. Kunhaman 1999: "Amartya Sennum Vikasana Arthasaastravum" (Amartya Sen
and Development Economics), pp. 11-36, Rajagopalan, V. (ed.) 1999: Amartya Sen: Oru
Samvaadam (Amartya Sen: A Debate--Malayalam), Malu Ben Publications,
Thiruvananthapuram, p. 28.

9
6 I (the debates concerning this has not ended even today) that attracted the attention of
Sen. "45 Convincingly so,_ he argues thus further, "It is an undebatable fact that for
attaining sustainable development and poverty alleviation on a permanent basis, broad
social base and participatory structure of production are required and the democratic
social order is suited for its emergence and sustainability. However, arguing that
democracy is participatory/bourgeois democracy is not beyond criticism." 46 He argues
that the concept of 'social action' in Amartya Sen is quite in tune with pressure group
tactics that do not seek to subvert the existing system. And broadly speaking, it is the
classical tradition in general and Smithian tradition in particular that informs the thinking
of Sen, according to him. He wonders why Sen is silent about the conscious strategy of
the dominant classes of not resolving the fundamental issues concerning the broad masses
of people on ~ stable basis and instead trying to silence them through countless poverty
alleviation programmes, or more appropriately, in our view, through countless number of
partial solutions. He argues, the experience so far is that poverty alleviation [and solution
to the question of unemployment or 'the reserve army of labour'] is impossible under a
market-oriented economic structure. We would modify his proposition by saying that
even if poverty alleviation and full employment is made possible under capitalist
development through conscious policies of the State or other kinds of human agency
(through 'public action' in Sen's terminology), widening economic disparities is an
inevitable characteristic of capitalist development. The concept of human development in
Sen is increasingly getting wider acceptance. While concluding, Kunhaman rightly argues
that in thinking about an alternative model of economic growth through poverty
alleviation, Sen·s ideas on development should definitely be useful and beyond this, there
is no point in exaggerating his contributions to Development Economics. 47

Dreze and Sen themselves concede the prevalence of wide income differentials in the
state. They argue that in terms of the "Gini coefficient of the distribution of per-capita
expenditures", Keralam fares badly compared to states like Bihar or Uttar Pradesh. 48
Moreover, they are candid enough to admit the stagnation in growth, 'educated
unemployment', etc. Nevertheless, their argument had the major flaw that they do not
make even a mention ofthe penurious social situation of the marginalised social groups in
Kerala society, namely, Adivasis, Dalits, fisherfolk and to some extent, women. The
relative deprivation and social discrimination against these sections or "the 'Outlier'

Ibid, p. 25.
Ibid.
M. Kunhaman 1999, pp. 16, 26, 36.
Dreze and Sen 2002, p. 354. We give details in Chapter V.

10
phenomenon"~ 9 remains a black spot in the Kerala experience that is too stark to be
overlooked.

The levels of disparity between the historically marginalized sections, namely, Dalits,
Adivasis, fisher people, etc. and the mainstream society in the state presents a stark
contrast in terms of both human development and economic development indices. In
some cases, it is even more pronounced than at the all-India level. Thus the disparity in
literacy levels in case of the Adivasis and the denial of land rights in case of the Dalits in
the state are much more stark than at the all-India level. For instance, while the literacy
rate for the total population at all-India level in 1991 was 52.19 per cent50 , the literacy
rate for Dalits at all-India level in 1991 was 37.41 per cent and for Adivasis, only 29.60
per cent. 5 1 The correspon~~ng_figure~_for J(er:alam were higher at 79.66 per cent for Dalits
and 57.22 per cent for Adivasis. 52 However, the literacy rate for the total population in
Keralam was far ahead in 1991 at 89.81 per cent. 53 Thus the relative gap in literacy rate
for Dalits with the total population at all-India level was 14.78 percentage points. The
corresponding gap in Keralam was a shade better i.e., marginally lower at 10.15 points.
However, in the case of Adivasis, the relative gap in literacy rate was 22.59 percentage
points at all-India level, but was much higher at 32.59 points in Keralam. Similarly,
poverty level among Adivasis in the state in 1993-94 was 37.3 per cent and among Dalits,
36.4 per cent as compared to the state average of 25.8 per cent and the all-India average
of 37.3 per cent. Adivasis at all-India level had much higher poverty level of 52 per cent
and Dalits, 48 per cent (See Table 5.6 in Chapter V).

The assertion by Gail Omvedt tha~ Dalit access to land in states such as Keralam today is
akin to the level in the 1931 Census should be thought-provoking enough. 54 Thus, based
on NSSO figures, the 199f figures for average landholding at all-India level for 'Others'.
i.e., non-Dalits, non-Adivasis was 1.17 hectares, for Adivasis, 1.06 hectares and for
Dalits, 0.49 hectares. The corresponding figures in Keralam were 0.33 hectares for

Tharamangalam, Joseph 2006: "Understanding Kerala's Paradoxes: The Problematic of the


Kerala Model of Development", pp. 1-37; in Tharamangalam, Joseph 2006: Kerala: The
Paradoxes of Public Action and Development, Orient Longman, New Delhi, pp. 15-19.
;o
Census of India 1991a: "Literacy Rates for States and Union Territories, 1981-1991 ", in India.
Paper 2 of /992, Final Population Totals: Brief Analysis of Primary Census Abstract, Office
of the Registrar General and Census Commissioner, Ministry of Home Affairs, New Delhi.
Paswan, Sanjay & Paramanshi Jaideva (ed.) 2002: Encyclopedia ojDalits in India, Education,
vol. 10, Kalpaz publications, Delhi, p. 77.
Census of India 1991: Kerala, Primary Census Abstract. Scheduled Castes and Scheduled
Tribes, Directorate of Census Operations, Kerala, p. 14.
S.l
Census 1991, p. 14.
Gail Omvedt 2006: "Kerala is Part of India: The Kerala Model of Development, Dalits and
Globalisation", pp. 188-214; Tharamangalam, Joseph 2006: Kerala: The Paradoxes of Public
Action and Development, Orient Longman. New Delhi, p. 200. (It was in the 1931 Census that
caste enumeration was last published.)

II
·Others', 0.34 hectares for Adivasis and merely 0.07 hectares for Oalits. 55 Given the high
density of population wit.hin the state, per capita land availability is quite low but the stark
disparity in landholdings between the mainstream society and the historically deprived
section of Oalits cannot be overlooked. Notably, the average landholding by Oalits at all-
India level is less than half of the average landholding by the rest of the population, in
Keralam, it is only below one-fourth. The land question of the Adivasis in the state is also
merits serious attention as a question of dispossession rather than as a question of
historical deprivation in this respect. Our analysis of the landholding status of Dalits and
Adivasis vis-a-vis the rest of the rural population in Chapter V following Rural Labour
Enquiry Reports based on !fle National Sample Surveys further clearly confirms our
contention on the relative disparity of these sections vis-a-vis the general population in
the state, in spite of the fact that the former have overwhelming representation among the
-agrarian classes (See Table 5.9 for 1999-01 and Table 5.10 for 1977-78 in Chapter V).

In this context, it is worth citing the very interesting and indeed, powerful critique of the
'Kerala model' by the Rashtriya Mahasabha (RMS) led by the Adivasi leader C.K. Janu
and M. Geethanandan. The Manifesto ofRMS says:

"It upset the rhythm of the harmonious relationship between human


beings and nature and commodified human relations. Through agrarian
reforms, it alienated from land Adivasis, Oalits and other sections of
people who had organic relationship with nature". 56 An anti-people
economic exchange system was established and as a result, the
marginalised sections are alienated from control over resources and
globalisation is making life difficult for them. 57

In their analysis, Oreze and Sen may be held guilty of overlooking the fact that Keralam
has the highest proportion (63 per cent) of rural households not owning any agricultural
land among 17 major states even after the land reforms much-lauded by them. 58 It may be
noted that the corresponding all-India average was 36 per cent. It may be argued that it is
in the context of high proportions of rural non-farm employment in the state that the
social contradictions landlessness could have given rise to, have been benumbed. 59 Thus
the latest figures show that agriculture contributes only 32 per cent in employment in the
state as against 60 per cent at all-India level 60 and in rural areas, non-agricultural activities

Ibid, "Table: 8.1: Statistics'on landholding", p. 192.


Rashtri)'ll Mahasabha (RMS) 2004: Maniftsto (Draft) (Malayalam), 19 February, released at
Adivasi-Dalit Collective Political Conference, Jogi Nagar, Emakulam town hall, p. 12.
RMS 2004, p. 12.
Data as given in Dreze & Sen 2002: Table A.3, Part II: Other Indicators; as cited from
~Q
National Family Health Survey 1992-93, Indian Institute of Population Studies (liPS).
Detailed analysis follows in Chapter V.
60
Government of Kerala & Centre for Development Studies 2005: Human Development Report
2005: Kerala, pp. 46-48.

12
contributed almost 50 per cent ofthe workforce by 1991. 61 The reverse side of the picture
is that agriculture still rem_ains the principal commodity producing sector in the state, still
employing over 50 per cent of the workforce in rural areas.

Dreze and Sen have only a minimalist agenda for amelioration of endemic "basic
deprivations" or in other words, a reformist agenda for the achievement, in particular, of
better PQLI, namely, low birth rate, low death rate, low infant mortality rate and high
literacy rate. Their agenda is centred on land reforms, basic education and health care
towards "facilitating fast and widely shared growth" 62 by means of the market. One might
wonder why this cannot be interpreted as a condescending approach that seeks to provide
'basic entitlements' to the peoples in peripheral countries within the very framework of
the capitalism of oligopolies rather than aiming at fundamental social transformation and
developmei'it"ofproductive forces in the peripheral economies~ This may also be read as
providing, in effect, greater legitimacy and therefore, '-'!'ider social support base and a
sustainable framework for the intensified exploitative drive by global capitalist forces in
contemporary times. This is particularly because for all their welfarist concerns, Dreze
and Sen are unambiguous supporters of the nee-liberal reforms and therefore their
approach can only be classed as part of the dominant orthodoxy.

We do not mean to underestimate the validity and usefulness of the concept of 'human
development' as distinct from 'economic development', logically derivable from the
studies on the developmental experience of Keralam. It has rightly been pointed out, "Sen
has succeeded in detaching the discipline of Economics from its positivist lifelessness
('Economists would also call it scientific') and making it socially relevant by lending it
nonnative dimensions." 63 Nevertheless, we would hasten to add that a symptomatic
treatment of social maladies is insufficient and that we need to strike at the root causes of
social maladies addressing the principal contradictions, targeting the principal structures
of oppression at the micro-levels of classes and social groups, at the meso-level of the
national formation and the macro-plane at the country and global levels.

We might well say that the 'Kerala model' is now being put on trial in that the 'transient
ecstasy' of high - disproportionate - social sector development could turn out to be
unsustainable without a corresponding development of the productive sectors. We would
argue that the acute underdevelopment characteristic of commodity producing sectors in
the state, the fears of a crunch in the labour market outside the state, the volatility in the

bl
Mridul Eapen 2003: "Rural Industrialisation in Kerala: Re-Examining the Issue of Rural
Growth Linkages", Working Paper 348, Centre for Development Studies.
Thiruvananthapuram, July, pp. 11-12.
Dreze and Sen 2002, p. 130.
M. Kunhaman 1999, p. 17.

13
prices of cash crops and perhaps, most importantly, the Structural Adjustment Policies
being pursued seem to il)dicate that the Kerala trajectory is essentially unsustainable.
Several scholars, particularly, those affiliated to the Centre for Development Studies,
Thiruvananthapuram have proposed that there is a tum-around in the performance of the
Kerala economy during the period of liberalisation. 64 However, it needs to be conceded
that the commodity producing sectors of the state, namely, Agriculture and Industry have
failed to match up to the levels of human development and the widely acknowledged
growth ofthe Service sector in recent years. Thus during 1983 to 1999-2000, the share of
the primary sector in income decreased by 26 per cent and its employment share fell by
36 per cent and in the secondal):' sector, even as employment share increased by 27 per
cent, income share fell by 24 per cent. It was only the tertiary sector that boomed by 37.5
per cent in income and 43 per cent in employment during this period.65 We would argue
that such a disproportionate pattern of development in itself may be viewed as an
expression of the dependency syndrome in the state.

Erosion of the achievements in the social sphere that the state has made in the past is
indeed a fan from grace for a state that has often been projected as a model in several
respects. Thus even Punjab which has given low priority to the social sectors, has been
overtaking Keralam in the late 1990s, with higher investments in education, thanks to its
favourable economic performance. 66 The weak productive, if not revenue base of the state
could be attributed as the reason behind the decline in social expenditure by the state in
real terms.

We would hold that if indeed we have to learn from the Kerala experience, we need to
mark out between what are universal and what are the specificities of this experience. So
then, it may be pointed out that the social achievements of Keralam have been obtained
through an exceptional route to prosperity apart from the historical factors mentioned by
Dreze and Sen. This route was through the colonial legacy of high value addition
plantation crops dependent on external markets; and following the oil price hikes of 1973,
through remittances from the Persian Gulf as well, as a result of the employment

Achin Chakraborty 2005: "Kerala's Changing Development Narratives", Economic and


Poliiical Weekly, February 5, pp. 541-47, vol. 40, no. 6; K.P. Kannan 2005: "Keraln"s
Turnaround in Growth: Role of Social Development, Remittances and Reform", pp. 548-554,
Economic and Political Weekly, February 5, vol. 40, no. 6; Government of Kerala & Centre
for Development Studies 2005: Human .Development Report 2005: Kera/a, prepared by the
Centre for Development Studies, Thiruvananthapuram and published by the State Planning
Board, pp. 43-48.
Government of Kerala & Centre for Development Studies 2005: Human Development Report
2005: Kerala, p. 47.
bb
Joseph Tharamangalam 1998: "A Rejoinder" in "The Kerala Model of Development A Debnte
(Part 2)", pp. 47-52, Bulletin ofConcerned Asian Scholars, vol. 30, no. 4, p. 47.

14
opportunities (mostly for unskilled construction workers 67 ) created there, thanks to the
historical links of Kerala!TI with this region. This was possible primarily because of the
huge disparity in the currency exchange rates of India vis-a-vis these oil-rich countries in
West Asia.

As for the plantation economy, in Malabar (northern part of present-day Keralam), East India
Company had started a spice plantation as early as 1797 at Anjarakkandi.68 In the princely
state of Thiruvitharnkoor (presently, southern part of Keralarn), plantations were
established mainly ~ince the l~te l91h century. Thus the most important and largest
plantation companies there were the British Kannan Devan Hill Produce Company and the
Anglo-American Direct Tea trading company that were registered in 1878 and in 1897,
respectively. 69 By 1930-31, there was 60,400 acres of rubber plantation and 78,000 acres
of tea plantation in Thiiuvithamkoor alone. 70 Going by the statement of D.H~ Buchanan,
the prominent British chronicler of the time, the smaller princely state (presently, the
central part of Keralam) also had a proportionate representation of plantations,
comparable to the other two states and Burma. 71 Going a long way along the footsteps of
the colonial pattern of plantation-dominated development of agriculture, today, Keralam
has 6.42 lakh hectares cultivated with four plantation crops, namely, rubber, tea, coffee
and cardamom, "accounting for 29 per cent of the net cropped area in the state and 42 per
cent of the area under these crops in the country". 72

As for the remittances, the total annual remittances received by Kerala state increased
form less than 10 crore rupees in 1972-73 to more than 14,000 crore rupees by 1999-
2000. Moreover, remittances constituted a massive 23 per cent of the Net State Domestic
Product in 1999-2000.73

We also need to recognise the other specificities of the Kerala experience such as the
socio-religious movements during the late 19'h and early 20th centuries that fought out

67
This is clear from the fact that 80 per cent of the Kerala emigrants had no formal technicol
education (Zachariah, K.C., E.T. Mathew, S. lrudaya Rajan 2000: Socio-Economic and
Demographic Consequences of Migration in Kera/a, Working Paper No. 303, Centre for
68
Development Studies, Thiruvananthapuram, May, p. 48).
R. Prakasam, "Keralathile Thozhilali Vargavum Thozhilali Prasthanavum Roopam kondo
Kalaghatam" (Malayalam) in G Priyadarsanan (ed.) SNDP Yogam Platinum Jubilee Smaraka
Grantham, SNDP Yogam Platinum Jubilee Celebration Committee, Kollam, 1978, p.327.
P. Chandrarnohan, Social and Political Protest in Travancore: A Study of the S.N.D.P. Yogam
70
(1900-1938), M.Phil dissertation, CHS/SSS, JNU, 1981, p.47.
V. Mathew Kurian 1986: The Caste-Class Formations (A Case Study ofKerala), B.R. Publishing
71
Corporation, New Delhi, p. 27.
V. Mathew Kurian 1986: The Caste-Class Formations (A Case Study ofKerala), B.R. Publishing
Corporation, New Delhi, p. 26.
Figures from Government of Kerala 2006: Economic Review 2005, State Planning Board.
Thiruvananthapuram, p. 67.
K.P. Kannan and K.S. Hari 2002: 'Kerala's Gulf Connection: Remittances and their Macro-
economic Impact' in Zachariah et at (eds) 2002: Kerala's Gulf Connection, Centre for
Development Studies, Thiruvananthapuram.

15
caste oppression and promoted education, the subsequent Communist movement that
fought for land rights against feudal/semi-feudal landlordism, thus becoming instrumental
in securing livelihoods and a host of other movements such as the library movement and
literacy movement that made the achievements of the Kerala experience possible. There
are also other factors that Dreze and Sen recognise such as an enlightened public policy
orientation followed by the princely states, the missionary efforts and not least of all, a
State policy that is responsive to popular demands of welfare.

The universal kernel of the Kerala experience is, in our view, the feasibility and the
possibility of achieving minimal levels of human development even with low levels of
economic growth. And we need to be honest that this is despite persisting disparities,
landlessness, high rates of unemployment, suicides, mental illness, alcoholism, etc.

It has been rightly pointed out that Franke & Chasin,74 for instance, failed to make it an
essential part of their analysis the structural linkage of the Kerala economy with the all-
India and global economic system that causes underdevelopment of the peripheries. As a
result, 'Kerala model' was presented as a sustainable one. 75 The swelling ranks of Gulf
returnees is a cause for concern for the state. 76 More than 95 per cent of the total
international migration from the state is to the countries of the Persian Gulf. All the
emigrants to the Gulf are supposed to eventually return to the state since they are
employed as temporary or casual labourers. 77 Although return migration was not
substantial in the 1970s and the early 1980s, the Survey conducted in 1987 by the
Government of Kerala found that there were nearly 86.5 thousand returned emigrants;
1992-93 Survey found only 1.244 lakh returned emigrants. But return flows have
increased since then. In 1998, it was estimated that 4 lakh emigrants had returned to the
state during the period, 1993-97. 78 Of late, the drives towards indigenisation of the
labour-force in some of the countries in the Persian Gulf, such as Oman, have reduced the
job opportunities for Malayal_ees. It is the sustainability of a Gulf boom-driven Services-
dominated economy that we mean to question here.

Richard W. Franke and Barbara H. Chasin 1998: "Kerala: A Valid Alternative to the New
World Order", in "The Kerala Model of Development A Debate (Part I)", Bulletin of
Concerned Asian Scholars, vol. 30. no. 3, July-September, pp. 25-28.
'~ Joseph Tharamangalam, 1998, p.29 & p.34.
76
Further, 79,000 employees returned from the Gulf in 1998 and 1.27 lakh in 1999, according to
estimates (Hindu, June 16, 1999, New Delhi edn.).
P.R. Gopinathan Nair 2006: "Linkage Effects of International Migration on the Kerala
Economy", pp. 269-286; in Rajasenan, D. & Gerard de Groot 2006: Industrial Economy of
Kerala: Nodes and Linkages, Cochin University of Science and Technology, Cochin, p. 270.
7S
K.C. Zachariah, P.R. Gopinathan Nair and S. trudayarajan 200 I: Return Emigrants in Kerala:
Rehabilitation Problems and Development Potential, Working Paper no. 319, Centre for
Development Studies, Thiruvananthapuram; as cited in P.R. Gopinathan Nair 2006, p. 276.

16
Further, the state having the highest unemployment in the country is yet another negative
distinction. With about 3;2 per cent of the country's population and merely 1.18 per cent
of the geographical area of the country, the state is home to 16 per cent of the country's
unemployed. In absolute numbers, as worked out from NSSO 43'd round ( 1990), the
number of chronically unemployed in the state rose from a much lower level of 1,44,000
in 1965 to 18,79,000 in 1987-88.79 The relative intensity of unemployment in Tamil Nadu
(1.72), which figures in the second position in this respect, is far lower than that of
Keralam (4.63) in 1990-91.80 There has been a deceleration in the growth of employment
in the state during the 1990s.81 The unemployment rate in Keralam rose from 15.51 per
cent in 1993-94 to 20.97 per cent in 1999-2000. The corresponding increase at all-India
level was from 5.99 per cent to ·7.32 per cent.82 The total number of work seekers in the
_live_ ,registers of the Employment Exchanges. in .the state in 2004 was 37.56 lakh. 83 It is
also notable that the employment seekers in Keralam in 2004 consisted of 17.92 per cent
below matriculation, 59.18 per cent matriculates, 14.9 per cent plus-2 educated, 6.38 per
cent graduates and 1.62 per cent postgraduates. 84 This means that in terms of its
magnitude, the question of unemployment in the state is not merely a question of
educated unemployment as it is often made out to be85 but primarily a question that
concerns literate unemployment. There is a serious gender dimension to the question of
unemployment in the state. This is clear from the fact that out of the 37.24 lakh job
seekers through employment exchanges in June 2005, 21.41 lakh were women. 86 The
gender dimension, particularly in educated unemployment is further corroborated by the
'
Human Development Report 2005 for Kerala: Unemployment among women is two to
three times higher than among men. It argues that for those below the primary level of
education, chronic unemployment is almost negligible, at the level of less than 2 per cent
for the last two decades. The intensity of unemployment was the lowest for rural men and
the highest among urban women in Keralam. 87 The last two statements are not surprising
since employment openings in the countries of the Persian Gulf were mostly available for
unskilled construction workers and there was a scarcity for workers in agricultural
operations in the rural areas ofthe state.

7Q
M.A. Oommen 1993: Essays on Kerala Economy, Oxford & IBH, Delhi, p. II 0.
80
Ibid, Table II, p. II 0.
Sl
Jeromi, P.O. 2003: "What Ails Kerala's Economy", Economic and Political Week~v. 19 April.
vol. 38, no. 16, p. 1598. See also our discussion on unemployment in Chapter V.
Government of Kerala 2006: Economic Review 2005, State Planning Board,
Thiruvananthapuram, p. 496.
8.1
Ibid, p. 497.
84
Ibid, p. 497-98.
s~
For instance, in Dreze & Sen 2002, p. 98; K.P. Kannan 2005, p. 553; and Government of
Kerala & Centre for Development Studies 2005: Human Development Report 2005: Kerafa.
pp. 109-11.
81>
Government of Kerala 2006: Economic Review 2005, p. 499.
87
Ibid, pp. I 09, Ill.

17
"It has also been ruefully realised that not only Kerala's literacy, but also its rates of
mental illness and suicide correspond to the world metropolis". 88 According to National
Crime Records Bureau, in 1997, the rate of suicide per million population was I 00 at the
all-India level whereas in Keralam it was nearly three times higher at 285. Keralam
figured in the highest slot among 17 major states in this respect (See Table A.7 in
Appendices). 89 By contrast, it is interesting that there was no case of suicidal death in
1997 in the adjacent Malayalam-speaking Lakshadweep islands known for its
· backwardness. 90 The 2001 Census put the suicide rate in the state marginally higher at
29.5 per lakh population, the all-India average remaining at 11.1 per lakh population.91
Going by latest figures, during 20Q4, 9053 persons committed suicide in the state. Illness,
mental illness in particular and other prolonged illnesses are cited as the largest single
cause for suicides. Thus 1381 persons ended their lives owing to insanity and 1322 due to
other prolonged illness. Family problems come next, taking a toll of 2028 lives.
Bankruptcy caused the third single largest number of suicides at 888 down from I 019 in
2003.92 This conforms to the general trend at all-India level in 1997 with illness and
family problems reported as the two major causes of suicides, accounting for 20.16 per
cent and 18.44 per cent, respectively. 93 E. Durkheim had made a sociological
classification of suicides into egotistic suicides resulting from loss of sense of integration
with social group, anomie suicides resulting from a lack of collective order as during
social or political upheavals and altruistic suicides done for the sake of others in the
community.94 This, however, is quite insufficient to understand the present-day
phenomenon of suicides in Keralam for instance, resulting from illness, family problems,
bankruptcy, etc. Nevertheless, lack of social support is a thread that is running through
these cited causes.

89
K.T. Rammohan, 2000, p. 1234.
89
·Based on Government of India 1999: Accidental Deaths and Suicides in India /997, 'Suicide
rate', 1997, National Crime Records Bureau (NCRB) data presented in New Delhi, Table IS,
p. 134.
M.A.M. Khan 2000: "The undiscover'd country, from whose bourn no traveller returns', The
Hind11 Open Page, 15 August, Tues. New Delhi edn., p. 21.
91
As cited in Ma.leeha Raghaviah 2005: "Ill-equipped to take care of the mentally ill", 8
November, Thiruvananthapuram edn., p. S.
State Crime Records Bureau [2005]: "Suicides by Causes in Kerala during 2003 & 2004", as
cited in Government of Kerala 2006: Economic Review 2005, State Planning Board,
Thiruvananthapuram, p. 524.
QJ
M.A.M. Khan 2000: "The undiscover'd country, from whose bourn no traveller returns', Hindu
Open Page, IS August, Tues. New Delhi edn., p. 21. For a gendered analysis of suicides in the
state, see, 'Gender and its Interfaces with Class in Keralam' in Chapter V. Such an analysis, in
our view, points in a different direction as far as the causes of suicides are concerned.
Ibid, p. 21.

18
Keralam has also earned the dubious distinction of being the state with the highest
number of people with mental illness in the country. Thus according to the National
Sample Survey Organisation Survey on 'Disabled Persons in India', there are 272 persons
per one lakh population in the state suffering from mental illness, the corresponding all-
India average being far lower at 105. Keralam also figures high among states for other
kinds of disabilities, including mental retardation, with the sole exception of blindness. 95
While 132 out of every one lakh population suffered from psychiatric disorders at the all-
India level, in Keralam, the corresponding figure was startlingly high at 283 per lakh
population, according to Census 2001. Alternatively, going by Census 2001, 58 out of
1000 persons in the state suffer from a range of psychiatric disorders i.e., constituting 5.8
per cent of the population.96 La~k of opportunities coupled with intense competition,
~nemploymenL_ or employment in jobs not commensurate with qualifications,
consumerism with the 'Gulf boom', 'Gulf syndrome' among young women resulting from
prolonged absence of their husbands, decreasing social support in keeping with
individualistic ways of life, etc. h~ve rightly been attributed as the social context for the
97
rise in mental illness.

Very high rates of alcoholism, rising rate of crime, etc. are causes for concern as well. In
the year 2000, a total of 99,033 crimes were committed under the Indian Penal Code
(IPC}. 98 In 2004, the total number of crimes committed under IPC went up to I ,04,025. 99
The total number of crit:nes committed in the state in the year 2004 was 1,56, 135. 66.63
per cent of them were committed under the Indian Penal Code and 33.37 per cent under
Special Local Laws. The crime rate also showed an ascending trend by 11.62 per cent
over the previous year. 100 It may, however, be admitted that the murder rate in the state
was the lowest at 14 per million population as against 40 at all-India level in 1998 (See
Table A. 7 in Appendices). 101 As for alcoholism, Keralam stands first among the states in
India in terms of per capita consumption of liquor at 8.3 litres, followed by the Punjab

9S
Sangeeth Kurian 2006: "Survey points to high mental illness in Kernln", Hindu, 02 February,
Thiruvananthapuram edn., p. I.
Malecha Raghaviah 2005, p. 5.
Modem medicine has made great strides in the treatment of mentally ill persons, way ahead
from the days of electric shocks and administration of depressants, to a wide range of drugs to
treat specific problems. Nevertheless, it has been pointed out thai the state presents a dismal
picture wilh regard to the number of psychiatrists per patients. Thus while the global average
is 3.96 psychiatristS per mentally ill patients, the corresponding average in the state is only one
QS
per one lakh patients (Malecha Raghaviah 2005, p. 5.).
Government of Kerala 2005: Statistics for Planning 2005, Department of Economics and
Statistics, Thiruvananlhapuram, "Cognizable Crime Under IPC for the year 2000 to 2002",
table 7.8; as cited from State Crime Records Bureau.
Government of Kerala 2006: Economic Review 2005, p. 522; as cited from State Crime
Records Bureau, Thiruvananthapuram.
100
Government of Kerala 2006: Economic Review 2005, p. 522.

19
with 7.9 litres, as against the all-India figure of 4 litres per person. 102 Even as we concede
the merits of a focus on the sectors of social welfare for the achievement of 'human
development', all these aforementioned superlatives of the negative order should
constitute negative examples that makes one wonder if Keralam should not be considered
a 'negative model' on these counts.

Throughout the 1980s, "Kerala model" was celebrated the world over for achievements in
human development, just as the "East Asian tigers" were projected right up to the mid-
1990s for fast economic growth following basic reforms for human development in
several of these countries. The implication that could be drawn for the peripheral
countries and nationalities of the· world from the developmental experience of Keralam
was: If it is _I?_<?s~i~l~ t? ~chi_eve high PQLI/high human d_evelopmeot even without
economic development or even when the per capita growth in the economy remained very
low, why take the tortuous road of ushering in structural transformation by challenging
the powers-that-be within the country and at the international level? It is against this
proposition that we have posited the argument that the very factors, which have
contributed to the human development/development of the social sectors in the st.ate could
be viewed as the manifestation of a dependency syndrome, in tum, raising the question of
the very sustainability/feasibility of this pattern of development.

Objectives of the Study


I) A primary objective of the study is to understand the nature of Class-Nationality
interface, linked, as they are, under the overarching processes of surplus
accumulation in Jndia in.general and in the case ofKeralam, in particular, as Class
and Nationality seem to be the predominant social categories shaping, in turn, the
other social entities. Whether there has been a contradiction between Kerala
nationality on the one hand, and global capitalism and the dominant socio-
economic structure/dominant production relations at the all-India level, on the
other is a major question guiding our inquiry.

We would also seek to understand the rectitude of the political positions of the
various streams involved in a debate on the nationality question of Keralam during the
1980s, in particular.

101
Government of India 2000: Crime in India 1998, as cited from 'Murder rate, 1998'. National
Crime Records Bureau (NCRB), New Delhi, Table 6, p. 49.
102
Global Alcohol Policy Alliance, htto://www.ias.org.uk; as cited in Government of Kerala &
Centre for Development Studies 2005: Human Development Report 2005: Kerala, p. 30.

20
2) To explore the symbiotic relationship between Class and Nationality in the case of
Keralam, in the s~nse that classes within Kerala society are being constituted in
material terms under the overriding influence of the Kerala nationality as a
political economy construct. 103

3) To understand whether and how the contradictions involving the non-class


marginalised social groups in Kerala society particularly, gender, caste,
community and the human-nature contradiction are shaped by Class and
Nationality in Keralam since the land reforms down to the days of Structural
Adjustment Programme (SAP). We would not like to view Class as an abstract
category but as a substantive one related to caste and gender in particular, in the
context of India. We mean to understand the processes of underdevelopment of
the produCtive sectors"ofthe economy on a broader canvass, i.e. to take a bird's
eye-view and to identify the social forces capable of bringing about social
transformation i.e., both democratisation of society and development of
productive forces, in favour of all deprived sections in Kerala society. We would
embark into in this venture by first engaging in a critique of the 'Kerala model'
approach which is, perhaps, the most high profile school on Kerala studies.

4) To understand the impact and implications of SAP on Keralam. Does Structural


Adjustment Programme accentuate the contradiction between Kerala nationality
on the one hand and the socio-economic structure/dominant production relations
at the all-India level, on the other. What are its impact/implications for the class
and social relations in the state?

5) In the conte~t of agriculture being the primary commodity-producing sector in


society, we would also have a modest objective of understanding the nature and
extent of capitalist development in agriculture, class/caste relations and mode of
production, with reference to issues like land concentration and landlessness,
se:_mi_-feudal tenancies and speculative trade on land.

Class analysis would also be attempted as a study of the process of the political struggles
of the masses, and not merely by defining classes by their economic position or position
in the production relations! 04 This would involve an examination of caste/community
identity and class identity.
Moreover, it would be our objective to understand the continued relevance, if any, of the
slogan, 'land to the tiller' tmder a regime of globalised financ~.

Contextualising the Study


The study, we hope, could at least partially fill in the void in academic studies into the
political economy of the state. The search for alternatives is imperative lest the transient
ecstacy of the 'Kerala model' turns an agony forever. A set of studies published in the
Economic and Political Weekly in 1990 with a lead article, 'Kerala Economy at
Crossroads', refle~ted upon the crisis of development retardation. 105 There was near
unanimity among these scholars ~b?ut the crisis of development in the state. However, the
road ahead remained, by and large, uncharted.

At times, the options propounded only serve to confirm and consolidate the same
exploitative relations. E.M.S. Namboodiripad's would be a representative opinion to
present the viewpoint of the mainstream left politics of Keralam. He said, "Within the
limitations imposed by the global and national structures ... we will have to find practical
solutions to the various problems that our state faces." 106 The effort would be to find
solutions within the constraints of the existing social system. Such an approach is at
variance with the earlier work of Namboodiripad himself prior to the formation of the
linguistic state, set out in The National Question in Kera/a ( 1952), wherein he had
advocated structural transformation through land reforms and the formation of the
linguistic state as the logical steps ahead. 107

Scholars of a similar intellectual persuasion as E. M.S. Namboodiripad argued in a similar


vein as he did: "The emerging perspective on industrialisation indicates the need to
stimulate private investment, diversify industrial structure .... " They argue for a solution
of infra-structural crisis - expansion and renovation of rail, road, air and waterways,

10~
See the following articles that appeared in Economic and Political Weekly, vol. 25, nos. 35 &
36, September 1-15: K.P. Kannan 1990: "Kerala Economy at the Cross-roads", pp. 1951-57;
K.P. Kannan & K. Pushpangadan 1990: 'Dissecting Agri!iultural Stagnation in Kerala: An
Analysis across Crops, Seasons and Regions, pp. 1991-2004; Kurien, C. T. 1990: "More on
Efficiency and Exploitation in Development Economics", pp. 2019-20; John Kurien, T.R.
Thankappan Achari 1990: "Overfishing along Kerala Coast", pp. 2011-18; K. N. Nair 1990:
"Cattle Development in Kerala: Trends and Prospects", pp. 2005-10; P.K. Mari Bhat & S.
lrudaya Rajan 1990: "Demographic Transition in Kerala Revisited", pp. 1957-80; T.T.
Sreekumar 1990: "Neither Rural Nor Urban: Spatial Formation and Development Process",
pp. 1981-1990.
106
E.M.S. Namboodiripad 1994: "Presidential Address", International Congress on Kerala
Studies (ICKS), vol. I, p. 5.
107
E.M.S. Namboodiripad 1952: National Question in Kerala,. People's Publishing House,
Bombay.

22
solution of the energy crisis and better irrigation." 108 Again, the emphasis is not on a basic
change in the existing soci~l relations. We would argue that such within-the-system
solutions only serve to reinforce the existing social relations, making it rather 'efficient'
and functional. Of course, they may dole out stop-gap relief in the context of the
prevailing agony of development, but offer no feasible alternative to the status quo.

On the contrary, we hope, our study would shed light on the macro processes of
underdevelopment by trying to understand things ori a broader canvass, with a view to
transcend these structural constraints. Thus we look at the national formation of Keralam
'
in its_ constitutive relationships with the Indian State and global capitalism. Our attempt
would also be to understand how the macro structures and processes, in turn, shape the
··-micro structures and processes. Thus. we .look at the formations of Classes and social
groups in the state in their constitutive relationship with Keralam as a national formation
in political economy terms.

Some of the latest literature in development studies that have originated in the state
celebrates the high growth of the Services sector during the period of 'liberalisation'.
They are somewhat in tune with the proposition paraphrased by Moyo and Yeros that
"industrial transition is unnecessary in the periphery, that clinching 'comparative
advantage' in a global market is sufficient for national development". 109 Achin
Chakraborty, K.P. Kannan and Human Development Report Kerala 2005 seem to reflect
this view. 110 Nevertheless, Achin Chakraborty does consider female disadvantage and
morbidity rates as causes for concern in human development in the state and Kannan feels
that the state faces hurdles in translating its high human development and high economic
growth into development outcomes that could generate employment for the 'educated
unemployed' in the state and ensure equitable participation of its womenfolk. Human
Development Report Kerala 2005 says, "A major outcome of this Report is the emerging,
as well as encouraging, scenario in Kerala of the possible emergence of a virtuous cycle
of growth linking human development with growth." 111 The scholars involved in the
making of the Report, also spoke of a possible "turnaround" in the economic growth
process in the state. 112 The driving forces behind the growth was seen to be remittances

lOS
T.M. Thomas Isaac & P.K. Michael Tharakan 1995: "Kerala, The Emerging Perspective:
Overview of the International Congress on Kerala Studies", Social Scientist, vol. 23, no.l-3,
Jan.-March, pp. 16-17.
Ill'>
Sam Moyo and Paris Yeros 2005: Reclaiming the Land, Zed Books, London & New York.
David Philip, Cape Town, p. 4.
110
Achin Chakraborty 2005; K.P. Kannan 2005; Government of Kerala & Centre for
Development Studies 2005: Human Development Report 2005: Kerala.
Ill
Government of Kerala & Centre for Development Studies 2005: Human Development Report
2005: Kerala, p. 164. See also, K.P. Kannan 2005, p. 548; Achin Chakraborty 2005, p. 544.
· K.P. Kannan 2005, p. 548; Achin Chakraborty 2005, p. 543.

23
and economic reforms. 113 Rightly so has the notion of growth with human development
was promptly countered on grounds of sustainability. Moreover, it was also countered
that there is really no structural transformation in the economy, as is claimed, since the
predominance of the Service sector and declining level of workforce in Agriculture were
characteristic of the Kerala economy at least since mid-1990s. 114 We would add that there
is hardly any indication by these set of scholars that the disproportionate growth of the
Services sector, without a concomitant development of the commodity producing sectors
of the economy could be symptomatic of the dependency syndrome. Moreover, the
Report suffers from_a unilateral emphasis, verging on a populist orientation, on women as
a marginalised social .category
\
within the state, to the near-total exclusion of less
as
numerous others such Dalits, fisher people, Adivasis, immigrant labourers, etc.

- ·· We' would hold that there is no lack of studies on, certain aspects of the Kerala state, such
as the human development achievements of the state. Economists studying the state have
mostly focused on one or the other sector of the economy. There have also been a number
of historical studies on the state, especially on the modern period. However, there has
really been a dearth of studies on The political economy of the state, especially from the
angle of Political Studies_

Our choice of "Class" and "Nationality" as the key categories seem to be most
appropriate in the case of Keralam, not only to understand the objective processes of
underdevelopment but also in terms of the potential, and to some extent, the actual
organisation of people's consciousness. The mode of production debate of the 1970s
confined itself to analysis of economic classes and the level of development of the
productive forces, and yet it left out the cultural processes that characterize the
superstructure of a given society and shape the relations of production. The studies on
culture subsequently, that is, during the past two decades, seems to have made a
qualitative shift iri our understanding of the societal processes. The terms, "Class" and
"Nationality", we hope, may enable us to locate our analysis in the conjunction of the
objective and the subjective. The 'objective'- here refers to the material position and the
'subjective', to the aspect of consciousness. This should also· be in keeping with the
general spirit of the findings of cultural studies in recent times that it is only a 'subjective
objectivity' that we can aspire for and not an 'objective objectivity' in our understanding
of social reality. In other words, we would hold that a study on 'Class' and 'Nationality'

IIJ
K.P. Kannan 2005, pp. 550-51.
II~
M.A. Oommen 2005: "Is Kerala Changing from a 'Crisis' to a 'Turnaround'?", Economic and
PolitiCal- Weekly, vol. 40, 30 April, pp. 1917-19.

24
could hold the key to a revealing understanding of the socio-economic and political
economy context of contemporary Keralam.

Nevertheless, we would seek to understand Class and Nationality in the case of Keralam,
as they are being constituted primarily in terms of their material position and to a lesser
extent in terms of their level of consciousness. We hold that given their material position,
they have also the potential of being converted into 'social entities for themselves'. 115
Nevertheless, the political constitution of these social categories depends on the agency of
the political movements that sanitise their consciousness and give them a sense of
direction, which has not yet occurr~d in many a case. And therefore, in order to deal with
the constitution of Class and Nationality in Keralam in its present phase, we would
approach it more from the political economy angle "and to a lesser extent, from the angle
of subjectivity.

By making Class-Nationality interface a major focus of our study, we hope it would not
only enable us to locate the forces that hamper and retard the development of productive
forces and cause impoverishment of the broad masses of people but also help identify the
social forces that could potentially act as agents of change. In other words, our concern
would be to comprehend both structure of the existing society and the potential agency of
social transformation in the future. While focussing upon the predominant social
categories of Class and Nationality, our effort could also be to understand how these, in
tt:m, shape and constitute the marginalised :social groups of the pre-existing society,
particularly in the era of Structural Adjustment Policies. The choice of such topic enables
us to understand things in relation, rather than in isolation. This is because Nationality is
seen in its constitutive relation to the country-level structures, specifically the lndian State
and global structures, specifically, global capitalism. And Class, used in the common
noun form, is not seen as an abstract cat<rgory but in its constitutive relation to Nationality
and also as a substantive category related to social groups i.e., caste and gender, in
particular and to tribe and community also in the Indian context. It is also the disciplinary
privilege of Political Studies to be able to analyse societal processes in terms of
appropriate concepts and categories, of course, with an interdisciplinary thrust.

This is after Marx's classification of 'class in itself' and "class for itself' discussed in Chapter
II.

25
Studies on the causes of industrial stagnation in the state have often pointed out how in
the words of Rammoha_n, labour relations had turned "a fetter upon economic
development" 116 and yet failed to locate the issue in the context of the limitations imposed
by the system. 117 Conversely, what we would attempt is an academic venture at getting to
the roots of issues rather than trying to react or even respond promptly to issues of current
relevance, in the manner of fire-fighting against contingencies that keep cropping up. By
concentrating out focus on the common nouns of 'Class' and 'Nationality', we would, on
the contrary, seek to explore herein both the structural constraints for the development of
the productive sectors in keeping with the high human development, and seek to identify
the plausible social bases for an alternative pattern of development as well. On this count,
we would privilege 'Class' and 'Nationality' as the principal Social Structures of
. -
Accumulation (SSA) at this stage of social development in Keralam. The term, Social
Structures of Accumulation (SSAs) as employed by Barbara Harriss-White refers to "the
matrix of social institutions through which accumulation and distribution take place". 118
We treat these categories as not only the primary Social Structures of Accumulation
(SSA), but also as having the potential to embody social consciousness that could lead the
way forward towards radical structural transformation of society. We would classify
social/political movements into four categories: Class struggles, Nationality struggles,
Social liberation struggles and General democratic movements. 119

In defense of the period chosen it must be said that 1970 was the landmark year when the
land reforms were initiated in the state on a large scale, thus marking the realignment of
classes in a largely agrarian society, at least in terms of their economic position of classes,
if not in terms of their political consciousness. Moreover, the oil shocks of 1973 created
employment opportunities for Keraleeyar (the people of Kerala) in the oil-rich Persian
. .
Gulf countries. This, in turn, led to the significant phenomenon of a remittances-driven
economy since the mid-1970s. We have preferred not to specify the year ending the
period because the effects ofthe Structural Adjustment Policies (SAP) in 1991 have only
been becoming increasingly evidel'_lt during the period of this study. Leaving out the

Ill>
K.T. Rammohan 2000: "Assessing Reassesement of Kerala Model", Economic and Political
Week(v, April 8-14, vol. 35, no. 15, pp. 1234-36.
117
K.K. George 1998: "Historical Roots of Kerala Model and Its Present Crisis", pp. 35-40,
Bulletin of Concerned Asian Scholars, vol. 30, no. 4, p. 38; Joseph Tharamangalam 1998:
"The perils of Social Development without Economic Growth: The Development Debacle of
Kerala, India", pp. 23-34, Bulletin of Concerned Asian Scholars (BCAS), vol.30, no. I, Jan.-
March, pp. 49-50.
118
Barbara Harriss-White 2003: India Working Essays on Society and Economy, Cambridge
University Press, Cambridge, p. 13. For a detailed discussion on the concept of SSAs, see
Chapter II.
110
More on these in Chapter VII.

26
period since 1991 would not be feasible since the impact of SAP on the political economy
of the state is too pronounced to be ignored, by any count.

Out of the two distinct but overlapping methods to political economy analysis as
mentioned by Terry Byres, namely, analytical-political economy method and
chronological-political economy method, 120 for now our analysis primarily follows the
former. Nevertheless, we do grant that the latter could have yielded quite useful insights
and as we have mentioned in the Acknowledgements, we mean to defer an historical
analysis of the evolution of Class and Nationality in Keralam to a later project, In other
words, although this work bears reference to the process of land reforms in 1970s as in
Chapter V and an analysis of the 'discourses of accumulation' involved in the debate on
the nationality question of Keralam during the I 980s, it primarily involves an analysis of
the contemporary scenario of political economy within Keralam. In further defense of the
choice of the period of our analysis, we would argue that it would have been rather facile
and ahistorical to take 1991 as the watershed year because the initiation of neo-liberal
reforms in 1991 only compounded many of the problems/contradictions that have already
-been existing prior to that. We would argue that even if one wants to undertake an impact
analysis of the post-'liberalisation' phase, one needs to have an understanding of the
situation prior to 'liberalisation' for comparative purposes. And given our disciplinary
orientation, this political economy analysis is more from the angle of Political Studies
rather than from the angle of Economic analysis. And as this work also falls within the
ambit of the interdisciplinary field of Development Studies and the multidisciplinary field
of Area Studies, trespassing into the boundaries of certain other disciplines like Sociology
also becomes inevitable.

A Note on the Method

Some observations are in order about our method of analysis that would take us to the
very philosophical moorings of Social Sciences. Explicit value biases as may appear in
this study may not be dubbed as 'ideological' since value biases or pre-judices themselves
are seen to be contributing towards knowledge production as Hans-Georg Gadamer 121
would have us believe. Moreover, diverse theoretical orientations that seek to connect
disparate issues and facts in various ways could be considered integral to the studies in
Social Sciences. Methodologically conscious social science researchers would concede

•:o Terence J. Byres (ed.) 1997: The State, Development Planning and Liberalisalion in India, Oxford
University Press, Calcutta, Chcnnai, Mumbai, first pub. 1994, p. 37.

27
that it would be rather preposterous to speak of an 'objective' analysis in human affairs.
Application of analogies ~f the methods of the natural sciences to that of the social
sciences have, many a time, turned out to be laughable failures. Objectivity may have
greater applicability to the so-called 'immutable' laws of motion in natural sciences. Yet
it is now conceded by many natural scientists that human subjectivity plays an important
factor in our understanding these 'immutable' laws. A paradigm-shift as explained by
Thomas Kuhn in The Structure of Scientific Revolutions could completely upset our
understanding of even the natural reality, as has happened in the Copernican revolution
which abandon~ the Ptolemiac geocentric paradigm for a heliocentric paradigm. 122
Understanding of human affairs also occurs within the limits of certain paradigms or at a·
lower level of abstraction, certain frameworks of analyses. Yet there is a greater role of
human subjectivity within social sciences because the researcher is part of t!"te social
reality that slhe is analyzing. The social situatedness of the researcher implies his/her
interests/biases/pre-judices. This is also reflected in the representation of facts.
"Reflections are not simply mirrors of the social world, of course, but reflect selectively
what constitutes a fact, what facts are significant, and how the bare facts are to be
interpreted." 123 In this sense, we would hold that Max Weber's well-known
methodological injunction to let the values of the researcher come into full play in the
choice of the topic of research and in the conclusions but to make the process of research
itself free from value judgements, as far as possible, has only limited validity.

Biases/pre-judices/pre-judgements enable us to understand as propounded by Hans-Georg


Gadamer in Truth and Method. 124 In this parlance, understanding is possible only with
pre-understanding and judgements with pre-judgements. There are no 'value-free'
researches but there are common biases and uncommon biases and uncommon biases, we
believe has the potential to give rise to uncommon kinds of knowledge. Scholars with
greater inclination towards relativism would . hold that there are different truths for
different people, contingent upon their respective world-views. We would rather hold that
there are different aspects of the same truth, as perceived by us. The researcher's
biases/interests come to play in the choice of the framework of analysis and consequently
determine the aspect of truth as perceived by him/her. The social position of a social

·~· Hans-Georg Gadamer 1996: Truth and Method, Continuum, New York, 2"d revised edn., first
pub. 1960.
I"
Thomas S. Kuhn 1996: The Structure of Scientific Revolutions, University of Chicago Press,
Chicago; cited in Paul M. Sweezy 1979, p. I 15.
Ronald J. Herring 1983: Land to the Tiller: The Political Economy of Agrarian Reform in
South Asia, Oxford University Press, Delhi, p. 6.
Hans-Georg Gadamer 1996.

28
analyst could shape his/her framework of analysis and consequently his/her conclusions.
Yet there is nothing deter~inistic about it in that an intellectual, unlike ordinary mortals,
is able to transcend the interests of his/her class/social group. Here we would hold the
notion of 'de-classed intellectuals' in V.I. Lenin .

. Conscious epistemologists rule out the possibility of 'objective'/'scientific' or impartial


understanding in human sciences. In this sense, Marx's insistence on his work being
'science' as against 'ideology' took an entirely different route of explanation. In defense
of Marx, it may, however, be added that his notion of 'science' was quite different from
what we understand it today. He held out 'science' against 'ideology' as characterised by
-
bourgeois mystifications. The proletarian vie':Vpoint was held to be 'science' as free from
mystifications. 125 Although our approach here.in follows a different orientation, it may not
be seen as contradicting the Marxian paradigm. Another vital additional factor making it
impossible to have an objective understanding of human affairs is that 'immutable' laws
of motion of social development are made a mockery of by the role of conscious human
agency.

Our methodology herein is an interdisciplinary one using conceptual categories and


theoretical work on political analysis and Development studies, and also relying on
statistical and economic analyses. The study involves extensive survey and critical
analysis of primary and secondary sources on the economy,. society and politics of the
state. besides study of theoretical works on the related areas, as in Chapter ll, particularly
and throughout the thesis. Given the broad sweep of the topic under our analysis, we have
mainly used the approach of critically surveying the existing works in related fields, since
our inquiry is in on a topic that is hardly worked upon. Nevertheless, we have also made
liberal use of primary sources such as Economic Reviews of the State Planning Board,
Human Development Report 2005, Census Reports, Legislative committee reports, etc.
The research has also involved informal interviews of scholars, especially those working
on Keralam, ~ctivists working for social change and affected people as at Nainamkonam
colony, Adivasi people, and urban and rural workers from different parts of the state, etc.
These have mainly contributed to enhancing our perspective, clarifying views and facts,
etc. A combination of simple statistical methods, logical reasoning and help of empirical
studies are being used so as to understand the topic from a multi-disciplinary perspective.
Database as available on the economy and society of the state are also used to a limited

Jorge Larrain 1991: "Ideology" in A Dictionary of Marxist Thought, Maya Blackwell,


Worldview publications, New Delhi, pp. 247-52.

29
extent. These are provided. in the statistical appendix and especially in Chapter Y. Thus
we have worked out landho_lding patterns, agricultural labour participation from the Rural
Labour Enquiry Reports published every four years by the Ministry of Labour of the
Government of India. We have used the Reports of 1977-78 in order to understand the
post-land reform scenario and of 1999-200 I in order to understand the latest situation. We
have also Census Reports mainly for population estimates by social groups.

Indeed, it is the Marxist dialectical method of understanding social reality in terms of


Totality, Contradictions and Change or Movement in time that we find mo~t suitable to
follow herein. 126 We would follow a top-down approach in identifying what Marx terms
as the "rich totality of many det~rminations and relations" in society. 127 This is much
- more appropriate because the direction of the transformations and determinations today
increasingly follows a trajectory "from above". 128 We would not like to go with an
empiricist approach that 'misses the woods for the trees'. Indeed, "an aggregate view of
social formations" is "necessary as a safeguard against empiricism that only took notice
of pci'rts"} 29 We do go with the assertion that 'if appearances were all that were to reality,
then there would be no need for science'. Thus Marx in the Capital says, "All science
would be superfluous if the outward appearance and the essence of things directly
coincided." 130 In this sense, we seek to uncover the underlying pattern in social reality,
trying to figure out 'the internal relations ofthings'. Social contradictions of various kinds
are seen as prime movers of the social process. As we have mentioned earlier, we have
not resorted to an extensive analysis of Change or Movement in time of the social
processes owing to our own limitations while doing this thesis.

Herein we would favour the theoretical approach of 'methodological holism' as against


·methodological individualism'. Theoretically, this involves a rejection of the maximising
individualistic rationality of neo-classical Economics in Gary Becker for instance} 31 The
basic arguments of Rational Choice Theory (RCT) are: 1) There is a maximising

a:o
The non-formal classes in Jawaharlal Nehru University by R.S. Rao on Marxist dialectics
have helped me to clarify my views in this regard.
As cited in Camfield 2004-05: 425.
Byres, Terence J. 2002: "Paths of Capitalist Agrarian Transition in the Past and in the
Contemporary World", pp. 54-83, in V.K. Ramachandran and Madhura Swaminathan (ed.),
Agrarian Studies Essays on Agrarian Relations in Less Developed Countries, Proceedings of
the international conference during 3 to 6 January 2002, Tulika, Kolkata, p. 58, passim.
Manoranjan Mohanty 2004: "Conclusion: Social Movements in a Creative Society", pp. 388-
406, in Manoranjan Mohanty (ed.) 2004: Class. Caste, Gender: Readings in Indian
Government and Politics, Sage publications, New Delhi, Thousand Oaks, London, p. 396.
IJO
Karl Marx 1977: Capital, vol. 3, Progress publishers, Moscow, first published by Engels in
1894.

30
behaviour, with an identifiable maximand; 2) the maximand is the self-interest of the
individual and 3) the self-interest is narrowly self-centred and oblivious of consequences
for others. 132 Amartya Se~ accepts RCT I, disputes RCT 2 and rejects RCT 3. Gary
Becker himself had disowned RCT 3 but retained it in his theory as a heuristic device.
Sen invokes the authority of Marx himself for his advocacy of SCT as Marx disputed that
while political economy tended to assume that "each person has his private interest in
mind, and nothing else", in fact the "point is rather that the private interest is already a
socially determined interest." 133 Similarly, Albert Einstein had asserted that even most of
our ideas are obtained from society. 134 He sets forth the alternative of a Social Choice
Theory (SCT) in place of the incorrigibly individualistic RCT. In its applications as in
Cost-Benefit Analysis, RCT is .also thoroughly utilitarian. This, in tum, raises several
serious ethical concerns.- After Marx, however, we would view that in a society with
. - -.-- - --- - ~ - . -

entrenched hierarchies, there are irreconcilable collective interests and therefore, we


would rather view society in terms of Classes, Nationalities and Social Groups rather than
as a social whole in terms of interests. 135 In t.his view, human society is not merely
comprised of atomised individual actors or individual players, as in the game theory but
by collectivities bound together by common interests. There are not merely individual
actors but structures, agencies and processes. 136 We would, herein, view that structures,
processes and even agencies can have quite impersonal dynamics.

Now let us have a brief synoptic view of what each of the following chapters in this thesis
deal with.

Chapter II, "Conceptualising Class and Nationality in India" seeks to anchor this work in
an appropriate theoretical framework. We have sought to view both Class and Nationality
as having the dual aspects of accumulation and identity. We have focused more on the
aspect of accumulation under the overarching framework of capitalist development. We
have critically reviewed the Marxist approaches to Class analysis from the angle of a
Third World subaltern 137 perspective. We have reviewed the cultural theories on
nationalism and sought to locate their political economy through the Dependency and

Ul
Gary Becker 1995 (1976): The Economic Approach to Human Behavior, University of
C_hicago Press, Chicago. There are also others of similar persuasion like Paul Samuelson who
proposed the theory of Revealed Preferences.
132
As cited In Amartya Sen 2002: Rationality & Freedom, Oxford University Press, New Delhi.
pp. 30-31.
I)J
Karl Marx 1971 [ 1857-58]: Gundrisse in Marx's Gundrisse, trans. David McLellan,
Macm.illan, London.
Albert Einstein 1949: "Why Socialism?", Monthly Review, vol. I, no. I, pp.9-15 (reprinted in
the May issue of this journal every year).
13S
For more on how we understand Classes and Social Groups, see Chapter V.
136
Structures are sometimes rubbished as reified notions but for the people of contemporary Iraq,
American imperialism as a structure is a reality of day-to-day experience.
IJ.7
·subaltemity' is used by us in the Gramscian sense, not that of the later writers of the
Subaltern studies.

31
World System theories. Through these reviews, we have tried to find their plausible
relevance to the Class and Nationality questions in India, that we have viewed as a multi-
national country. We have sought to pin down the definitionally elusive notion of
'development' and sought to distinguish it from developmentalism. We have briefly
surveyed some of the theoretical strands in theorising the class basis of the State in India.
Further, we have indicated how the "Social Structures of Accumulation" (SSA) approach
contains the potential to synthetically link the approaches on both accumulation and
identity, witii a possibility of identifying the primary structures of accumulation as well.
Before concluding we have also tried to find the possible theoretical links between Class
and Natio~ality in understanding a country like India.

Chapter ITI, titled, "Facets of DePendency and Articulations of the National question in
Keralam" seeks to identify Keralam as a national formation in political economy terms, in
the first section. The over-inflated growth of the Service sector, stagnation of the
commodity-producing sectors, particularly, the industrial sector, high unemployment,
outflow of investible surpluses, etc. are viewed as manifestations of the dependency
syndrome in the state. The next section discusses the Centre-state relations, with
particular reference to financial relations. We also seek to solve the puzzle as to why has
the question of federal autonomy turned a non-issue under liberalisation and identify
critical areas where the Centre-state relations have come under greater strain. The third
section seeks to analyse the political implications of a Structural Adjustment Joan from
the Asian Development Bank (ADB) and explore the actuality of a 'liquidity crisis' in the
, state. [n ~he fourth section, we seek to analyse the various articulations on the nationality
question in the state during the 1980s and seek to understand the material interests lurked
behind each of these political positions. Before the concluding section, we touch upon the
question of Class-Nationality interface in the state.

Chapter IV, "Implications of the Neo-liberal Reforms for Kerala~" deals with the impact
of the SAP ,in general and their implications that are rather futuristic. The greater part of
this chapter deals with a critique of the phenomenon of globalisation and their
Implications for India and later part of the chapter deals with the state-specific
implications of SAP economically and politically. We conclude indicating the need for a
self-reliant trajectory of development, including the short-term regulatory measures and
the ways in which globalisation can be countered by political movements.

Chapter V, "A Structural-Locational Analysis of Classes and Social Groups in Keralam"


deals with Class as a substantive phenomenon, rather than an abstract, decontextualised
one. To this end, we have sought to view subaltern class formations in relation to caste
and gender, in particular, in the specific context of India. We have engaged in a brief
analysis of how Class relates to Women, Dalits, Adivasis, fisher people and immigrant
labourers. We have sought to identify the major factions of the dominant classes in the
state by a method of locating the sections that comer huge, undeserved benefits from the
-
State, often illegal or even forcibly. We have sought to locate economic classes in relation
to caste through an extensive data analysis ofNSSO-based Rural Labour Enquiry Reports
of 1977-78 and 1999-200 I, to capture the post land reform scenario and the contemporary
one. We have critically surveyed the after-effects of land reforms on the agrarian class
relations in the state. We have reflected on the contemporary character of the
mode/relations of production in the state. We have also sought to locate the sharp
contradictions on the agrarian scene, even against the backdrop of a decline of agriculture.

Chapter VI,· "Subaltemity and Political Discourse: Class as a Relational Process of


Becoming in Keralam" deals with the aspect of class struggle. We follow an approach of
viewing society from the very bottom of the social ladder._.Ciass is seen in its
multidimensionality and the Gramscian term, 'subalternity' is employed to capture this.
After dealing with theoretical aspects such as on land reforms, the concept of discourse,
the notion of Adivasi identity, etc. we proceed towards analysing the contending
discourses on the Adivasi land question in the state with a view to uncovering the class
interests underlying each of them. We also deal with the emerging scenario of Dalit land
struggles in the state by taking the instance of a defensive land struggle waged in a Dalit
colony in southern Keralam.

Chapter Vlf, "Conclusion: Class, Nationality and the Task of Social Transformation in
Keralam" set:k to find interfaces between Class and Nationality as against the prevailing
trend of viewing each in isolation. We have aiso summed up the major findings of the
preceding chapters. Further, we have sought to identify factors that could pave the way
for genuine social transformation in the state.

33
Chapter II

Conceptualising Class and Nationality in India

I. Conceptualising the Process of Class Formation in India


Marx
Gramsci
E.P~ Thomps_on and Ellen Meiksins Wood
Autonomist Marxism
' Towards a Theory ofWor.king Classes as Historical Formations
A Critique of the Review by Camfield
A Note on the Mode of Producti·on Debate in India
II. Class and Nationality: Re-instating some missing links
The Aspect of Political Economy in National Formation
The Cultural Aspect of National Formation
India as a Multi-National Country
Towards a Definition of the Nation
Focus on Accumulation: Dependency theory
Critique of the Dependencia School
Focus on Accumulation: World System Theory
The Commodity Chains Approach
III. The Meanings of Development
IV. Contextualising State and Class in India
Defining the State
The Need for the Notion of Relative Autonomy
The Statist view: The State as an Autonomous Site or Subject
Kalecki: the Indian State as an Intermediate Regime
The Iudian State as a capitalist State: (a) pure and simple, or (b) backward
A Gramscian View of the Indian State
V. "Social Structures of Accumulation" Approach
VI. Contextualising Class-Nationality Interface in India
VII. Conclusion
CHAPTER II

Conceptualising Class and Nationality in India


"Countries want independence,
nations want liberation,
people want revolution"
-Mao Tse-Tungt
In this chapter we attempt a synthetic approach of linking issues related to Class,
Nationality and other social categories, as we consider these categories as crucial to the
process of surplus accumulation/expropriation. At the out'>et, we will have a critical
review ofthe Marxist theorisations,on Class as can be relevant to a Third World country
like India. Thereupon, we shall seek to de.fine Nationality in a two-fold way, in terms of
language, culture and consciousness on the one hand and more importantly to us, in terms
of its political economy on the other and seek to examine its applicability to the case of a
'multinational' country like India. Thereafter, we focus on accumulation on a worldscale
en route Dependency and World System theories and the constitutive effects of this
process upon Class and National formations in 'peripheral' countries like ours. Following
this, we examine the semantics of 'Development' and argue that it could be well be a
'discourse of accumulation'. Subsequently, we examine the centrality of the State in
mediating social contradictions and the allocation of resources and take an overview of
the debates on the Class/social character of the State in India. We, then, examine the
'Social Structures of Accumulation' approach, which we believe, can synthesise the
concerns of accumulation and social identity, and possibly locate the principal
determinant in a complex totality of relations. And before concluding, we also seek to
locate the Class-Nationality interface in our country.

Conceptualising the relationship between Class and Nationality in India, it may be argued
that under the overriding impact of Global capitalism, today, most societies the world
over, are primarily Class divided societies, albeit Class divisions, surplus extraction and
uneven development taking on 'National' dimensions. 2 After Samir Amin, it may be
argued that the law of value has 'National' besides 'Class' and such other social
dimensions. 3 David McNally says, it would be a grievous error if we drop the nation-state

Cited in All India People's Resistance Forum (AIPRF) 1996: "Giobalisation Structural
Adjustment and National Resurgence", pp. 1-13, Symphony of Freedom Papers on Nalionality
Question, Papers presented at the International Seminar in New Delhi, 16-19 February, 1996,
AIPRF, Hyderabad, p. I, emphasis original.
Global capitalism herein is referred to as 'Imperialism' in the Leninist sense with its defining
features as primarily, monopoly and export of capital.
Samir Am in 1997: Capilalism in lhe Age ofG/obalisalion, Madhyam Books, Delhi.

34
out of view when we speak about the intemationalisation of capital. 4 Mao Tse-tung's
captivating slogan, "Countries want independence, nations want liberation, people want
revolution " 5 may be recalled in this context. The countries seek independence from the
clutches of 'imperialism', nations seek liberation from the yoke of oppression by any
dominant nationality and the State, and it is 'people' in all its multidimensionality and not
merely some abstract classes who demand revolution. If oppression and exploitation are
multi-faceted, so must be a political movement for liberation.

I. CONCEPTUAUSING THE PROCESS OF CLASS FORMATION IN INDIA

David Camfield has a densely written, intelligent and above all, honest overview of the
important s;;~ds of Marxist. theorisations on Class. 6 We would prima~ily bank on a
recapitulation and critique of this paper from a Third World critical Marxist perspective
for a theoretical overview of the Class question. 7 We would view that although the
experience of full-fledged capitalism came first in the. presently advanced capitalist
countries, Class cannot merely be considered as a Eurocentric construct since even
capitalism itself is not a Eurocentric phenomenon.

There are three specific theoretical caveats that Camfield sets forth right at the beginning
of his paper:

The first one concerns the spatial dimensions of social life. Camfield says, "In capitalist
societies, class relations are anchored in the places where paid work is done but are also
very much present in the community and household spheres of social life.'' 8 'Should not
the unwaged family labour of women in the kitchen, nursery, etc. be considered in
analysing class situations and class relations?' asks Brenner. 9 Other feminist writers have
also questioned an abstract notion of Class. Thus Rosemary Hennessy questioned the
gender-neutral concept ofCiass. 10

David McNally 1999: "The Present as History: Thoughts on Capitalism at the Millenium".
Monthty.Review, July-August, vol. 51, No. 3, pp.l49-161.
Cited in All India People's Resistance Forum (AIPRF) 1996: "Giobalisation Structural
Adjustment and National Resurgence", pp. 1-13, Symphony of Freedom, p. I, emphasis
original.
David Camfield 2004-05: "Re-Orienting Class Analysis: Working Classes as Historical
Formations", Science & Society, vol. 68, no. 4, winter, pp. 421-446.
Nevertheless, we would also draw upon other theoretical resources within the Marxist
tradition.
David Camfield 2004-05, pp. 426-7.
Johanna, Brenner 2000: Women and the Politics of Class, Monthly Review Press, New York.
p. 424.
10
Rosemary Hennessy 1993: Materialist Feminism and the Politics of Discourse, New York, p.
112 ff.

35
The second caveat concerns the "multidimensionality of social being":• Thus he says,
··Class structures the totali!Y of social relations, which cannot be reduced to class even as
all social relations are mediated by each other." 12 One should not, reasonably, have
theoretical blinders about it ......... Workers' identities have facets other than class. "One
should not expect to find any generic worker or essential worker, or for that matter,
working class consciousness ... ", says Karen Sacks. 13

The third caveat concerns the distinction between formal class organisations and the less
formal ones that constitute the cultural bases of social life. Under the class struggle
analysis after Miliband, it is useful to adopt the distinction that James Wickham made
between working class movement ~d working class. 14 For him, there are formal
"institutions" of worker:s like u~ions and parties and less formal "quasi-institutions" like
shop· stewards committees and teiuu1t5' assoCiations to friendship networks. Formal
organisations and the cultural basis- the "connective tissues of cultural life" 15 need to be
considered separately.

Camfield intelligently summarises Marxist theorisations on Class beginning with Marx


through Gramsci and E.P. Thompson, leading up to Ellen Meiksins Wood and the school
of autonomist Marxism.

Marx

Marx never elaborated on his theory of Class. Nevertheless, the 'red thread' that runs
through his ideas on Class is that the working class has to undergo a process of self-
development to transform itselfthrough its own struggles and ready itself to take power. 16
This "process of maturation" is "an educational and transforming process". 17 Class, in
conventional Marxist terms, was defined structurally in terms of the relationship towards
the means of production. The question of ownership over the means of production
determines the objective basis for the existence of social classes. His famous two-fold
distinction between class "in itself' and class "for itself' in his works up to 1852 is very

II
Camfield 2004-05, pp. 426, 430, 437, 443.
I~
David Camfield 2004-05, p. 427.
Karen Sacks 1989, Sacks; Karen 1989: "Towards a Unified Theory of Class, Race and
Gender'', pp. 534-550, American Ethnologist, vol. 16, no. 3, pp. 542-3; Cited in Camfield
2004-05, p. 426.
I~
James Wickham 1979: "Social Fascism and the Division of the Working Class Movement:
Workers and Political Parties in the Frankfurt Area 1929-1930", Capital and Class, vol. 7, pp.
1-34; cited in Camfield 2004-05, pp. 424-5.
1$
Bryan D. Palmer 1988: "What the Hell: Or Some Comments on Class Formation and Cultural
Reproduction", pp. 33-42, in Popular Cultures and Political Practices,Richard B. Gruneau
(ed), Garamond, Toronto- Canada; cited in Camfield 2004-05, p. 425.
lo
Camfield 2004-05, p. 427.
17
Hal Draper 1978: Karl Marx's Theory of Revolution, vol. 2, The Politics of Social Classes,
Monthly Review Press, New York, p. 80; cited in Camfield 2004-05, p. 427.

36
crucial. In the 1847 text, Poverty of Philosophy, he says, "Economic conditions had first
transformed the mass of people of the country into workers. The combination of capital
has created for this mass a common situation, common interests. This mass is thus already
a class {in itsel.fl as against capital, but not yet for itself. In the struggle ... this mass
becomes united, and constitutes itself as a class for itself'. 18 Further, Marx had also traced
how workers unite for the sake of maintenance of wages and subsequently in the face of
united capital, the association takes on a political character and the struggle of class
against class becomes a political struggle. 19 He thus speaks of the process whereby "class
in itself" (class en siche) turns into "class for itself' (class fur siche) wherein class-
consciousness ~omes into play. Thus the question-of economic status or class situation or
class location on the one hand, and class-consciousness on the other seem to be the two
essential criteria or defining characteristics of Class in Marxian analysis.

Marx's analysis ofthe French peasantry in 1852 goes in a similar vein. Thus Marx says:

In so far as millions of families live under economic conditions of


existence that separate their mode of life, their interests and their culture
from those of the other classes, and put them in hostile opposition to the
latter, they form a class. In so far as there is merely a local interconnection
among these small-holding peasants, and the identity of their interests
begets no community, no national bond and no political organisation
among them, they do not form a class. They are consequently incapable of
enforcing their class interest in their own name [emphases addedJ. 20
They had common economic conditions that in tum, marked out a distinctly similar mode
of life, interests and culture. for them and yet they had the weakness of association beyond
their locales which undermined their "classness". "They cannot represent themselves,
they must be represented" in national politics, says he. 21 It is notable that Marx's
classification of the organisational forms of class-conscious intervention is quite open-
ended: "Community", "national bond", "political organisation" are, for him, the bases for
similarly exploited people to become a force capable of class-conscious intervention. In
this sense, Marx was not averse to viewing the phenomenon of class struggle in a much
broader sense.

Marx was also guilty of sometimes treating society in a naturalistic manner. 22 Even in
Gundrisse and Capital, where according to Daniel Bensaid, there is "a radical

18
Karl Marx 1975: The Poverty of Philosophy, Progress publishers, Moscow, first published
1847, pp. 159-60 (emphases and text in square brackets added).
'"
20
Ibid, pp. 159-60.
Karl Marx 1852 (1968): "The Eighteenth Brumaire of Louis Bonaparte", in Selected Works,
Progress publishers, Moscow, first pub. 1852, p. 172.
21
Ibid, p. 172.
Camfield 2004-05, p. 429.

37
deontologization" whereby "being is resolved into existence, class essence into class
relations", the outcome of class formation of the proletariat is thought to be ultimately
assured. 23 There was an "optimistic evolutionism" in Marx, 24 an inexorable expectation
about the development of a revolutionary class. Camfield is quite right in rejecting along
with Daniel Bensaid, Marx's rather linear conception of .the process of class formation.
Marx tended to underestimate the tenacious persistence of non-revolutionary ideas among
workers.

Yet, it is to his credit that Marx did recognise racism and nationalism as significant
phenomena that impeded class formation. Marx was not wholly unaware of the problems
involved in the working class constituting itself as a 'Class for itself'. Marx and Engels in
German Ideology spoke of how the working class is divided by the ideology of its.
ruiers. 25 ''fr)he advance Of capitalist production develops a WOrking class which by
education, tradition and habit looks upon the requirements of that mode of production as
self-evident natural laws". 26 He had taken note ofthe nationalism of the English workers
pitted against Irish immigrants. Likewise, he says, "Labor with white skin cannot
emancipate itself where labor with black skin is branded". 27 "[O]vercoming competition,
division and subordination is central to the working class's maturation through
struggle. n28

Further, Camfield rightly points out concerning Marx, "His conception of social being
was not as multidimensional as social reality itself."29 There is substantial amount of truth
in this charge. 30 In response to Camfield and in defense of Marx, however, we might
argue that Marx could have been viewing capitalist society as developing in the direction
of increasingly democratising social relations. Marx could have turned a blind eye to the
question of non-class social categories like gender in recognition ofthe growing tendency
towards democratisation of society under classical, free-competition capitalism, which
had 'freed' the serfs, made way for women to participate in "socially productive work" 31 ,

2.1
Daniel Bensaid 2002, p. 116; cited in Camfield 2004-05, p. 429.
Cam field 2004-05, p. 430.
Karl Marx and Frederick Engels 1970: German Ideology, Pan One. Ed. C.J. Anhur,
International Publishers, New York, p. 64.
Marx 1977: Capital: A Critique of Poltical Economy, vol I., trans. Ben Fowkes, Vintage, New
York. p. 899; cited in Camfield 2004-05, p. 428.
Quoted in Camfield 2004-05, p. 429.
28
Cam field 2004-05, p. 429
Ibid, p. 430.
)0
Wally Seccombe and D.W. Livingstone (2000: "Down to Earth People": Beyond Class
Reductionism and Postmodernism, Garamond, Aurora, Canada) have an interesting attempt at
d.:vcloping a multi-faceted historical materialist social being, according to Camtield 2004-05,
p. 430.
)I
Frederick Engels 1891: The Origin of the Family, Private Property and the State, Progress
publishers, Moscow, 1977 print, first published 1884, p. 158.

38
away from the drudgeries of the household and was fast moving towards the
establishment of universal suffrage. This orientation of thinking should also be evident
from the arguments of Marx and Engels in the first few pages of the Communist
lvfanifesto on how capitalism had made giant leap-forwards in the sphere of advancing
production and democratising social relations even as it introduced the cash-nexus in the
relationship between 'man and man', i.e. between human beings. Apparently, this
orientation of classical free competition capitalism is quite unlike that of contemporary
capitalism in its oligopolistic stage, which is, apparently, devoid of the democratising
potentialities of yore but articulates with non-capitalist modes of production, thus acting
as the prime force of social regressiveness.
'

Gramsci

Gramsci was imprisoned by the Italian fascist State in 1926 and his writings from prison are our
main source of his ideas. He had emphasised on the historical and relational nature of the
process of class formation. His concern was to grasp the specificities of working-class
formation. 32 National peculiarities in social relations, for him, were to be understood in their
originality and uniqueness ... "Yet the perspective is international ...." 33 He rejected pre-
determined notions or fatalistic conceptions about how classes are formed. Thus he assigned
great importance to the role of intellectuals and political organisations. Writing in Mussolini's
prison in 1930s, he had greater appreciation of the pressures building up against the formation
of revolutionary working classes.34

He takes into account not only the "objective formation" of classes by "developments and
transformations occurring in the sphere of economic production. He advocates an
examination of the social origins, traditions and ideology of classes that emerge out of
·'social groups" and about processes of "decomposition, renovation or neo-formation" of
the exploited class. He did not think class formation to be a smooth or linear process. His
approach has been not only to make a synchronic (structural-positional) analysis of
classes but also a diachronic (relational) one. He suggests that class formation is a
relational process, as related to the subaltern class's necessarily unequal relations with a
dominant class over time. Thus the denial of franchise or enjoyment of full citizenship by
the working class is an important element of experience, with significant effects on
workers' consciousness and organisation. 35

Camfield 2004-05, p. 433.


Gramsci, Antonio 1971: Selections from the Prison Notebooks. Quintin Hoare and Geoffrey
Nowell Smith (ed. & trans.), International Publishers, New York, p. 240.
Camfield 2004-05, p. 433.
Ibid. pp. 431-2.

39
Gramsci gives ample recognition to the agency of political collectives and their
leaderships in the process of class formation. Thus according to him, parties play a very
important role in working class formation. The relationship between party and class is
dialectical. Political organisation, for him, entails "organisers and leaders", "its
intellectuals". 36 Intellectuals give the class homogeneity and awareness of its own
function not only in the economic but also in the social and political fields. Otherwise,
popular consciousness is a complex admixture of ideologies of the hegemonic class and
ideas arising from practical experience including critical insights. Intellectuals are capable
of organising ~ new hegemony. Parties are also vital to the development of a class's
intellectuals, its organisers. Parties translate different conceptions of the world into
pracuce. 37
0

· While not hicorporating the study of gender and other social relations into his theory of
classes, Gramsci's study of classes in its complexity leaves it open to development in this
direction. 38 The very notion of 'subaltemity' became a fertile conceptual ground for
linking Class and non-Class modes of oppression, although later theorisations tended to
overemphasise the autonomy of non-Class contradictions from Class contradictions. The
trajectory of Subaltern Studies is a patent example. 39

E.P. Thompson and Ellen Meiksins Wood

E.P. Thompson was primarily a historian, albeit a politically engaged one. [As a staunch
opponent of structural Marxism a Ia Louis Althusser and an ardent theoretical defender of
human agency,] he was hostile to a theory developed outside of an ongoing dialog with
the historical processes. 40 His ideas were not always clear and therefore Wood's careful
elucidation of a theory of Class out of his work has been of great use. 41

In the preface to his great work, The Making of the English Working Class, he writes that
Class is a "historical phenomenon", not a "structure". It is something that "happens" in
"human relationships". Thompson writes, "(C]Iass [as a relationship] happens when some
men [sic], as a result of common experiences (inherited or shared), feel and articulate the
identity of their interests as between themselves, and as against other men whose interests

Jb
Gramsci 1971, p. 334; Cited in Camfield 2004-05, p. 432.
~7
Camfield 2004-05, p. 432.
JS
Ibid, p. 433.
Sumit Sarkar 1998: "The Decline of the Subaltern in Subaltern Studies", Writing Social
History, Oxford University Press, New Delhi, pp. 82-108.
E.P. Thompson 1978c: "The Poveny of Theory or An Orrey of Errors", pp. 1-210, in The
Poverty of Theory and Other Essays, Monthly Review Press, New York, p. 43 .
•• Camfield 2004-05, p. 433-34.

40
are different from (and usually opposed to) theirs". 42 Camfield feels that instead of
'Class', if 'Class formation' is used, the meaning would have been clearer, avoiding
misreadings. 43 However, Class formation seems to be the end-result of the processes of
self-identification, class consciousness and class struggle, for Thompson as would be
evident from our citations from his writings, later in these pages. 44 He opposes vulgar
Marxist notions of Class wherein class consciousness is seen as a simple reflection of a
relation to the means of production, the consciousness the class ought to have, as decided
by a "party, sect or theorist". 45

In his essay, ''The peculiarities of the English", he says, "[C]Iass is not this or that part of
the machine, but the way the machiTJe works once it is set in motion ...." "Class is a social
and cultural formation (often finding institutional expression) which cannot be defined
abstractly; or ih- isolation, but only in terms of relationships with other classes; and
ultimately the definition can only be made in the medium of time. A 'happening', a
'process', a 'relationship', a 'formation' are ideas central to Thompson's concept of
class.'"'6 He also mentions similar "experiences" and "disposition to behave as a class". 47

Did not Thompson give a short shrift to the "objective" dimension of Class? According to
Ste. Croix, instead of Marx's two-sided analysis in The Eighteenth Brumaire- "economic
conditions of existence" on the one hand and "community", national bond" and political
organisation" on the other, Thompson acknowledges only the second aspect. Thompson's
more structuralist critics pointed out that he dissolved class "in itself' into class "for
itself', making class analysis irrelevant when class-conscious collective action is not
happening. 43

On his part, Thompson in his article, "Eighteenth-Century English Society: Class


Struggle Without Class?" argues that the concept not only enables us to organise and
analyse evidence; i"t is also, in a new sense, present in the evidence itself', in self-
conscious class organisations and cultures. It can be a "heuristic or analytic category" in
pre-industrial societies, where identities of rank and status matter. Taken in themselves,

E.P. Thompson 1980: The making of the English Working Class. Harmondsworth, Penguin,
England, pp. 8-9. Text in square brackets is added by us.
Camfield 2004-05, p. 436.
Thompson 1978a: "Eighteenth-Century English Society: Class Struggle Without Class?",
Social History, pp. 133-65, vol. 3, no. 2, p. 149; Thompson 1978c: "The Poverty of Theory or
An Orrey of Errors", pp. 1-210, in The Poverty of Theory and Other Essays, Monthly Review
Press, New York, p. 106.
E.P. Thompson 1980, p. 9.
Camfield 2004-05, p. 435.
Thompson 1978b: "The Peculiarities of English .. , pp. 245-301 in The Poverty of 7neory and
Other Essays, Monthly Review Press, New York, p. 295.
Perry Anderson 1980: Arguments Within English Marxism, Verso, London, pp. 39-43.

41
these statements seem to reduce 'Class in itself i.e., Class in its latent potency to turn into
'Class for itself merely as ary analytical category, in effect, denying its reality. However,
he says, no other concept is available to understand "a manifest and universal historical
process". 49 Because people behaved in class ways, there is the pervasive reality of class
struggle. He says,

[P]eople find themselves in a society structured in determined ways


(crucially, but not exclusively, in productive relations), they experience
exploitation (or the need to maintain power over those whom they
exploit), they identify points of antagonistic interest, they commence to
struggle_ around these issues and in the process of struggling they discover
themselves as classes, they come to know this discovery , as class
·consciousness. Class and class-consciousness are always the last, not the
first, stag~ in the real historical process. 50
So then, he does not leave out Marx's "economic conditions of existence" from his class
theory. He does admit that ''static structural analysis" of Class could be "valuable and
essential" in offering a "determining logic". 51

"Productive relations" or class relations in the synchronic sense of class situations exist in
all societies in which exploitation takes place. Exploitation leads to class struggle, out of
which class formations "arise at the intersection of determination and self-activity ... in an
open-ended process of relationship of struggle with other classes- over time". 52

Ellen Meiksins Wood goes beyond interpreting Thompson in Democracy Against


Capitalism. Wood says, "[T]here are really only two ways of thinking theoretically about
class: either as a structural location or as a social relation", and the latter is the
"specifically Marxist" route to theorizing class. The process whereby "class situations
give rise to class formations" is a complex historical process, according to her. 53

As Camfield puts it, "Class is not a location but an exploitative relationship between
producers and appropriators of surplus labor." Further he says, "Class may be considered
synchronically as a class situation." Nevertheless, "class ought to be considered
diachronically, as a historical process." 54 The class struggle analysis after Ralph Miliband
is considered a useful approach herein as against the static structural analyses of class
situations.

Thompson 1978a, p. 148-49.


so Ibid, p. 149.
SI
Ibid, p. 147n.
Thompson 1978c, p. 106 cited in Camfield 2004-05, p. 436.
Ellen Meiksins Wood 1995: Democracy Against Capitalism: Renewing Historical
Materialism, CUP, Cambridge, England, pp. 76, 83.
Camfield 2004-05, p. 426-27.

42
Wood further suggests that it is necessary to follow Thompson in utilising the concept of
experience. "It is in the medium of this lived experience that social consciousness is
shaped and with it the dispo~ition to behave as a class."55

What is probably of greatest value in Thompson has been that class formation is seen as a
structured process and a relationship. Relations of production is only the point of
departure, class formation itself being an open-ended process. This is a question that
demands empirical - historical and sociological analysis rather than a solution at the
theoretical level, according to Wood. This is where the most important questions about
·class lie, according to her. 56 We might add that this is where the specificities of the
historical experience of classes and the role of human collective agency comes in. This
would bring along an important injunction to study the specific social determinants of
experience and the cultural expressions thereof in each case. Thompson does not
theoretically assert 'the multidimensionality of social being' and yet recognises that class
relations are not the only kind of social relations. Gramsci's crucial emphasis on the
agency of political parties is largely missing in Thompson. And yet he certainly does not
neglect agency in his historical work. The Making of the English Waking Class examines
plebeian radical societies and other political institutions at length. He tells his readers
right at the outset, it "is a study in an active process, which owes as much to agency as to
conditioning. The working class did not rise like the sun at an appointed time. It was
present at its own making". 57 We would hold that this would however, appear contrary to
the statement that "Class and class consciousness are always the last, not the first, stage in
the real historic~l process",58 unless we bring in the Marxian notion of "class in itself'.
Such inconsistencies~ could, probably have arisen from the polemic style of writing that
Thompson had adopted. Nonetheless, it is beyond doubt that Thompson's approach on
Class placed ·much greater emphasis on the aspect of class struggle vis-a-vis class
situations.

Autonomist Marxism

Autonomist Marxism originated in Italy in 1960s. For English readers, Wright (2002) 59 is
recommended as indispensable. Cleaver,60 Zerowork, the short-lived autonomist journal

~5
Wood 1995, p. 96.
so Camfield 2004-05, p. 437.
E.P. Thompson 1980, p. 8.
Thompson 1978a, p. 149.
Steve Wright 2002: Storming Heaven: Class Composition and Struggle in Italian Autonomist
Marxism, Pluto Press, London & Sterling, Virginia.
Harry Cleaver 1992: "The Inversion of Class Perspective in Marxian Theory: From
Valorisation to Self-Valorisation", pp. 106-144; cited in Camfield 2004-05.

43
m mid-1970s, Yan Moulier (1986),61 autonomists aligned with the Italian Communist
Party, such as M. Cacciari, et al are important proponents of this approach. 62 The chief
contribution of this school has been a theory of working classes as historical formations
with a trio of concepts: class composition, decomposition and recomposition.

Class composition involves the structure of class power existing within the division of
labour associated with a particular organisation of constant and variable capita1. 63
Decomposition refers to the process whereby any division of labour within capitalist
production is not only technical but also a specific mode for capital's attempts to control
labour, according to these autonomists. Capital attempts to break the growing unity
among workers by establishing ,a new class composition favourable to itself by
reorganising production with new technology and a new division of labour, with a view to
tame labour insurgency. Recomposition refers to activities that unite workers as a class
against capital. 64

We would, however, suggest that it might be erroneous to suggest that capitalists


reorganise division of labour with new technology primarily with the motive of
decomposing the working class. The prime motivation could often be to improve an
employer's competitive position vis-a-vis other capitalists. And this has mainly to do with
the dynamism of capitalist development, which in turn, has an effect of displacing·labour
and much more broadly, decomposing the working class.

Autonomists aligned with the Italian Communist Party like M. Cacciari may not have
been widely off the mark when they contended that the concept of class composition was
reductionist inasmuch as institutions and class consciousness are treated as reflections of
a class composition. It would be an ahistorical error to read a class formation off a
structure of production. Otherwise, the notion of class composition, in itself, certainly
does not displace the centrality of class struggle. 65

Moulier (1986) argued that class composition, decomposition and recomposition do not
take place only at the point of production but across the capitalist society. This is in
harmony with the expanded scope of Class in autonomist Marxism. 66

ol
Yann Moulier 1986: "L'operaisme italien: organisation/representation/ideologiou Ia
composition declasse revisitee." Pp. 37-60, in L "italie: le philosophe etle gendarme. Marie-
Blanche Tahon and Andre Corten (ed), Editeur, Montreal, Quebec- Canada.
Camfield 2004-05, pp. 438-440.
Cleaver 1992, p. 113; cited in Camfield 2004-05, p. 438.
Camfield 2004-05, p. 438-40.
Ibid, p. 440-41.
60
Cited on ibid: 441.

44
Camfield's assessment of autonomist Marxism is notable: The concept of class
composition helps us to pa~ attention to how different sectors of a working class relate to
each other as \yell as with capital. The concepts of decomposition and recomposition are
helpful in analysing waves of workers struggles and employers' offensives, provided they
are used without assuming specific motives to, say, the capitalists engaged in reorganising
the workplace. 67

We would argue that class analysis is rendered ever more complex in a Third World
country which is not characterised by pure capitalist relations but capitalism of
oligopolies articulating with non-capitalist relations. And therefore, the concept of class
composition as related to capitalist division of labour may not be as interesting in the
Third World.

Towards a Theory of Working Classes as Historical Formations

In contrast to notions of Class as location or level of wealth, struggle is key to Marx's


conception of class relations. Conflict, herein, is materially and historically grounded in a
way that is unlike the metaphysical Nietzschean idea of universal will to power, most
often through Foucault.68

For Marx, working classes are not static class situations but formations in time. However.
the rather linear conceptions of class formation in Marx that working class inevitably
matures towards a revolutionary Class for itself (his "optimistic evolutionism") needs to
be abandoned (not his belief in the possibility of workers' self-emancipation), as
Camfieid rightly feels. 69

The autonomist notions of class decomposition and recomposition helps us understand


Class in and beyond paid workplaces. Class composition, for them, is not merely a
technical matter. The concept of class composition is an invitation to fill the abstractions
such as "the capitalist labor process" and "relations of production". 70

Gramsci and Thompson consider Class as a process. Thompson is the more eloquent on
this count. He demands an examination of the lived history of really-existing workers.
Gramsci's suggestions about research into national contexts and the social origins of new
working classes reflect a similar orientation. 71

o7
Camfield 2004-05, pp. 441-42.
68
Mark Neocleous 1996: Administering Civil Society: Towards a Theory of State Power.
Macmillan and St. Marlin's, London and New York, pp. 79-87.
oQ
Cam field 2004-05, p. 442.
70
Ibid, pp. 442-43.
71
Ibid-; p, _443.

45
Camfield has harped on the "multidimensionality of social being" 72 and rightly says that
in general, Marx, Gramsci, Thompson and the autonomist Marxists do not adequately
appreciate that Class· is "always mediated by other social relations" and that ..class
formation is no~ solely about class". 73 Marx himself pointed to a "rich totality of many
determinations and relations" in society. 74 Camfield identifies "gender, race, nation,
sexuality and space" as being interrelated to Class. This is not to collapse non-Class
social relations into Class or vice versa "It is necessary to analytically distinguish each of
these social relations ... because each has its own character.... In concrete social reality,
class and other social relations interpenetrate."7S

Grarnsci emphasises on the key rol~ of class conscious unions, parties and other working
class organisations as key players in class formation. Organisations and their intellectuals
propagate particular conceptions of the world and motivate certain actions leading to the
organisation of a new hegemony. 76 Gramsci's guidelines are complemented by
autonomist Marxism's concept of class composition as they problematise the relationship
between workers and their organisations.

A substantive and better-grounded understanding of how working classes are made and
remade as historical collectivities is not only an intellectual challenge but if working class
self-activity is central to the future possibilities of capitalist societies, such
77
reconceptualisation would have definite political implications, concludes Camfield.

A Critique of the Review by Camfield

Reviewing the Marxist theorisations on Class, particularly, en route Camfield's paper, we


would like to highlight some of the main ideas and attempt an application to the Indian
context: After E.M. Wood, Camfield characterises the two-fold way of understanding
Class - either as a structural location or as a social relation and rather favoured latter
without abandoning the former.

Camfield rightly has no abstract, de-contextualised understanding about Class. On the


contrary, he views Class in all its multidimensionality, as interrelated and interpenetrated
by other social relations. Camfield has rightly identified "gender, race, nation, sexuality
and space" as being interrelated to Class. 78 We might add, nationality (i.e., nations

Ibid, pp. 426, 437, 443.


7;1
Ibid, p. 443.
74
Cited in ibid, p. 425.
H
Camfield 2004-05, pp. 426, 443.
7b
Ibid, p. 444.
77
Ibid.
78
Camfield 2004-05, p. 426.

46
without own States), caste, tribe and community in the Indian context. Caste is a very
important social peculiarity in the context of India. Caste overlaps with Class in that the
majority among the lower classes still belong to the lower caste groups. We would,
however, caution to add that even for the multidimensionality of the social being, it is
possible to identify the primacy of one or the other kind of social contradiction at any
given stage of historical development.

It has been very useful that Camfield has read the Gramscian notion of subaltemity as
being open to the ideas of multidimensionality of class formations. Similarly, Camfield
notes how Gram sci has emphasised the role of class agency - of parties and intellectuals.
Gram sci was much more conscious than Marx of the impediments to class consciousness
at the cultural level and the social/cultural origins of new classes and their nationaL
character. Thompson's emphasis on 'lived experience' and the acknowledgement of the
pervasive reality of class struggle because people behaved in class ways, have also been
useful. The arguments in autonomist Marxism are less interesting but we feel, Camfield is
right that the concepts of class composition, decomposition and recomposition could be
of some value.

Now, we would like to attempt a critique of Camfield's paper in some respects from a
critical Marxist perspective from the Third World. Mao's approach to class analysis may
be posited against the rather strict criterion of class consciousness laid down by
Thompson, "Class and class-consciousness are always the last, not the first, stage in the
real historical process". 79 Mao says, "To distinguish real friends from real enemies, we
must make a general analysis of the economic status of the various classes in Chinese
society and of their respective attitudes towards the revolution". 80 'Attitude towards the
revolution' was a sufficient criterion for a class analysis. To be fair towards Thompson,
his own words may be cited in his defense: ''The working class did not rise like the sun at
an appointed time. It was present at its own making". 81 Nevertheless, it is rather apparent
that he tended to place greater emphasis on the aspect of class consciousness, rather than
on the aspect of economic or structural location a Ia the structuralists.
I

In the context of the Third World, the question of class formation becomes much more
complex, with 'multiple determinations and relations'. It is crucial to speak of Space as a
category of accumulation, particularly in the contemporary context of oligopolistic
capitalism on the worldscale. So it becomes important to look at the pioneering

i9
Thompson 1978a, p. 149.
so
Mao 1965: "Analysis of the Classes in Chinese Society", Selected Works of Mao Tse-tung,
vol. I, Foreign Languages Press, Peking, first published 1926, p. 13.
81
Thompson 1980, p. 8.

47
contribution of Paul Baran to Marxism. 82 Dependency theories and World System
theories. We have also found the 'Social Structures of Accumulation' approach in Barbara
Harriss-White 83 to be a con~eptual impulse with fertile theoretical grounds enabling us to
capture the various facets of both accumulation and identity including that of Space,
making it possible to link it to an over-arching class analysis.

We could, however, caution to add that despite the 'multidimensionality of the social
being' and the multiplicity of 'determinations and relations', after the phraseology of
Marx himself, it is possible to identify the primacy of one kind of social structure at any
given stage of historical development.

In the context of a Third World ·country like India, where myriad unresolved social
contradicti_o!!s p_ermeate the social reality because of the distortionary influence of
colonialism/monopoly capitalism, a 'pure' Class analysis would leave out of purview the
multidimensionality of the social formation in question. Third World societies like ours
could not pass through the supposedly 'natural' stages of economic development in the
schema of 'modernisation theory' as proposed by W.W. Rostow because they had to
reckon with the dominant influence of global monopoly capitalism. 84 D.O. Kosambi had
made an important theoretical observation in proposing that India had a 'co-existent mode
of production', meaning that unlike in Europe, without displacing one mode of
production, another mode of production came to prevail alongside the former. making our
social reality a lot more complex. 85 In the context of a society with 'graded inequalities',
our effort should be to identify the principal factor, the connecting thread that runs
throughout the totality of a social formation, shaping an~ constituting the various aspects
of the totality. Thus in a country like ours. today, 'bonded labour' in itself does not
constitute the mode of production but only an aspect of a co-existent mode of production.

Moreover, in the context of countries like India, working class in the formal sector of the
economy in both its private and State segments, is a rather privileged category with
organised. . bargaining power vis-a-vis theirI counterparts in the unorganised sector.
Political praxis, therefore, needs to focus on the working class and other deprived classes
in the teeming unorganised sector of the country who are apparently, the real subalterns.

s~
Paul Baran 1957: The Political Economy of Growth, Monthly Review Press, New York.
SJ
Barbara Harriss-White 2003: India Working Essays on Society and Economy, Cambridge
University Press, Cambridge, pp. 13-15, 240, 244.
W. W. Rostow 1992: The Stages of Economic Growth: A Non-Communist Manifesto,
Cambridge University Press, J'd edition, first published 1960.
Damodar Dharmanand Kosambi 1975: An Introduction to the Study of Indian History, Popular
Prakashan Pvt. Ltd., Bombay, first published 1956, p. 14 and D.O. Kosambi 1965: The
Culture and Civilisation ofAncien/India in Historical Outline, London.

48
Unorganised labour constitutes about 93 per cent of the total labour force in India. 86
Apparently, the workers in t~e formal sector may be considered a better-off category vis-
a-vis the unorganised workers in the informal sector. However, whether the former can be
designated as a labour aristocracy in comparison to unorganised sector workers is a
matter that needs investigation specifically in the context of Structural Adjustment in
general, and 'labour flexibility', in particular, 87 as even the rights of workers in the formal
sector are increasingly getting undermined. 88 Peasantry in much of the non-industrialised
parts of the world constitute the main component ~f the working population. So then,
trying to build a theory of 'working class formation' in the Third World would not be as
useful as it i~ in the industrialised countries.

"[Q]ualitatively different contradictions can only be resolved by qualitatively different


·methods."89 In this sense, caste is a very important social. specificity in the context of
India. Caste overlaps with Class in that the majority among the lower classes still belong
to the lower caste groups. And yet caste cannot, justifiably, constitute the prime basis of
mobilisation for fundamental social transformation in Indian society because popular
mobilisations within castes take place under the leadership of the elites within the castes
and often serve to promote the class interests of these elite minorities.

As was acknowledged by Paul Sweezy, Samir Amin, et al Third World, or more


precisely, the "countrysides of the periphery"90 is the very 'eye of the storm' of radical
social transformation on the worldscale in the era of global monopoly capitalism. We
would consider the notion of the 'Third World' as used by Mao Zedong quite useful. Mao
had classified the two superpowers of his time as the first world, the lesser imperialist
countries as the Sec.ond world and the other countries which have mostly been the
erstwhile colonised countries, as the Third World. This was useful, in his understanding,
for striking tactical alliances between the Third and the Second Worlds against the
aggressions of the First. The usefulness of this concept cannot be denied even as there is
only one superpower in the world today. In-this sense, the notion of the Third World was
more ingenious than the notion of the periphery. But the notions of the centre and
periphery are also quite useful in the parlance of viewing the world capit~list system in its
totality and exploitative inter-relations. The notions of both 'Third World' and periphery

86
Harriss-White 2003, p. 17.
87
'Labour flexibility' is a term used euphemistically to refer to the greater labour insecurity or
the erosion of the rights of labour under SAP.
ss For details, see the section, 'Implications of the proposed labour reforms' in Chapter IV.
8<1
Mao Tse-Tung [Zedong] 1965: 'On Contradiction', Selected Works of Mao Tse-Tung, vol.l.
Foreign Languages Press, Peking.
Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
Neoliberalism", in Reclaiming the Land, Zed Books, London & New York, David Philip,
Cape Town, p. 9.

49
acknowledge the spatial dimensions of accumulation on the world scale. It may be further
added that in liberal characterisations of the First World as the advanced capitalist, the
Second World as the erstwhile socialist and the Third World as the rest of the world, the
substantive meaning of the aforesaid categories go missing.

In many of the underdeveloped countries, capitalism articulated with non-capitalist modes


of production and so retarded the development of productive forces in these countries.
Opinions diverged with some arguing that non-capitalist modes of production had resisted
capitalist penetration and others arguing that the former were kept alive by capitalism, if
not created by lt. 91 Even in the advanced capitalist countries, there is seen to be the
prevalence of non-Class modes o(surplus expropriation such as race and gender. And
apparently, imperialism, as a "parasitic"92 variety of capitalism only accentuates this
trend. In any case, it is worth asserting that the Class reality of the Third World is much
more complex than in the advanced capitalist countries and so it has given rise to debates
on the Class character of the State93 and the character of the mode of production,
particularly in the agriculture sector of these primarily agrarian countries.

Speaking of the dominant class coalition, PraRab Bardhan conceptualised it to be made up


of the dominant proprietary classes, namely, State/Intelligentsia, the industrial
bourgeoisie and rich farmers. For Bardhan, a section of the middle class, namely the
professional class, is part of the dominant coalition in India, especially those placed in
key positions of the State apparatus. 94 The Communist Party of India held the dominant
class coalition to be composed of the national bourgeoisie and the landlords. Communist
Party of India (Marxist) formed in 1965 after the split, held it to be made up of a
collaborationist big bourgeoisie and the landlords. Communist Party of India (Marxist-
Leninist), popularly called the 'Naxalites' 95 and also as 'Maoists' at present, viewed the
dominant class coalition to consist of: feudalism, imperialism and comprador-bureaucrat
capital.

Frans J. Schuunnan 1993: "Introduction: Development Theory in the 1990s", pp. 1-48,
Beyond the Impasse New Directions in Development Theory, Zed Books, London, New
Jersey, p. 7.
V.I. Lenin 1917 [1986): Imperialism the Highest Stage of Capitalism, Progress Publishers,
Moscow, p. 117.
OJ
This concerned what particular coalition of classes had the dominant intluence upon the State.
granting that it was not purely a bourgeois State.
Pranab Bardhan 1998: The Political Economy of Development in India (expanded edition with
an epilogue on the political economy of refonn in India), Oxford University Press. New Delhi,
first pub. 1984, pp. 40-53.
This· is because this movement originated in the Naxalbari village of North Bengal.

50
A Note on the Mode of Production Debate in India

In the course of the mode of production debate in India, Jan Breman, Jairus Banaji,
Barbara Harriss-White, et al have held that despite the pervasive informality of social
relations, the mode of production that characterises Indian economy has been basically
capitalist in nature. 96 In other words, it is held that India has a predominantly capitalist
mode of production with semblances of pre-capitalist relations/non-capitalist tendencies
persisting to a large extent.97 ·

The social reality in the becoming is no doubt, very important for our analysis.
N.everth.eless, we would conside_r _that _the vJew held by R.S. Rao, Pradhan H. Prasad,
Amit Bhaduri, et al had the distinctive advantage of recognising the reality that has
been prevailing in the sprawling countryside that more appropriately represented the
98
Indian social reality. Their line of thinking was closer to the Naxalite/Marxist-Leninist
practitioners who opted to change the Indian social reality. It was rightly pointed out by
Gail Omvedt that the polemics on the mode of production in India had begun with the
Naxalbari uprising. 99 It might be admitted that despite their apparent mistake of trying to
approximate the Indian social reality to the pre-revolution Chinese one, the broad
characterisation of Indian economy as "semi-feudal, semi-colonial" has been more
nuanced in taking into account the persistence of large scale pre-capitalist social relations
in the realm of India's dependent capitalism increasingly being incursed upon by an
aggressive expansion of the global capital. The empirical reality of the country-side in
many parts of India does not, as yet, seem to suggest the emergence of full-fledged
agrarian capitalism, with its varying degrees of penetration across regions and sub-
regions.

Jan Breman (1976), "A Dualistic Labour System? A Critique of the 'Informal Sector'
Concept", Economic and Political Week(v, vol. II, no. 48, 27 November, pp. 1870-6; vol. I I,
no. 49, 4 December, pp. 1905-8; vol. II, no. 50, II December, pp. 1939-44; Jairus Banaji
1999: "Metamorphoses of Agrarian Capitalism", Economic and Political Weekly, vol. 34, no.
40, 2 October, pp. 2850-8, Review article of Daniel Thorner (ed.) (1996), Ecological and
Agrarian Regions ofSouth Asia circa /930, OUP, Karachi.
Barbara Harriss--White 2003: India Working Essays on Society and Economy, Cambridge
University Press, Cambridge.
08
R.S. Rao 1995: Towards Understi:mding Semi-Feudal. Semi-Colonial Society, D. Narasimha
Reddy (ed.), Perspectives, Hyderabad, pp. 75-6; Amit Bhaduri 1983: The Economics of
Backward Agriculture, Academic Press, New York; Pradhan H. Prasad 2000: India: Dilemma
of Development, Meeta Krishan (ed.), Mittal, New Delhi.
00
Gail Omvedt 1981a: "Capitalist Agriculture and Rural Classes in India", pp. 140-59;
Economic and Political Weekly, vol. 16, no. 52, Review of Agriculture; cited in Alice Thorner
- 1982, p. 2064.

51
The debate in the left circles in India on the patriotic/collaborationist/comprador character
of the Indian big capital could also throw some light on the actual character of capitalist
development in lndia_l 00 Suniti Kumar Ghosh, again, closely associated with the Naxalite
stream, asserted that the Indian big bourgeoisie was comprador in character. Ghosh
consistently argued that the Indian big capital, supposedly, the leading class in the
dominant class combine in India, arose with trade and commerce under colonialism and
then diversified into finance and production and had its interests historically intertwined
w!th the _interests of colonialism/imperialism i.e., the global metropolitan capital and it
continued to be so. 101

. Utsa Patnaik sought to make an ill'!portant observation that even when certain relations of
production persisted, eg., the semi-feudal one, the predominant mode of production
tt:nT;ed ouno be something else, eg. the-c:·apitalist. 102• ·

Summing up the mode of production debate in India, some of the major observations by
Alice Thorner were as follows: She conceded to the dominant viewpoint in the debate that
capitalism dominates the rural agrarian scene and yet was not sure if Indian agriculture
would follow the laws of motion of capitalist development. 103 The debate had amply
shown that widespread tenancy and/or share-cropping does not necessarily indicate the
presence of feudal relations, nor does the concentration of landholding. Similarly, wage
labour in itself cannot be taken to constitute signs of capitalist relations. Yet the shift from
exploitation of tenants to large-scale or intensive farming by hired labour is significant.
The concepts of preservation/destruction of earlier modes of production by capitalism,
and articulation of di,fferent modes within a single social formation continued to figure in
the discussion, indicating their general acceptability. We would, however, hold a differing
opinion that the fluidity of the situation in this regard could be owing to the process of a
decadent capitalism articulating with pre-capitalist social relations. She also noted a
failure or even unwillingness in India to deal with cultural aspects_l 04 Similarly, the

100
The Indian big capital has, more often than not, been considered the leading class in the
coalition of classes that control the State in India. Hence the importance of this debate. The
dominant class coalition is also held to comprise of rural magnates, bureaucratic and political
elite and global monopoly capital. See, Suniti Kumar Ghosh 2000: The Indian Big
Bourgeoisie, New Horizon, Calcutta; R.S. Rao 1995; Pranab Bardhan 1998: The Political
. Economy of Development in India, OUP, New Delhi and Ashok Mitra 1977: Terms of Trade
and Class Relations, Cass, London.
101
Suniti Kumar Ghosh 2000: The Indian Big Bourgeoisie, New Horizon, Calcutta.
102
Utsa Patnaik (ed.) 1990: Agrarian Relations and Accumulation: The mode of production
debate in India, Oxford University Press, Bombay.
IOl
Alice Thorner 1982 abc: "Semi-Feudalism or Capitalism? Contemporary Debate on Classes
and Modes of Production in India" in three parts, Economic and Political Weekly, vol. 17,
Dec. 4, no. 49, pp. 1961-66; Dec. II, no. 50, pp. 1993-99 & Dec. 18, no. 51, pp. 2061-66; p.
2063.
104
Ibid, pp. 2063-64.

52
tendency to advocate single-class movements indicated the scholars' "armchair" or
impractical orientation according to her.

II. CLASS AND NATIONALITY: RE-INSTATING SOME MISSING LINKS

In the context of the Third World, 105 it is crucial to speak of Space as a category of
accumulation or in other words, "spatial structures of accumulation"; 06 particularly in the
contemporary context of oligopolistic capitalism on the worldscale.

Moyo and Yeros have an analysis of the relationship between the agrarian/class question
and the national question that is informed by the dichotomous relationship between the
centre and the peripheries on the global scale. Thus they say, it is "in the countrysides and
shantytowns of the periphery, where imperialism is experienced most brutally" 107 and this
in tum, calls for reflection on the relationship between the agrarian and national
questions. 108 The numerous human catastrophes have largely been rural affairs that have
demanded answers.' 09 It is curious that despite the alleged "'disappearance' of the
peasantry after a quarter-century of structural adjustment in parts of the Third World, i.e.,
following the crisis of the 1970s, 'new rural movements' have emerged - the most
progressive and militant movements in the world today being based in the "countrysides
of the periphery". 110 Moyo and Yeros make a crucial point when they say that even as
..trade unionism has suffered disorganization and co-optation" during the phase of "neo-
liberal restructuring", the rural movements, having their social base among semi-
proletarianised peasantry, landless proletarians and urban unemployed, often employing
the land occupation tactic, have upheld "genuine labour internationalism", constituting
the very "nucleus of anti-imperialist politics" today. 111 "It is perhaps ironic that rural
movements have become the 'natural' leader,s of progressive change, not by virtue of
being exploited by capital, but by being expelled from it." 112 Moyo and Yeros argue that

105
We would like to use the term. 'Third World' in the sense Mao had used it, that is, as a
'subordinate bther' of the First World, which then consisted of the two super-powers, and the
Second World as consisting of the other imperialist powers in Europe, Asia (Japan) and North
America (Canada). During the Cold War, Mao had envisaged a possible alliance with the
Second Wor.ld to fight the 'imperialistic' designs of the First World. We do not mean to use it
in the confusing sense many others had used it, viz., the First World as the US-led bloc of
countries, the Second World as the 'socialist' bloc countries led by Soviet Union (probably
with the exclusion of China) and the Third World as the 'non-aligned' bloc of countries.
100
Harriss-White 2003, p. 208.
107
Sam Moyo and Paris Yeros (ed.) 2005: "Introduction", Reclaiming the Land, Zed Books,
London & New York, David Philip, Cape Town, p. 4.
lOS
Ibid, pp. 3, 4-5.
IOQ
Ibid, p. I.
110
Ibid, pp. 2, 5, 9, 10.
Ill
Ibid, p. 9.
II:!
Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
Neoliberalism", p. 55.

53
that "underdevelopment has persisted and expanded under neoliberalism, through the
contradictory forces of proletarianization, urbanization, and re-peasantization, yielding a
'semi-proletariat' which in tum constitutes the core social base of rural movements ... .'' 113
It is not surprising therefore that these "rural movements today constitute the core nucleus
of opposition to neoliberalism". 114 Moyo and Yeros assert, "[T)he agrarian question,
despite its globalization, remains intimately tied up with the national question." 115 The
specific route of this linkage has been that "capitalism has subordinated agriculture to its
·-
logic worldwide, but without creating, by necessity, home markets capable of sustaining
industrialization, or fulfilling the sovereignty of decolonized states." 116 "In this sense, the
_agrarian question re~ains unresolved" and also "intimately related to the national
117
question."

As for Nationality, a theoretical approach could be· propo·sed to the study of subject
nationalities, in the course of an empirical study on Keralam, that is, taking into account
not only the aspect of language/culture, consciousness/subjectivity but also more
importantly, the process whereby a nationality is constituted in material terms i.e. in terms
of its political economy. An additional factor would be territoriality. So a nationality
would be a 'territorial community'..The constitution of a Nationality in terms of political
economy (a Nationality 'in itself) could have an immense bearing upon its constitution in
terms of consciousness (a Nationality 'for itself) as is borne out by many a Nationality
movement in regions of relative underdevelopment. Studies by Tom Nairn seems to point in
this direction. Tom Nairn regarded national is~ as a product of and response to, 'uneven
development of capitalism' . 118 Our approach would be at variance with the proliferating
studies on Nationality since 1960s that have placed exclusive emphasis on the first aspect.
Alternatively we would draw insights from the studies by Tom Nairn, Samir Amin,
Lenin, et al. The term, 'nationality' herein is being used in the Indian parlance, in
reference to nations without own states that constitute a multinational country that India
is.

The Aspect of Political Economy in National Formation

From 1960s, culture, ethnicity, identity became 'a major problematic'- a focal point in
the studies on nationalism (as with Gellner, Anderson, Smith, Connor, et a/). 119 Such

Ill
Moyo and Yeros (ed.) 2005, "Introduction", p. 5.
11•
Ibid, p. 6.
··~ Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
Neoliberalism", p. 55.
lib
Ibid, p. 14.
117
Ibid, p. 14.
118
Tom Nairn 1997: Faces ofNationalismJanus·Revisited, Verso, London.
119
Aloysius, G. 1997: Nationalism without Nation in India, Oxford University Press. Delhi, p.l7.

54
work has, for now, somewhat dominated over the earlier painstaking studies of nations
and nationalism, giving pri!Tlary emphasis to the aspects of political economy besides
considering the role of language/culture and consciousness/subjectivity. 120 As against a
rather unilateral approach considering nationalism as primarily a cultural category,
unmindful of the aspect of political economy, a synthetic approach, could lead to better
understanding and deeper insights.

Capitalism and the nation-state were viewed as twins conjoined at birth. 121 In the era of
'imperialism' (in the Leninist sense), Class is seen to have a symbiotic relationship with
nationality, shaped, in tum, as they are, by the dominant pattern of development process .
..
The era is characterized by monopoli~ on the international scale; by the merger of
banking capital with industrial capital, leading to the formation of financial oligarchies,
"finance capital"; by the export of capital, etc. 122 'Imperialism' is "parasitic or decaying
capitalism" 123 as Lenin called it, devoid of the revolutionary potentialities of capitalism in
its incipient stage, whether to democratise society or to achieve a self reliant, independent
development of the indigenous productive forces. On the contrary, 'imperialism' was
instrumental in the preservation of pre-capitalist/non-capitalist social forces, particularly
'semi-feudalism'. Around 1970s, the modes of production theory argued that a number ~f
modes of production coexist in society, and that they articulate with each other (regarding
exchange of labour, goods, capital, etc.). Further, it was thought that the relationship
between capitalist and non-capitalist modes of production was favourable to the capitalist
mode of production. Apartheid was cited as a classic example. 124 Although Lenin himself

Since 1990s, Anthony D. Smith 1995: Nations and Nationalism in a Colonial Era, Polity
Press; Moore 1998: Nationai'Self-Determination and Secession, Oxford University Press:
Margaret Moore 200 I: Ethics of Nationalisms, Oxford University Press; Calhoun 1997:
Nationalism, Open University Press; Cannovan 1996: Nationhood and Political Theory,
Edward Elgar; David Miller 1995: On Nationality, Clarendon, Oxford; David ·Miller 2000:
Citizenship and National Identity, Polity; Will Kym licka 200 I: Politics in Vernacular
Nationalism. Multiculturalism and Citizenship, Oxford University Press; Michael Hechter
200 I: Containing Nationalism, Oxford University Press; J. Kristeva 1993: Nations without
Nationalism, Oxford University Press, New York, Columbia; Partha Chatterjee 1986:
Nationalist Thought and the Colonial World, Oxford University Press, Delhi; Partha
Chatterjee 1994: The Nation and its Fragments Colonial and Postcolonial Histories, Oxford
University Press, Delhi; have been some of the studies on Nationalism. Hugh-Seaton Watson,
Walker Conner, Karl Kautsky, Plekhanov, Otto. Bauer, Kedurie, Hans Kohn, John Plamenatz.
Kamenka, Ernst Gellner, Benedict Anderson, et at have been earlier writers on the area.
r:o Karl Kautsky, Rosa Luxemburg, Otto Bauer, J. V. Stalin, V.I. Lenin, et al. For instance, please
see Otto Bauer 2000: The Question of Nationalities and Social Democracy, University of
Minnesotta Press, Minneapolis, London.
1::1
Ellen Meiksins Wood 1999: "Unhappy families: Global capitalism in a world of nation-
,.. states", Monthly Review, vol. 51, no. 3, July-August.
V.I. Lenin 1917 (1986}: Imperialism, the Highest Stage ofCapitalism, A Popular Outline,
Progress Publishers, Moscow, first published 1917, p. 84.
1:!3
Lenin 1917 (1986}, p. 117.
124
Schuurman 1993, p. 6.

55
does not clearly draw such implications out of his analysis of 'imperialism', his analysis
leaves it open to development in this direction. In a similar vein, Samir Amin 125 argued
that the law of value operates not only with Classes but also with Nationalities.
Capitalism is organised nationally and ordered hierarchically, in our present world, with
the United States at the top and the lesser imperialist powers 'at the tap' and the Third
World at the bonom} 26

With 'imperialism', appropriation of surplus value assumes global dimens·lons. Uneven


development_ is an inevitable characteristic of the capitalist mode of production and even
more so with 'imperialism', "the latest stage of capitalism". Oppressed/peripheral
countries (multinational states), nations (nation-states) and nationalities (nations without
own states) become sites of struggles vis-a-vis 'imperialism'. Globalisation and Structural
Adjlistmenf Policies oeirig pushed through by international financial institutions (a Ia
IMF, World Bank, ADB) and multilateral institutions (a Ia WTO) create economic
conditions that further accentuates the process. So then, it is a scenario that reminds us of
Mao's famous slogan that we have mentioned in the very first paragraph in this chapter.

In Chapter IV, we examine in detail the arguments of Prabhat Patnaik regarding how
there is a distinction between the home-base of capitalism and the outlying region where
capital feels less secure and so demands higher rates of return. There is a hierarchy of
currencies in the world economy at the bottom of which are the Third World currencies
which do not constitute safe media for holding wealth and therefore it necessitates
deflationary economic policies in these countries with a view to retain investor
confidence. 127

Additionally, pricing behaviour in product markets has to be a component of any


explanation of terms of trade movements that, after all, refer to prices. Wealth-holding
behaviour plays a role in terms of trade movements, undoubtedly mediated by pricing
behaviour in product markets via its effect on exchange-rates, especially in a world
characterized by the dominance of 'freely mobile' intem~tional finance capital. 128 "A
world of globalised finance would result in the deterioration of real exchange-rates purely
because of the wealth-holding decisions of international rentiers, and through pricing
rules tum the terms of trade against agriculture". 129

Samir Amin 1997.


Implications drawn from Ellen Meiksins Wood 1999.
Prabhat Patnaik 2002, pp. 97, 100. See detailed analysis in the section, 'A retlection on the
economic collapses of our day' in Chapter IV.
t:s
Ibid, p. lOS ..
Ibid, 2002, p. 149.

56
Historically, nations •and nation-states arose, for the first time, in Western Europe in the
context of the emergence of capitalism, in the process of people's struggles against
-
·feudalism'. A nation, as a linguistically homogenous territory was somewhat
synonymous with a unified market. 130 However, both in the colonial and neo-colonial
phases of'imperialism', national formations in the peripheral countries ofthe world faced
retarding effects and followed on a different trajectory. This was a result of a retrograde
alliance of 'imperialism' with the pre-capitalist social forces (particularly, 'feudalism' [or
'semi-feudalism']), subsequently mediated by the native capitalist classes whose interests
were intertwined with the interests of 'imperialism'. Therefore, these emerging
nationalities had to reckon with the twin forces of 'feudalism' and 'imperialism'. 131
Nationality struggles, in such cases~ become a mode of Class struggle itself- in their ·
'objective' c~~~gurat!?n -_~ontributing to the democr~tisation of society. However, given .
the variegated nature of nationalisms, it is incumbent on us to ask 'what is the specific
content of each nationalism?' The typology of progressive and reactionary nationalisms
may be a useful one in this context. The Marxist political economy perspective enables us
to understand nationality question in terms of the struggles of people, particularly against
'feudalism' [or 'semi-feudalism'] and 'imperialism' i.e. in the case of progressive
nationalism. By 'progressive', we mean. embodying democratic values. No implications,
however, are drawn oflinearity in the process of progress as regress is also quite possible,
as the history of the 201h century has shown.

The development of classes within a nationality rnay be conceptualised as integrally


linked to the development of the nationality under the overriding impact of dominant
forces within a multinational country and at the global level. In this view, liberation from
class oppression and liberation from national oppression are like two sides of the same
coin. And therein lies the importance of understanding the Class-Nationality interface.

On the one hand, nationality struggles may involve a struggle for democracy - towards
fulfilling the task of democratisation of society under the leadership of the emerging
capitalist class- a task that remains unfulfilled in the era of 'imperialism'. On the other
hand, it may also be a mode of class struggle itself inasmuch as it is pitted against
'feudalism' [or 'semi-feudalism'] and 'imperialism'.

Nationalities are points of departure in our journey towards internationalism. "[T]he point
of departure is 'national'- and it is from this point of departure that one must begin. Yet

130
Lenin, V.I. 1914 (1977): The Right of Nations to Self Determination, Selected Works Vol. I,
Progress Publishers, first published 1914, Moscow.
131
AIPRF 1996, pp. 118-9.

57
the perspective is international and cannot be otherwise". 132 As against the policy of
··catch 'em and hold 'em", the policy of forcible integration, a voluntary union of
nationalities, on the basis of their democratic rights, is the ultimate guarantee for a lasting
unity. Right to self-determination, including secession is the most democratic right as far
as the nationalities· question is concerned. 133 The principle of self-determination is
certainly in crisis under globalisation. But it cannot been superseded so long as its raison
d'etre, imperialism [and national oppression] exist. 134

The Cultural Aspect of National Formation

The aspect of language, culture and consciousness have played a very important role in
national formations and has been ..assignect the pride of place in recent analyses. Ernest
Gellner defined nationalism as 'primarily a principle which _holds that the political and
national unit should be congruent.'ns Gellner, according to Hobsbawm, stresses 'the
element of artifact, invention and social engineering which enters into the making of
nations'. 136 'Nationalism, takes pre-existing cultures and turns them into nations,
sometimes invents them, and often obliterates pre-existing cultures: that is a reality.' 131
The process of invention of a nation, for Gellner, involves imposition of a common high
culture on the variegated complex of local folk cultures. 138

Anthony D. Smith summed up the fundamental lessons he learned from Gellner: Firstly,
nationalism is so variegated a phenomenon that it requires classification for any progress
in understanding. Secondly, that nations and nationalism involves an underlying
sociological reality. Thirdly, that nationalism is product of specifically moderh conditions
-particularly, ofthe phenomenon ofindustrialism. 139 According to Smith, nationalism is
an "ideological movement for the attainment and maintenance of autonomy, unity and
identity of a human population, some of whose members conceive it to constitute an
actual or potential 'nation'." Further, he defines a 'nation', as a "named human population
,sharing an historic t~rritory, common myths and memories, a mass, public culture, a
°
single economy and common rights and duties for all members." 14 For Anthony D.

ll2
Antonio Gram sci 1971: Selections from the Prison Notebooks. Quintin Hoare and Geoffrey
No\vell Smith (ed. & trans.), International Publishers, New York, p. 240.
Lenin 1977 (1914).
Sam Moyo and Paris Yeros (ed.) 2005, p. 13.
IJ~
Ernest Gellner 1996: Nations and Nationalism (Journal), vol.2, part 3, November, p.l.
IJ6
E.J. Hobsbawm 1992: Nations and Nationalism since 1780: Programme, Myth, Reality,
Cambridge University Press, Cambridge, 2"d edition, first published 1990, p.IO.
137
E. Gellner 1996, pp.48-49.
IJS
Partha Chatterjee 1986, p.21.
ll9
Anthony D. Smith 1996: "Nations and their pasts", Nations and Nationalism, vol.2, part 3,
November, pp.358-9.
Anthony D. Smith 1996, p.359.

58
Smith, nationalism's 'core doctrine' 'fuses three ideals': self determination, expression of
national character, and each nation contributing its special genius to the common fund of
humanity. 141

For Benedict Anderson, nation was an 'imagined political community', imagined, first of
all, by its elites. Anderson in his book. Imagined Communities, 142 emphasized on 'the
ideological creation of the nation' as central. 143 He spoke of 'the vanguard role of the
[colonized] intelligentsia derived from its bilingual literacy' . 144 He also emphasized on
the 'formation of a print-language' - 'the dynamics of print-catpitalism' and the shared
experience of the 'journeys' undertaken by the colonized intelligentsia' . 145 If, for Gellner,
nation was just 'invented', for Anderson it was, at least 'thought out' or 'imagined',
obviously. by the elite.
- .-
~ .-

E.J. Hobsbawm, for the most part, agrees with the analysis of Gellner. Hobsbawm too
spoke of "invented traditions" after the fashion of Gellner. 146 "If I have a major criticism
of Gellner's work, it is that his preferred perspective of modernization from above, makes
it difficult to pay adequate attention to the view from below", 141-·says he. He too believed,
along with Gellner, that the non-congruence ofthe ethnic/ national factor with the actual
process of state formation has given rise to the current ·wave of ethnic agitations.
However, he did not believe in the potentiality of such ethnic agitations in providing any
alternative principle towards the political restructuring of the contemporary world. 148 He
had no belief that the classic 'Wilsonian-Leninist' slogan of self-determination of the
nationalities could' offer any solution for the twenty-first century scenario. "The
phenomenon", he believes, "is past its peak",' 49 apparently against the belief of Gellner
and Anderson. He says, "It is not impossible that nationalism will decline with the decline
of the nation-state." 150 He envisages "subordinate. and often rather minor roles" to nations
and nationalism in a scenario of "the new supranational restructuring of the globe". They
would rather be "retreating before, resisting, adapting to, being absorbed· or dislocated"
by such restructuring, he contends. This is a predictable outcome of an analysis that, for
the most part, skirts the concerns of political economy, in attempting to understand the

Partha Chatterjee 1986, p.8.


Benedict Anderson 1983: Imagined Communities: Reflections on the Origins and Spread of
Nationalism, London.
Partha Chatterjee 1986, p.21.
Partha Chatterjee 1986, p.21.
Partha Chatterjee 1986, p.21.
Anthony D. Smith 1996, p.359.
E.J. Hobsbawm 1992: Nations and Nationalism since 1780: Programme. Myth, Reality,
Cambridge University Press, Cambridge, 2"d edition, first pub. 1990, pp.l 0-11.
1"'8
Hobsbawm 1992, p.l81.
··~
r:;o
Hobsbawm 1992, pp.l81, 192.
Hobsbawm 1992, pp. 181, 192.

59
nationality phenomenon. He seems to have considered nationalism almost like a veritable
amalgam of absurdity. He_ does not seem to have believed at least some varieties of
nationalism to be capable of embodying the enlightenment values of 'reason, liberty and
progress' as he does not take pains to analyse the specific content of any such nationalism
in detail.

For Hobsbawm, the nation is largely, a set of 'invented traditions'. For Anderson, the
nation is an 'imagined political community'. But neither of them would regard
nationalism as entirely a construction - a figment of imagination. lSI They do recognise
the material aspec::ts that make for the construction of the nation. Thus Gellner said, the
perception of uneven development in traditional society with industrialisation, creates the
possibility for nationalism. 152 And Anderson spoke of 'capitalism, a technology of
communications (print), and the fatality of human linguistic drversity' that 'made the new
communities imaginable' . 153

Towards a Definition of the Nation

The definition by Anthony D. Smith above is useful indeed. And there are several
definitions of the nation worth our consideration. Thus Tom Nairn regarded nationalism
as a product of and response to, the 'uneven development of capitalism' . 154 'Stalin's
definition', says Hobsbawm, is probably the best known among the attempts to establish
objective criteria for nationhood.' 155 It says, "A nation is a historically constituted, stable
community of people, formed on the basis of a common language, territory, economic life
and psychological make-up manifested in a community of common culture ... none of the
above characteristics taken separately is sufficient to define a nation. More than that, it is
sufficient for a single one of these characteristics to be lacking and the nation ceases to be
a nation." 156 These are, apparently, rather strict criteria of defining a nation. T.K.
Oommen in his book, Citizenship, Nationality and Ethnicity says, 'territory and language
(communications) are the two important preconditions for a nation's existence'. 'Neither
race nor religion can provide authentic content to the process of nation formation ... as
they have both undergone de-territorialisation', he says.IS7 Further, he thinks race and
religion to be 'exclusionary in orientation'. "In contrast", he thinks, "linguistic and tribal

I ~I
AnJhony D. Smilh 1996, p.360.
I ~2
Partha Chatterjee 1986: Nationalist Thought and the Colonial World: A Derivative
Discourse?, Oxford University Press, New Delhi, p.4.
Benedict Anderson 1983, p.46.
Anthony D. Smith 1996, p.360.
Hobsbawm 1992, p.S.
J.V. Stalin 1974: 'Marxism and the National Q!Jestion', Works, Vol. 2, Gana Sahitya Prakash,
Calcutta, pp.l94-21 S.
157
T.K. Oommen 1997b. p.21.

60
communities can provide the bases for nation formation provided, they have a minimum
size". 158

It would be worthwhile to pinpoint two distinct aspects of the process of the making of a
nation: One, the process of the nation being materially constituted - in the main, the
aspect of its political economy. The other is the aspect of language/culture,
consciousness/subjectivity - in the main, the ideological creation of the nation out of a
pre-existing baggage of 'shared world of meanings'. Historical evidence and empirical
phenomena should point in the direction of the former aspect being the principal one,
particularly in the current phase of aggressive global finance capitalism. Even as political
economy has a principal role in the ~!laking of a nation, we would argue that in the further
development or underdevelopment of a nation also material (not simply and narrowly
economic) factors, particularly the aspect of political economy, are involved. One
additional component may be mentioned as well: the aspect of territoriality. There could
as well be aspiring nations who could make claims to a particular territory. But
territoriality, no doubt, is an essential component of what constitutes a nation. So a nation
is essentially a 'territorial community'.

Nationalism is a rather amorphous category and requires classification if any significant


progress is to be made towards understanding it. The typology of nationalism may
involve the broad categorisation of progressive nationalism and reactionary nationalism,
in the Marxist parlance. The Marxist approach has the distinctive advantage that it takes
into account the dimensions of material interest and not merely the cultural expressions of
nationalism. Nevertheless, it may be admitted that this classification could only be an
indication in this direction and is rather insufficient to capture the varied forms of
nationalisms. Further, distinction may be made between nationalism in the advanced
capitalist countries and nationalism in the peripheral countries of the world and between
the nationalism in a dominant nationality/nation and an oppressed one. It is imperative
on us to ask, 'what is the content of any particular nationalism?' It may be rather
misleading to speak al;l_~ut nationalism in general.

The concept of self-determination also cannot be understood merely as formal


institutional structures.IS9 These are "no guarantee of identity unless these are

1~8
Oommen, T.K. 1997b: Citizenship, Nationality and Ethnicity: Reconciling Competing
Identities, Polity Press, Cambridge, pp. 21, 66, 169.
Cobban, Selassie, Brownline, Yel Tamir, and Moore are some of the prominent scholars in studies on
the concept self-determination. See Moore 1998: National Self-Determination and Secession, Oxford
University Press. The Charter of the United Nations Article I (2) provided lbr self-determination as
self-government UN covenant on Economic, Social and Cultural Rights and Article I of the UN
Covenant on Civil and Political Rights also provided for the right to self-determination.

61
accompanied by socio-economic transformation and cultural rights." 160 This would
involve "political, economic and cultural self-determination". 161 Cultural self
determination would mean "de-colonising the mind" and reclaiming the "authenticity and
autonomy" of the "values, cultures and languages of the people of Asia and Africa", thus
"moving the centre" not only from Europe but more importantly, from our ruling minority
to the "creative base among the people". 162

India as a Multi-fVational Country

"The union of Indian States continues to be a stupendous multi-national entity", ":rites


.T.K. Oommen. "There are only 12 languages in India with 10 million or more speakers,
. . ,
and all of them are accorded recognition as 'national" languages" [included in the eighth
. schedule of the constitution], he says elsewhere. 'The size factor is a tricky one, and yet if
one fixes the size of a nation say, at 1 miUion there are more than 33 such communities in
India. Yet, all of them would not qualify to the status of nations as all of them do not
possess a homeland.' 163

It may be noted that the term 'nationality' is being used herein in order to refer to what in
the classical western parlance is used as the 'nation' i.e. a population inhabiting a more or
less homogenous linguistic territory that was somewhat synonymous with a unified
market. Nations possessing their own states have been called 'nation-states', in the west.
Herein the term, 'nationality', in the Indian parlance, means to refer to the many nations
without own states that together constitute a multinational country such as India.
Nationalities in India are not always co-terminus with the existing states (provinces) even
today. The aspect of political economy in the process whereby nationalities are
historically constituted and the aspect of language, culture, consciousness may be said to
be the determining factors in the making of a nationality even in India.

That political economy plays a most important part towards the making of a nationality
can be seen from the emergence of nationalities like Assam despite its ethnic and
linguistic plurality. The massive drain of oil, tea and timber gave rise to a militant
nationality movement in the eighties, demanding secession from India. Jharkhand and
Uttarakhand also seem to have been constituted into nationalites in popular consciousness
10 the process of the struggle against the state and the dominant classes in India,

160
Manoranjan Mohanty 1996: "Resounding Symphony of Freedom", Foreword in Symphony of Freedom
Papers on Nationality Question, Presented at the International Seminar, New Delhi, February 16-19,
1996, AIPRF, Hyderabad, p.v.
161
Manoranjan Mohanty 1996, p.iv.
Ngugi wa Thiongo 1996, pp.281-7.

62
demanding the status of separate states (provinces). In Jharkhand, it was again the drain
of resources - minerals - that seems to have given rise to the movement. Neither
Jharkhand nor Uttarakhand
-
were homogenous culturally, linguistically or ethnically. In
Jharkhand, there were tribals and non-tribals. In Uttarakhand, there were two Pahari (hill)
languages, Garhwali and Kumaoni. Yet they could come together to constitute a
nationality in the process of their struggle. This, again, points to the importance of
understanding the nationality question from a political economy angle, in India as well.
Even in the case of 'reactionary nationalism'- as is understood in the Marxist parlance-
material interests of the respective ruling classes are involved. Thus some studies have
shown how the material interests of Indian dominant. classes are most sharply represented
in militant Hindutva nationalism in India. So, once again, it may be asserted that
nati()nality.movements cannot be construed as merely ~ultural protests.

Speaking in general of the aspect of political economy of national formations and the
Class-Nationality interface in particular, it would be immensely useful to draw on
theories that have attempted to focus on Accumulation and analyse 'spatial patterns of
accumulation' -Dependency theory, World System theory and the 'Social Structures of
Accumulation' approach that sought to integrate the social and spatial dimensions of
Accumulation.

Focus on Accumulation: Dependency theory

According to the modernisation theorists, to activate economic growth, one must


concentrate capital spatially and economically, which at first results in geographical and
sociai inequality. This polarisation however, is to be reversed in the last instance by a
·trickle-down' mechanism from the most dynamic sectors and regions to the periphery. In
many developing countries, this critical turning point is far from being reached. Rather
there is increasing regl"onal and social polarisation. It is worth mentioning the 'bluff
concepts' in the modernisation theory, such as, 'trickle-down'.' 64 The 'trickle-down'
process had failed absolutely. Two hundred years ago, the income ratio between world's
rich and poor countries was 1.5:1, in 1960, it was 20: l, in 1980 it went up to 46:1 and in
1989, the ratio was 60: i .' 65

IO.l
T.K. Oommen 1997a: "Citizenship and National Identity in India: Towards a Feasible
Linkage" in Citizenship and National Identity: From Colonialism to Globalism. Sage, New
,.,. Delhi, Thousand Oaks, London, pp. 4, 161, 169 {emphasis added}.
Schuurman 1993, p. 3 7, f.n. 9 & 12.
16~
Trainer, F. 1989: 'Reconstructing radical development theory', Alternatives, XIV, pp. 481-
515; World Bank 1991: World Development Report, OUP, New York & Oxford; cited in
Schuurman 1993, p. 10.

63
It was pointed out that with the per capita growth of early 1990s to the tune of 1.3 - 1.6
per cent, it would take another 150 years for Third World countries to achieve half [the
level of the then] per capita i~come of Western countries. 166

A.G. Frank argued that Rostow's theory was ahistorical. It denies history to
underdeveloped countries. The dependistas (dependency theorists) argued that the world
system comprises of regional economies, integrated by the division of labour between
these regions. Capitalist development has multiple histories.' The following elements
could be identified in the arguments of the dependistas:

1) That surplus is expropriated from the satellites

2) That there is a polarisation of capitalism between metropolis & satellites

3) That the satellites continued in the fundamental structure of capitalism. 167

Underdevelopment is not just the lack of development. Development of the core is the
reason for the underdevelopment of the periphery. Underdevelopment is not an original
condition. It is a created condition. 'Development of underdevelopment' was both a
process and a project.

David Slater is not averse to viewing notions of the periphery as 'the subordinated
other'. 168 Rightly did he commend the dependency perspective for having called into
question two central tenets of the modernisation theory: First, the [Eurocentric] notion
that the Third World had no meaningful history prior to its discovery and inscription into
the Western project was effectively exploded. 169 Second, the contention that the relations
between the First and th~ Third Worlds were beneficial for the Third was inverted and it
°
was argued that the periphery suffered from these interrelations. 17 For instance, the
171
empirical investigations of Payer, for instance, pointed to the actuality of this I ine of
thinking. He had examined the politics of debt, emphasising the fact that since 1982 the
Third World has been a net exporter of hard currency to the developed countries. 172

160
Schuurman 1993, p. 9.
1(>7
Schuurman 1993.
16S
Ibid, p. 34.
16<>
Eurocentrism is rather, a state of mind, a political-philosophical view and not per se an
attitude determined by geographic location (Schuurman 1993, p. 37, f.n. 9). We would add
that the 'new world' of Americas and Oceana are cultural extensions of Europe on this count.
170
David Slater 1993: "The Political Meanings of Development: In Search of New Horizons",
pp.93-112, in Schuurman, Frans J. 1993: Beyond the Impasse New Directions in Development
Theory, Zed Books, London, New Jersey, p. 99.
I 71
C. Payer 1991: Lent and Lost- Foreign Credit and Third World Development, Zed Books,
London.
17.:!
Slater 1993, p. 95.

64
With the disenchantment to the predominant modernisation theory of mainstream
Economics, the dependency _theory came up during the end of 1960s. Dependency theory
was an offspring of its time, influenced by several political and economic events. 173

I) The failure of the import substitution strategy was recognized by the Economic
Commission for Latin America (ECLA), under the direction of Raul Prebisch which
confirmed a deterioration in the terms of trade for traditional Latin American primary
product exports as compared to the import of industrial goods.

2) The Cuban revolution in 1959 presented Latin America with the possibility of socialist
revolution.

3) The military ~oup d'etat in Brazil in 1964 led to a policy of opening the floodgates for
foreign capital and many future dependistas were exiled abroad and began critically
examining the Brazilian economic path.

4) The US invasion of the Dominican Republic in 1965 quashed a popular uprising


supported by some enlightened army officers, indicating that 'imperialism' was prepared
to aggressively assert its interests in Latin America 174

The theoretical influences of Dependency theory were: (a) Marx and Lenin on class
analysis and the relation between 'imperialism' and capitalism, (b) Rosa Luxemburg on
the penetration of the capitalist mode of production· in non-capitalist societies and its
consequences on the dismantling ofthe 'natural economy', (c) Raul Prebisch and Gunnar
Myrdal with their analyses in terms of 'core' and 'periphery', (d) the French structural
Marxists of the 1970s who advocated the modes of production concept, (e) Paul Baran,
known as the first radical political economist, who as early as the 1950s wrote about the
negative consequences of monopoly capitalism for the periphery, stressing on the transfer
of economic surplus from the periphery, hindering its development. 175 Paul Baran in 1957
argued that underdevelopment in Less Developed Countries (LDCs) is qualitatively
/

different from early stages of capitalism in advanced capitalist countries. All societies
need not pass through similar stages. Underdevelopment of this sort is intricately linked
with development of capitalism. 176

According to Schuurman, despite the diversity in articulations of the Dependistas, there


were, nevertheless, some common grounds: 177

173
Schuurman 1993, p. 3.
174
Ibid, pp. 3-4.
175
Ibid, p. 36.
176
Baran, Paul 1957: The Political Economy of Growth, Monthly Review Press, New York.
171
Schuurman 1993, p. 5.

65
Underdevelopment is a historical process, not necessarily a condition intrinsic to the
Third World.

The dominant and dependent countries together form a capitalist system- point later
elaborated further by World System theory.

The periphery being plundered of its surplus, leading to the development of the core
is an inherent consequence ofthe functioning of the world system.

There were also common grounds of agreement among the Dependistas about the
pejorative role of multinational corporations.

Andre Gunder Frank 178 who wrote in English, rather than Spanish, was outspoken and
polemical and wrote not only about Latin America but also about the historical
development of the capitalist world system. Frank's claim that Latin America was
capitalist right from the beginning of the colonial period, came under fire from the
Argentinian economist Ernesto Laclau. 179 Laclau argued that capitalism was a mode of
production rather than a mode of exchange. He focused on the sort of labour relations
which created a product in the first place, rather than on what happened to the surplus. If
rather than the manner of production, matters such as production for a market and
appropriation of the surplus were of prime importance in defining capitalism, then
capitalism should have existed since the ancient Greeks, reasoned Laclau arguing that
such a definition would have turned capitalism into a meaningless concept. The
proponents of the modes of production were often called 'productionists' and those of the
mode of exchange were called 'circulationists'. Circulationists held that
underdevelopment is caused by and maintained by surplus transfer (such as unequal
transfer) from the periphery to the centre. Productionists on the other hand argued that the
question is rather one of how the surplus is produced in the periphery and the class
formation that results. The basic idea of the modes of production theory is that a number
of modes of production coexist in society, and that they articulate with each other
(regarding exchange of labour, goods, capital, etc.). Further, it was thought that the
relationship between capitalist and non-capitalist modes of production was favourable to
the capitalist mode of production. Apartheid was used as a classic example. The concept
seemed to lose its meaning with the identification of many local modes of production. 180

I iS
Andre Gunder Frank 1967: Capitalism and Underdevelopment in Latin America, Monthly
Review Press, London; Andre Gunder Frank 1969: Latin America: Underdevelopment or
Revolution, Monthly Review Press, London.
Emesto Laclau 1971: 'Feudalism and capitalism in Latin America', New Left Review, pp.l9-
38.
ISO
Schuurman 1993, pp. 6, 7, 37, f.n. 3.
Marxists pointed out that Marx had pointed out that the concept was to be used at the
national level, and that at any one point of time, there was only one [dominant] mode of
production. 181

Cardoso 182 in 1970 spoke of 'dependent development' arguing that the Third World was
industrialising (also Warren's position) but that it remained structurally incomplete.
Developing countries are then having to follow the lead of the world economy dominated
by Transnational corporations, which supply the missing inputs and also influence the
decision making process. David Becker and Richard Sklar (1987) criticise them on
grounds such as neglecting the capability of Newly Industrialised Countries (NICs) for
technical innovation, for proposing an unrealistic alternative in the form of total
autonomy and a State that would represent the will of the people. Despite such criticisms,
Schuurman feels that the dependencia school of Cardoso, et a/ had the strength of
analysing a variety of class alliances and class oppositions} 83

Walter Rodney's studi 84 was another ·effort in the direction of understanding


underdevelopment in the context of Africa.

Critique of the Dependencia School

The dependencia school was criticised as both mechanistic and externalistic, as it


privileged the external over the internal, as the explanatory variable. It was criticized as
being against Marxism as it tended to argue that surplus is created in circulation, not in
production. Thus the criticism by Robert Brenner was that the dependistas located surplus
in circulation, not in production} 85

Nevertheless, it cannot be gainsaid that the external got internalised through division of
labour or commodity chains. It is a single world system, a totality. It is the dialectics that
is more important.

David Booth 186 who provided a philosophical critique of the Dependencia school has
been an important reference for the debate on the impasse. Booth's critique is based on
three grounds: teleology, economism and epistemology. According to Booth, both the
circulationists and productionists in the Marxist camp had defined capital ism in

181
Ibid, p. 7.
os:
Cardoso, F. & E. Faletto 1979: Dependency and Development in Latin America, University of
California Press, first pub. 1970.
ISJ
Schuurman 1993, pp. 19--20.
18-1
Walter Rodney 1972: How Europe Underdeveloped Africa, Howard University Press.
ISS
Brenner, R. 1977: 'The Origins of Capitalist Development: A Critique of Neo-Smithian
Marxism', New Left Review, no. I 04, pp. 25-92.
186
David Booth 1985: 'Marxism and Development Sociology: Interpreting the Impasse', World
Development, vol. 13, no. 7, pp. 761-87.

67
teleological terms, i.e. in terms of inescapable and fixed outcomes. 187 We would,
however, like to point "Out_ that telos in Marx did not seem to be an inescapable or fixed
outcome but rather a desirable ethical goal or a normative goal or value-goal to be strived
towards and in this sense, the teleology of radical political economists may be considered
only desirable. The structural Marxist, Bill Warren 188 who positioned himself against the
dependencia theorists is also placed by him in the teleological camp. According to
Schuunnan, even the Modernisation theorists exhibited the teleological trait. 189

The second charge was economism which accused the Marxists of reducing the political,
social and· cultural factors in developing countries in terms of the functional needs of
metropolitan capital, ignoring the'r specificities. In defense of the dependistas, it may not
however, be forgotten that accumulation of economic surplus is, arguably, the principal
featiire-of global capitalism.

The third accusation was on epistemological grounds that the concepts such as unequal
trade and exploitation were rarely based on empirical data and were almost never
calculable and were moreover, wrapped in pseudo-scientific jargon. On the other hand,
Booth does not mention the 'bluff concepts' of the modernisation theory, such as,
'trickle-down'! 90 In defense of the dependistas, we would argue that invariable insistence
on empirical validation of phenomena tantamounts to a philosophically unsustainable
empiricist inclination. It is only through theoretical understanding can 'the internal
relations ofthings' be grasped.

Booth ( 198'5) attracted much attention but the basis of his critique was not new.
B~!rnstein 191 had already begun to move .away from the dependistas and the modes of
production school. He reproached the dependistas of wanting to eat the cake and have it
too. The core was portrayed as autonomous and the periphery as dependent. According to
Bernstein, this logic was not consistent because the core could not be autonomous if it
had based itself on exploitative interdependence vis-a-vis the periphery. Further,
Bernstein scorned the modes of production school for providing a 'shopping list' of
production modes, which was empty rhetoric. On the contrary, in India, for instance, the
mode of production debate was engaged in for the purpose of securing understanding
about the ground reality by radical scholars who wanted social transformation. Bernstein
claimed that a theory of underdevelopment was not possible and attempts to construct

187
Schuurman 1993, p. 12-13.
188
Bill Warren 1980: Imperialism: Pioneer of Capitalism, Verso, London.
ISO
Schuurman 1993, p. 13.
100
Ibid, pp. 13, 38, f.n. 12.
1'>1
Henry Bernstein 1979: 'Sociology of Underdevelopment vs. Sociology of Development?' in
Lehmann, David, (ed.) 1979: Development theory: Four Critical Studies, Frank Cass, London.

68
such a theory as ideologically coloured. In this way, Bernstein [anticipated] both Booth
( 1985) and the postmoderni~t criticisms. However, neither Bernstein nor Booth provided
a concrete way out of the impasse in radical development theories. 192

Booth's criticism of radical political economists had concluded that the problems and the
solutions lay at a metaphysical level. However, since mid-1980s, the trend has been
against metatheories, accusing development theories as having its starting point in the
untenable modernity discourse. 193

The postmodem notion of 'deconstruction' entails dismantling of structures to find actors


within these structures. Structures
. ,
are held to be merely reified notions (eg. the world
system), which have merely an apparent value. Deconstruction eventually leads to the
individual· actor as the only valid unit of analysis. 194 The Actor-oriented approach of
Norman Long had also attempted to deconstruct structures into actors.

We would hold structures, indeed, are abstractions of aspects of inter-connected reality,


the dynamic of which is manifested in real life. They can be deconstructed only at
significant loss to perceiving reality. Thus even if 'imperialism' as a social structure is
rejected out of hand as invalid, the reality of American occupation and the resistance
against it are real in the experience of the people of contemporary Iraq and least of all,
reduced to the level of individual actors.

Focus on Accumulation: World System Theory

The World System theory sought to understand the world capitalist system in itc; totality.
Schuurman 195 says, "[The World System] approach was developed in the mid 1970s,
when the East Asian countries were experiencing swift growth that could no longer be
described as dependent development, particularly as they had begun to challenge the
economic superiority of the USA in a number of areas." [?!]. Today, well after the East
Asian financial crisis in 1997, we know that this belief was ill-founded. East Asia has
been the single case where "the internal and external constraints to peripheral
accumulation were lifted under the aegis of the United States, for geostrategic reasons, in
a Cold War context". 196

Schuurman 1993, pp. 13-14.


Ibid, p. 22.
Ibid, p. 26.
Ibid, p. 7.
Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
Neoliberalism", p. II.

69
The failure of the Cultural Revolution in China and economic stagnation in the Eastern
Bloc countries led to an opening in the direction of international capital. Previously
unthinkable alliances as between Washington and Peking were formed. Wallerstein who
was the most outspoken figure in this terrain based his ideas on those of A.G. Frank and
other dependistas. They shared in common the concepts of unequal trade, the exploitation
of the periphery by the core and the existence of a world market. There were also semi-
peripheries (like Brazil) which acted as buffer between the core and the periphery. It is
differentiated from the periphery by their more significant industrial production. It
functions as a go-between importing high-tech from the core and exporting semi-
manufactures to it. It imports raw f!taterials from the periphery and exports to it industrial
end-products. 197 The semi-peripheries had succeeded in endogenising their capital goods
sector. 198

The World System was seen in this period as a handy tool to differentiate between the
internal and external factors as explanations of underdevelopment. For the World System
approach there were no more external factors, as it offered a simple solution to this
question - that of moving from the country level to the more abstract global level. There
is no longer a core capitalism and a peripheral one but one capitalist world system.
Another World System author is Samir Amin who began publishing since 1976. He did
not agree with Wallerstein about the presence of capitalist mode of production in Latin
America since the 19111 century, but he agreed about the existence of unequal trade that led
to a disarticulated economic system and about the existence of semi-peripheries. (A
disarticulated economic system is described by Amin using a refinement, probably of
Kalecki, of the distinction of Marx between Departments I and IT of the economy. For
Marx, Departments I was the economic sector producing capital goods and Departments
II, consumer goods. The relation between these two is expressed in economic symbols as
a reproduction scheme determining the reproduction of the capitalist system. Ia- capital
goods, Ib- raw materials, Ila- mass consum'er goods, Ilb- luxury consumer goods. In
the core, economic development is the result of the relation between Ia (capital goods)
and Ila (mass consumer goods). In the periphery, it is between Ib (export of raw
materials) and and lib (luxury consumer goods), which cannot result in independent
development. This disarticulation of the economy is maintained by the changing
coalitions within elite circles, according to Amin. 199

Schuurman 1993, pp. 8-9.


Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
Neo!iberalism", Reclaiming the Land, Zed Books, London & New"York, David Philip, Cape
,.,., Towri,-p. II.
Schuurmah 1993, pp. 8-9,37, 39, f.n. 16.

70
In general, the criticism of World System approach was same as that of dependency
theories: the neglect of c!ass analysis, the neglect of diversity of the Third World, the
assumption of non-workable political options such as self-reliance and socialism at a
world scale. As with the previous approaches, the World System approach was pushed to
the background by mid-1980s. 200

It may, however, be happily noted that theorisations of the doctrine of 'uneven


development' is not confined to or typical of radical political economists 201 alone. Less
radical scholars202 have set forth their own versions of explanations of this phenomenon.
Speaking of international trade-industrialisation linkage, Krugman says, "[A] small "head
start" for one region will cumulate over time, with exports of manufactures from the
leading region crowding out the industrial sector of the lagging region. This
process ... captures the essence ofthe argument that trade witndeveloped nations prevents
industrialization in less developed countries."203 He further says, "As long as both
countries produce agricultural goods, wage rates will be equalized by trade; while because
of the external economies in manufacturing production, whichever country has the larger
capital stock will have a higher profit rate and will therefore grow faster. The result is an
ever-increasing divergence between regions, which ends only when a boundary of some
kind has been reached."204 The lagging region's nascent industrial sector gets ruined by
manufacturing exports from the leading region, as it happened in the case of the Indian
textile industry in the eighteenth century. As Paul Baran says, the process "extinguished
the igniting spark without which there could be no industrial expansion in the new
underdeveloped countries."205 What Krugman sought to do was "to apply the tools of
orthodox economics to some of the ideas of the economic system's radical critics'". 206
Krugman's model validates "a two-stage pattern of development that bears a striking
resemblence to a Hobson-Lenin view of imperialism" and further "extends the analysis to
a three-region world" 207 consisting of Centre, Semi-Periphery and Periphery.

~00
Ibid, p. 9.
~01
Baran 1957; Frank 1967; Immanuel Wallerstein 1974: The Modern World System, Academic
Press, New York; Wallerstein, I. 1979: The Capitalist World Economy, Cambridge University
Press, Cambridge, Massachusetts.
~02
Myrdal, Gunnar 1957: Economic Theory and Under-developed Regioris, Duckworth, London,
Lewis 1977; Kaldor, Nicholas 1970: 'The Case for Regional Policies', Scottish Journal of
Political Economy, vol. 17, no. 3, November; Dixon, R.J. & Thirlwall, A.P. 1975: 'Model of
Regional Growth Rate Differences on Kaldorian Lines', Oxford Economic Papers, vol. 27,
July, pp. 201-14.
~OJ
Krugman, Paul 1994: "Trade, Accumulation, and Uneven Development", in Paul Krugman
(ed) 1994: Rethinking International Trade, The MIT Press, Cambridge, Massachusets;
London, p. 93.
Krugman 1994, pp. 97-8.
Cited in Ibid, p. 100.
Ibid, p. I 04.
Ibid, p. 94.

71
After Jurgen Habermas' Knowledge and Human Interest and more specifically, Marxist
notions of class interest, w~ would argue that the acceptance or rejection of a particular
theory has to do with specific interests as related to particular social locations of the
proponents in question, without of course, denying the exceptional possibility of
transcending them. The non-acceptance of the dependistas in the mainstream may have
more to do with the character of the changed political and economic scenario under the
neo-liberal epoch, rather than any epistemological grounds, as, is claimed by Booth and
Schuurman. Thus Norman Long and Magdalena Villarreal acknowledge the centrality of
power differentials and struggles over social meaning, which are interwoven with actors'
, I
. accumulated s_ocial_ experiences, commitments and culturall¥-acquired dispositions as
shaping the nature of knowledge processes inherent in develop~ent inte~ention. 208

Th~ only way out that Leslie Sklair saw to get out of the impasse in development studies
was a combination of metatheory, theory and empirical research in one project.
Schuurman did not agree with Leslie Sklair's proposal to promote an untestable theory to
the rank of metatheory. In fact, this is what was done by the World System theorists to
..
solve the difficult problem of empirical difference between internal and external factors
that are instrumental in underdevelopment. 209

Schuurman rightly says, "Whichever theoretical corner, we may choose to sit in, it cannot
be denied that development on a world scale is of importance to the inequalities within
the Third World and between the First and Third Worlds." The increasing triadisation of
the world economy involving Europe, the US and Japan is of great concern as well.
Inequality is thus a relevant concept, not only on a micro-level (the household) or meso-
level (social categories), but also on a supranational level. 210 Analysing the global
polarisation that has taken place since beginnings of capitalist deve!opment with the
eighteenth century industrial revolution in Europe, Bairoch of the World System school
pointed out that the ratio of disparity in national incomes between the richest countries in
the capitalist-core and the poorest countries at the underdeveloped periphery in 1750 was
only 1.8:1. More than a century later, this ratio· went up to 5:1, after half a century in
1913, it showed a marked.rise to 10:1, after less 'than four decades in 1950 it jumped to a
height of 18:1 [although this period was characterised by two major World Wars], and by

:::08
Nonnan Long and Magdalena Villarreal 1993: "Exploring Development Interfaces: From
transfer of Knowledge to the Transformation of Meaning", in Schuurman (ed.) 1993, pp. 140-
168; as paraphrased in Schuurman 1993. p. 34.
Schuunnan 1993, pp. 14-15.
210
Ibid, p. 31.

72
1977, i.e., in less than two decades, it already reached an astounding height of 29:1. 211
··one of the problems to be faced is that, while the micro- and the meso-levels are
primarily defined using socio-cultural variables, the spatial dimension is present only
implicitly, analyses of diversity and inequality on a national or supranational level have
an explicit spatial dimension which, in tum, does not tell us very much about the actors
involved." 212

The Commof!ity Chains Approach

The Commodity Chains Approach was a growth out of the world-economy analyses that
sought to plug in their apparent lo?pholes. Criticisms have been advanced of the World
System and Dependency theories on reasonable grounds, first that they have ignored
production and privileged trade,-thus misreading the source of value and second that they
neglected factors internal to the national territories, class relations in particular. Keeping
Gereffi, Korzeniewicz, Hopkins and Wallerstein as their guiding lights, Rammohan and
Sundaresan proposed to overcome these lacunae by focusing on socially embedded
analysis of commodity chains. A commodity chain is a 'network of labour and material
processes that precede a finished commodity'. The specific location of a social
group/country/zone in a commodity chain influences its relative share of value. Nodes in
the commodity chain constitute each of the production operations in them. Nodes are
characterised by linkages of raw material, labour/relations of production, technology,
product markets. 213 Rammohan and Sundaresan argue that the commodity chains analysis
atTords an integrated examination of both production and circulation of commodities.
They do not seek to replace concepts such as mode of production, as they admit but how
the articulation of modes of production with each other is 'rendered redundant' in a
commodity chains analysis and how -exactly they distance themselves from the
··Enlightenment modernist conception of development" is left unclear. 214 We would view
that commodity chains analysis is an approach that gives centrality of space to

P. Bairoch 1981: 'The Main Trends in National Economic Disparities since Industrial Revolution', in
P. Bairoch and Levy-Leboyer (eds) 1981: Disparities in Economic Development Since the Industrial
Revolution,. Macmillan, London; as cited in K.J. Joseph & K.N. Harilal2006: "Regional Implications
ofGiobalisation: An Analysis ofKerala", pp. 94-114, in Tharamangalam, Joseph 2006: Kerala: The
Paradoxes of Public Action and Development, Orient Longman, New Delhi, p. 99. See also the
section, 'Focus on Accumulation: Dependency Theory'.
Schuurman 1993, p. 31.
G. Gereffi 1994: 'Capitalism, Development and Global Commodity Chain', pp. 211-31, in L.
Sklair (ed.) Capitalism and Development, Routledge, London; G. Gereffi & M. Korzeniewicz
(eds.) 1994: Commodity Chain and Global Capitalism, Praeger, New York; T. Hopkins & I.
Wallerstein 1994: 'Commodity chain in the capitalist world-economy prior to 1800', pp. 17-
50, in Commodity Chain and Global Capitalism, Praeger, New York.
K.T. Rammohan & R. Sundaresan 2003: "Socially Embedding the Commodity Chain: An
Exercise in Relation to Coir Yarn Spinning in Southern India", pp. 903-23, World
Development, vol. 31, no. 5, pp. 903-05.

73
commodities rather than the producers of commodities. The difference in emphasis could
be productive of a different_ kind of knowledge. However, we would prefer to go with an
approach that focuses on collectivities of people organised around the production and
exchange of commodities, which may help us obtain knowledge that could be more
directly beneficial to these sections.

Having spoken of the theorisations of Nationality - both its cultural and political
economy variants, we would strongly. advocate a blending of the two kinds of
theorisations to arrive at a ·better understanding of the phenomenon of national
formations. It would be useful to invoke the logic of 'Class in itself' and 'Class for itself'
logic in Marx to the phenomenon, of national formations as well. 'Nationality in itself'
may be referred to as the objective economic and territorial formations and 'Nationality
for itself'' to refer to the aspect ofitational consciousness.

III. THE MEANINGS OF DEVELOPMENT

Robert A. Nisbet- defined development as "change proceeding lineally, cumulatively and


purposively OVer long periods of time. nllS

Dudley Seers argued that any discussion of the meaning of development could not
realistically avoid the question ofvaluejudgements. 216 He gave a normative definition of
development that it ought to be seen in the context of providing the necessary conditions
for the universally acceptable aim of 'the realisation of the potential of human
personality' .217 In this sense, he expressed a healthy scepticism of the development in the
First World, with evils such as urban sprawl, advertising pressures, air pollution and
chronic tension. 218 Seers puts on the agenda in a measured way a series of issues relating
to the ethics of development. 219

Amartya Sen defined development as follows: "Development consists of the removal of


various types of unfreedoms that leave people with little choice and little opportunity of
exercising their reasoned agency. The removal of substantial unfreedoms ... is constitutive

Robert A. Nisbet 1977: Social Change and History: Aspects of the Western Theory of Development,
Oxford University Press, New York, p. 45 cited in Rammohan, K.T. 1996: Material Processes and
Developmentalism Interpreting Economic Change in Colonial TlrUVitamkur. 1800-1945, Ph.D.
dissertation submitted to the University of Kerala, Centre for Development Studies,
Thiruvananthapuram, p. I.
Dudley Seers 1972: 'What are we trying to measure?' Journal of Development Studies, vol. 8, no. 3,
April, pp. 21-36.
217
Dudley Seers 1972, p. I 05.
::.as
Seers 1972, p. 22; cited in David Slater 1993: "The Political Meanings of Development: In Search of
New Horizons", pp.93-112, in Schuurman, Frans J. 1993: Beyond the Impasse New Directions in
Development Theory, Zed Books, London, New Jersey, p. I 05.
David Slater 1993, p. 106.

74
of development." 220 He includes civil and political freedoms, economic facilities, social
opportunities including entitlement to health and education sevices, transparency
guarantees and social safety nets among the freedoms desired. 221 A distinction is drawn
by Amartya Sen between development of material production and 'human development',
which refers to the development of human capabilities. Expansion of incomes is only one
of the important means to, but not the end of development in this view. Income growth is
not a sufficient condition for such transformation. Elementary capabilities to lead
healthier and longer lives, being literate, •freeaom derived from social and political
participation, etc. are also counted in among development indicators. Development in this
."' ·'
view is certainly only a means and not an end in itself and human beings are not
con'sider~d as ~er;ly the beneficiaries of development but also its active agents. 222 What
Seers speaks about also looks more akin to the notion of 'human development'.

That the notion of human development has gained, at least, conceptual acceptance even
by the International Financial Institutions is clear from the fact that since 1978, the World
Bank began to implement a programme based on meeting the basic needs of the people,
namely, primary education, primary health, nutrition, etc. Based on the experience
derived from this programme, in 198 I, renowned Development thinkers such as Paul
Streeten, Shahid Javed Burkhi, Mehboob ul Haq, Norman Hicks, Francis Stewart, et al
brought forward a new approach in the book, First Things First. This book has been the
basic ideological source of the Human Development Reports (HDRs) being published by
the UNDP since 1990. (Late) Mehboob ul Haq. the chief architect of the HDR is one of
the authors of this book. Literacy, average life-span and per capita income were taken as
the basic indicators of the Human Development Index (HOI). Since 1995, Gender
Development Index (GDI) also began to be calculated separately. 223 The philosophical
moorings of the 'basic needs paradigm' can be traced back to the book, A Theory of
Justice 224 by John Rawls, who is often designated in political theory as an 'egalitarian
liberal'.

Lummis 225 deconstructs the notion of development, which is so central to the


Enlightenment discourse. He says, it involves a number of metaphors with evolutionary,

Amartya Sen 1999: Development as Freedom, OUP, New Delhi, p. xii.


Ibid, pp. 38-40.
Sen's ideas, as paraphrased in Kunhaman, M. 1999: "Amartya Sennum Vikasana
Arthasaastravum" (Amartya Sen and Development Economics), pp. 11-36, Rajagopalan, V.
(ed.) 1999: Amartya Sen: Oru Samvaadam (Amanya Sen: A Debate--Malayalam), Malu Ben
Publications, Thiruvananthapuram, p. 17.
Kunhaman, M. 1999, p. 33.
John Rawls 1971: A Theory ofJustice, Harvard University Press, Cambridge, Massachuseus.
C.D. Lummis 1991: 'Development Against Democracy', pp. 31-66, Alternatives vol. 16, no.
I, winter.

15
universal and reductionist implications. It implies that developed countries is the positive
image of which the devel<?ping countries are the negative image, with latent potential to
become the former. That which becomes visible is already embedded in the 'genes'. The
result of development process is fixed; it is only the speed that differs. 226 The policy-
makers pretend to know the building blocks of the structure, the genes as well as the final
outcome.

For Lummis, 227 the ideology of development. which we would designate better as
'developmentalism' does not indicate any positive transformation: "'Villagers are driven
out and dams are built; forests are cut down and replaced by plantations; whole cultures
are smashed and people recruited into quite different cultures; people's local means of
subsistence are taken away and they are placed under the power ofthe world market'". 228

In contrast. the World Bank argues that 'when markets work well, greater equity often
comes naturally' .229 This is passed off as productive transformation with equity. 230 On the
other hand, we would argue that equity does not ensue automatically from the operations
of the market forces but to say the le~t, it requires conscious intervention by the State
and other agencies.

Schuurman rightly opines that the construction of a non-reductionist and non-teleological


development theory is the challenge of the 1990s.231 Well after one whole decade of
writing this, the signs of development of such a theory is yet to be seen.

In the light of the above discussion we would define Development in general as the non-
linear process whereby human beings transcend the determinations of nature. lt may
further be described as transcendence of animal-like existence at the subsistence level. 232
It is a transcendence in the secular, material realm. It is secular because it has to do with
seculum- this world. It has to do with the material realm as opposed to transcendence in
the spiritual or cultural realm. The outcome is not pre-determined as it is the human

226
Schuurman 1993, pp. 26-27.
227
C.D. Lummis 1991: 'Development Against Democracy', Alternatives vol. 16, no. I, winter,
pp. 31-66, p. 48.
228
David Slater 1993, p. 106.
229
Ibid; World Bank 1991, p. 138.
:Jn
Slater 1993, p. 106.
2JI
Schuurman 1993, p. 32.
232
Rabindranath Tagore in his Letters from Russia had said, "[nhe humanness of human beings
is not in just subsisting ... civilization consists of transcending mere subsistence." (Cited in
Rahman, Md. Anisur 2002: "Humanizing the Poverty Discourse" in Proceedings of
International Workshop on Research for Poverty Alleviation, Kerala Research Programme on
Local Level Development, Centre for Development Studies, Thiruvananthapuram, 16-18
September, p. 4). He went on subsequently to reflect his elitist mindset, saying, "All the best
fruits of civilization have blossomed in leisure. Hence it is necessary to preserve leisure in one
part of human civilization" (Cited in Rahman 2002, p. 4, f.n. 7).

76
agency that determines in which direction development has to take place. And the
process may not necessarily be linear, as has been pointed out by the discussions on the
development of development/underdevelopment.

IV. CONTEXTUALISING STATE AND CLASS IN INDIA

The Class-Nationality interface is not a simple one to one relationship but is mediated by
the super-imposing presence of the State. So then, let us attempt an understanding of the
Class nature of the State in the Indian context.

In the words of Sudipta Kaviraj, 'all societies have "structures" and states have to obey
their logic, and adapt to its compulsions'. 233 An instrumental view of the State in a
narrowly functional sense could be insufficient and needs to be transcended. 234 [n the
usual economic literature on planning, the failure to secure the larger goals of planning
are not considered as having anything to do with the nature of the State and instead, an
array of technical weaknesses are presented. Sukhmoy Chakravarty's 235 analysis, for
instance, adopts this approach. More insidiously, the State is, in effect, considered neutral
and even transcendental. Where there is a conflict between, say, reducing poverty and
securing more equal distribution of income on the one hand and accumulation and growth
on the other, the State may opt for the latter, at the cost of the former. But then, this is
seen as a conscious and rational decision, in favour of the 'general interest'. 236

Byres proposes to abandon the narrowly instrumental notion of a neutral, technocratic,


'developmentalist' State, so common in the writings on development planning. 237 We
would hold that the narrowly instrumental view of the State is not limited to the writings
on development planning but is also quite commonly implied in conventional Marxist
writings.

Root-and-branch neo-classical econ?mists take a line of argument that has now become a
sort of orthodoxy. They-oppose the 'failure' of State intervention via planning. Their ideal
State is a minimal one. The State that interferes in economic activity other than on a
minimal basis simply creates and protects vested interests, spreads inefficiency and
distortion, prevents the proper functioning of markets, generates rent-seeking rather than

Sudipta Kaviraj 1991: 'On State, Society and Discoure in India', pp. 72-99, in James Manor
(ed.) 1991, Rethinking Third World Politics, London & New York, p.73; cited in Terence J.
Byres (ed.) 1997: The State, Development Planning and Libera/isation in India, Oxford
University Press, Calcutta, Chennai, Mumbai, pp. 82-103, first published 1994, p. 45.
!34
Byres (ed) 1997, p. 42.
Sukhmoy Chakravarty 1987: Development Planning: The Indian Experience, Oxford
University Press, Oxford, pp. 39-52.
Byres (ed.) 1997, p. 47.
Byres (ed.) 1997, p. 48.

77
productive activity, denies the transforming role of outward-looking export-led growth,
and so on. 238

Defining the State

Jessop points out that difficulties loom large in seeking to define the State. 239 'That
apparently simple exercise is fraught with difficulty' according to Byres. 240

The definition of the State by Abrams: "A palpable nexus of practice and institutional
structure centred on government". 241 This admittedly pragmatic definition of the State is
'
rather minimalist and t~erefore not so useful in revealing the actual character of the State
whether in terms of its class/social t>ase or in the Trotskian/Weberian terms of arrogating
to itself the legitimate monopoly over violence [and regulation].

Better is the definition provided by John Haldon, Marxist historian, as follows: 'The State
represents a set of institutions and personnel. .. exerting authority over a territorially
distinct area'. 242 'Institutions and personnel' bears reference to the 'the whole institutional
ensemble' of the State. 243

The Need for the Notion of Relative Autonomy

Miliband, rather favours the idea that the State acts on behalf of'the dominant or "ruling"
class'. 244 He reminds us that ruling class is made up of separate elements, with
presumably, differing interests. 245

[n the instrumentalist view of the State, the State acts at the behest of the 'dominant or
"ruling" class' and Miliband rejects it as the vulgar deforrriation of the thought of Marx
and Engels. 246 According to Byres, there was no single dominant class in India in 1947 or
in the mid-1990s. Rather, there is "an array of dominant classes, and within those,

:38
Ibid, pp. 45-46.
Bob Jessop 1982: The Capitalist State: Marxist Theories and Methods, M.Robertson, Oxford,
p.22.
Cited in Byres (ed.) (997, p. 49, f.n. 25.
P. Abrams 1988: "Notes on the Difficulty of Studying the State", Journal of Historical
Sociology, vol. I, no. I, pp. 58-89; Cited in Harriss- White: India Working Essays on Society
and Economy, Cambridge University Press, Cambridge, p. 72.
.
: :
John Haldon 1991: 'The Ottoman State and the Question of State Autonomy: Comparative
Perspectives', pp. 18-108, Journal of Peasant Studies, vol. 18, nos. 3 & 4, April/July, Special
Issue on New Approaches to State and Peasant in Oltoman History, pp. 31-2; cited in Byres
(ed.) 1997, p. 50.
Bob Jessop 1982, p. 20, et passim; cited in Byres (ed.) 1997, p. 50.
Byres (ed.) 1997, p. 51.
Ibid, p. 51; Miliband, Ralph 1973: 'Poulantzas and the Capitalist State', pp. 83-92, New Left
Review, no. 82, p. 85.
Byres (ed.) 1997, p. 50, f.n. 27; Miliband, Ralph 1989: Divided Societies: Class Struggle in
Contemporary Capitalism, Oxford University Press, Oxford & New York, p. 85.

78
important class fractions". 247 He says that in the context of India, there is a State intent
upon capitalist transformat~on, and yet capitalist classes in both town and country are not
yet clear~y dominant in the social formation. 248 The State may be forced to accommodate
such non-capitalist classes, in ways inimical to capitalist transformation, ways that
prevent access to crucial sources of accumulation. A further sense in which the 'at the
behest of reading' could not be sustained is that the 'State acts as a factor of cohesion in
the social formation'. 249 In Poulantzas's words, the State 'prevents the social formation
from bursting apart'.zso

Byres gives the example of the ·poverty alleviation programme of the Indian State in
which the State may have to act in the teeth of considerable opposition. We would,
however, question if it could not, instead, be read as an effort at legitim ising the existing
system and patterns of accumulation, particularly in the context of populist electoral
politics necessitated by parliamentary democracy? We would hold that in mediating class
conflict over a social terrain of relative asymmetry of power relations, the State, more
often than not, arbitrates in favour of the more powerful. Therefore, it should be
remembered that its class nature is primary, principal and fundamental and its relative
autonomy is useful to bring in a subtlety of analysis and point to possibilities of
exceptional States like the Bonapartist one that favoured a class(es) that were not yet
dominant in society. The aspect of relative autonomy should not be overemphasised.

The second example that he cites is that in the wake of independence, capitalist class(es)
were weakly developed or were arguably in embryonic form in both town and country,
and that it was because of relative autonomy that the State was able to carry forward
capitalist transformation even with a civil society characterised by entrenched non-
capitalist classes. In other words, the State was constrained in its 'capitalist mission' by
the powerful existence of dominant classes whose interests are seriously threatened by
capitalist transformation. 251 We would argue that both the examples furnished by Byres
for the relative autonomy of the Indian State may be disputable. The second example may
be disputed because the Indian big capital was considered to be the leading class in the
dominant class combine, in most shades of Marxist thinking.

:47
Ibid, p. 50; Terence J. Byres 1981: 'The New Technology, Class Formation and Class Action
in the Indian Countryside', Journal of Peasant Studies, 8, 4 (July), pp. 405-54.
248
Ibid, p. 51.
l.JQ
Jessop 1982, p. 16.
Nicos Poulantzas 1973: Political Power and Social Classes, London, p. 50; cited in Byres
(ed.) 1997, p. 51.
Byres (ed.) 1997, p. 53.

79
Byres argues, "It seems most useful, then, to posit the state as representative of an array
of dominant class interests", which may be especially contradictory in the prolonged
transitional situation in post-1947 India. Byres rightly speaks of the representation and
mediation by the State of different dominant class interests. Speaking of Planning, he
believes that understanding on policy matters would be greatly enhanced if the centrality
of Class was taken into account, without trivial ising the processes at work or ignoring the
specificities of concrete situations.252

The view of the Communist Party oflndia (Marxist) was represented as below: 'The state
in India is an organ of the. class rule of the bourgeoisie and landlords, led by the big
bourgeoisie which is increasingly collaborating with foreign finance capital in pursuit of
the capitalist path of development'. 253 According to Sudipta Kaviraj, there has been, in
this literature, a 'tendency to underestimate the political functions of the sfate, and to view
the state as merely an expression of class relations rather than a terrain, sometimes an
independent actor in the power process. 254

However unhelpful the formulations of Hanson were, implicit in his study was the idea
that in a serious treatment of planning, the nature of the State matters and that narrow
instrumental view of the State would not do.m

The Statist View: The State as an Autonomous Site or Subject

Scholars such as Theda Skocpol tended to view the State as having almost total structural
and behaviourdl autonomy. This represents the Statist view that emphasised on the special
interests of the State by virtue of its insertion into the international order and also by its
unique responsibilities for maintaining domestic order. 256 She argued that there has been a
paradigm switch in the Western Social Sciences in the 1970s: from 'societal' approaches
which treated the State as a depedent variable to those ['Statist' approaches] that treated it
as an independent variable. Thus she identified Structural Functionalism and Pluralism as
dominant 'societal' approaches to the State among the American academia. 257 The Statist
view has been quite effectively criticised particularly from a Marxist angle both
empirically and theoretically for undermining the dynamics of class struggle. Analysing

Ibid, pp. 53-54.


Kurian 1975, p. 113.
Kaviraj 1988, p. 2431.
Byres (ed.) 1997, p. 62.
Theda Skocpol 1985: 'Bringing the State Back In: Strategies of Analysis in Current Research',
in P.R. Evans, D. Rueschemeyer and T. Skocpol (eds.) Bringing the State Back In, Cambridge
University Press, Cambridge, pp. 3-37; cited in Bob Jessop 1990: State Theory: Pulling
Capitalist States in their Place, Polity Press, Cambridge, UK, pp. 92-3.
2S7
Cited in Bob Jessop 1990: State Theory, Polity Press, Cambridge, UK, p. 281.

80
the State in its own right, naively assuming the separation of the State from social and
economic spheres and the[! claiming that it one-sidedly influences and directs change in
these spheres is quite an inconsistent position in itself. 258 The underlying assumption
driving a wedge between State and society rules out "any derivation of the state from the
mode of production and/or from class dynamics". 259 For others, the 'Statist' view
represented a nostalgia for the strong welfare State in the US and/or the modernising State
in the less-developed countries in an epoch ·when forces were at work undermining it. 260
Jessop had in 1982 already pointed to the general dangers in the 'State a.S a factor of
cohesion' position, like that of embracing an unjustifiable 'class reconciliation' view or
one of a neutrai/Olympian State in pursuit of social justice. 261 Evidently, the notion of a
'State for itself or a 'self-determining State' is a non-Marxist view. 262

Kalecki: the Indian State as an Intermediate Regime

The notion of intermeditate regime was proposed by the Polish economist Michael
Kalecki in 1964 for the first time and more fully in 1966 in his brief essay, 'Intermediate
Regimes'. 263 The two instances clearly cited as exemplars in his argument were India and
Egyp~ 64 • The idea was strongly endorsed by K.N. Raj who sought to give more concrete
content to it in the context oflndia. 265

The contrast between classical and state capitalism is significant.266 Kalecki provides the
sefining characteristics of an intermediate regime as tallows: It is a 'regime', a 'state' or a
'government', 'representing the interests of' the two classes, urban lower middle class
and the rich peasantry- indeed, two fractions of one class. It is an 'intermediate regime'
inasmuch as the classes whose·interests it represents 'stands between' the proletariat and
267
the bourgeoisie. The second characteristic of the intermediate regime was that it
followed a policy of neutrality between the two blocs -the socialist and the advanced
capitalist. It received aid from both the blocs. Intermediate regimes have been 'the
proverb.al clever calves that suck two cows'. Their position in international relations

258
Jessop 1990,,p. 285.
259
Paul Cammack 1989: 'Bringing the State Back In: A Polemic', pp. 261-90, British Journal of
Political Science, vol. 19, no. 2. pp. 263-4, 268; cited in Jessop 1990, p. 286.
Jessop 1990, p. 286.
~61
Jessop 1982, pp. 20-24; cited in Byres (ed.) 1997, p. 52.
Byres (ed.) 1997, p. 53 ..
Reprinted in both Kalecki 1972a: The Last Phase in the Transformation ofCapitalism, New
York and London; and Kalecki 1972b: Selected Essays on the Economic Growth of Socialist
and the Mixed Economy, Cambridge, See also Byres (ed.) 1997, p. 62.
Byres (ed.} 1997, p. 62, f.n. 48.
K.N. Raj 1973: 'The Politics and Economics of "Intermediate Regimes"', Economic and
Political Weekly, vol. 8, no. 27 (7 July), pp. 1189-98.
Byres (ed.) 1997, p. 63.
K.N. Raj 1973, p. 1191.

81
defended them against the pressure imperialist powers to restore the "normal" rule of big
business. 268

Byres questions where the middle peasants figures in this scheme, especially since they
are a large component of rural social structure.

Byres holds that the categorization of intermediate regime cannot be sustained. " ... [A)ny
categorization of the Indian State that portrays the Indian urban bourgeoisie as a helpless
suppliant to a state dominated by the 'lower middle class', albeit with rich peasant
representation, cannot be taken seriously". He further says, " ... [T]he Indian urban
_ bourgeoisie_ is manifestly one of the dominant classes in the Indian social formation; and
that the Indian state has consistently attempted to represent its interests: via development
planning, via the public sector, via a concerted attempt to keep organized labour in severe
check; and in all kinds of other ways. :~ 269

Thus the railway workers, as allies of the lower middle class in Kalecki's intermediate
regime had a vital confrontation with the Indian State in the rail workers' strike of May
1974. This was a crucial episode in the relationship between the Indian State and the
organized labour. The unprecedentedly concerted action of the rail workers threatened the
urban bourgeoisie and the strike was repressed with a rare vehemence and ferocity. 270

The notion of intermediate regime underestimates the strength of both the rich peasantry
and the urban bourgeoisie. It also overlooks the antagonism of interests between town and
country - a contradiction that lies at the heart of the whole transition problematic. "I
would suggest that the Indian state, with a degree of relative autonomy and with an eye to
I

the cohesion of _the social formation, may in essence, be seen to represent actively the
interests of both the rich peasantry (and latterly capitalist farmers, in certain parts of
India) and the urban bourgeoisie. These interests, however, are at bottom contradictory.
Therein lies the central dilemma of Indian political economy."271 We could rather read
'semi-feudalism' or 'semi-feudal landlords' in place of 'rich peasantry' and add the
essentially anti-people colonially-inherited bureaucracy as allied to the urban big
bourgeoisie to be part of the dominant classes.

268
Kalecki 1972a, p. 121.
269
Byres (ed.) 1997, p. 67.
270
Ibid, pp. 67-8, For reports on this strike, Economic and Political Weekly, vol. IX, no. 18, May
1974; no. 19, II May; no. 20, 18 May; no. 21,25 May; no. 22, I June; no. 23, 8 June, no. 24,
15 June.
271
Byres (ed.) 1997, p. 68.

82
The Indian State as a capitalist State: (a) pure and simple, or (b)
backward
First, there are those who categorise the Indian State as being, in its essence, a capitalist
State, particularly among those with a Trotskyist orientation.

One formulation, viewing the Indian State as capitalist pure and simple was that of A.R.
Desai whose work272 was first published in 1968. He spoke of the Indian State as
representing the interests of the Indian capitalist ruling class, engaged in modernisation
on capitalist lines. 273' The reality of an incomplete transition, or perhaps, a non-classical
trajectory was acknowledged by Jairus Banaji. 274

The problematic is one of the continuing dominance of classes, which are clearly non-
capitalist or proto-capitalist (especially landlords and rich peasants) and the contradictions
inherent in a State that represents such a diversity of class interests, and its implications
for accumulation. '[A]ttributing political dominance to the capitalist class in a society in
which the capitalist form of production is still not entirely predominant ... raises some
theoretical problems.275 Others sympathetic to Maoist ideas, most notably, and rigorously
Bhaduri276 and also by Prasad insist that [the agrarian structure in] India is tenaciously
dominated, overall by semi-feudal structures. 277 He argues that the process of
accumulation has been consistently checked 'because of the low growth in Indian
agriculture ... mainly due to semi-feudal relations of production. He pointed to in the mid-
l980s to the continuing 'stranglehold of bureaucratic and semi-feudal structures on the

A.~. Desai 1975: State and Capitalist Society in India: Essays in Dissent, Bombay, pp. 139,
140, 142, 149.
:n Byres (ed.) 1997, p. 68.
Jairus · Banaji 1973: 'Backward Capitalism, Primitive Accumulation and Modes of
Production', Journal of Contemporary Asia, vol. 3, no. 4, pp. 393-413; cited in Byres (ed.)
1997, p. 69.
Byres (ed.) 1997, p. 69.
Amit Bhaduri 1983: The Economic Struclllre of Backward Agriculture, MacMillan, New
Delhi and Academic Press, New York.
:77 Pradhan H. Prasad 1973: 'Production Relatio.ns: Achilles Heel of Indian Planning', Economic
and Political Weekly, vol. 8, no. 19, 12 May, pp. 869-72; Pradhan H. Prasad 1974:
'Reactionary Role of Usurer's Capital in Rural india', Economic and Political Weekly, Special
Number 9, 32-33-34, August, pp. 1305-8; Pradhan H. Prasad 1979a: 'Semi-Feudalism: The
Basic Constraints of Indian Agriculture', in Arvind N. Das and V. Nilakant (eds.) Agrarian
Relation in India, New Delhi, pp. 33-49; Pradhan H. Prasad 1979b: 'Caste and Class in Bihar',
Economic and Political Weekly, vol. 14, nos. 7 & 8 Annual number, February, pp. 481-4;
Pradhan H. Prasad 1980: 'Rising Middle Peasantry in North India', Economic and Political
Weekly, vol. 15, nos. 5-6-7, pp. 215-9; Pradhan H. Prasad 1986: 'Institutional Reforms and
Agricultural Growth', Social Scientist, vol. 15, no. 6, 157, June, pp. 3-19; Pradhan H. Prasad
1987: 'Towards a theory of transformation in semi-feudal agriculture', Economic and Political
Weekly, vol. 22, no. 31, I August, pp. 1287-90; and Pradhan H. Prasad 1989: 'Neglected
Aspects of India's Development Planning', Economic and Political Weekly, vol. 24, no. 28
(August, 15 May), pp. 1591-5; cited in Byres (ed.) 1997, p. 70. Several of these articles are re-
printed in a later edition, Pradhan H. Prasad 2000: India: Dilemma of Development, Meeta
Krishan (ed.), Mittal, New Delhi.

83
Indian economy' and an associated dilution of 'the resources needed for accumulation
and technology'. 278

A Gramscian View of the Indian State

Gramsci sought to explore 'the maintenance of class domination through a variable


combination of coercion and consent'. His concepts, coercion and consent, hegemony and
passive revolution have had significant impact upon theorising the concrete treatment of
the State. His appeal ~as been considerable among those seeking to avoid both economic
determinism and class reductionism. Hegemony was 'the successful mobilisation and
reproduction off.!le "active consent" of dominated groups by the ruling class through their
exercise of intellectual and morai leadership'. This is not to be understood in terms of
mere indoctrination or false consciousness. It involves taking systematic account of
popular interests and demands, making compromises on secondary issues, without
sacrificing the fundamental long-run interests of the dominant group. 279

In this context, we would hold that the granting of reservations to the Scheduled Castes
(SCs) and Scheduled Tribes (STs) and the proposal for the bill to grant reservation for
women in elected assemblies, the proposed bill against domestic violence, the right to
informati~n bill, etc. may be viewed as having been necessitated by the need to secure
legitimacy, particularly from deprived social identities and maintain the dominance of the
'ruling' classes. 'The limited nature of consent' 280 leads to a weak basis for a political
order, which comes to rely increasingly on force. 281 We would say that the deepening
crisis of legitimacy_ofthe Indian State might be viewed as the reason for the increasing
ascendancy of the fascist movement in India. Gramsci has used the term, passive
revolution to analyse the unified Italian State, the Risorgimento: to capture the absence of
a classical bourgeois revolution in Italy and the weakness of the Italian bourgeoisie. The
concept helps understand how a bourgeoisie that suffers from 'relative economic
weakness' 282 handles the turbulence and contradictions of an attempted capitalist
transformation.

Kalyan Sanyal identifies the central dilemma of a transitional economy wherein interest
groups located within the domain of pre-capital may have considerable influence on the

Prasad 1986, pp. 8,12.


Jessop 1982, pp. 146, 148, 153.
Anne Showstack Sassoon 1991: 'Hegemony', pp. 229-31, in Tom Bottomore (ed.) 1991
(2000}: A Dictionary of Marxist Thought, Maya Blackwell Worldview, New Delhi, Indian
reprint 2000, p. 23 I.
!SI
Ibid, p. 231.
Buci-Giucksmann, Christine 1980: Gramsci and the State, Lawrence and Wishart Ltd,
London, pp. 54-55, 61.

84
State [and society] and may thwart the expansion of capital. He points to 'the dissociation
of the domain of the pre-capital from the process of accumulation ... [which] has posed a
serious problem for the hegemonic role of capital' .283

Partha Chatterjee argues that the notion of passive revolution has some plausibility in the
context of India. 284 Firstly, planning/capitalist transformation has failed to produce a full-
scale assault on the institutional structures of the colonial State and secondly, it has failed
to attempt an attack on pre-capitalist dominant classes. The apparent failure of agrarian
reform is a cac;e in point.

The Gramscians make references to 'interest groups' and 'interests' rather than to classes.
Where classes are identified, they tend to appear in very general terms, as archetypes
rather than concrete classes: 'the bourgeoisie', 'the subaltern classes', and 'the old
dominant classes'. The veiled and allusive language Gramsci was forced to use in order to
pass the scrutiny of his fascist censors has become an obligatory part of the Gramscian
discourse. "[A]dequate treatment of the Indian State however demands concrete, detailed
and unambiguous class analysis", says Byres. 285

The appeal to Gramscian categories for those who wish to avoid economic determinism
and class reductionism itself may contain a danger. The exponents of this approach may
have gone ''too far down the road of perceived virtue", according to Byres. Neglect of
economic contradictions and constraints 2s6 and according to Byres, "of class agency and
class-for-itself action" seem to be the theoretical costs incurred in this process. 287 At the
very least, Terry Byres rightly argues for the abandonment of the narrowly instrumental
view of the State so commonplace in the conventional economic literature on planning. 288
We would, however, hasten to reiterate that the Class character of the State is primary,
principal and fundamental although the notion of its relative autonomy could be useful to
bring in a subtlety of analysis and capture the possibilities of exceptionalities.

283
Kalyan K. Sanyal 1988: 'Accumulation, Poverty and State in Third World Capital/Pre-Capital
Complex', Economic and Political Weekly, vol. 23, no. 5, 30 January, Review of Political
Economy, pp. PE27-PE30, pp. PE28.
2114
Partha Chatterjee 1994: The Nation and its Fragments: Colonial and Postcolonial Histories,
Oxford University Press, Delhi.
28S
Byres (ed.) 1997, p. 74.
286
Jessop 1982, pp. 209-1 0.
~87
Byres 1997, p. 74.
288
Byres 1997, p. 75.

85
V. "SOCIAL STRUCTURES OF ACCUMULATION" APPROACH

The 'Social Structures of Accumulation' (SSA) approach can be considered as a very


useful attempt at integrating 'the multidimensionality of social being' without losing out
·the s"pecificities of the components in the social totality. 289

Barbara Harriss-White (BHWi90 critically borrows the most important theoretical


framework in the book, India Working namely, the concept of "Social Structure(s) of
Accumulation" (SSA) from D. Gordon, et al 291 and D.M. Kotz et al292 in the USA who
undertook historical analyses of SSA in the macro-economy in the context of long waves
ofbusiness cycle. SSA for BHW r~fers to ''the matrix of social institutions through which
accumulation and distribution take place": 293 A general hypothesis is proposed, faintly
reminiscent of Marx294 that this complex-of institutions emerges and gradually becomes
consolidated but eventually they tend to block and undermine the accumulation process
that they initially promoted. [Yet] these institutionalised structures are seen as
"continually [?!) changing" and shaping the character of class conflicts and social
stability. 295 The State is seen to be a crucial SSA regulating capital and labour, allocating
resources and performing ideological functions. Among the non-State SSA in India are
considered Class, gender. religious plurality and caste. Moreover, in an unorthodox vein,
the economic organisation of space is counted in among SSA. The other SSA are thought
to be "mapped on to space". 296 Writing elsewhere, she thinks that in developing
economies, ethnicity, age or life cycle and even language could be among SSA. 297 She
seeks to distinguish the specificity of each of these SSA aS against the fashionable
approach of viewing them as components of "civil society", lumping them together as
'·networks" or as "social capital''. 298 Taking a dig at the maximising individualistic

189
For a detailed critical review of Harriss-White 2003, see Sebastian 2003: "Reining in the
lesser lords: "Social Structures of Accumulation" in India's informal economy'', Indian
Journal of Labour Economics. vol. 46, no. 2, April-June 2003, pp. 305-319; and for a briefer
revised and abridged version, with greater elaboration on the SSA approach, see Sebastian
2004: "The India of the 88 per cent",.frontier, vol. 36, no. 42, May 9-15, pp. 5-8.
Barbara Harriss-White 2003.
D. Gordon, R. Edwards & M. Reich 1982: Segmented Work, Divided Workers, Cambridge
University Press.
D.M. Kotz, M.T. McDonough & M. Reich (eds) 1994: Social Structures ofAccumulation: The
Political Economy of Growth and Crisis, Cambridge University Press.
Barbara Harri~White 2003, p. 13.
Karl Marx 1977, 'Preface' to A Contribution to the Critique of Political Economy in Marx &
Engels, Selected Works I, Progress, Moscow, first published 1859.
29S
Barbara Harri~White 2003, p. 14.
Ibid, pp. 240, 244.
Barbara Harri~White 2003b: "On Understanding Markets as Social and Political Institutions in
Developing Economies", in Ha-Joon Chang (ed.) Rethinking Development Economics, Anthem
Press, London, p. 492
29S
Barbara Harri~ White 2003, p. 15.

86
rationality of neo-classical Economics, she says, "[E]conomic rationality is only one of
several social rationalities ~t work in the economy." 299 "[T]here is no privileged list of
·crucial' institutions or forces. On the other hand, some institutions are always seen to be
involved .... ", says she. 300 Alternatively, identification the principal (set of) determinant(s)
at any given stage of social development could make for a rather revealing analysis.

SSA is, no doubt, the most important term in the book, India Working (2003) - a
conceptual impulse with potentially fertile theoretical grounds, if critically appropriated.
The concept has the distinctive advantage of capturing, on the one hand, the culture and
identity of a social formation and how it serves as a distinctive structure of accumulation,
on the other. The conventional Class-based political movements have failed to devote
adequate autonomous attention to non-Class forms of oppression. The concept of SSA
· may be useful towards ameliorating this shortcoming by linking the various kinds of
oppressi~ns as they are related to the encompassing processes of accumulation and the
overarching class divisions in society. The SSA approach could be considered far
superior to the currently fashionable studies on culture and identity without the slightest
mention of the accumulation processes and the social matrix thereof. Possibly, the
concept could constitute the framework of analysis for future researches on political
economy/mode of production.

VI. CONTEXTUALISING CLASS-NATIONALITY INTERFACE IN INDIA

From the foregoing discussion, it has. been recognised that the Indian State after the
transfer of power in 1947 has not been able to function as an unimpeded bourgeois State
but has been constrained by powerful classes opposing full-fledged capitalist
transformation. It has been generally recognised in the literature on the class character of
the Indian State that Indian big capital has taken the leading role towards achieving
capitalist modernisation. The Bombay Plan in 1944301 sponsored by eight industrialists
had viewed planning as essential to the successful development of capitalism in post-
colonial India. 302

Capitalism,_ weak though, was already developing from within the decadent feudal society
at the time ofthe advent of colonialism on the scene. 303 By then, many a nationality, with

Barbara Harriss- White 2003, p. 240.


•100
Ibid, p. 14.
JOI
Sir Purushotamdas Thakurdas; J.R.D. Tata; G.D. Birla; Sir Ardeshir Dalal; Sir Shri Ram;
Kasturbhai Lalbhai; A.D. Shroff and John Matthai 1945: A Brief Memorandum Outlining a
Plan of Economic Development for India, Bombay; Also cited in Suniti Kumar Ghosh 2000,
pp. 235-49, 257.
301
Byres (ed.) 1997, pp. 41-42, f.n.ll.
JOJ
AIPRF 1996, p. 120.

87
full-fledged languages such as the Bengalis, the Punjabis and the Malayalees (Keralites,
or Keraleeyar as per the native usage) had already developed. The colonial conquest put a
break upon such 'natural' growth and development of the nationalities. Permanent
Settlement in Bengal in I 793 is an instance par excellence of the colonial-feudal alliance.

At the time of the transfer of power, both 'imperialism' and Indian big capital had great
stakes in a unified Indian market. A federal structure of the organisation of state power
with the inclusion of Pakistan in such federation, would have greatly eroded the
predominance of these classes vis-a-vis the small capitalist classes that wanted to control
the markets of the respective nationalities constituting the vast multi-national country that
is India Hence the communal paJ1ition of the country and the subsequent adamance of
the Indian n:aiing classes to concede the rights of the various nationalities. 304 In defer~nce
to the popular demands, the Nagpur ·session Of the Iridian National Congress had
reorganised the local Congress organisations on linguistic basis place of following the
colonial administrative divisions until then. 30s This must have made the mobilisation of
masses in support of the cause of anti-colonialism much easier.

After the transfer of power in 1947, however, the Congress retracted from its earlier
promise of reorganisation of states on the linguistic basis. Already in 1944, the Bombay
Plan prepared by prominent industrialists in India had opposed the reorganisations of the
formation of linguistic states on grounds that it could weaken the unity of India, lead to
the grov.1h of regional separatism and hamper planned development of the economy. 306
This can legitimately be viewed as the expression of the interests of the Indian oligopolies
like Tata and Birla for a unified market without significant competition from the
regional capitalists. Under the Bombay Plan, development of basic industries was
envisaged in the public sector under State ownership and control, which could, in effect.
boost the surpluses of the Indian big capital, whose interests were intertwined with the
interests of global capitalism. Further, it may be argued that it opened the way for a
paradigm of dependent development with global capital increasingly dictating terms over
time, particularly since the IMF loan in 1982, the Balance of Payments crisis in I 990 and
the initiation ofthe Structural Adjustment Policies in mid-1991.

The death of Potti Sriramulu in I 952 after 58 days of hunger strike demanding the
formation of Andhra state gave a new impetus to the movement for reorganisation of the
country on a linguistic basis, as people's anger in Andhra knew no bounds. As a result,
the Andhra state had to be formed, excluding Telangana. The States' Reorganisation

Suniti Kumar Ghosh 2000 and 1996. See also AIPRF 1996.
AIPRF 1996, p. 121.
Thakurdas, et a/ 1945.

88
Commission had to formed in 1953 and led to the subsequent reorganisation of states in
1956. The non-capitalist rel~tions within the states, and more specifically, feudal or semi-
feudal relations were also a hindrance to the full-fledged development of the
nationalities. 307

Pritam Singh in 1999 rightly mentioned that there are two versions of 'Indian
nationalism' -secular and Hindu- which are opposed to each other in their premises and
perspectives in many ways, but one aspect which unites them is their insistence on the
denial of multiple nationalisms in India. In a similar vein, 'Indian nationalism' is
considered_ as 'the dominant strategy of accumulation' by him. 308 We could, more aptly,
consider it 'the dominant discourse of accumulation' in India. M.S. Golwalkar, We or
Our Nationhood Defined, 1938 may be representative of the Hindutva school and
JawaharlaT NehiU, Discovery of India may be representative of the secular school. A
pluralistic version of religious nationalism of India may be found in Gandhi's Hind
Swaraj. After our critical appropriation of the Social Structures of Accumulation
approach, we could consider the 'pan-Indian big nation' as represented in the Indian State
as the dominant sociaVspatial structure of accumulation.

The conceptions of 'Indian nationalism' have suffered from being devoid of any
consistent basis of an 'inclusive national identity. 309 Rather than providing a unifying
thread, the South Asian social system of caste has been an extremely divisive factor and
could not form the basis of national identity. The notion of 'unity in diversity' as
conceptualized by Nehru was inclusive and yet was unable to pinpoint any one or any set
of underlying principle(s) defining the Indian nationhood such as language. The Hindutva
school, on the other hand, provided 'Hindutva' or 'Hindu-ness' to be the basis of the
nationhood of India and yet suffered from being an exclusivist credo, excluding a huge
minority of over 12.6 per cent (in 1991 ), Muslims and a small minority of about 2.3 per
cent (in 1991 ), Christians. Despite its inherent conceptual contradictions, it should be
admitted that 'Indian nationalism' is a dominant socio-economic reality, primarily shaped
by the Class and social character of the Indian State and the dominant classes. Indian
°
nation is just a legal entity? according to Abraham Eraly. 31 For U.R.· Ananthamurthy, it is
311
an "undefinable unity". Any subjective preferences of the intelligentsia apart, 'Indian
nationalism' also dominates the conceptual horizon of an average Malayalee today.

)07
AIPRF 1996, p. 121.
308
Pritam Singh 1999, p. 87.
)OQ
For an interesting popular discussion, "What is Indian?" see Outlook, 20 August 200 I
featuring Sanjay Subramaniam, U.R. Ananthamurthy, Kancha llaiah, Arjun Appadurai,
Arvind Rajagopal, Abraham Eraly, John Kenneth Galbraith, John Keay, eta/.
)10
Outlook 2001, p. Ill.
) II
Ibid, p. 102.

89
VII. CONCLUSION

We have herein examinecf the conceptualisations of Class both as a structurellocation 312


and as a relationship and a process in a non-linear manner. We have argued that we need
, to have a class analysis that would be sensitive to 'the multidimensionality of social
being'. The notion of 'subalternity' in Gramsci could be usefully employed so as to
capture such multidimensionality in social formations of the deprived classes and social
groups. Moreover, Gramsci's emphasis on the role of the 'leaders and intellectuals' in the
process of the subalterns socially constituting themselves and the importance of the
culturai dimension in the process of class formation are quite useful. The Gramscian
notion of how the State seeks to gain legitimacy by generating the 'active consent' of its
subjects is also helpful. With a renewed focus on the agency of human collectivities, we
could move away from deterministiC/naturalistic implications in our analysis of social
formations. And by emphasising the autonomy and specificity of particular
contradictions, we would be able to steer clear of the reductionist modes of social
analysis. Nevertheless, we also need to iook at social reality in its inter-connectedness, as
a totality.

Development is defined by us as the non-linear process whereby human beings transcend


the determinations of nature. It is important to draw a distinction between development
per se which is beneficial for human well-being and 'developmentalism', which is a
discourse of accumulation in the interests of the dominant classes. 'Accumulation' is the
k~y word that could integrate Class analysis with a political economy analysis of national
formations. Although national formation may be primarily constitutive of the social
relations/social contradictions within it, it is the Class dominance of a particular coalition
of classes as represented at the level of the pan-Indian ·State that has the primary
constitutive effect upon the particular national formations within the country. In the era of
oligopolistic capitalism, in the context of the Third World, 'spatial patterns of
accumulation' are of great significance particularly as it relates to national formations -
Countries and Nations or Nationalities. Paul Baran (1957), Dependency theory, World
System theory and the conceptualisation of the 'Third World' tried to captt,Jre the spatial
dimensions of accumulation. The usage of the term, 'periphery' in this parlance is useful
for understanding the world capitalist system in its totality and exploitative interrelations.
Empirical estimates negated the claims of a 'trickle down' process under the
modernisation theory. Massive increases in regional and social polarisation has
characterised the history of capitalism on a world scale since the industrial revolution.
The usage of the term 'Third World' is also useful in the parlance of building up tactical

_Further details are provided in the early part of Chapter V.

90
alliances between the Third and Second Worlds against the First World, i.e. the
superpowers. Modes of ~roduction controversy enabled us to understand how in the
peripheriesffhird World different modes of production co-existed and articulated with
each other, so as to generate ever greater surpluses under the capitalism of oligopolies.

Mode of production debate focused on the aspect of class relations and surplus extraction
in the process of production whereas the Dependency and World System theories focused
on the relationship between centre and periphery on the world-scale and surplus
expropriation in the process of exchange. Commodity chains approach adopted a
commodity-centric approach within the world system theory and thus sought to overcome
the criticisms of these theories. as bei~g extemalist i.e., not focusing on class/social
relations internal to a society and circulationist i.e., having exclusive and unilateral focus
on trade. We- would rather favour a producer-centric approach to even a commodity-
centric approach. An analysis of the class reality of the peripheralffhird World national
formations is rendered immensely complex since we need to consider how
space/nationality, class, gender, caste, tribe, community, etc. are mutually inter-related in
the process of surplus expropriation. In this sense, the law of value operates not only with
classes, but also with these other social/spatial structures of accumulation. In the context
of the Third World/peripheral regions of the world, one should not look for pure class
formations. This is because myriad unresolved contradictions coexist in these societies,
particularly because of the dominance of colonialism/imperialism. which have historically
articulated with various pre-capitalist social relations. That is why a broad designation,
'people' as opposed to the 'dominant classes' becomes appropriate in these countries.
Considering:the fact of the spatial patterns of accumulation, we could confidently argue
that nationality movements pitted· against oppressive structures such as semi-feudalism
and imperialism may be considered an aspect of class struggle itself, contributing to the
democratisation of society although the issues concerning nationality are not reducible to
a class angle.

Analysis of working class formations in the manner in which it is done in the advanced
capitalist countries can only be misapplications in the context of countries like India.
Modern industrial working class is a minuscule category and the informallunorganised
sector constitutes around 92 per cent of the economy in the Indian context. We would
view that working class in the formal/organised sector of the economy is a rather
privileged category in countries like ours, although there is, apparently, some erosion of
their privileges under neo-liberal reforms. So it is the working class in the
unorganised/informal sector, in industrial, agricultural and service sectors, that could play
a crucial leading role in social transformation. This is taking into account both their

91
structural location in the system and their advanced level of consciousness. 313 Social
transformation in countries of the peripheryffhird World can be achieved through the
political struggles by a coalition of multiple subaltern classes and social groups. For a just
outcome, the subaltern classes within such coalition should be able to lead or at least
maintain the strong independence of its line, while being part of such coalition.

The aspect of consciousness as it relates to Class and Nationality cannot be overlooked.


The insights offered by the modes of production controversy, Dependency and World
System theories need to be synthetically linked to studies on Class, Nationality and other
social categories wherein social consciousness is embodied. As against the unilateral and
exclusive fmphasis on. the cul~ral dimension since the 1960s on the question of
NationalitY and a shift away from Class issues since around 1980s, we would recommend
viewing social reality at the inter-junctions between accumulation and identity, structure
and agency, enabling collective action for social transformation. Thus we would be able
to speak of both potential/structural-locational class formations and actual class
formations, i.e. in terms of consciousness. So also we need to speak of Nationality both in
political economy terms or in terms of the 'regional geographies of accumulation' on the
one hand and in terms of language, culture and consciousness on the other. The 'Social
Structures of Accumulation' approach offers potentially fertile conceptual grounds for an
analysis that could capture both the specificities of the particular social and spatial
structures of accumulation on the one hand and their totality on the other, without turning
reductionist either on the aspect of politicai economy concerning accumulation or on the
aspect of consciousness/identity. In the context of graded inequalities, it is imperative to
identify the principal structure(s) of accumulation or the principal contradiction in the
complex totality of social relations at any given point of social development. This is very
much required if we need to achieve our desired ends of social transformation.

While speaking of the class/social character of the State, we would reject both the
instrumentalist understanding of the State, which holds that the State is an instrument of
class rule, with little relative autonomy and also the notion of the 'self-determining State',
which understands the State to be a terrain independent of the structural constraints posed
by the social context in which it operates. State does have to obey the structural logic of
the society in which it operates and yet it can and does have a certain minimal degree of
relative autonomy. In the context of India, the notion of Intermediate Regime as proposed
by Kalecki may have little validity given the apparent predominance of the pan-Indian

J IJ
The working class in the unorganised sector could play a leading role particularly because a
substantial section of them in India have organic links with the rural/agricultural sector, as
they are seasonal/casual workers swarming the cities as agriculture is not being able to sustain
them.

92
dominant classes. Studies and debates on the class character of the Indian State indicate
that it is not a single class that is dominant but a coalition of classes. It would be facile to
speak of India as just a 'capitalist' country because we need to recognise the co-existence
and articulations among different modes/relations of production both internal and external
to the country. Nevertheless, the Indian big capital seems to be the leading class in the
coalition of dominant classes in the country so far. However, the sphere of the Indian
economy and society is increasingly being incursed upon by the global metropolitan
capital in alliances with the Indian one under neo-liberal reforms. We have also argued
that in the context of India, the question of nationalities needs to be understood against
the back~rop of the dominance of the pan-Indian dominant classes._ We have also sought
to briefly analyse the category of the 'pan-Indian big nation' as represented in the Indian
State as a Social Strt.!~ture of Accumulation and tried to identify the 'many nationalisms'
in the country as counterpoised to it as 'counter-discourses of accumulation'. Now let us,
in Chapter III, tum to analysing the case of one of these nationalities, namely, Keralam
both as a political-economic formation and also as a socio-cultural formation.

93
Chapter III

Facets of Dependency and Articulations of the


National Question in Keralam

I. KERALAM AS A NATIONAL FORMATION IN POLITICAL ECONOMY TERMS


Secondarfl Sector
Sectorwise SDP Growth
The Tertiary Sector
The Dependency Syndrome in Keralam
The Paradoxical Fiscal Crisis of the state
Outflow of Investible Surplus
Growth of Consumerism
The Macro-leuel Implications of Unemployment and Migration

II. A CONTEMPORARY, OUTLOOK ON CENTRE-STATE RELATIONS: THE

KERALA CASE
Revenue Mobilisation by the State
Finance Commissions and the Centre-State Fiscal Relations
Fiscal Crisis and the Expend~htre Pattern of the State
The Curiow? Disappearance of the Question of Federal Autonomy

Ill. THE ADB BONDAGE: REFLECTIONS ON THE ADB LOAN AND THE

FISCAL PENURY IN THE STATE

IV. ARTICULA~ONS OF THE NATIONAL QUESTION IN KERALAM

Conceptualisations of Keralam as a nationality


Articulations on the nationality question in Keralam

V. CLASS-NATIONALITY INTERFACE IN KERALAM

VI. CONCLUSION
Chapter III

Facets of Dependency and Articulations of the


National Question in Keralam
"'Wiien I speal{.of moving tfie center, it is in two senses. tFirst is moving it from its assumetf f«ation in tlie
West .... <But I afso speal{.a6out it in tfie conte:J(!. of movinlJ it from its assumetf lOcatiDn in tfie minority
socialstratum in alisocieties to its creative 6ase among tfie peopfe. ~ - NIJUUi wa Tniong 'ol

Our anaJysis in this chapter involve~· an ami lysis of Keralam a5 a national formation
facing problems o~ underdevelopment vis-a-vis Indian and global metropolitan capital on
the one hand _and a_lso pi_tted ·against the Indian State wi~ its primarily unitary
2
Constitutional structure, on the other. In other words, what we seek to attempt is an
understanding of the 'regional geography of accumulation' 3 in case of Keralam. So then,
it is Nationality as a 'Social/Spatial Structure of Accumulation' (SSAt in the case of
Keralam that we seek to analyse. Throughout this chapter, we shall bear in mind the
question whether neo-liberal reforms have accentuated the nationality contradiction. In
Section I, we have analysed pattern of development in Secondary and Tertiary sectors.
(We have focused our analysis on the Primary sector in Chapter V). Further, we have
analysed the paradoxical, macro-level fiscal crisis of the state, implications of
unemployment and outmigration, and the overall dependency syndrome in the state.
Section II analyses the question of federal autonomy in the state in the contemporary
scenario, with reference to the Centre-state fiscal relations, the plausible reasons and
countervailing factors contributing to the disappearance of the question of federal
, autonomy during the period of neo-liberal reforms. We also have a further section on the
rather contemporary issue of the implications of an Asian Development Bank (ADB)-
driven development on the one hand and its implications for the Centre-state relations, on
the other. Following thereon, we have a section on the articulations of the national
question in the state and with special reference to the case of the debate within the
Marxist-Leninist stream during the late 1980s because there has been an attempt therein

Ngugi wa thiong'o 1996: "Decolonising the Means of Imagination", pp. 281-87, Symphony of
Freedom, Papers on Nationality Question presented at the international seminar in New Delhi,
February 16-19, All India Peoples Resistance Forum, Hyderabad, p. 281.
Complaints voiced about overall underdevelopment, particularly of the commodity-producing
sectors of the state and demands for federal autonomy have been recurrent themes in the post-
1956 Keralam.
Barbara Harriss-White 2003: India Working Essays on Society and Economy, Cambridge
University Press, Cambridge.
Harriss- White 2003.

94
to link the nationality question to the class question, which coincides with our own
concern within this thesis.

It is very important to mention that the current scenario about the movements for self-
determination of the nationalities in India have been classified into three categories: (I)
movements for independence of those nationalities that have historically hardly ever
identified themselves as part of the Indian Union, (2) the movements of nationalities
encompassing the major chunk of the population in the country, i.e., nationalities tha: are
relatively more developed and have become consolidated into linguistic states, and (3) the
movements of the emerging nationalities and ethnic groups for separate statehood or for
so~e form of regional autonomy! Keralam, clearly comes in the second category and
·understandably its right to self-determination has been articulated, more often than not, as
demands for federal autonomy, in terms of a contradiction with the Indian State. And
reasonably enough, it is the vertical disparity with the Indian State that quite often
became a cause for grievance. Even when grievances about horizontal disparities with
other states were aired, as in the case of Centre-state financial allocations, it was in
opposition to the perceived discrimination between the states by the Centre that these
grouses were expressed. 6 K.K. George and M.A. Oommen speak of horizontal disparities
resulting from the inequitable distribution of resources by the Union government.' Thus
the Eleventh Finance Commission was protested to by scholars such as K.K. George and
M.A. Oommen on grounds that it privileged states with low levels of human development
against states like Keralam that followed a trajectory of development resulting in high
levels of human development.

It is conceded that the poverty data during the period of 'liberalisation' is highly
contested. However, there is a consensus across the board that there has been a definite
increase in income inequalities across people, rural and urban areas and states in the
country. 8

Following our two-fold approach of understanding national formations as a construct of


political economy on the one hand and as constituted by language, culture and

All India People's Resistance Forum (AIPRF) 1996, p. 122.


For the conceptual distinction between vertical and horizontal disparities on the question of
federal autonomy, seeM. Govinda Rao 1997: "Indian Fiscal Federalism: Major Issues", pp.
224-58 in Sudipto Mundie (ed.) 1997: Public Finance Policy Issues for India, Oxford
University Press, New Delhi, pp. 236-41.
As in K.K. George 1993: Limits to Kerala Model of Development, Centre for Development
Studies, Thiruvananthapuram & M.A. Oommen 1993: Essays on Kerala Economy, Oxford &
IBH Publishing Co. Pvt. Ltd., New Delhi, Bombay, Calcutta.
A. Deaton and J. Dreze 2002: "Poverty and Inequality in India: A Re-Examination'',
Economic and Political Weekly, September 7, pp. 3729-48.

95
consciousness on the other,9 we would primarily seek to focus on the former i.e., Keralam
as a political economy construct since Keralam belongs to the second category of
nationalities in India, in the classification made in the paragraph above whereby these
nationalities are already consolidated into linguistic states and their demands are
primarily those relating to greater autonomy from the Union government. Let us begin by
asking the question: What are the specificities of Keralam as an economic formation?
High human development without a corresponding development of productive forces,
industrial stagnation, high incidence of unemployment, export orientation in agriculture,
imPof1 dependence ·on food, dependence on remittances; disproportionately high
de~elopment of the s·~rvice sedor and not the least, the paradox of ari acute fiscal crisis
cO-habiting a
surfeit: of capital in the economy may be cited as s~me of the stark
specificities. The social/caste reform movements, the struggle for land reforms and state
formation, massive outmigration, etc. contributed to the historical constitution ofKeralam
as a national formation with distinctive features such as these.

The nationality problem in the case of Keralam may be construed historically as a


contradiction in terms of political economy, with global capitalism and the Indian
State/dominant classes. 10 Let us attempt an understanding of how Kerala nationality has
been constituted in economic terms.

And with this end in view, let us review the performance of the Kerala economy
particularly in its secondary and tertiary sectors in recent years:

I. KERALAM AS A NATIONAL FORMATION IN POUTICAL ECONOMY TERMS

Usually, in the Third World, lack of capital has been considered a major hurdle towards
industrialisation and development of productive forces. In this respect, Keralam seems to
~ave been an exception in having a surfeit of capital and yet not being able to achieve
development of its productive forces. So then, it would be an interesting question as to
what constraints of structure and agency have caused underdevelopment in Keralam.
Labour relations in Keralam have often been depicted as fetters on development in
popular perception and sometimes in scholarly parlance. However, there seems to be no
ample empirical evidence to support this view. 11

0
See a theoretical analysis in this respect in Chapter II.
10
As we shall argue in Chapter IV, this contradiction seems to have, in some respects,
accentuated with the initiation of the Structural Adjustment Policies (SAP) since 1991.
II
See, P. Mohanan Pillai 1999: Sameeksha (Malayalam), March 16-31, p. 6 and P. Mohanan
Pillai & N. Shanta 2006: "Kerala's Industrial Development: Past and Present", pp. 38-68, in
Tharama11galam, Joseph 2006: Kerala: The Paradoxes of Public Action and Development,
Orient Longman, New Delhi, p. 5 I.

96
Probably, the most important aspect about the macro-level political economy of Keralam,
aggravating the economic exploitation of the nationality, has been that the peripheral
affluence of capital has not contributed significantly to the development of productive
forces within Keralam thus ameliorating unemployment and outmigration, although it has
contributed to inflation. 12 Thus the Consumer Price Index of Agricultural Labourers
(CPIAL) in Keralam has steadily increased from the level of 58 in 1974-75, i.e., when the
Gulf boom began, to 330 in 2002-03, i.e., roughly a six-fold increase over three
decades. 13 So then, it gives rise to a question of control over financial resources by the
state.

The .land reforms in early 1970s,


. .
gave a fillip to capitalist social relations in agriculture,
which has already had wide prevalence in the state by then. 14 We examine in great detail
the agrarian class relations, the land· question, the decline of food production, etc. in
Chapter V.

Secondary Sector

Industrial development is considered to be a desirable outcome under both liberal and


Marxist frameworks. Modernisation theory, a Ia W.W. Rostow considered it as the
further stage following the development of agriculture. Given the predominance of
industry over agriculture and town over country under capitalist development, industrial
production, in any .case, is associated with high value addition. By contrast. it may be
recalled that under the feudal social.order, agriculture had primacy over commerce and
handicrafts, and countrysides over towns. Soviet industrialisation debate and A Critique
of Soviet Economics by Mao Tse-tung considered industrialisation highly desirable
although Soviet Union had opted for heavy industrialisation at the cost of
agriculture/peasantry ·and Maoist China opted for small industries and considered industry

12
See Tharamangalam 1998.
IJ
Government of India (various years): Annual Report of Consumer Price Index Numbers -
Agricultural and Rural Labourers, 'Consumer Price Index of Agricultural Labourers in
Kerala' (Base year 1986-87=100), Labour Bureau. During the pre-Gulf boom period, it
increased from 15 in 1960-61 to 42 in 1973-74, i.e. marking roughly a three-fold increase over
more than one decade. This period, however, is not comparable to the later period because the
pre-boom period was also characterised by three major wars involving India, i.e., in 1962,
1965 and 1971, and the country was only going through the Green revolution for achieving
food self-sutliciency.
•• See the review of arguments by Ronald Herring in Chapter V of this thesis.

97
to be the 'leading sector' even as agriculture was conceptualised as the 'main sector'} 5
We too would consider industrial development to be necessary for development
'transcending the determinations of nature'. Yet we would re-iterate the distinction we
have drawn in Chapter II between 'development' and 'developmentalism' as a discourse
of accumulation, not contributing to human welfare.

A cursory look at the Secondary Sector in Keralam would reveal the extent of retardation
of this sector. The traditional industries constitute a major share of the industrial sector.
They include coir, handloo~, beedi and cashew.' 6 In this sector there is resistance to
introduction of modem technologies,
. for the well-founded
.
fear of displacing labour. 17
Large segments of this sector seerris to be increasingly becoming unsustainable due to the
high costs ofproduction.and the consequent Joss ofmarkets.

In the modem industrial sector, electricity generation, chemical and chemical products,
food products, rubber and plastic products and wood and wood based industries were
dominant. Electricity generation has been the single largest industry, accounting for
nearly one-fourth of the total value added in factory sector. 18 This is exclusively hydel
power generation of which only one-third of the total potential has been tapped. For
environmental reasons, further exploitation ofhydel power [involving major projects] and
the setting up of coal-based thermal power stations may not be feasible but there is scope
for gas based thermal power generation. 19 Till 1983, the state was power surplus,
exporting electricity. But energy intensive chemical industries, with little forward and
backward linkages to the rest of the economy, set up during this period, have turned no
longer affordable. 20 By mid-1980s the state had become power deficit. 21 Whatever little

I~
For the Soviet Industrialisation Debate, please refer, V.I. Lenin [undated] Collected Works.
vol. 3, Moscow; N.l. Bukharin 1983: .Transition to Socialism, R.B. Day (ed.), Spokesman,
London; R.W. Davies 1980: The Socialist Offensive: The Collectivisation of Soviet
Agriculture. 1929-30, Macmillan, London; Maurice H. Dobb 1960: Soviet Economic
Development Since 1917, Routledge & Kegan Paul, London, 5th edn.; E.H. Carr 1970:
Socialism in One Country, 1924-26, vol. I, Harmmondsworth, Penguin Books; Evgeny
Preobrazhensky 1965: The New Economics, Clarendon Press, Oxford; E.H. Carr and R.W.
Davies 1974: Foundations of a Planned Economy, 1926-29, vol. I, Harmmondsworth,
Penguin Books; Nirmal Kumar Chandra 1992: "Bukharin 's Alternative to Stalin:
Industrialisation Without Forced Collectivisation", Journal of Peasant Studies, vol. 20, no. I,
October, pp. 97-159. , .
See also, Mao Tse-tung 1977: A Critique of Soviet Economics, Monthly Review Press, New
York.
16
K.K. George, 1997, p. 253.
17
See, K.T. Rammohan 2003: "Socially embedding the commodity chain: An exercise in
relation to coir yam spinning in southern India", World Development, vol. 31, no. 5, pp. 919-
20.
18
K.K. George 1997, p. 253.
I 'I
K.K. George 1997, p. 253.
20
K.K. George 1997, p. 254. The concept of forward and backward production linkages was
first propounded by A.O. Hirschman as inducement mechanisms for stimulating economic

98
growth was achieved in the secondary sector was in electricity generation and
construction and not in mapufacturing. 22

At least in Keralam, the Public Sector Undertakings (PSUs) were 'at the commanding
heights' in the secondary sector. In 1989-90, Kerala state government had 80 PSUs,
excluding the huge Kerala State Electricity Board (KSEB) and Kerala State Road
Transport Corporation (KSRTC}. These 80 accounted for 9.7 per cent of the total 823
PSUs at the all-India level and 6. 7 per cent of the total investments in these enterprises.
But only 32 of these .SO PSUs' returned a profit. 23 65 per cent of the PSUs have been
continuously running at losses?4 As for KSEB and KSRTC, they were not even in a
· ··~·PQsition to' pay back interests on debts. 25 The statistics of the state government shows that
out of 72 units under the direct control of state industries department, only 27 returned
- .- - . . -- - - - ---

profits in ·1997-98. And as on March 31, 1996 they had liabilities amounting to Rs. 741.05
crores. 26 It has been rightly poi~ted out that the way out to redeem the PSUs seems to be
to suitably restructure them and make their functioning accountable to the public at large
rather than disinvest and hand them over to private capital.27

The stagnation in commodity producing sectors has to be examined in depth and


accoqnted for. With an interesting range of raw materials, why is it that industries based
upon them did not come up? Rubber, for instance, is an abundantly available raw material
and yet the state exports semi-manufactures of rubber and so also with coconut despite
being the major producer of these two raw materials useful for tyre industry and soap
industry, respectively.

The Case of Mining

Similarly, in the mining within the secondary sector, beach sand minerals including the
rare earths containing titanium and zirconium are also being exported out of the state as
raw materials. 28 The coast sand dunes ofKeralam are enriched with six minerals, namely,
ilmenite, rutile, zircon, monazit~, leucoxene (brown ilmenite), sillimanite and garnet.
Kollam and Alappuzha districts are ·the most potential source of these mineral deposits

activity (A.O. Hirschman 1958: The Strategy of Economic Development, Yale University
Press, New Haven).
21
M.P. Parameswaran 1990: "Kerala's power predicament: Issues and solutions" Economic and
Polilical Weekly, Sept., vol. 25, no. 37, 15 September, pp. 2089-92.
22
K.K. George 1997, p. 251.
23
Joseph Tharamangalam 1998, pp. 29-30.
24
B.A. Prakash 1994, p. 34.
2S
K.K. George 1997, p. 409.
26
Hindu 1999: Feb.26.
27
P .L. Beena 1994, ICKS vol. 5, p. 19.
28
Damodaran & Govindarajulu 1994, p. 3.

99
along a coastline that stretches about 150 km. 29 Minerals like Zircon and Monazite find
use in the nuclear industry. Zircon is used as structural materials in nuclear power
reactors. The mineral 'monazite' is radioactive as it contains thorium and uranium.
According to the top officials of the Indian Rare Earths Limited, all these six minerals
except sillimanite and garnet which are used as refractory and ceramic are categorized as
'Prescribed Substances' in the Atomic Energy Act, 1962, due to their use in the nuclear
industries and are categorized as 'Atomic Minerals'. 30 Zircon is normally produced as a
byproduct of the mining and processing of heavy-mineral sands containing the titanium
minerals ilmenite and rutile. 31 Titaniu~ is used in the aerospace industry thanks to its
- -
high steel-like strength to its low ,weight
.
ratio. According to the IRE website, ilmenite is
primarily exported to customers engaged in production of slag and sulphatable Titanium
dioxide (Ti02) pigment.

It has been pointed out that the case of monazite has been an instance of the drain of
natural resources of the state. The state has the largest and best deposit of monazite in the
country. The central government has exclusive monopoly over this and it gives 1.5 per
cent royalty on this, whereas even the erstwhile colonial government used to give 7.5 per
32
cent.

The 22 km. coastal stretch from Neendakara to Kayamkulam (including Alappad


panchayat in Kollam district, which was the worst affected by the tsunami disaster on 26
December 2004), has a heavy mineral content of 127 million tonnes with ilmenite content
of 80 million tonnes.33

In late April 2003, the Kerala Minister for Industries, P.K. Kunhalikkutty had announced
in the Assembly that a 17-km stretch of state-owned coastal land that lies north of the
Alappad panchayat i.e., from Kayamkulam estuary to Thottappilly in Alappuzha district
would be leased out to Kerala Rare Earths and Minerals Limited (KREML), a joint sector
company 34
, to ~onduct mineral sand mining for twenty years. The heavy mineral content
along this stretch was estimated at 17 million tonnes, with ilmenite content of 9 million

!9
Sekhar, et al 2003.
JO
T.K. Mukherjee & A.K . .Das 2005: "Fall out of new beach sand mineral policy",
http://www.shilpabichitra.com/shi Ipa2003/dest085.htm I ( 14.04.2005).
Jl
Hedrick, James B. 2005: "Zirconium and Halfnium" http://minerals.usgs.gov/mineralsl
pubslcommodity/zirconium/730400.pdf ( 14.04.2005).
32
K.T. Rammohan 1991: "Understanding Keralam: The Tragedy of Radical Scholarship",
Monthly Review, vol. 43, no. I, Dec, pp. 18-31.
lJ
www.keralaindustry.org. The official death toll in Keralam had crossed 176
(www.kaumudionline.com 2004; Meppayin 2005), out of which Kollam district alone
accounted for 142 deaths (Meppayin 2005). It was in Alappad panchayat under
Karunagappally taluk where a large number of people lost their lives (Nair 2004).
IRE, a central public sector undertaking, and Kerala State Industrial Development Corporation
hold 20 per cent and 26 per cent equity stake, respectively, in KREML. However, the
controlling stake is held by the private company, Cochin Minerals and Rutiles Ltd (CMRL).

100
tonnes. 35 "The unprecedented haste with which the lease was awarded evoked
suspicion."36 The propose_d mining poses serious threat to a fragile eco-system in that the
adjoining Kunanad marshlands, below the sea level, known as 'the rice bowl of the state'
and Vembanad lake, the largest water-body in the state might get engulfed by the sea. 37
There can be no doubt that it has been grossly against the interests of the state and its
people that both the United Democratic Front (UDF) and Left Democratic Front (LDF)
governments have been pursuing a policy line of extending support to the mining lobby
that caters primarily to the ~uclear in~erests, to the wanton destruction of natural environs
and to the detriment of human lives_and livelihood in the state.38

Why did capitalist development efthe secondary sector not take place in Keralam, unlike
say, in Tamil Nadu, Maharashtra or Gujarat? Can it be answered in general terms that it is
a fall-out of the uneven development characteristic of capitalism, particularly in its
oligopolist phase? Let us look at the specific reasons in case ofKeralam, in this respect.

With no significant industrial development and having had a trade-driven, plantation-


dominated economy since colonial times, Keralam, today, is practically an exporter of
semi-manufactures and human labour. With a production system targeted for external
markets, Keralam has long been an externally-oriented economy, in most likelihood,
more than any other state in India. 39 This has, primarily been a colonial legacy. A
powerful class of traders also developed under colonialism and it would not be far off the
mark to designate their interests as having been intertwined with the interests of
colonialism and in this sense, the dominant trading class in the state was 'comprador' in
their origins. Both the plantation, lobby and the traders lobby had their lot intimately tied
up with the external markets and there was little possibility of tht::m being patriotic
towards the Kerala nationality. They would rather have their eyes fixed on quick and easy
profits with the lowest possible risk and so it was quite unlikely that they would resott to

JS
www.keralaindustry.org.
31>
Jacob, Sreedevi 2003: http://www.indiatogether.org/2003/aul!lenv-kermining.htm
(09.01.2004); Sekhar, L.K and Jayadev S.K. 2003: "Karimanal (Mineral Beach-Sand) Mining
in the Alappuzha Coast of Kerala- A People's Perspective" in Martin J. Bunch, V. Madha
Suresh and T. Vasantha Kumaran (eds.), Proceedings of the Third International Conference
on Environment and Health, Chennai, India, 15-17 December,
www.yorku.ca/bunchmj/ICEH/proceedings/Sekhar L ICEH papers 470to488.pdf
(09.01.2005).
l7
Jacob, Sreedevi 2003: http://www.indiatogether.org/2003/auglenv-kermining.htm
(09.0) .2004).
38
More on this in Chapter V, in the section on fisher community.
39
For an historical account of the development of entrepreneurship in the largest Malayalee
princely state ofThiruvithamkoor, see Raman Mahadevan 1991: 'Industrial Entrepreneurship
in Princely Travancore' inS. Bhattacharya (ed) 1991: The South Indian Economy: Agrarian
Change, Industrial Structure and State Policy C. /914-/947, Oxford University Press, Delhi.

101
other productive investments. 40 It indicates a basic inability as yet of Keralam under these
dominant classes of embarking on a trajectory of independent, self-reliant development
and of substantially overcoming the mode of exchange relations initiated under
colonialism and the classical international division of labour. Thus Keralam has been a
major market for consumables, benefiting the pan-Indian big capital and global
capitalism.

Keralam was one of the worst victims of the "License-Permit Raj" of the central
government prior to 1991.41 Moreover, the central investment in the state declined
steadily from the already low 3.2 per cent in 1974 to 1.62 per cent in 1986. 42 The statistics
represents a process of industrial _retardation when we compare the pre-1947 industrial
development of say, the princely state ofThiruvithamkoor which was significantly higher
than that ofthe aii-India. 43

The net value addition by manufacturing during 1990s declined to 5.39 per cent as
compared to 5.77 per cent during 1980s. Although there has been a marginal decline in
this respect during 1990s in the two neighbouring states, the case of Keralam is in
contrast to the trend at all India level with the corresponding figures of 9.06 per cent and
6.51 per cent (See Table 3.1 ).

Table 3.1: Annual growth of Net Value Added by manufacturing in factory sector

1981-2 to 1990-91 1991-2 to 1997-8

I Kerala 5.77. 5.39

Kamataka 7.71 7.24

Tamil Nadu 7.94 7.08

'
All India 6.51 9.06

Source: Calculated from various issues of Annual Survey of Industries; as cited in


Subrahmanian & Azeez 2000.

The dominant industry groups m Keralam even today belong mainly to


agriculture/forestry based and chemical based industries. Three industry-groups, food
products, basic chemicals and rubber-plastic-petroleum, taken together, account for more

40
More on these Regionally Dominant Classes in Chapter V under the section, "Historical
Constitution of Dominant Class Formations in Keralam".
41
Government of India 1965: Report ofthe Monopolies Inquiry Commission, K. C. Das Gupta,
New Delhi.
A.D. Damodaran & V. Govindarajulu 1994, ICKS II, p. 2.
4)
K.K. Subramanian 1990, Economic and Political Weekly, Sept.

102
than 50 per cent of the total value addition by manufacture. 44 Although non-electrical and
electrical machinery accounts for 10 per cent of the total value addition, capital goods
industry does not have a fair share in Keralam, a trend that continues in the 1990s, in
contrast to the two neighbouring states. During 1990s, high growth was recorded with
two of the' traditionally high profile industry groups in Keralam, namely, food products,
and paper and paper products. 45

pte low growth of chemical industries and rubber based industries could account for the
low-growth overall in the industrial structure of Keralam. The reason could be that the
liberalised _imports of these products under the new exim policies arising out of WTO
.conditonalities; caused a sharp decline of these industries; and it reflected on the overaU
industrial growth in the state. 46

During August 1991 to April 2000, i.e., during the first decade of 'liberalisation', Foreign
Direct investment (FDI) to Keralam was only 0.30 per cent of all India as compared to the
neighbouring states ofKamataka with 7.55 per cent and Tamil Nadu with 5.27 per cent. 47
The low industrial development of Keralam has earlier on been explained in terms of
labour militancy and the resulting industrial unrest and high wage cost with low
productivity. But of late, there has been realisation that there is no sufficient evidence for
labour alone being responsible for the low industrial development in the state. 48 Thus
efficiency wages 49 of workers in registered manufacturing in Keralam was 0.89 as
compared to 0.64 in Kamataka and 0.78 in T.N. in 1997-98. In 1990-91, it was 0.88 as
compared to 0.76 in Kamataka and 0.72 in T.N. 50 Nominal wage rates in 1996-7, was
Rs.l 07/- that is, higher than in T.N., Rs. 10 II- but lower than in Karanataka, Rs.ll8/- and
lower than the all India rate ofRs. 122/-.51
0

The Labour Bureau estimates show that compared to other states in India, Keralam had
the lowest number of strikes and lock-outs in 1997.52 That during liberalisation, trade
unions are on the back foot against the renewed offensive of capital is clear from the
I

substantially declining trend of strikes'froni 31 in 1997-98 to 16 in 1998-99. The number

44
K.K. Subramanian and E. Abdul Azeez 2000, p. 14.
4S
K.K. Subramanian and E. Abdul Azeez 2000, p. 14 .
•• K.K. Subramanian and E. Abdul Azeez 2000, p. 18.
47
K.K. Subramanian and E. Abdul Azeez 2000, p. 22; as cited from SIA statistics, Government of
India
48
State Planning Board 1984; Kannan 1998.
40
This is money wages divided by laboul'"productivity on lines suggested by Kaldor ( 1970).
so K.K. Subramanian and E. Abdul Azeez 2000, p. 25; as cited from SIA statistics, Government of
India ·
Sl
K.K. Subramanian and E. Abdul Azeez 2000, p. 23.
S2
P. Mohanan Pillai 1999: Sameeksha (Malayalam}, March 16-31, p. 6.

103
of man-days lost in 1998-99 on account of strikes by employees and lock-outs by
employers came down to 10:88lakh from 14.33 lakh in 1996-97. 53

Bureaucracy at various levels of state and local government has also been blamed for
industrial stagnation. 54 Supply constraints of inputs like land, fuel, infrastructure and state
policies have also been blamed for lack of industrial growth. 55 Alice Albin argued that
regional factors, primarily hindered industrial development in Keralam. They included:
lack of entrepreneurs, natural resource endowment, public investment, land prices, wage
rates. and labour disputes. B.A. Prakash argued that unfavourable economic factors,
development policies and social, political and labour factors were responsible for
industrial retardation.

The industrial structure hypothesis blaming it on lack of sufficient forward and backward
linkages has also been, sometimes, mentioned as a cause of industrial
56
underdevelopment. It may, however, be worthwhile to recall the wisdom of the Marxist,
dependency and World system theories that uneven development is characteristic of the
capitalist mode of accumulation, particularly so in its oligopoly stage. 5 7

Similar to that of Mohanan Pillai has been the analytical exercise carried out by Jayan
Jose Thomas who argued that the industrial backwardness of Keralam is owing to its
"path-dependent process of industrialization". 58 Thus in 1930s, when the princely state of
Thiruvithamkoor decided to go in for large-scale modern factories and the pan-Indian big
capital got attracted by the cheap and abundant supply· of hydro-electric power in the state
and came forward to set up a number of the highly power-consuming chemical industries.
The chemical industries have hardly had linkages to the rest of the economy in the state
and did not help in the further industrialisation of the state. Thus the lop-sided industrial

Piilai, P. Mohanan & N. Shanta 2006: "Kerala's Industrial Development: Past and Present'',
pp. 38-68, in Tharamangalam, Joseph 2006: Kerala: The Paradoxes of Public Action and
Development, Orient Longman, New Delhi, p. 51.
K.K. Subramanian and E. Abdul Azeez 2000, p. 28.
55
K. K. Subramanian and E. Abdul Azeez 2000, p. 21.
~6
K.K. Subramanian and P.M. Pillai 1986: 'Kerala's Industrial Backwardness: Exploration of
Alternative Hypothesis', Economic and Political Weekly, vol. 21, no. 14, April 5, pp. 577-92;
P. Mohanan Pillai 2006: "Structuring Industrial Linkages in a Developing Region: The Case
of Kerala", pp. 11-46, in Rajasenan, D. & Gerard de Groot 2006: Industrial Economy of
Kerala: Nodes and Linkages, Cochin University of Science and Technology, Cochin.
Paul Baran 1957: The Political Economy of Growth, Monthly Review Press, New York;
Am in, Samir 1974: Accumulation on a World Scale: A Critique of the theory of
Underdevelopment, Monthly Review Press, London, 2 vols.; Wallerstein, I. 1979: The
Capitalist World Economy, Cambridge University Press, Cambridge, Massachusetts.
Jayan Jose Thomas 2005: "Kerala's Industrial Backwardness: A Case of Path Dependence in
Industrialization?", World Development, vol. 33, no. 5, pp. 763-83.

104
structure is pointed out as a major reason for the lack of further industrialisation of the
state. 59

Jayan Thomas (2005) further sought to explain the phenomenon of regional


underdevelopment of the industrial sector in the state by taking recourse to the
Harrodian/Keynesian theories as against the neo-classical ones arguing that triggered by
"economies of macro-scale"60 and induced by technical progress, a "polarisation process"
sets in between countries, states and regions within a country. Where a region already
possesses some initial advantages with potential economies of scale already existing,
output expands rapidly as also productivity, unit production costs decline rapidly and
, capital accumulation and technic;al progress proceed apace. The market share of the
region further increases, leaving other regions behind. There results "a cumulative cycle
of growth differences"61 between regions.·Myrdal ( 1957) and Lewis ( 1977) are two other
not-so-radical scholars who have also tried to explain the phenomenon of 'uneven
development' .62

This explanation under the liberal political economy framework is somewhat in tune with
the explanations of 'uneven development' under capitalism as with the Marxist viewpoint
of Paul Baran and the radical political economists of the dependency and World system
schools. The key difference, perhaps, is that unlike with the liberal school, the latter
considered the polarisation process as the result of an exploitative relationship as far as
the periphery is concerned.

Under neo-liberal reforms in India, it has been observed that states with more advanced
levels of material development, with better infrastructure, agglomeration advantages and
market attractions could receive the lion's share of private industrial investment. 63
Industrial economists concerned about the lopsided industrial development in Kerala state
have advocated that State should come in and rectify the situation. 64

This may be characterised as 'the industrial structure hypothesis' in explaining the lack of
industrialisation of the· state. However, this explanation did not consider the lack of
agency of the State, primarily the state government, which could have initiated measures

59
Jayan Jose Thomas 2005: "Kerala's Industrial Backwardness: A Case of Path Dependence in
Industrialization?", World Development, vol. 33, no. 5, pp. 763-83.
1>0
Kaldor 1970.
61
Dixon & Thirlwall 1975.
62
Gunnar Myrdal 1971: Asian Drama: An Enquiry into the Poverty of Nations, Allen Lane,
London, first pub. 1968; W.A. Lewis 1977: The Evolution of the International Economic
Order, Princeton University Press, Princeton.
l>l
K.J. Joseph & K.N. Harilal 2006: "Regional Implications of Globalisalion: An Analysis of
Kerala", pp. 94-114, in Tharamangalam, Joseph 2006: Kerala: The Paradoxes of Public
Action and Development, Orient Longman, New Delhi, p. 103.
Subramanian 2003.

105
towards the industrialisation of the state. Moreover, it does not consider the severe fiscal
strain under which the st~te government was operating, even if it wanted to initiate pro-
active industrialisation measures.

We would propose that trying to understand the phenomenon on a broader canvass in


relation to the operations of the Indian and global metropolitan capital might have been
much more rewarding. Herein comes the importance of understanding the lack of
_ development of productive forces of the state from a dependency paradigm and the
crucial importance of the question of the autonomy of the state from the Centre, if it was
to be capable of taking up measures in this direction.6 s
i. , t

The dilemma, however, is thai if the State itself has no control over the financial
resources of the state such as remittances, how could it be in a position of saving the
situation? ·The state, apparently, has a surfeit of capital, as we have pointed out earlier.
The remittances contribute to inflation, but do not help to ease the fiscal problems
because the state government has no control over these financial resources. 66 This may be
considered as one of the central dilemmas of the political economy ofKeralam.

Theorisations differ starkly about what happens to regional inequalities under


•Jiberalisation'. Jagdish Bhagwati (1993) suggests that "if markets respond with allocative
efficiency to relative factor scarcities, if regions with lower capital-labour ratios have a
higher marginal productivity of capital and therefore offer higher rates of return to capital,
then regional disparities ought to be reversed by deregulation and replaced by regional
convergence ...67 However, the data on regional inequalities suggested the very reverse. 68

Sectorwise SOP Growth

Industrial development during the post 1947 period was quite low, as compared to the
first half of the 20th century under the princely rule in Thiruvithamkoor and Kochi.

65
The state already had an impressive number of PSUs vis-~-vis other states in the country.
66
Joseph Tharamangalam 1998, p. 32.
67
Jagdish Bhagwati 1993: India in Transition: Freeing the Economy, Clarendon, Oxford; as
paraphrased in Harriss-White 2003, p. 245.
68
R. Mohan & P. Thottan 1992: The Regional Spread of Urbanisation, Industrialisation and
Urban Poverty, pp. 76-141, in Harriss, B., S. Guhan & R. Cassen 1992: Poverty in India:
Research and Policy, Oxford University Press, New Delhi; R. Meher 1999: 'Inter-state
Disparities in Levels of Development and the Implications of Economic Liberalisation on
Regional Economies of India', Review of Development and Change, vol. 4, no. 2, pp. 198-224.

106
Table 3.2: Sectorwise Growth in Kerala (1962/63 to 1985/86) (In Percentages)

Period SDP%- Primary sec. % Secondary Tertiary sector


sector % %

1962/63-74175 3.2% 2.23% 4.71% 4.24%

1975176-85/86 1.76% Minus0.70% 2.15% 5.32%

Source: Compiled from C.T. Kurien 1995: "Kerala's Development Experience: Random
Comments.About the Past and Some Considerations for the Future", Social Scientist, Jan.-
March, pp. 51-52. ·
The decade preceding mid-1970s recorded a moderate gro~ in Kerala economy at 3.2
per cent SOP. growth, which declined to merelY- 1.76 per cent in the decade following it,
which coincided with the Gulf boom. So the stagnation in Kerala economy coincided with
the beginnings of the Gulf boom in mid-1970s (See table 3.2). Harilal and Joseph
characterised it as a 'Dutch dis~ase' and argued that it was a decline of non-tradables as a
result of a surge in the tradeable sectors of the economy. Herein exported human labour
may, more appropriately be considered the tradeable commodity.

During 1980-81 to 1987-88, when the annual compound growth rate for all-India was
10.56 per cent, Keralam recorded only a marginal rate of 1.73 per cent in value added by
manufacture. 69 Growth rate ofthe State Domestic Product in the 1980s was 2.2 per cent
compared to 5.2 per cent GOP growth for all-India. Even this growth rate was achieved,
largely, on account of the tertiary sector. 70

The overall SOP growth and the growth rates in the primary and secondary sectors came
down during 1980s. The better performance of the tertiary sector, structurally unrelated to
the first two, can be accounted for by the remittances from the Gulf, through migrant
Keralite workers, which began to pour in since the mid-70s. 71 Whereas the OECD
countries72 in particular lost out in the oil shocks of 1973, Keralam was an indirect
beneficiary through migrations to the Gulf countries made rich by the three-fold rise in oil
prices. Roughly halfthe number of migrants from India to West Asia are from Keralam. 13

Kurien, C.T. 1995: "Kerala's Development Experience: Random Comments About the Past
and Some Considerations for the Future", Social Scientist, Jan.-March, pp. 50-69.
70
Mridul Eapen 1994: "Employment and Unemployment in Kerala - An Analysis of Recent
Trends", International Conference on Kerala Studies {ICKS)- Abstracts, vol. 2, AKG Centre,
Thiruvananthapuram, p. 65.
71
C.T. Kurien 1994.
72
Leading industrial economies in Europe, plus the US, Japan, Canada, Australia and New
Zealand- a total of24 countries in 2002.
7J
T.N. Krishnan 1994, p. 58.

107
Interestingly, it was argued that as against a linear process of cultural homogenisation and
global cosmopolitanism resulting from greater global interdependence, there are certain
processes ?f hybridisation, fragmentation and crystalisation of identities taking place as a
result of migration and cultural influence brought in by the Malayalee diaspora abroad. 74

The total sectorwise contribution to State Domestic Product (GSDP) in Keralam during
1998-99 was 59.72 per cent for service sector, 26.6 per cent for agriculture sector and
13.51 per cent for manufacturing and mining (with mining contributing only 0.21 per cent
ofSOP). 75

The annual growth rate of Net Do.mestic Product (NDP) during the Structural Adjustment
Policies (SAP) since 1991 (as in Table 3.3) is 6 per cent whereas during 1980s it was only
less than 5 per cent and during 1970s, less than 3.5 per cent. The growth rate during
1990s is slightly more than the all-India and the neighbouring state of Kamataka, but
slightly less than that of the other neighbouring state ofTamil Nadu. The growth in itself
looks positive as against the stagnation of the 1970s and the low growth of the 1980s, and
at a higher level than the growth at all India level. If the remittances of the emigrants is
also included, the picture could be more positive (It is important to note that CSO's NDP
estimates do not include remittances).

Table 3.3: Annual growth rates of Net Domestic Product (NDP)

Period Kerala Karnataka Tamil Nadu All India

l97i-2 to 1980-1 3.43 - - 3.44

1981-2 to 1990-1 4.83 5.39 5.35 5.36

1991-2 to 1997-8 6.05 5.46 6.26 5.64

Source: Calculated using CSO data on National Accounts Statistics collected from EPW
Research Foundation and RBI Handbook of Statistics; as quoted in Subrahmanian &
Azeez 2000. -- ·

However, it is important to look at the sectors of growth in order to understand the actual
character of the growth pattern in 1990s (See Table 3 .4). Thus service sector has recorded
the highest growth rate at 7.91 per cent, even higher than at the all-India level of 6.47 per
cent. Growth of industry is less (5.04 per cent) than that of all-India (6.85 per cent).
Growth rates of agriculture in Keralam is significantly higher, probably due to the sharp

Kamala Dawar 1998, pp. 100-101. [Interestingly, most of the migrants from Keralam have the
dream of returning back to settle in the state, perhaps, unlike the Gujarati or Punjabi migrants
abroad.] Arjun Appadurai's writings could be of help for studies in this direction.
Ce~tral Statistical Organisation (CSO) 2002: www.indiastat.com.

108
fluctuations in the prices of cash crops produced by Keralam (especially of rubber during
1990s).

As for the sectoral contribution to total NDP growth during 1990s, services occupy an
overwhelming 59 per cent. The share of industry has markedly declined; even the share of
agriculture has marginally declined. The overall picture shows that the commodity
producing sectors are faring badly, even as the service sector is surging ahead. Herein
construction is included in the service sector. But even when construction is excluded
from the service sector, it occupies the largest share (45 per cent) in the NDP growth
during 1997-98. 76 This pattern of growth should be considered a cause for concern since
growth in tertiary sector is usually considered to be of a rather volatile kind.

Table 3.4: Sectoral contribution to total NDP growth in Keralam

Period Agriculture and Industry Services


allied activities

1981-2 to 1990-1 31.87 17.43 50.70

1991-2 to 1996-7 29.27 11.68 59.05

Source: Calculated using CSO data on National Accounts Statistics collected from EPW
Research Foundation and RBI Handbook of Statistics; as cited in Subrahmanian & Azeez
2000.

The Tertiary Sector

As mentioned earlier, the growth of the Tertiary Sector has been significantly higher,
structurally unrelated to the primary and secondary sectors of the economy, boosted and
sustained by the remittances from abroad. 77 There has been expansion of education and
health services, in quantitative terms, though not so much in qualitative terms. Thus,
specialised health care is available to only to 5 per cent of the population in Keralam. 78
But quantitative achievement in itself (for example, in literacy) is an asset unsurpassed by
other states. Between 1960 to 1980, the state's spending on education ranged from 30 to
40 per cent of its total revenue receipts. 79 The historically higher rates of expenditure on
human resource development has stood the state in good stead as is evident from the huge
remittances derived from export of human resource from the state. Over the years,

71>
_K.K. Subramanian and E. Abdul Azeez 2000, p. 8.
71
Nair.,,P.R. Gopinathan & Mohanan Pillai 1994: Impact of External Transfers on the Regional
Economy of Kerala, Centre for Development Studies, Trivandrum.
78
Hindu 1998: Co.imbatore ed., June I 5.
79
Joseph Tharamangalam 1998, p.30.

109
however, Keralam has earned the dubious distinction of being the only state whose real
social expenditure has come down during 1985-86/1991-92 period as compared to the
decade ending in 1984-85.80 The 'success-induced problems' of Keralam have partly
contributed to additional financial burden in the social sector. Thus the improvement in
life expectancy brought along the need for additional spending on old age care. Continued
expenditure was required even to sustain the achievements ofthe past. But the fiscal crisis
of the state is at the root of the crisis in social sector spending, as also, perhaps, of the
general crisis of development.

The Public Distribution System (PDS) has been one of the best in the country, in terms of
its wide reach. In 1980s, Kerala_m was the only state whose spending on education was
more than 6 per cent of its SOP, against an average of 3.65 per cent for all states in 1988-
89.s'- --

It has· been pointed out that the growth of the service sector in the state at 62.18 per cent
of the NSDP during the 1990s was concentrated mainly in Transpot1 by other means
(other than railways) at 15.64 per cent which almost doubled its proportion as compared
to the eighties, Banking and insurance which has continued to maintain its position as the
leading component in· service sector growth at I 7. I 5 per cent during the 1990s, and
Trade, hotels and restaurants in the third position at 12.46 per cent. 82 Both Transport by
other means and Banking and insurance were considered as Producer services. However,
the linkages with production have not been within the state but external to the state. 83

The disproportionately high growth of the service sector, structurally unrelated to the
agricultural or the industrial sectors, may be conceptualised with reference to the mode of
operation of global capitalism in peripheral/Third World nationalities. Several scholars in
the field of Development Studies viewed the growth propelled by a bourgeoning service
sector during liberalisation as a positive development. 84 It may be noted that our
understanding is at variance with this approach. Neo-liberal reforms even in the advanced
capitalist countries have focused on "clearing a channel to the profitable expansion of the

80
Thomas Isaac T.M./Michael Tharakan P.K., Social Scientist, Jan-March 1995, p. 12
81
Joseph.Tharamangalam, 1998, p. 30.
S2
P. Mohanan Pillai & N. Shanta 2005: "Long Term Trends in the Growth and Structure of the
Net State Domestic Product in Kerala", Working Paper 376, Centre for Development Studies,
Thiruvananthapuram, October, pp. 30-31. It may be noted that construction is not included in
the Service sector herein.
SJ
P. Mohanan Pillai & N. Shanta 2005, pp. 34-35.
84
Chakraborty Achin 2005: "Kerala's Changing Development Narratives", Economic and
Political Weekly, vol. 40, no. 6, 5 February, pp. 541-47; Kannan, K.P 2005: "Kerala's
l:urnaround in Growth: Role of Social Development, Remittances and Reform", Economic
ana- Political Weekly, vol. 40, no. 6, 5 February, pp. 548-554; K.K. Subrahmanian and E.
Abdul Azeez 2000: Industrial Growth in Kerala: Trends and Explanations, Working Paper
No. 310, Centre for Development Studies, Thiruvananthapuram.

110
low-productivity service sector". 85 The operations of monopoly capitalism in the
peripheral nationalities, often, leads to a distorted pattern of development such as of
'mono-crop economies' and· development of intermediary commercial and trading capital,
rather than industrial capital in keeping with the export-orientation of these economies. 86
Thus Frank viewed it as a result of the aggression of the capitalism of the developed
countries and Am in spoke of peripheral economies as resembling the 'spokes in the wheel
of Global capital'. This could be the basic reason for the disproportionate development of
the service sector, structurally unrelated to the commodity-producing sectors of the
economy. 87. Thus the service sector grew first in the colonial and semi-colonial/neo-
colonial countries much before the development of manufacturing industries.

M. Kabir (2003) argued in the context of a historical study of colonial Keralam that the
internal dynamics of the agrarian structure was the primary determinant of the growth in
Services. He however, underplayed the role of colonialism, in determining the growth of
the Service sector in the state. 88 We would argue that the relationship was not so much to
be viewed as a dichotomous relationship or binary opposition between colonialism and
the local agrarian structure because the two were so intertwined with each other because it
was colonialism itself that set into motion the process of transforming the agriculture
sector by introducing commodity production and eventually turning it into a plantation-
dominated one. The classic study by William logan on Malabar had also shown how
colonialism had upset the traditional patronage-clientelage relationship and made all
categories of tenants insecure. This, in tum, had provided the context of the so-called,
·Mappilla revolts', more appropriately designated as 'Malabar rebellion' during the late
l91b and early 201h .centuries·. 89

ss Robert Brenner 2002: The Boom and the Bubble: The US in the World Economy, Verso,
London, New York, p. 35.
86
Paul Baran 1957: Political Economy ofGrowth, Monthly Review Press, New York; A.G.
Frank 1967: Capitalism and UnderdevelopmenJ in Latin America, Monthly Review Press,
London; Samir Am in 1974: Accumulation on a World Scale: A Critique ofthe theory of
Underdevelopment, Monthly Review Press, London, 2 vols ..
87
On the other hand, Colin Clarke, Fischer, et at viewed the growth of the Service sector as
corresponding to the development of the'economy and Kuznet made empirical verification of
this hypothesis. Yet another theory, namely, the residual employment theory argued that the
excess supply of labour created its own employment in the Services and that the sector did not
demand high capital investments and allowed easy entry, etc. Although the residual
employment theory seems to have some extent of applicability with Service sector in general,
the Dependency framework of Frank, Amin, et al seems to capture much more of the
specificities of the peripheral economies (See Chapter II in this thesis and M. Kabir 2003:
Growth of Service Sector: Malabar /90/-1951, Department of Economics, University of
Kerala, Thiruvananthapuram for a detailed review of these theories although this review is
quite prejudiced against the Marxist, dependency and world system approaches. These latter
approaches are sympathetically reviewed by us in Chapter II of this thesis.).
81
M. Kabir 2003: Growth of Service Sector: Malabar 1901-1951, Ph.D. thesis, Department of
Economics, University of Kerala, Thiruvananthapuram.
89
William Logan 1887: Malabar, 3 vols., Government document, Madras.

111
Re-channelising agricultural surplus for industrialisation (as in the Soviet Union of the
inter-war period) was often projected as a model for industrial development in the newly
independent countries ofth~ Third World after the Second World War. 90 Why this model
could not be materialised is a matter to be probed into in each case. Questions may be
posed if it was due to the pejorative role of global capitalist forces and the native
dominant classes whose interests were enmeshed/intertwined with those of the former.

The Dependency Syndrome in Keralam

Keralam, today, is virtually an exporter of semi-manufactures and human labour. In other


words, Keralarn _has_ not moved away from the mode of exchange relations initiated by
colonialism. Some difference may" be noted here with the historically better performance
of the erstwhile princely states of Keralarn, Thiruvitharnkoor ·and Kochi, whether in
industry or in agriculture, in comparison to all-India. Frontier industrial development had
characterized the colonial.:monarchical rule in Keralam before the· transfer of power.
There cannot be a dispute about the veritable resource base of the state. Keralam has an
interesting range of raw materials, high rain agro-climatic geography, long sea shore with
infinite marine and maritime possibilities, including inland transport systems and an
efficient human resource base. 91 Coral reefs, backwaters, forty-four rivers and ~ich bio-
diversity are assets of Keralarn. 92 A rich tradition of Ayurvedic medical system is among
the positive legacies ofthe state.

There were expectations through the process of liberalisation, of surplus realisation to


some minimal extent in exchange relations ofKeralam on the international arena, relative
to the disadvantageous position of Keralam with the rest of India in this regard. 93 This
might partly explain why the demands for national self-determination in the form of
demands for greater federal autonomy for the state or even for the independence of
Keralam as a national formation from the Centre have been on a low key during the entire
period of 'liberalisation' beginning since 1991. Access to the wider world market for the
agricultural products of the state, with a likelihood of greater returns than when their

See Evgeny Preobrazhensky's critique of this model in Section Ill of this chapter: 'The ADS
bondage... '.
91
Damodaran, A.D. & V. Govindarajulu 1994: International Conference on Kerala Studies
(ICKS)- Abstracts, vol.2, p. 3.
M.A. Oommen, 1996, p. 8.
Q)
See the price differentials in rubber and coconut during pre- and post-liberalisation periods in
Poomima Varma 2002: Agriculture under Economic Liberalisation: A Study of Rubber and
Coconut Prices in Kera/a, M.Phil. dissertation in Applied Economics of the Jawaharlal Nehru
University, New Delhi, Centre for Development Studies, Thiruvananthapuram. There was
narrowing gap between the domestic and global prices of rubber, coconut and coconut oil
since early 1990s. However, the most important impact was fall in the prices of rubber and
coconut; the two major crops that cover 60 per cent of the gross cropped area in the state
(Varma 2002, pp. 61, 2).

112
prices wer·e fixed by the business lobbies in India, particularly by the lobbies of Bombay
businessmen could have b-:en a rather satisfying outcome for the plantation and traders
lobbies within the state. However, the likelihood of better terms of trade was
accompanied by the anarchy of agricultural production internationally and risk of the
great uncertainties and volatilities in prices that ensues therefrom. However, these
dominant classes within the state preferred to tie up their destinies with the forces of the
globalisation of capital and pin their hopes on the prospects of international finance rather
than trying to resist them. We would view that this orientation has much to do with the
historical origins of these classes as adjuncts of colonial interests, as we have already
argued.

To begin. our examination of the question of the financial dependency of the state, the
·- . - - -· .
migrant Malayalee workers have brought in huge foreign exchange earnings for two
decades since 1974 ($15-20 billion), comparable even with the case of a vast and
sprawling country like China 94 Remittances contributed 300 crore rupees annually by
early 1990s as foreign exchange (forex) reserves of the Government of India. 95 The total
cash remittances received by Kerala households during the 12 months of 1998 was
Rs.35,304 million. 96 Including non-household remittances and goods received by
households, the total value of household remittances (cash plus goods) amounted to
Rs.40,717/- or 10.7 per cent ofSDP. 97

Similarly, Rs.l,OOO crore (Rs.IO billion) worth forex is earned every year through export
of plantation crops and marine products. 911 Thus the export earnings of the state's marine
food exports was Rs. 1,000 crore during 1998.99 Nearly 30 per cent of the gross cropped
area in the state constituted exportable cash crops including natural rubber. 100

Nationalized banks, financial institutions like LIC and GIC, and the Cochin Stock
Exchange initially and the Mumbai and National Stock Exchanges today became a drain
upon the finances of the state. 101

K.T. Rammohan 1991.


K.T. Rammohan, 1991.
This is supposed to be an underestimate since remittances may be under-reported and because
it does not include remittance to institutions and other non-household remittances. Goods
received as remittances (clothing, jewellery, electric and electronic gadgets) valued Rs.
5,413/- (K.C. Zachariah, et al, May 2000, p. 21).
K.C. Zachariah, et at, May 2000, p. 22.
K.T. Rammohan 1991.
K.C. Zachariah, et al, May 2000, p. 21.
S. Mohanakumar & R.K. Sharma 2006: "Analysis of Farmer Suicides in Kerala", pp. 1553-58,
Economic and Political Weekly, 22 April, vol. XLI, no. 16, p. 1553; Government of Kerala
·.2004: Economic Review, State Planning Board, Thiruvananthapuram.
101
K.T: Ram Mohan & K. Ravi Raman 1990: ... , Economic and Political Weekly, .... Similar
studies-done in the case of the Punjab for instance, argued that there appeared to be an outflow
of savings from the Punjab to other parts of the country (eg. Dunham, D. 1991: "Agricultural

113
As for the exportable agricultural produces of the state, Keralam ranks first among the
states producing coconuts_ in India and it produced 5.76 billion coconuts in 1996-97
accounting for 44.3 per cent of India's total i.e., 12.99 billion_l 02 The state has near
monopoly in rubber,· which is another exportable commodity. Even recently, it was
pointed o_ut that Keralam accounts for 92.15 per cent of the total rubber production in the
country. 103 However, the export intensity of rubber has been quite low ranging from 0.24
per cent in 1997-98 to 10.67 per cent in 2003-04. 104 Presumably, this could be because of
the_high demand for natural rubber within the country itself. Keralam accounted for 92.3
per cent (559.1 thousand tonnes) of the total rubber production in India (605 thousand
'
tonnes) as in 1998-99_1°5

The share ofthe production of spices ofKeralam was 5.9 per cent of all India in 1991-92
(7'b position among states) and 4.1 per cent in 1998-99 (8th position). 106 In 1998-99,
Keralam was the top producer of cardamom in India, accounting for 55.4 per cent {4,990
tonnes) of the total production of cardamom in India (9000 tonnes). 107 Recent figures
show that Keralam also accounted for 90 per cent of the pepper production in India. 108 It
may also be recalled that India is the biggest producer of pepper, accounting for 25 per
cent of the total world production and having l3 per cent share in the total world
exports. 109 Pepper seems to be the major foreign exchange earner among the cash crops of
Keralam. Thus, out of 75,000 tonnes of pepper produced in India in 1998-99, Keralam
accounted for 60,000 tonnes. The export of 35,000 tonnes of pepper during 1997-98
obtained the country around Rs.487 crore in foreign exchange. 110

As we have mentioned in the beginning of this ~ection, one of the most important aspect
. .
about the political economy of Keralam, aggravating the nationality problem in material
terms, has been that neither the huge amount of remittances by non·-resident Keralites nor
the export earnings, mainly from cash crops and marine products have contributed
significantly to the development of productive forces within Keralam although they have

Growth and Rural Industry: Some Reflections on the Rural Growth Linkages Debate",
Working Paper no. 14, Institute of Social Studies, The Hague; Pritam Singh 1999).
10~
www.indiastat.com 2000: As cited from Industrial Databook, CIER.
10)
S. Mohanakumar & R.K. Sharma 2006: "Analysis of Farmer Suicides in Kerala", pp. 1553-58,
Econ_omic and Political Weekly, 22 April, vol. XLI, no. 16, p. 1554.
104
S. Mohanakumar & R.K. Sharma 2006: "Analysis of Farmer Suicides in Kerala", pp. 1553-58,
Economic an<f'Political Weekly, 22 April, vol. XLI, no. 16, p. 1554.
lOS
Government oflridia 2000: Rajya Sabha, Answers to questions, www.indiastat.com.
lOb
Government of India 2002: Ministry of Agriculture, Press Information Bureau,
www.indiastat.com.
107
Government of India 2002: Ministry of Agriculture, www.indiastat.com.
108
S. Mohanakumar & R.K. Sharma 2006: "Analysis of Farmer Suicides in Kerala", pp. 1553-58,
Economic and Political Weekly, 22 April, vol. XLI, no. 16, p. 1554.
lOCI
S. Mohanakumar & R.K. Sharma 2006: "Analysis of Farmer Suicides in Kerala", pp. 1553-58,
Economic and Political Weekly, 22 April, vol. XLI, no. 16, p. 1556.
110
Hindu, April18, 1999.

114
contributed to inflation. So then it is a question of control over financial resources by the
state. As for the state gove~ment, it has been encumbered with the burden of a heavy
debt with interest commitments higher than the loan amount raised. 111

The production base of Keralam was somewhat rightly characterised by acute fiscal
crisis, leading to the 'basic developmental problem - deterioration in the performance of
productive sectors, aggravating poverty and unemployment.' 112 So it becomes incumbent
on us to probe into the factors responsible for the stultification of the productive forces in
the state.

The Paradoxical Fiscal Crisis of the state

The acute fiscal crisis of the state needs in-depth analysis. It is a paradox of sorts that
abundant superflu-ity .of capit3l -exists side by side with acute fiscaf crisis: How and why
does it occur needs to be probed into.

The remittances from several million migrant Keralites living and working abroad is a
major source of finances. As we have observed earlier, remittances contribute to the
foreign exchange reserves of the Government of India, alleviating Balance of Payment
crisis and may cause inflation within the economy of the state but need not contribute to ·
the development of productive forces. During the twenty years from 1974 to 1994,
remittances to the state have been to the tune of $15-20 billion, going by conservative
estimates. If we include the illegal transfers of money from abroad also, the amount
would have been considerably higher. It is an interesting comparison that even in China,
the remittances by overseas Chinese between 1979 to 1993 was only $33 billion. 113
Remittances to the state varied from 15 to 30 per cent of SOP during 1972-73 to 1989-
90.114 The massive foreign exchange remittances to the state by the migrant workers from
the state, as household cash remittances alone (excluding non-household remittances) was
estimated at 3,530.4 crore rupees for the year 1998. 115 Going by latest estimates, nearly
25 per cent of the net SOP of the state is accounted for by remittances from abroad. 116
Apart from remittances, dom.estic income, particularly from the sale of cash crops, is also
not serving the end of productive investment within the state. 'Kerala model' has rightly

Ill
See, K. Ravi Raman 2004: "The Asia11 Development Bank loan for Kerala (India): The
adverse implications and search for alternatives", Working paper 357, Centre for
Development Studies, Thiruvananthapuram .
.. 112
B.A. Prakash, 1994, p. 25. This was prior to the imposition of expenditure curbs on the state
through the FRBM Act since 2003.
113
M>A. Oommen, 1996, p. 5.
114
T.N. Krishnan, ICKS II, 1994, p. 58.
liS
K.C. Zachariah et at, May 2000.
lib
Pushpangadan 2003: 'Remittances, Consumption and Economic Growth in Kerala: 1980-
2000', Working Paper no. 343, Centre for Development Studies, Thiruvananthapuram.

115
been designated as a transient ecstacy, sustained largely, by remittances. The
disproportionate developm_ent of the service sector does not seem to be sustainable, given
the crunch in the labour markets outside the state and the consequent decline in
remittances and volatility in the prices of cash crops, lately. The surge in the growth of
the Service sector and the 'phenomenon of cash surplus' 117 since early the decade of
2000s can be explained in relation to remittances pouring into the state.

Outflow of investible surplus

While there was sharp increase in bank deposits within the state, the Credit-Deposit (CD)
ratio declined sharply. 118 Thus as per the assembly debates in Keralam in 1994-95, 18,000
crore rupees was deposited in the banks ofKeralam. Out ofthis~ only 1986 crore rupees
119
was given out as credit- within the state. 52,822 crbre rupees was estimated to be
available with the Scheduled Commercial Banks within the state 120 (about 9 per cent of
which is expected to be Non-Performing Assets) ..121 The credit-Deposit (CD) ratio was
merely 44.88 per cent by March 1998. 122 By way of comparison, in Maharashtra and
Gujarat, it is over 100 per cent. 123 The CD ratio in Keralam was estimated to be 30 per
cent less than that of other states in early 1990s. 124 According to the data provided by the
Reserve Bank of India, the Credit-Deposit ratio of Scheduled Commercial Banks in
Keralam was only 41.52 per cent in March 2000, with Rs.390,449.4 million deposited and
I

only 162,148.9 million given out in credit. 125 After complaints being raised by the state
government in 2002, there was some rise in CD ratio in the subsequent years. These
should be indicative of the extent of outflow of investible surplus from the state. The
Cochin Stock Exchange which was started in 1978 grew- remarkably in 1980s,
particularly in the second half of the decade, with the daily trading volume rising from
rupees 3 lakh in 1984 to over rupees 800 lakh in 1989. 126 The massive consumer
expenditure within the state is another major channel of capital outflow.

117
Isaac, T.M. Thoma's and R. Ramakumar 2006: "Why Do the States not Spend? An Exploration into
the Phenomenon of Cash Balance Surplus of States and the FRBM Acts", Paper presented at the Centre
for Development Studies, Thiruvanathapuram, 20 October.
118
T.M. Thomas Isaac/P.K. Michael Tharakan. "Kerala, The Emerging Perspective: Overview of the
International Congress on Kerala Studies", pp. 3-36, Social Scientist, vol. 23, no.l-3, Jan.-March 1995,
p. 12.
119
Malayala Manorama 1996.
120
Hindu, 2 Dec. 2002.
121
This was revealed in personal communication in 2002 by the Head of the SBI in Keralam.
122
Hindu, July 22, 1998.
123
T.G. Jacob, 1998.
124
Damodaran & Govindarajulu, ICKS II, 1994, p. 2.
12
s RBI, 2000.
126
K.T. Rammohan & K. Ravi Raman 1990: Economic and Political Weekly.

116
Growth of Consumerism

Going by latest estimates, the people of Kerala state who constitute 3.10 per cent of
India's population in 2001 account for an impressive 4.28 per cent of the total
consumption expenditure in the country in 1999-2000. 127 The per c;apita consumption
expenditure in the state was 816.76 rupees per month, which was the highest among
major ~tates in ·1999-2000, as against the all-India average of 590.98 rupees per month.
Punjab which followed in the second position had a per capita consumption expenditure
of792 rupees per month and Haryana in th~ third position had 768 rupees per month. The
lowest figure in this;respect was for Orissa at 414 rupees, followed by Bihar with 417
rupees. 128 Agai~, the NSSO surveys on per capita consumer expenditure of major states in
India reveal that Kera!~m h~ climb~~.fr:o'!' 8_m position in 1972-73 to 3_n~_ position in_1983
and to 151 position in 1999-2000, relegating Punjab to the 2nd position from its long-held
151 position and putting Haryana behind in the 3rd position. This is indicative of how the
Iittle Keralam with .little industrial production constitutes a major chunk of the consumer
market for Indian and global oligopolies. 129

The remittances contribute to inflation, but do not help to ease the fiscal problems
because the state. government has no control over them. 130 This is one of the most
important problems of the politic~l economy of Keralam. Spurred on by remittances,
there has been _a boom in the consumer culture of the state. By early 1990s, the per capita
consumption of Keralam in real terms, doubled vis-a-vis the proportion of it in of 1960-
61.13i There is a drain upon the state's resources in terms of the surplus extracted for
consumer goods like medicines, cosm_etics, hospital equipments, foreign liquor, besides
building materials, paints, etc. 132

It is also worth mentioning the direction in which public policy is moving with regard to
the. development of the state even today. President Abdul Kalam's 10-point Vision 2010
for- Keralam, as presented in the state assembly on 28 July 2005 has been given great
policy importance during the UDF government and even under the LDF government that

127
This figure is derived from the per capita consumption in 1999-2000 multiplied by the total
population_ in Keralam in 200 I, as percentage of the corresponding figure at all-India level.
128
This is based ori the combined figures of both rural and urban per capita consumption
expenditure in 1999-2000. Government of India 2001: Differences in Level of Consumption
among Socio-economic Groups, 1999-2000, National Sample Survey 55'h Round, Ministry of
Statistics and Programme Implementation, September.
129
Jose Sebastian 2003: "What We Malayalees Produce and Consume? Mapping the local
products in the consumer goods market of Kerala" (booklet}, Institute for Enterprise Culture
and Development, Thiruvananthapuram, November.
IJO
Joseph Tharamangalam, 1998, p. 32.
Ill
T.N. Krishnan, 1994, p. 58.
Ill
M.A. Oommen, 1996, p. 6.

117
took over the reins of power in the state in 2006. The Vision emphasizes on: (I) Tourism
development, (2) Inland waterways, (3) Knowledge products, (4) Herbal and Ayurvedic
pharmaceutical products, (5) Training of nurses and paramedics, (6) Exclusive Economic
Zones, (7) Fishing and sea products, (8) Coastal poverty alleviation, (9) Commercial
crops and (10) Space technology for connectivity, small-scale industries, skill training. 133
It is worth mentioning that except for three of these above-mentioned points, namely, 2, 8
and 10, seven ofthese points would, in effect, boost the foreign exchange reserves of the
Government o~ In_dia, without necessarily contributing to the advancement of productive
forces within ·Keralam. We would further argue that the President's Vision can
appropriately be designated as a techno-centric and production-centric paradigm as
opposed to a people-centric paradigm of development.

The Macro-level Implications of Unemployment and Migration

In the Malayalee popular culture, jokes go round that a Malayalee migrant had offered to
sell a hot cup of coffee to Tensingh and Hillary when they reached the peak of the Mount
Everest after great ordeals and that there was a Malayalee who offered tea and vada to
Neil Armstrong when he first landed on the moon. The implicit meaning of these satirical
anecdotes was that Malayalees have been an enterprising people who have gone all over
the world and performed what is unthinkable to others in normal parlance, all for the sake
of just eking out a living. Obviously, it is for lack of opportunities within the state that
they had to do this.

It was ~ointed out in the latter part of the 1990s that the state had one-tenth of the
country's unemployed. 134 In 1987, Keralam had 43.09 lakh unemployed which was a
whopping 40 per cent of the total work-force. 29 per cent among them were educated.
There has been a 24 times increase in the ranks of the unemployed between 1960 to
1991. 135 If these figures seem inflated, according to Kerala Migration Study (KMS)
conducted by K.C. Zachariah, et al, 12.68 lakh (1.27 million) people are unemployed in
Keralam. This is roughly one-third of the estimates by employment exchanges at 37 lakhs
(3.7 million) in 1998. The KMS gives an unemployment rate of II per cent with 23 per
cent female and 7.5 per cent male unemployment. About 70 per cent of the unemployed
were educated above the level of secondary school. 136 31 lakh (3.1 million) persons were
self-employed in Keralam according to KMS. 137

IJ)
Government ofKerala 2005: "10+3+3 Mission for Kerala's Development and Poverty
Alleviation", www.kerala.gov.in (13.12.2005).
134
K.K. George 1997, p. 251.
ll$
B.A. Prakash 1994, p.23.
1.16
K.C. Zachariah, et a/2000, p. 28.
IJ7
K.C. Zachariah, eta/, 2000, p. 29.

118
About 40 lakh persons, out of a total of about 240 lakh adults are currently registered with
the Employment Exchang~s in the state, seeking employment. Quite a large number of
138
them are indeed employed. It may, then, be assumed that they are seeking better job
openings than the ones they are in. According to the National Sample Survey, 21 per cent
of the labour force in the state in 1999-2000 was unemployed. The magnitude of
unemployment in the state was estimated at a similar level by the South Asia Migration
Study (SMS). 139
. .
On the basis of this study and yet another survey-based study, namely, Kerala Migration
Study (KMS), both conducted at the Centre for Development Studies,
· Thiruvananthapuram, K.C. Zachariah and S. Irudaya Rajan argued that remittances
cre~ted an income effect that raised the reserve price of labour and. made it possible for
· labour to remain out of employment for longer periods of time. 140 In other words, they
tried to view unemployment as related to the lower supply of labour resulting from the
income effect consequent upon emigration. They argue, "Unemployment is more a social
problem than an economic problem in Kerala today." 1.u Such a view tends to argue that it
is out of relative affluence and not because of the lack of opportunities that a significant
section of the workforce remains unemployed and so it could breed complacency about
the gravity of the ,whole question of unemployment. Results of the same set of surveys,
however, show that females contributed two-thirds of the increase in unemployment in
the state during 1998-2003.' 42 This is indicative of the emerging challenge of tackling
huge rises in female unemployment in the state.' 43

Moreover, if unemployment is not considered a 'social problem' but as a specifically


'economic problem' with its basis in -the macro-economy even in the high-income
societies ofthe advanced capi~ali.st world, the argument by Zachariah and Rajan does not
seem very convincing in a society with very low per capita incomes. There is also a
problem of perception in consi.dering it as a "social problem" if the whole adult
population in the state does· not remain passive workers 'serving the needs of
'
accumulation'. This is especially to be emphasised because a significant section of the

IJ8
K.C. Zachariah and S. lru~aya Rajan 2005: "Unemployment in Kerala at the Turn of the
Century: Insights from CDS OulfMigration Studies", CDS Working Paper 374, August, p. 7.
IJ9
K.C. Zachariah and S. lrudaya Rajan 2005, p. 7.
140
K.C. Zachariah and S. lrud.aya Rajan 2005: "Unemployment in Kerala at the Tum of the
Century: Insights from CDS Gulf Migration Studies", CDS Working Paper 374, August, pp.
45-49.
141
K.C. Zachariah and S. lrudaya Rajan 2005: "Unemployment in Kerala at the Turn of the
Century: Insights from CDS Gulf Migration Studies", CDS Working Paper 374, August, p.
26; see also pp. 5, 54.
141
K.C. Zachariah and S. lrudaya Rajan 2005: "Unemployment in Kerala at the Turn of the
Century: Insights from CDS Gulf Migration Studies", CDS Working Paper 374, August, p. 21.
14).
See more on unemployment in the state in Chapter I.

119
unemployed in the state are educated, which is basically a problem of the educated of not
being able to find employll)ent commensurate with their education. It may also be borne
in mind that a number of the so-called unemployed opt out of the workforce in order to
acquire skills or education that could make them more knowledgeable or employable. At
least a small section of those who opt out of the workforce could even be political or
social activists, who could be performing functions that are socially very relevant.
Crucially, we would propose an alternative way ofviewing the question of unemployment
instead of viewing it as related to remittances as related to emigration and the income
effect created by it. We could_alternatively take an entirely different route of explanation
relating the phenomenon of unemployment to lack ofdevelopment of the productive forces
. '.
as related to lack of control over the financial resources of the state. We would believe
that t,he -latter route of explanation could accommodate the concerns that we have
expressed here above.

Until 1947, Keralam was· a net in-migrating state. 144 Kerala was not an out-migrating state
before the 1940s. Migration is rather new phenomenon in Keralam as it has been taking
place mostly since 1960s. Since early 1970s, emigration from Keralam has been on the
increase. 145 The first transition was from a net in-migration to net out-migration. The
second transition was a change from a predominance of out-migration to a predominance
of emigration. 1 ~ 6

In 1998, there were 2.05 million persons from Keralam were those residing outside the
state. 147 The number of emigrants in the second half of 1998 was somewhere between
1.55 million and 1.17 million. 148 Arab countries of West Asia accounted for 95 per cent of
the emigrants with Saudi Arabia alone accounting for nearly 40 per cent of the total. 149 As
a result of migration, the number of unemployed declined by 32 per cent and
unemployment rate fell by about 3 per cent. 150 Emigration contributed to reduction of
unemployment rate from 21.4 per cent to 19.2 per cent, i.e., by 2.2 per cent in 2003. The
corresponding decline in 1998 was higher a~ 2.6 per cent. 1St This indicates that migration
might have acted as a safety-valve to social and political unrest in Keralam by its dual
effect of reducing unemployment and bringing in huge inflow of remittances.

144
K.C. Zachariah; E.T. Mathe~; S. lrudaya Rajan 2003: Dynamics of Migration in Kera/a
Dimensions, Differentials a'!d Consequences, Orient Longman, New Delhi, p. 386.
K.C. Zachariah, eta/ 2003; -~. I.
K.C. Zachariah, et a/2003, pp. 386-7.
K.C. Zachariah, et a/2003, p. 384.
K.C. Zachariah, eta/ 2003, p. 384.
K.C.' Zachariah, et a/2003; p. 384.
K.C. Zachariah, eta/, May 2000, p. 28.
K.C. Zachariah and S. lrudaya Rajan 2005: "Unemployment in Kerala at the Turn of the
Century: Insights from CDS Gulf Migration Studies", CDS Working Paper 374, August, pp.
43-44.

120
The possible correlation bet\veen unemployment and suicides is often acknowledged. 152
Unemployment has been partly mitigated by massive emigration abroad and outmigration
to other parts of the country. Migration must have also had a sobering effect on the crime
rates in the state. It was pointed out in early 1990s that roughly half the number of
migrants from India to West Asia were from Keralam. 153 However, fears arose of a
crunch in the labour market outside the state since the crisis in the Gulf in 1990.

A break in the upward trend of migration may come about for several reasons: the stock
of young workers in Kerala is likely to decrease; the more technically qualified workers
from other South Asian and South East Asian countries would give stiff competition to
Kerala workers; the Gulf countrie~ might close the doors to expatriate workers to give
jobs to their own citizens; wage-rates in the Gulf region may become attractive; and so
on.-A slow-down in the economies of the Gulf countries could be another factor in the
possible declining trend of emigration. 154 Only a minority of the emigrants and out-
migrants from Kerala are technically qualified. only 20 per cent with some technical
training. "In the international competition for jobs, Kerala emigrants stand to lose because
of their poor technical competence." 155

Assessing the trend of migration from the state, Zachariah, et a/ say, "Until now, the
number of emigrants from the state has always been more than the number of return
emigrants. However the number of out-migrants from the state has remained lower than
the number of return out-migrants in several years. More importantly, net emigration and
net out-migration have both been on a downward trend during the past five years." 156 0n
the other hand, the sheer momentum of past emigration could ensure a period of
increasing emigration trend for some more years, 157 possibly through the social networks
already built up over the years.

Remittances cause inflation and price-rise within the economy of the state. It has not
contributed to the development of productive forces as the highly mobile cash-inflows
can and does get drained out of the state. Even after three decades of Gulf emigration, the
State has not been able to improve the educational system in the state to provide technical
education on a wider scale, even though better training could have helped obtain greater
returns through remittances. Since education is a state subject, this could also be

____________
1$2
:.-·
See for instance, Dreze, Jean & Amartya Sen 2002: India Development and Participation.
Oxford University Press, Oxford, first published 1996, p. 98.
T.N. Krishnan 1994, p. 58.
K.C. Zachariah, et a/2003, pp. 384, 447-8.
K.C. Zachariah, et a/2003, p. 391.
K.C. Zachariah, et a/2003, p. 447.
K.C. Zachariah, eta/ 2003, p. 448.

121
reflective of the indifference of the successive state governments towards what is
primarily beneficial to the ~entral government.

To conclude section I, let us pose the question, 'To what extent, the ongoing commercial
revolution of Keralam can be converted into an appropriate form of industrial revolution
before it dissipates itself?' 158 To what extent can the remittances (in banks, financial
institutions and Stock Exchanges) be made use of in order to advance production in the
state? Despite arguments to the contrary, by P.J. James, for example, it may not be proper
to equate the hot money coming in through portfolio investment to the capital generation
within the state through sale of produces and the capital generation through remittances,
obtained through the sale oflabour power outside the state.

It has been pointed out that the instability of the economy of Keralam emerges from the
following facts: Food and other consumables including industrial products are imported.
Keralam, being on the tip of the continent, incurs high transportation costs on these. The
high cost of consumables hikes up money wages, causing flight of industries. Export-
oriented agriculture in the state is having to face up to the vagaries of international market
forces and the policies of central government. Crunch in the labour market outside the
state has an adverse impact on the inflow of remittances: 59 In the light of these facts and
more, is it not advisable that the state should go in for a rather independent, self-reliant
development of the production base? Such a development model could reduce
dependence on external market forces, developing food self-sufficiency, thus paving way
for forward and backward linkages to the rest of the economy, enhancing the purchasing
power of the people, thereby finding indigenous product markets, making education
oriented towards the productive processes and the people's struggles towards building up
a more humane social order.

What sectors can be linked up to the all-India market and the world market, without being
at the mercy ofthese, could be looked into. The possibilities of selective, prudent tourism
could also be looked into instead of indiscriminate encouragement of pleasure touri~m

now being pursued as at Kovalam in Thiruvananthapuram district and Kumarakom in


Kottayam district~ That industrialisation in itself is no panacea for the crisis of
development in the state is shown
. ,_ by the negative example of Birla's Gwalior Rayons at
Mavoor, Kozhikode. Not onl.~- that the industry did not bring much employment, it
became a nightmare for the local people by emitting toxic waste into the Chaliyar river.
The state government has, for years on end, been supplying bamboo reeds to the industry

C.T. Kurien, Social Scientist, Jan.-March 1995, p. 65.


K.K. George, 1997, p. 252.

122
at a rate less than one rupee per tonne. 160 Such negative experiences help us draw a
distinction between 'development' that is people-oriented and 'developmentalism' that
serves the needs of accumulation of the dominant interests.

II. A CONTEMPORARY OUTLOOK ON CENTRE-STATE RELATIONS: THE


KERALA CASE

It is worth stating that up till this point in time since the formation of the linguistic state
50 years back on I November 1956, the nationality question in the case of Keralam has
basically been a question of federal autonomy, particularly as it related to the right to
development. This is because the broad masses of the people within the state identify
themselves with the pan-Indian national identity in the sense of Keralam being a national
formation within India, a country comprising of multiple nationalities. Large numbers of
educated unemployed from this state' found outmigration-for emp-loyment openings to the
rest of India a viable option to be exercised particularly until mid-1970s, when
possibilities opened up of emigration for employment to the countries in the Persian Gulf.

To trace the historical background a little further, the caste reform movements and the
temple entry movement gradually got subsumed under the anti-colonial movement, which
, had by early 20th century already begun to make waves in the Malabar region (in the
north) and the princely states ofThiruvithaamkoor (in the south) and Kochi (in the central
part), the three of which, together were constituted into the Kerala state in 1956. Thus the
national imaginary of the Malayalees, the Malayalam-speaking people, who constitute the
overwhelming majority have already had within their conceptual horizon the notion of the
linguistic state of Keralam within the country of India. It may be recalled that the demand
for a unified Dravida nation-state comprising of what are presently the four South Indian
states also did not have much currency in this region except in Tamil Nadu. Similarly, the
demand for a separate nation-state of Keralam was raised by Kerala Socialist Party in
1940s, i.e., prior to the formation of the li~guistic state and by the Central Reorganisation
Committee, Communist Party of India (Marxist-Leninist) (CRC, CPI-ML) led by Mr. K.
Yenu in the 1980s did not capture the popular imagination and these political formations
remained fringe groups within the state. Even in the context of the angry oppositional
national identity of the Malay~lees during the food shortages of the 1960s and early
1970s, the popular demand hard~y ever went beyond the clamour for the 'legitimate share
of the state'.

As we have already indicated at the beginning of this chapter, with reference to the

160
C. Sarathchandran and Baburaj [2001): 'Baakkipatram [Balance-sheet]: Chaliyar the Last
Struggle', documentary film in Malayalam on the agitations against Mavoor Gwalior Rayons.

123
studies on federal autonomy, it is not the horizontal disparities between the states that is
of our concern here. It is the vertical disparity between the Union and the states that is the
primary focus of our concem. 161 In addition to shifting our focus to the vertical
disparities, we would further advocate a paradigmatic shift from the approach of
complaining about the financial allocations by the Centre to placing the issue in the
perspective of the states being allowed to have primacy of control over their own
resources. After all, it may be borne in mind that the financial resources in the Central
pool are accrued from the states themselves.

Speaking of the vertical disparities in Centre-state financial relations, the major sources of
tax revenue or items having prospects of higher revenue collection like income tax,
corporate tax and wea~th ~ax were allocated to the Union government under the
Constitution. Besides, import and export duties, excise duty imposed at the point of
production of goods and services, the excise tax (except on toddy and arrack), customs
revenue, etc. are in the Union list as per the Constitution. 162 If the states have to resort to
market borrowings, they need to obtain permission from the Centre. 163 This leaves severe
constraints on the revenue resources and a narrow base for resource mobilisation by the
states. The state governments were left with only sales tax, excise duty on alcoholic
drinks, tax on .vehicles, amusement tax, land tax, tax on agricultural income, stamps,
registration, entertainment and electricity, etc. 164

• Over the years, the central government has been exercising higher control on these too.
For most states, around one-half to two-thirds of total revenues derived by them come
from sales taxes. 165 Although the states are permitted to tax agriculture under items 45 to
48 of the State List, in the context of the industry-agriculture divide, in general and the
adverse terms of trade in agriculture, in particular under capitalist development, taxing
agriculture as under colonial rule, gives rise to a question of feasibility. A further
dimension is added to this question in the context of agrarian crisis and peasant suicides.
Moreover, taxing agriculture entails targeting the Regional Dominant Classes (RDCs)
that are powerful within the states and therefore it could give rise to serious political /

'•
161
M. Govinda Rao 1997, pp. 236-41.
162
See items 82 to 92 in the ·anion List of the Constitution of India under Schedule 7: The
Constitution of India with selective comments by P.M. Bakshi, Universal Law Publishing Co.
Pvt. Ltd., Delhi, seventh edi.tion (2006), p. 366.
16)
Ashok Mitra 2004: "Centre-State Financial Relations: How Wise will a Nation-wide VAT
be?", http://www.networkideas.org/alt/jul2004/ah05 _ V AT.htm (08.04.2006).
16-1
The sources of revenue of the states are listed under items 44 to 63 of the State List under
Schedule 7 of the Constitution of India: The Constitution of India with selective comments by
P.M. Bakshi, Universal Law Publishing Co. Pvt. Ltd., Delhi, seventh edition (2006), p. 369.
lbS
Ashok Mitra 2004: "Centre-State Financial Relations: How Wise will a Nation-wide VAT
be?", http://www.networkideas.org/altljul2004/alt05_VAT.htm (08.04.2006).

124
unrest. These could be the reasons why most state governments have not exercised this
option. Even as they are d_eprived of the rights and privileges of raising taxes, the states
were overburdened under the State List with the major developmental responsibilities like
agriculture, industry, rural development, infrastructure as related to material production,
education and health, which are the major social services involving heavy financial
burden, etc. As we have already indicated, the states are, however, denied the
wherewithal to adequately carry out these responsibilities.

Let us continue below our discussion in the previous section on the fiscal crisis by
examining the fiscal predicament the state government found itself in recent years, i.e., as
it relates to the Centre-State relations:

Revenue Mobilisation by the State

For Keralam, sales tax, motor vehicles tax, excise tax and stamps and duties have been
the main sources of tax revenue. 166 The eighth and ninth Finance Commissions had
admitted that Keralam has been one ofthe states,making above a·verage tax efforts. 167 The
ratio of 'own' revenues (raised by the state government) to SOP (State Domestic
Product), excluding the taxes collected by local bodies, had reached the high level of 15
per cent in 1987-88. 168 Prior to the introduction of the Value Added Tax (VAT) system in
most of the states in the country, sales tax and excise duty in the state were much higher
than in the neighbouring states, Tamil Nadu and Karnataka, and much higher than in the
Union Territory, Mahe. It has been pointed out that further raising of rates could lead to
further diversion of economic activities to across the state's borders. 169 K.K. George had
pointed out that there could be some scope for Keralam to raise more revenues from the
public sector statutory corporations and companies whose contribution to the state's
revenues has been meagre. 170 Even then, the fiscal crisis of the state at the time was too
severe to be tided over.

Finance Commissions and the Centre-State Fiscal Relations

The perception within the state has been that Keralam has always got a raw deal from the
central government's Finance Co_mmissions, Planning Commission or the various central
ministries. All Finance Comrn,i:_ssions have taken note of the state's comparative
achievements in social services .t? deny funds under special dispensations. However, they

1116
Hindu, March 15, 1999.
167
K.K. George 1994: "Trends in Kerala State Finances", pp. 397-416, in B.A. Prakash (ed.)
1994, p. 405.
loB
Ibid, p. 406.
11>0
Ibid & K.K. George 1997, p. 256.
170
K.K. George 1994 in B.A. Prakash (ed) 1994, p. 410.

125
invadably failed to take cognisance of the causative relationship between the state's
higher spending on these_ services and· the social achievements. Under the 81h and 91h
Finance Commissions, no allocation was made under special dispensation grants to the
state, perhaps, since the Commissions considered the problems of Keralam like
unemployment too big to be solved} 71 Central government's assessment of poverty level
in the state around mid-1990s was only 25 per cent which was at variance with the state
government's assessment at 40 per cent. 172 The state government is having to mop up
additional resources for poverty alleviation for 15 per cent of the population, not covered
under the Central government's schemes. The tenth Finance Commission had
mechanically fixed the state's share of revenues for the next 15 years, at 29 per cent. 173
Central investment in the state has also been on the decline. Keralam that accounted for
.15 to.20 per c~nt of the total foreign exchange earned by India_ t_~rough exports, had to be
satisfied with 1 to 1.5 per cent share of the Central plans. 174

On the other hand, the relatively better off social service sectors are plagued by 'success
induced secondary problems and the commodity producing sectors suffer form
stagnation' .m

Fiscal Crisis and the Expenditure Pattern of the State

The fiscal crisis of the state had reached unmanageable proportions. At the end of 1996-
97, the growing outstanding debt liabilities of the state was 51 per cent of SOP, at
Rs.l4,415 crores. 176 When the projected market loans and central loans was to the tune of
Rs.l ,4:18 crores for 1999-2000, the interest commitments on debt was even higher - to the
tune of Rs.1,642 crores. 177 The public debt burden of the state government was merely
4,716 crore in 1990-91 and skyrocketed to around Rs.36,000 crore during 2003-04 178 and
to Rs.40,000 crore by late 2004 179

During the 14-year period ending in 1987-88, Keralam was carving out from capital
account in order to finance revenue deficit, in sharp contrast to all other states utilising
re.ve~ue surpluses to finance capital deficits. No wonder, debt-servicing problems were

171
K.K. George 1994 in B.A. Prakash (ed) 1994, pp. 404-5.
172
Hindu 1997. · ~.
17J
Hindu editorial, July 8, 1.998.
174
Sameeksha (Ma1ayalam periodical) 1999: March 16-31, p. 13.
17S
K.K. George 1997, p. 250.
176
M.A. Oommen 1996, p. 8.
177
, Hindu, March 25, 1999. For a detailed analysis of the debt crisis of the state, see Government
. , of Kera1a 2001 (White Paper on State Finances. June), which sought to portray the initiation
of.SAP in Keralam as crisis-driven.
178
Ravi Raman 2004, p. 16.
179
Sunesh 2004-05, p. 5.

126
aggravated as all capital account funds were interest bearing funds. 180 The increasing
share of revenue deficit in the gross fiscal deficit (54 per cent in 1995-96 Budget
Estimates) has been an indication enough about the extent ofthe fiscal crisis faced by the
state. 181 Further, it is revealing that 91 per cent of the revenue expenditure was being
spent on establishment-related expenditure and interest payments. 182

Per capita capital expenditure was always lower in the state. Similarly, per capita plan
expenditure, under both revenue and capital heads was low. Per capita non-plan
expenditure, particularly revenue expenditure constituted the higher share of budgetary
expenditure. ~ 83 The revenue content of total expenditure is seen to be higher for Keralam
than for all the states. Surprising~y, the revenue content of development expenditure for
Keralam is also higher than that of its non-development expenditure, in contrast to other
-- -
states. The higher revenue content of development expenditure was, partly because of the
predominance of Social and Community services in the total expenditure. But revenue
content of expenditure on Economic services also has been higher than in other states.
Similarly, there has been higher non-plan content of expenditure on Social and
Community services (particularly education), but not on Economic services. 184

With the implementation of the Fifth Pay Commission recommendations in late 1990s,
providing for higher salaries to government employees, small states like Keralam have
been severely constrained further, financially. In effect, 'it has left a trail of misery for
these states', as far as their finances were concerned.

Besides ,being constrained by the Indian State and global capitalism, the state is also
'
constrained by the structures of accumulation within the state. 185 The Kerala case has
been designated as one where the fiscal crisis leads to economic crisis which, in tum,
leads back to fiscal crisis making a vicious circle. 186

Besides the question of financial autonomy from the Union government, there are also
questions ofpolitical and administrative autonomy of the state. 181 Thus the state was one
of the first victims of the use of Article 356 of the. Constitution whereby the elected
government in the state was dismissed through a Presidential decree in 1959. This had
far-reaching consequences for the class and other social relations in the state in several
------------ ·~
ISO
K.K. George 1994 in B.A.:P·rakash (ed.) p. 398.
lSI
M.A. Oommen, 1996, p. 8.
182
B.A. Prakash, 1994, p. 36.
183
K.K. George in B.A. Prakash (ed.), 1994, p. 411.
184
Ibid; p. 413.
185
We shall deal with them in detail in Chapter VI.
186
K.K. George in B.A. Prakash (ed) 1994, p. 416.
187
We have, however, considered the economic and financial dimensions as more important at
this point of social development ofKeralam.

127
decades that followed because it aborted an attempted restructuring of both the land
relations and the corrupt educational system in the state.

The Curious Disappearance of the Question of Federal Autonomy


Curiously, the question of federal autonomy has virtually disappeared and turned a non-
issue since the initiation of neo-liberal refonns in 1991 and there have been much Jess
protests since early 1990s against the vertical disparities in Centre-state relations as
compared to the high profile position that the question of federal autonomy enjoyed until
late I980s} 88 This needs to be accounted for. Let us attempt an examination as to what
could be the plausible reasons for this turnaround?

i) There has been a perceived shift in the locus of power or the centre of gravity, to a great
extent, from the Union government to the International Financial Institutions like the
World Bank, the International Monetary Fund (IMF), the Asian Development Bank
(ADB) and the multilateral trade body, World Trade Organisation (WTO). And the Indian
Big Capital has identified its interests much more closely with that of the global finance
capital. And the Regional Dominant Classes (RDCs), including non-monopoly capitalists
have followed suit. 189

ii) There is greater possibility for RDCs to secure international tenns of trade for
commodities produced regionally. And in this sense, there is much less distortion of the
market mechanism by the business lobbies within India. Unhindered access to the world
market must have been seen as beneficial to the RDCs although this has also brought in
its wake sharp volatility and uncertainty in the prices of such commodities since there is
anarchy of production in the global marketplace and a multiplicity of factors
overdetennine global commodity prices. Nevertheless, even the RDCs seem to have
identified their fortunes with that of the global finance capital and the process of
globalisation.

iii) Another reason cited has been the decline of the so-called 'Congress system' and
much Jess recourse to the use of Article 356 whereby elected
, governments in the states
ISS
Partha Chatterjee 2005: 'Concluding Remarks', ll)temational Conference on "Politics, Reform
and Prosperity- Quantitative and Qualitative Perspective on Contemporary India", Centre for
Studies in Social Sciences; Calcutta (CSSSC), Kolkata, 26-27 December; Venkatesh B.
Athreya 2005: "Giobalisatiol} and Decentralisation: Some Reflections", in A.K.G. Centre
2005: International Conference on Kerala Studies (ICKS) - Abstracts, Thiruvananthapuram,
vol, 2, 9-11 December, pp. 179-83.
ISQ
We would hold that given their structural location, the non-monopoly capitalists are of a
highly vacillating nature and are also capable of allying with alternative political movements
for structural transformation, provided the latter are able to present a credible enough
alternative to effectively challenge semi-feudal structures in the countryside on the one hand
and the Indian and global oligopolies on the other. This is particularly because the non-
monopoly capitalists are structurally counterpoised against these forces.

128
were dismissed by the Centre. 190 Indeed, the misuse of Article 356 has been a bone of
contention that has soured ~entre-state relations time and again. The climb-down of the
Congress party from its long-held position of the single dominant party in the country
may be attributed as the reason for lesser recourse to Article 356.

iv) The industrial licensing policy, pejoratively known as the 'Licence-Permit Raj' during
the pre-'liberalisation' period, has been abandoned under 'liberalisation'. This
abandonment is perceived to have benefited the RDCs because they had always alleged
the licensing policy to have been a discriminatory bureaucratic mechanism favouring the
Indian big capital. .

iv) The RDCs also hope to cope up and get their way through by trying to enhance the
-· low levels. of tax realisation and resorting to market borrowings that are permitted to them
and even negotiating loan agreements with International Financial Institutions. Thus the
new LDF ministry in the state in 2006 and its Finance Minister, T.M. Thomas Isaac hope
to resort to greater spending by the state government even in violation of the Fiscal
Responsibility and Budget Management (FRBM) Act, 2003 enacted by the Union
parliament and the Fiscal Responsibility Act (FRA), 2003 by enhancing the presently low
levels oftax-GSDP ratio in the state. 191 We would hold that this approach treats the issue
not as related to the Class and National questions but merely as a question of fiscal
management. This approach hardly has any substantive Class content to it and it hardly
has any focus on the apparent contradictions between the Centre and the states in terms of
the question of federal autonomy.

While these could have been factors that contributed to the question of federal autonomy
getting relegated to the backburner during the period of 'liberalisation', there have been
critical areas where the Centre-state relations have come under greater strain during this
period. Let us attempt an examination of some of the major factors that could well have
· been causes of contention in Centre-state relations:

i) The introduction of Value Added Tax (VAT) system at uniform rates since 2005 in
most of the states, has undermined the financial autonomy of the states to raise revenues
by followi~g their own pattern of taxation. Autonomy in this respect was quite important
especially because the states in ,Jndia are at different stages of development and might
.,·
190
Partha Chatterjee 2005: 'Concluding Remarks', International Conference on "Politics, Reform
and Prosperity- Quantitative and Qualitative Perspective on Contemporary India", Centre for
Studies in Social Sciences, Calcutta (CSSSC), Kolkata, 26-27 December.
1'>1
T.M. Thomas Isaac and R. Ramakumar 2006: "Why Ddo the States not Spend? An
Exploration into the Phenomenon of Cash Balance Surplus of States and the FRBM Acts",
Paper p_resented at the Centre for Development Studies, Thiruvanathapuram, 20 October.

129
need to encourage certain industries or discourage certain pattern of consumption, etc. 192
This is a very serious issue in Centre-state financial relations because the item of sales tax
clearly mentioned as item 54 in the State List has, by far, been the most important
component in the revenues of most state governments, as we have already mentioned
earlier in this chapter. Sales tax was a tax charged at the point of sale whereas VAT is tax
levied at each stage of production as related to the value of the product or service. Rightly
has Ashok Mitra, a prominent critic of VAT denounced the move to scrap sales tax and
substitute it by VAT as 'a further encroachment on the financial rights of the states'.

The argument that India inevitably needs to have a unified market under the VAT system
in order to· advance capitalist development cannot be sustained because there are
prominent instances that point to the contrary. In order to preserve the fiscal autonomy of
ihe states, the United States has chosen not to opt for the VAT system. In Canada, the
French-speaking Quebec stayed out of the VAT system. Besides, even as VAT comes in
place, there are several other obstacles to the free flow of the factors of production,
including monopolies and income inequalities. 193

Nothing short of a Constitutional amendment would have been required to dislodge the
states from their constitutionally mandated prerogative for collection of sales tax. And
yet, the Constitutional validity of such an amendment might be challenged on grounds of
violating the federal structure, supposedly one of the basic features of the Constitution in
the light of the precedent set by the judgement in Kesavanand Bharati case. 194 The
support to such an amendment is uncertain since it could spark off serious debates and
therefore, a consensus was arrived at to amend the existing sales tax legislations in the
states. Ashok Mitra is right in saying that the initiative for VAT came from the Centre.
And yet, it is to be noted that a unanimous consensus on it was arrived at in the
empowered committee of state finance ministers chaired by the Union Finance Minister
in 1999. So it may be assumed that there was no basic disagreement on VAT between the
classes that exercise dominant influence upon the State at the Centre on the one hand and
the RDCs on the other. VAT has been described as a 'dream child' ofthe World Bank and

IQ2
See Ashok Mitra 2004: "Centre-State Financial Relations: How Wise will a Nation-wide VAT
be?", http:J/www.networkid~~-orglalt/jul2004/alt05_ VAT.htm (08.04.2006); and Amaresh
Bagchi 2005: "VAT and State Autonomy", Economic and Political Weekly, 30 April. That
uniformity in ~ax structure ~;ould not be ~chieved at 12.5 per cent rate across commodities is
clear from the fact that apart from the exempt categories, there were two more rates, I per cent
and 4 per cent. The 4 per cent list ran into some 285 items. Pressures built for enlarging the
exempt list since VAT involved significant raising of taxes on several commodities that have
been taxed at a much lower rate (Bagchi 2005: p. 1806).
IQJ
Ashok Mitra 2004: "Centre-State Financial Relations: How Wise will a Nation-wide VAT
be?", http://www.networkideas.org/alt/jul2004/alt05_ VAT.htm (08.04.2006).
- Ashok Mitra 2004: "Centre-State Financial Relations: How Wise will a Nation-wide VAT
be?'', -http://www.networkideas.org/alt/jul2004/alt05_VA T.htm (08.04.2006).

130
the IMF and has been widely supported by the capitalist business houses because all of
them wanted "India to be al) integrated market so that capitalist enterprise can flourish
without any let or hindrance". 195 Just as there is a single, "Centre-administered excise
duty at the point of production, industrialists are keen to have a similar single, Centre-
administered tax at the point of distribution too". 196

We would also argue that apart from its ill-effects on Centre-state relations, the VAT
regime also has negative implications for the informal economy as it necessitated
universal billing if those concerned were to safeguard against taxation at multiple levels.
Moreover, the Jack of purchasing power of a substantial section of the population should
have been a powerful rationale for a'much lower tax rate than in the West. In this context,
slapping a tax rate of 12.5 per cent on most items should be considered as insensitive to
the needs and aspirations of the lower classes of people. 197

ii) The FRBM Act, 2003 has put a cap on fiscal deficits in states thus curbing the pro-
active economic role of the state governments. 198 This has rightly been characterised as
'an extension of unreason' to the states at the instance of the Union government and the
International Financial Institutions and after Joan Robinson, the obsession with cut backs
in fiscal deficit has been denounced as, "the humbug of finance". 199 In any case, it has
curtailed the autonomy of the states to manage their fiscal affairs in a manner that they
think fit. The incentive offered to the states has been in terms of a moratorium on the debt
incurred from the Centre. However, the implications of the deflationary economic
policies brought along by a regime of curtailed fiscal deficit is too serious to be
overlooked.

iii) The signing of international treaties, particularly, of the agreement for entry into the
World Trade Organisation (WTO) has reflected the unilateralism of the Central
government, particularly, the executive wing of the Central government on issues that

19S
Ashok l\1itra 2004: "Centre-State Financial Relations: How Wise will a Nation-wide VAT
be?", http://www.networkideas.org/all/jul2004/alt05 _ VAT.htm (08.04.2006).
196
Ashok Mitra 2004: "Centre-State Financial Relations: How Wise will a Nation-wide VAT
be?", http://www.networkideas.org/all/juli004/alt05_ VAT.htm (08.04.2006).
This argument holds even when it is countered that the effective rate of tax in the pre-VAT
period was higher, given the m,'4ltiple levels of taxation involved. It was argued that in Keralam
it was as high as 18 per cent (T.M. Thomas Isaac and R. Ramak-umar 2006: "Why Ddo the States
not Spend? An Exploration mto the Phenomenon of Cash Balance Surplus of States and the
FRBM Acts", Paper presented at the Centre for Development Studies, Thiruvanathapuram, 20
October).
IQS
T.M. Thomas Isaac and R. Ramakumar 2006: "Why Ddo the States not Spend? An
Exploration into the Phenomenon of Cash Balance Surplus of States and the FRBM Acts",
Paper presented at the Centre for Development Studies_ Thiruvanathapuram, 20 October.
'"" Joan Robinson 1962: Economic Philosophy, C.A. Watts and Co., London as cited in Prabhat
Patnaik 2005: "On Some Currently Fashionable Propositions in Public Finance", I.S. Gulati
Meinodal Lecture, Thiruvananthapuram, p. 23.

131
were of crucial concern to the state governments. Before the central government signed it,
the treaty was not ratified by the states. Thus the gradual lifting of Quantitative
Restrictions (QRs) under WTO conditionalities since the New Exim Policy, 1998 and
their complete lifting since 1 April 2001, has been a significant measure of import
liberalisation that has apparently had considerable impact on the economy of the states
subsequently. Moreover, the treaty has immensely expanded the realm of trade from
commodity trade to broad areas including intellectual property rights, investment,
services, agriculture, textiles, Information Technology, government procurement, etc. and
are expected to have considerable implications.

iv) Under conditions of fiscal pen~ry in the states, another issue that could have caused
strain in Centre-state relations was the Constitutional provision since 1950 un~er Article
293, which forbade borrowals from the Scheduled Commercial Banks within particular
states.

v) Another point of possible discord was that the Centre reserves the privilege of taxing
the Service sector, which is presently booming in states like Keralam. Thus Taxes on
Services has been inserted into the Union List as Clause 92C under section 4 of the 88 1h
Constitutional amendment in 2003.2°0

vi) With the implementation ofthe Fifth Pay Commission recommendations in late 1990s
initiated by the Centre, small states like Keralam have been severely constrained further
in financial terms. The rationale of further favouring the well-protected public sector
employees was questionable: This could also have been understood as a measure intended
to co-opt a small section of society in the context of the apparently 'anti-people policies
under globalisation.

Before concluding this section, it needs mention that self-determination in the case of
Keralam should not only be the question of federal autonomy in relation to Centre-state
relations but also a question of Class justice. And the question of Class justice demands
that the issues of both corruption and tax evasion be addressed in the first place. 201 We
shall return to the question of Class justice in subsequent chapters.

Let us now try to understand the problematic of dependency in development and the lack
of financial, political and ad~'inistrative autonomy of the state from the Union
government through an appraisal of the decision of the LDF and then the UDF

200
Bakshi, P.M. (with legal comments from-) 2006: The Constitution of India, Universal Law
Publishing Co. Pvt. Ltd., Delhi, seventh edition, f.n. 3, p. 366.
:!01
We have covered a number of instances of corruption and tax evasion in Section I,
"Identifying the Dominant Classes within the State", Chapter VI.

132
governments to go in for a Programme (Structural Adjustment) loan from the Asian
Development Bank (ADB).

III.THE ADB BONDAGE: REFLECTIONS ON THE ADB LOAN AND THE


FISCAL PENURY IN THE STATE

The Kerala state government has opted for a "programme lending" from the ADB as
distinct from a "project lending". A 'programme lending' is expected to would coordinate
well with the Structural Adjustment Programme of the World Bank. 202 The loan is routed
through the central government which receives the loan from the ADB at the London
Inter-Bank Offered Rate (LIBOR) of interest i.e., less than 3 per cent per annum, plus a
commitment charge of 0:75 per cent per annum and a front-end fee of 1 per cent. While
the central government would bear the foreign exchange risk for the loan that has to be
paid back in dollars, it virtually acts as a 'commission agent' charging an exorbitant
interest rate of 10.5 per cent per annum from the state government. 203 The first tranche of
the loan worth $775 million (around 3,750 crore rupees) sought to cover a wide range of
issues that include, Modernising Government Programme (MGP) and fiscal reforms,
reform of the power sectorl04 and legitimising schemes like poverty alleviation (with well
below 4 per cent allocation), environmental improvement and urban development. 205 A
second tranche of the ADS loan worth $700 million was in pipeline. The service sector
was supposed to be the focus ofthe reforms this time round. 206

The state government is already cash-strapped with an alarming and rising public debt
burden and unitary features such as the constitutional provision Article 293, prevent the
state government from directly borrowing from the Scheduled Commercial Banks within
the state, except through the compliance of the Central government. The first instalment
ofthe loan from ADB amounted to only Rs.3,750 crore.

Asian Development Bank's (ADB) loan offer to the Kerala government and its incursions
into the economy of Keralam gives rise to a host of questions like: Why does a capital
surplus state still face an acute fiscal crisis necessitating loan from an International
Financial Institution? 'There Is No Alternative' (TINA) is a favourite mantra with the
establishment. How far is it from the truth?

~02
Ravi Raman 2004, p. 22.
Ravi Raman 2004, pp. 7-8.
A massive hike in power tariffs in 2002 was aborted following widespread public protests,
with the mainstream left parties also backing the protests.
Ravi Raman 2004, pp. 7, 24.
206
Passline 2004-05: "ADB aid package: hope or smoke?", vol. 8, nos. 13 & 14, December 31,
January 31, p. 6.

133
According to ADB website in 2002, ADB established in 1966 has its headquarters at
Manila and is owned by 61 member countries today. The largest shareholders are Japan
and the United States each owning 15.9 per cent each. India was the largest borrower
from the ADB in 2001. 207

The amount of so-cal,led 'assistance' promised initially to Keralam was just 3,750 crore
rupees. It has subsequently been scaled down to less than half of it i.e. 1800 crore rupees
($ 37.5 crore), which was given as the first instalment. Out of the total amount of$ 37.5
crore, $ 30 crore comes from the ADB and $ 7.5 crore comes from the Dutch government
as the aid component. This part of the total 'assistance' extended would be grants from
the Government ofNetherlands to b~ expended on social security measures like poverty
alleviation and health infrastructure: However, oddly enough, these grants are clubbed
with the ADB loan and tnus come to play a legitimising role. The loan part of the so-
called 'assistance' has to be repaid at the interest rate we have mentioned earlier. 208

The first instalment of the loan, Rs. 1,800 crore is targeted towards 'Modernising
Government Programme' (MGP) and 'restructuring' public sector units. 209 Ultimately,
only two instalments of 600 crore each was disbursed under the MGP. 210 Apprehensions
were expressed that personnel of Non-Governmental Organisations might come to
acquire more importance vis-a-vis elected representatives of local bodies in
developmental activities. 'Local self governments' are known as 'local governments' in
ADB terminology. The Global Investors' Meet (GIM) which was scheduled to be held at
Kochi during January-February 2003 was expected to push forward the privatisation
agenda of the Bank in a major way with a target of luring in 'investments' worth 50,000
crore rupees.

Going by media reports and by the ADB website, the total loan amount was supposed to
go towards the 'cost of adjustment': These include, 'modernizing government and fiscal
reform', improving state government effectiveness and accountability, fiscal and
administrative reforms of the state government and the local self governments, reform of
the power sector, implementing Value Added Tax (VAT) system, the reform of industrial
sector. and service sector and legitimising schemes like poverty alleviation, participatory
poverty assessment and urban ·development. Infrastructure development by and for
private entrepreneurs on the basi~ afprinciples such as 'build-own-operate-transfer' has a
pride of place in the agenda ofADB. Improving infrastructure like building a super-

207
www.adb.org (2002).
208
Hindu, IS November 2002.
:oo Hindu, IS November 2002.

134
highway connecting Keralam from Kasaragode in the north to Thiruvananthapuram in the
south, and modernisation an_d gradual privatisation of the state-owned Kerala Minerals
and Metals Limited (KMML), Chavara have also been on the agenda of the government.

While extending the loan, the Bank had set forth multiple conditionalities, which included
bringing down fiscal deficits, which according to ADB, 'crowd out private investment',
the right of ADB to insist on a cross-conditionality with respect to other foreign contracts.
Another stipulation was that the state should assure a minimum annual "net attrition rate
of one per cent" from the State Level Public Enterprises (SLPEs) and approve other
measures of restructuring "including privatisation, disinvestment, merger'',- etc. Moreover,
public utilities (like education, health, sanitation, common property resources) are
required to be "run on market principles with cost recovery and efficiency in delivery
being pivotal points''. 211 'Stringent controls on government's unproductive expenditures'
is envisaged. In other words, this would mean cutting down the government's social
welfare expenditure, introduction of user charges in government hospitals, disallowing
the opening of new government schools (both usually catering to the impoverished
sections), scrapping subsidies, etc. -all based on the logic of 'no free meals'. We would
view that the combined implications of these conditionalities could be 'to facilitate the
free and unimpeded flow of private capital' in the state.

It is ironic that the ADB website says, "ADB is a multilateral development finance
institution dedicated to reducing poverty in Asia and the Pacific."212 One might wonder
what would become of the much talked about 'Kerala model' based on the logic of
human development once these neo-liberal reforms are implemented. The Bank feels that
unless there is a thorough overhauling of the governance and economic affairs of the
states, the 'economic reforms' initiated by the Union government cannot move ahead
further. And so it recommended doing away with the practice of the Centre giving
financial assistance to the states in order to tide over revenue deficits and accumulated
debt burden. There is no recognition herein of the role of the Centre towards creating
these in the first place. Apparently, this is what the I Oth Finance Commission sought to
implement. The most pernicious aspect of all is that unlike any other international
financial institution, the Bank had openly stated that it would intervene in the political
process in the state.

:no Mathrubhoomi newpaper 2006: "ADB vaaypa nilachu; bharana naveekaranavum" (ADB loan
ends; modernising government too- Malayalam), 7 November, Tuesday, Thiruvananthapuram
edn., p. 7.
Ravi Raman 2004, pp. 22-23.
212
www.adb.org (2002).

135
Such conditionalities were openly stated on the ADB website before some small-scale
agitations against the Bank ~ere initiated. In 2002, activists led by 'Poraattam' [meaning,
'struggle'] ransacked the ADB office at Thiruvananthapuram. Some novel methods of
struggle \vere also initiated as part of the anti-A DB campaign such as 'reclaiming nights'
by women's organisations. 213

One of the tactics of ADB has been to secure the official stamp of legitimacy by
channelising the research funds through the best research institutions in the state like the
Centre fo~ Development Studies, Thiruvananthapuram and by trying to attract the best
talent in the country to consolidate their hold over the economy and society. The
accentuation of the dependency that the loan would mean for the people of the state is
more than evident.

One could legitimately question the very economic rationality of the government in going
in for this loan. Let us consider the several alternate means of financial mobilisation the
state government and the concerned political parties could have resorted to. Some of them
are listed below:

i) The Government of Kerala could have generated at least 500 crore rupees annually
by implementing the recommendation of the Assurance Committee reports ( 1996 &
1997) ofthe lOth legislative assembly. 214 Thus it has been pointed out that the government
has legally given on lease 1,08,695 acres of land to those close to the establishment at
nominal lease amounts. Tata alone has thus cornered 58,583 acres of government land. In
some cases, the revised lease amount was as low as Rs. 5.30 per acre, per annum as being
paid by AVT Company.m

ii) The state government could devise ways and means to tap the massive foreign
exchange remittances to the state by the migrant workers from the state, as household
cash remittances alone (excluding non-household remittances) was estimated at 3,530.4
crore rupees for the year 1998.216 Notably, 80 per cent of them have been semi-literate
construction labourers and many of them from the backward district of Malappuram,
belonging to the minority Muslim community. The state government could have
demanded loans out of domestic deposits of nearly 52,822 crore rupees was estimated to

21).
This involved a night-long vigil along with cultural programmes in front of the state
Secretariat.
!14
Government of Kerala 1996: Legislative Assurance Committee Report, submitted to the tenth
Legislative Assembly, Thiruvananthapuram, 14 November; Government of Kerala 1997:
Legislative Assurance Committee Report, Submitted to the tenth Legislative Assembly,
Thiruvananthapuram, 29 July.
215
K. Ravi Raman 2004, p. 39.
216
K.C. Zachariah et al, May 2000.

136
be available with the Scheduled Commercial Banks within the state, 217 (about 9 per cent
of which is expected to be Non-Performing Assets) at Prime Lending Rates ranging from
minus 3 per cent to plus 4.75 per cent with public sector banks 218 or ~t around 4 per cent
or so per annum real interest rate with commercial banks? Crucially, what comes on the
way was the lack of federal autonomy itself. The states are proscribed by article 293 of
the Constitution itself regarding borrowals from the banks within the state. And yet, they
could make borrowals through the Government of India or through certain specified
projects as may be sanctioned by the banks.

iii) The state government could devise ways and means to ensure productive use of the
capital (forex or otherwise) accrued to the state as earnings from plantation crops and
marine exports, which was estimated at 1000 crore rupees as early as 1991. 219 Apparently,
forex earned through to~rism is also on the rise as Keralam is increasingly turning a
tourist hotspot in India as around 65 per cent of the tourists visiting India now come to
Keralam. The total tourist arrivals in Keralam during 2002 was 52,39,692. 220
Nevertheless, the danger of cultural degradation through indiscriminate pleasure tourism
is real.

iv) The state government could generate substantial additional resources by ensuring
tax compliance in sales tax collection within the state.

v) The state government could have initiated awareness/incentive campaigns against


the snobbish culture of exces.sive consumption of gold, with a view to generate savings
within the domestic economy by reducing the totally unproductive investments in gold,
the estimates of which range up to 8,000 crore rupees per annum within the state. 221

So then, was it really a 'crisis-driven response' that made the CPM-Ied left front
government in the first place to have opted for the ADB loan in 1998? The upshot from
the aforesaid analysis is that it was not owing to a 'liquidity crisis' or a lack of readily
usable financial resources that the state government has gone in for the ADB loan. The
ADB loan is basically about Structural Adjustment and the loan was, apparently, meant to
set the ball rolling in this respect. It is not a high interest rate that is of concern in the loan

'!17
Hind1,1, 2 Dec. 2002.
liS
C.R.L. Narasimhan, Hindu, Nov. 6, 2002.
::!19
K.T. Rammohan, Monthly Review, Dec. 1991.
::!20
Government of Kerala 2003: Economic Review 2002, State Planning Board,
Thiruvananthapuram; as cited from Ministry of Tourism, Government of Kerala.
221
George Varghese K., personal communication.

137
package of the ADB but the conditionalities associated that are basically meant to propel
SAP with a view to 'redistribuJe income to capital'. 222

The permission accorded by the central government to the ADB and World Bank to raise
S 100 million and $ ISO million each respectively in rupees from the Indian debt
market223 is indication enough that at least a substantial portion of the loans extended
would be raised from within 9ur own country and lent to us at high interest rates and with
stringent conditionalities attached. It may be marked that the real interest rate in advanced
capitalist countries today, is of the order of m'inus 0.5 to plus 1.5 per cent. 224 The ADB
website clearly stated, "[F]or every dollar lent by ADB in 2000, an additional 51 cents
was mobilized from other official sources, export credit agencies, and other commercial
institutions."22 s

Given the numerous alternate sources of financial mobilisation within the state, the
question arises: What is the character of the so-called fiscal crisis of the state that
necessitates the ADB loan? As we have already noted, it is a paradox of sorts that
abundant superfluity of capital exists side by side with acute fiscal crisis. We have also
observed earlier in this chapter that investible surplus is drained out of the state through
various channels. 226 In sum, the remittances and export earnings do not contribute to
development of productive forces within the state even as they contribute to inflation
within the state and even as they swell the forex reserves of the Central government and
boost t_he capital of the major accumulators outside the state.

The case of Keralam has thus been among the exceptional cases of third world societies
which have a surfeit of capital and huge unemployed labour force, and yet hardly any
development of productive forces. It has been pointed out in the classic Soviet
Industrialisation debate involving Lenin, Preobrazhensky, eta/ that the surplus generated
from agriculture itself is sufficient towards the industrialisation and development of
productive forces in.most economies. As was critiqued by Evgeny Preobrazhensky, this,
however, meant extracting surpluses at the expense of the peasantry for the sake of
building heavy industries, as in the Soviet case. Preobrazhensky denounced the Soviet
strategy the "primitive socialist ac~umulation". 227 Paul M. Sweezy considered it a model

Brenner, Robert 2002: The Boom and the Bubble: The US in the World Economy, Verso,
London, New York, p. 35.
Hindu 2002: "World Bank, ADB to tap Indian debt market", September 24,
Thiruvananthapuram edn.
Hindu 2002, Nov. 6.
www.adb.org (2002).
· K.T. Rammohan 1991: "Understanding Keralam the Tragedy of Radical Scholarship",
Monthly Review, vol. 43, no. 7, December, pp. 18-31.
~27
As quoted in Paul M. Sweezy 2000, p. 75.

138
of development with the thrust of building heavy industries, using surpluses expropriated
from the peasantry, in turn, necessitating a severely repressive State. Conversely, Sweezy
vouched for the Chinese model of development during the Mao period where the
"capital" needed did not come from any pre-existing source of surplus, but from a general
increase in the productivity (agricultural and industrial alike) of the labour force. 228 We
too would go with Sweezy that the general increase in productivity could contribute
surpluses towards meeting the developmental needs. 229

The question being posed is not just the one initially thrown up in the classical Soviet
industrialisation debate, namely, 'what has happened to the agricultural surplus - why
couldn't it contribute to industrialisation?' 230 Indeed there has been much agricultural
surplus generated through high value addition cash crops. But there were also very many
other means of surplus generation in Keralam. Explanations of underdevelopment such as
the lopsided development of industrial structure historically, relative absence of industrial
entrepreneurship within the state and labour relations as turning a fetter on development
could be explanations quite consistent with the neo-liberal framework. (One might
question. why even the 'restrictive labour practices' did not hinder the growth of thriving
activities like construction and transportation within the service sector?) Nevertheless, it
is only someone who casts a critical eye on the status quo who would even notice the
anomaly that the two basic components of the production process, namely, labour and
capital co-existing in abundant supply within the same geographical region and yet with
hardly any development of the productive forces.

One is reminded of S.K. Ghosh who consistently argued that the Indian big capital, which
arose with trade and commerce under colonialism and then diversified into finance and
production, had its interest.s historically intertwined with the interests of the global
metropolitan capital. It raises an ~ven more important concern if the loan is not a
reflection on the comprador ·character, not only of the Indian big capital, but also of the
regional dominant classes at least in this case? (This is not to forget instances of
coalescence. Thus Tata is the biggest landowner in Keralam.) 'Liberalisation' has

2!8
Paul M. Sweezy 2000, pp. 75-76.
::o
Sweezy 1977, pp. 75-77. ·-.
There were also later liberal variants of a similar persuasion. Eg. J.W. Mellor 1976: The New
Economics of Growth: A: 'Strategy for Indian and the Developing Countries (Cornell
University Press, Ithaca) argued for a 'new strategy of agriculture-led growth', which evoked
considerable controversy. It argued that four types of linkages, namely, (i) backward
production linkage, (ii) forward production linkage, (iii) consumption linkage, and (iv) capital
and labour linkages could impart dynamism to an efficiency enhancing technological change
in.agriculture oriented to benefit large cultivators in particular. Ashwini Saith 1992: The Rural
Non-farm Economy: Processes and Policies (ILO, Geneva) argued that the policy focus on
large farmers suggested a naive faith in the trickle-down mechanism of the benefits of
agricultural growth.

139
'empowered' the regional dominant classes in ll')dia to negotiate even directly with
International Financial lns~it~tions. One would wonder whether it is a vindication of the
statement by Mao Tse-tung indicating that independent, self-reliant path of development
of productive forces is not possible except under an anti-imperialist revolution led by the
basic producing classes? Thus Mao said: "In the epoch of imperialism, in no country can
any other class [other than the working class] lead any genuine revolution to victory. This
is clearly proved by the fact that the many revolutions led by China's petty bourgeoisie
and national bourgeoisie all failed." 231

It would be enlightening to question the very dogma of 'developmentalism' being put


forth. The fact remains that about 50 per cent of the total foreign investment to India
during 1992-93 to 2000-01 has been speculative portfolio investments (cross-border
purchases of stocks and other. financial assets with an eye on quick money). 232 Purchase
of existing productive capacities- euphemistically called, 'brown-field investment' -has
characterized a greater part of even Foreign Direct Investments (FDI). The instances of
'green-field investment' leading to the establishment of new productive capacities have
been few and far between. So the question arises: Is oligopolist global capitalism in its
present decadent state, capable of truly developing productive forces in our native
economies? Nee-liberalism may also be questioned on grounds of 'jobless growth'. It
may also be put under a scanner of suspicion for the economic crises that it caused in
several countries, subsequent to currency instability and capital flights. 233 So then, finally,
'growth' or neo-liberal 'developmentalism' may not constitute an index to greater human
welfare. This is only to indicate that the 'developmentalism' as aggressively being
promoted by international financial institutions like ADB may merely be a 'discourse of
accumulation', not actually leading to human welfare.

The call for a 'democratic hartal' (not forcibly enforced) by 'Quit Kerala agitation forum'
on I November 2002, the state formation day, failed or was rather defeated by the non-
participation of the mainstream. Writing for the Thiruvananthapuram edition of the Hindu
on the eve of the proposed hartal, C. Gouridasan Nair said: "Tomorrow's hartal is certain
to be a failure. But may be, for the first time in the state's history, a failed (or defeated)
hartal would be a more eloquent articulation of public ire against a socio-political issue
than hartals of the past that brought:misery to the people."234 One would rather tend to

2ll
Mao Tse-tung.J975: "On the People's Democratic Dictatorship", pp. 411-24, first pub. 1949,
in Selected Works of Mao Tse-Tung, Foreign Languages Press, Peking, vol. 4, p. 421.
2J2
Reserve Bank of India Bulletin (various issues), Balance of Payment (BoP) data.
We will be returning to these questions in detail in Chapter IV.
Hindu 2002: October 31, Thiruvananthapuram edn.

140
agree since what have been at stake are the concerns of self-reliance of the state and the
very self-respect of its citizens:

For a post-script to the ADB loan saga, in 2004, five municipal corporations in which
LDF came to power went in for "financial assistance to the civic bodies under the Kerala
Sustainable Development Project". 23 s The conditionalities imposed included either
privatisation or imposition of user charges on urban services such as solid waste
management, drinking water supply, etc. The newly formed LDF government under V.S.
Achuthanandan decided not to go in for any more fresh Joan package from the ADB,
probably against the background of public resentment that has been welling up. The
outgoing UDF government also did not take initiative to go in for any fresh instalment for
MGP, after receiving two instalments of600 crore rupees each. Even the proposed loan of
Rs.l200 crore towards 'modernisation' ofthe electricity sector was given up. 236

IV. ARTICULATIONS OF.THE NATIONAL QUESTION IN KERALAM

As was also mentioned in an earlier section, Keralam, herein, is being referred to as a


·nationality' in the sense of it being a nation-without-own-State, within India, a multi-
national country. In this sense, there have been numerous characterisations of Keralam as
a nationality. 237 As we have mentioned in the beginning of Section III in this chapter, the
demand for national self-determination has been articulated time and again in the recent
Kerala history. It would be worthwhile to inquire into the economic and class bases of
these demands and the rectitude of their political positions. For evaluating the rectitude of
their the divergent and contending political positions, we could consider each of them as a
particular kind of 'discourse of accumulation', on the basis of the class interests
represented and assess them against the yardstick of justice. This would entail an attempt
at understanding the character of 'Indian nationalism' on the one hand and the 'many
nationalisms' in India and Kerala nationalism in particular on the other as 'discourses of

.
accumulation' on the basis of the class interests represented. Moreover, we could also
pose a question whether the Kerala nationality has historically been in contradiction in
material terms with global capitalism and the Indian State/dominant classes and whether
this contradiction has accentuated wi_th the initiation ofthe Structural Adjustment Policies
(SAP) since 1991.

Hindu 2004: "Corporations for joint stand on ADB loan", Monday, Dec 06.
2J6
Mathrubhoomi newpaper 2006: "ADB vaaypa nilachu; bharana naveekaranavum" (ADB loan
ends; modernising government· too- Malayalam), 7 November, Tuesday, Thiruvananthapuram
edn., p. 7.
For instance, Namboodiripad, E.M.S. 1949, 1952, 1968; Oommen, T.K. 1997a & 1997b; K.
Venu 1992; P.J. Baby 1984; etc.

141
Conceptualisations of Keralam as a Nationality

The Malayalam speaking areas of the erstwhile princely states ofThiruvithamkoor, Kochi
and Malabar were constituted into a linguistic state in 1956. There was a general demand
for unified linguistic state of Keralam before 1956. While there was a chauvinistic and
expansionist demand on the part of some elite sections to include in Keralam non-
Malayalam speaking areas of Kanyakumari in Tamil Nadu and Thulu and Coorgi areas in
Karnataka., the Communist party demanded 'unified democratic Keralam' including only
Malayalam-speaking areas. 238 The Kerala Socialist Party had even raised the demand of
an 'independent Keralam' although it could not gain much popular support. 239

E.M.S. Namboodiripad's book, National Question in Kerala was published in 1952 i.e.,
prior to the formation of the linguistic state, analysed the development of the Malayalee
nationality and the various classes within it. 240 A Malayalam version of this book was
published earlier in 1949, titled, Keralam Malayalikalude Mathrubhoomi (Keralam: Land
of the Malayalees). He had emphasised the anti-feudal, anti-imperialist content of the
national question during the struggle for unified Keralam, in a characteristic Marxist
fashion. 241 Therein he had further advocated land reforms and formation of the linguistic
state as the logical steps ahead. He had also upheld the Leninist principle of right to self
determination, including secession for the people of an oppressed nationality.

E.M.S. Namboodiripad himself, in his book, Kera/a Yesterday Today and


Tomorrow discusses the emergence of Keralam as a nationality in the fourth chapter,
titled. "The Birth of a Nation". 242 He speaks of the emergence of "a new national
language', Malayalam, 243 "national arts" like Kathakali that had become "truly
national", 244 "national market". He said, "On the soil of the national market was rising the
national state and national culture. Kerala had thus acquired all the main characteristics of
a nation." 245 He says, Kerala was thus going through the same process of national
unification, the setting up of the nation-state, etc. as was witnessed in the European

238
P.J. Baby, "Keralathinte Dt<siya Prasnam" [The Nationality Problem of Keralam]
(Malayalam), Paper presented at a seminar at Thrissur in 1984, in Desiya Prasnam 1ndiayilum
Keralathilum, Janakeeya Prasidd_hikarana Kendram, no place, no date, pp. 87, 91.
2lQ
P.J. Baby 1984, p. 91.
240
E.M.S. Namboodiripad, National Question in Kerala, People's Publishing House, Bombay,
1952.
241
E.M.S. Namboodiripad 1952, pp. 287-88.
E:M.S. Namboodiripad, Kera/a Yesterday Today and Tomorrow, National Book Agency Pvt.
Ltd., Calcutta, August 1968 (2nd edition), Jan. 1967 (I" edition), pp. 57-65.
E.M.S. Namboodiripad 1968, p. 61.
E.M.S. Namboodiripad 1968, p. 62.
E.M.S. Namboodiripad 1968, p. 65.

142
countries m the same period. " 246 He uses the words, "nation" and "national ity" 2 ~ 7
interchangeably.

Keralam, indeed, qualifies to the pre-conditions of a 'nation' that T.K. Oommen was
speaking about, namely territoriality and language, besides viability of size. 248 It is among
the 12 languages in India with 10 million or more speakers. Malayalam has around 30
million speakers Vt'ithin Keralam, besides the several million migrants outside Keralam. 249
Besides, Keralam has been accorded the status of a linguistic state since 1956, along with
a number of other linguistic nationalities, in response to persistent demands. It may be
seen that Keralam even fulfilsthe popular strict criteria to nationhood set out by Stalin,
namely, common language, territory, economic life and common culture. 2 so

- Articulations on the Nationality Question in Keralam

After the formation of the linguistic state in 1956, the nationality question did not come
up in Keralam until new, serious economic and cultural situation developed in
Keralam. 251 Articulations on the nationality question of Keralam in the latter half of the
1980s was an indication of the new situation given rise to by variables that had not
hitherto become prominent. Thus P.J. Baby wrote in 1984, 'From the state of being
exporters of primary commodities for imperialism and its agents, and being a market for
them. Keralam has to turn into a national state capable of standing on its own legs and not
dependant on the outside forces'. 2s2

The response to the underdevelopment of the commodity producing sectors by the


successive governments in the state, irrespective of political orientation, has been to lure
in the Indian and the global metropolitan capital to effect development in the state.
Moreover, tourism, including pleasure tourism is being sought to be promoted on a large
scale in recent years. The efforts to encourage Information Technology industry in a big
way was not as yet successful, possibly because a proper industrial structure with forward
and backward linkages to provide boost to further industrial development could not be
built up.

E.M.S. Namboodiripad 196~, p. 64.


E.M.S. Namboodiripad, p. 62'.:
T.K. Oommen 1997b: Cftizenship, Nationality and Ethnicity Reconciling Competing
Identities, Polity Press, Cambridge, p.66.
T.K. Oommenl997a: "Citizenship and National Identity in India: Towards a Feasible
Linkage" in Citizenship and National Identity: From Colonialism to Globalism, Sage, New
Delhi, Thousand Oaks, London, p.161.
2SO
J.V. Stalin, 'Marxism and the National Question', Works, Vol. 2, Gana Sahitya Prakash,
Calcutta, 1974, pp.l94-215.
:!SI
P.J. Baby 1984, p. 92.
2S2
P.J. Baby 1984, p. 104.

143
If we need to comment on the sustainability of the pattern of development followed by
Keralam, we need to take ~nto account the structural linkage of the economy of the state
with the rest of India and the rest of the world. Studies show that the social achievements
of the so-called 'Kerala model' was made possible due to the disproportionate growth of
the service sector, largely, through the massive inflow ofremittances, since mid-1970s. 253

K.K. George ( 1993) tries to analyse the chronic fiscal crisis of the state, central
government's responsibility for starving the state of financial resources and argues for an
alternative development model. He argues that 'Kerala model of development had almost
reached the end of its tether' and argued for "a new strategy of economic growth based on
human resource development" for.Keralam. 254 The monograph is a good exposition ofthe
fiscal crisis of th~ state, for a period before the initiation of the SAP (1974-75 to 1989-
90). Nonetheless, it calls for further studies on the possible and feasible social basis that
could make for an alternative pattern of development.

M.A. Oommen's Essays on Kerala Economy raised certain pertinent issues on the Kerala
economy.255 It is a collection of essays by him dated from 1960 to 1992. It covers various
aspects of the economy ofKeralam which include the issues of land reforms, migration of
small enterprises, unemployment, fiscal crisis, energy crisis and development challenges.
The author touches upon some interesting features of Kerala economy. For instance, he
speaks about two paradoxes on the nature of unemployment in the state: the paradox of
high wages and high unemployment and the paradox of high incidence of unemployment
and scarcity of labour for agricultural operations. 256 Similarly, he speaks of the high rate
of educated female unemployment 257 and casualisation of the work-force. 258 He also
speaks about three development paradoxes in the state, namely: (a) low per capita income
and high per capita consumption; (b) low rate of growth in agriculture despite land
reforms, high investment in major irrigation and high level of investment credit per
hectare, and (c) high PQLI (Physical Quality of Life Index), along with high incidence of
unemployment and poverty. 259 The most crucial problem Keralam would encounter
during the nineties, he says, would be the question of raising resources for

2SJ
Nair, P.R. Gopinathan &.P. Mohanan Pillai 1994: Impact of External Transfers on the
Regional Economy of Keralli; Centre for Development Studies, Trivandrum, p. 32.
K.K. George 1993: Limits :to Kerala Model of Development, CDS, Thiruvananthapuram, pp.
133, 137. The 'Kerala model', in this parlance, is viewed as a pattern of human resource
development without a concomitant economic growth.
M.A. Oommen 1993: Essays on Kerala Economy, Oxford & IBH Publishing Co. Pvt. Ltd.,
New Delhi, Bombay, Calcutta.
M.A. Oommen 1993, p. 123.
M.A. Oommen 1993, p. 122.
2$8
M.A. Oommen 1993, p. 124.
25<>
M.A. Oommen 1993, p. 155.

144
development. 26° For building the production base he advocates: (a) evolving an export-led
growth strategy, (b) forging a strong agriculture-industry linkage, (c) solving the energy
crisis, and (d) formulating an environment-friendly development strategy. 261 He favours
the "small is beautiful" approach (small firms, micro and mini hydel projects, minor
irrigation, low cost housing, etc.) tied to the strategy of decentralised planning. 262 His
views can also be known from his Presidential address in the International Conference on
Kerala's Development Experience in 1996. Therein he asks, "Why not Kerala become a
centre of scholarship and discovery, a centre of computer engineering, both hard and
software, a centre of healthcare, traditional as well as modern, a centre of selective
prudent tourism, home of floriculture and flower trade and the like?" 263 Although the
argument has merit in itSelf as an eco-friendly developmental alternative, it may be
pointed out that ·it still operates within the paradigm of comparative advantage. We would
rather view that there is need for a pattern of development that is based on the concerns of
self-reliance and _equity. Moreover, it is necessary to uncover the dynamics of
underdevelopment in political terms and identify the social forces that could usher in a
new society.

·A variant Marxist view' of Rammohan and Ravi Raman (1990) was exceptional in
having sought to situate Keralam as being ensnared in the exploitative framework of pan-
Indian and multinational capital. These forces were identified as controlling substantial
extent of the cash crop growing highlands, the rich raw material base and the vast
consumer market of the region, and acting through the financial mechanism of banks and
stock market siphoning off the financial resources from the state. 264

Otherwise, there seems to be a general void as far as academic works on the political
economy of the state are concerned. This void, at least in part, was sought to be fi lied by
the debates among marginal political groups in Kerala society. Here we intend to take
only certain representative figures. K. Venu of the erstwhile CRC-CPI (ML) exemplified
a particular stream of the debate. In the final chapter of his book, he speaks of the right to
self-determination of the Kerala nationality. He questions why Keralam with an excellent
resource base and abundant inflow of capital was being unable to achieve industrial
development? For the industrial backwardness of Keralam, he puts blame on the capital
outflow from the state benefiting tll~ all-India big capital, and the powerlessness of the

M.A. Oommen 1993, p. 207.


~01
M.A. Oommen 1993, p. 211.
262
M.A. Oommen 1993, p. 165.
M.A. Oommen 1993, pp. 9-10.
K.T. Rammohan & K. Ravi Raman 1990: "OfCochin Stock Exchange and What it means",
Economic and Political Weekly, vol. 25, no. I, 6 January, pp. 11-20.

145
nationality to protect its own market. 265 The view somewhat echoes the document of his
political party dated Novemb~r l, 1987. 266 Thus the preface to this document identified
the nationalities question as the primary contradiction in Indian society. Again, Clause 44
of this document characterizes the 'new democratic revolution' of India as the
culmination of the new democratic revolutions of the different nationalities in India. Here
one is reminded of Lenin's words, "For complete victory of commodity production, the
bourgeoisie must capture the home market .... " 261 Instead of focusing on the issues of
unemployment, outmigration and. underdevelopment of the productive forces in the
commodity producing sectors of the economy, which are of prime concern to the basic
producing classes and the broad masses of people within the state, Venu placed exclusive
emphasis upon gaining a share of the market, a demand catering to the requirements of
the emergent bourgeoisie within the nationality. Subsequent debates have clearly brought
out how Venu's views were reflections of bourgeois nationalist inclinations within the
communist movement.

P.J. James represents another stream of political opinion. 268 He says, in the absence of a
_revolutionary political alternative, people belonging to various nationalities and oppressed
sections fall back on their immediate social networks such as family, clan, tribe, race,
religion, etc. 269 So also "in the context of the recent setbacks suffered by proletariat and
progressive forces at a global level... various nationality movements that left the scene
· decades back are now bouncing b~ck with intensified vigour." 270 He denounces the
national chauvinistic movements and the manner in which imperialism has used them to
their benefit. But he fails to appreciate the general democratic content or the anti-feudal,
anti-imperialist orientation of many a nationality movement.

In the debate, the position of the 'Red Flag' stream has been that the nationalities question
can be resolved in course of the revolutionary class struggle itself. It seems, however, that
by counterpoising class struggles to nationality struggles, wittingly or unwittingly, they
tended to support 'the big nation chauvinism' of the pan-Indian dominant classes.

26~
K. Venu• 1992: Oru Communj~tukaarante Janaadhipathya Sanka/pam [The Conception of
Democracy by a Communist] (tii1alayalam}, Vicharam Pubications, Thrissur, pp. 365-368.
C.R.C. CPI (ML) Kerala State·Committee 1987: Keralathinte Puthan Janaadhipathya Viplava
Paripaadi (The Agenda for the New Democratic Revolution of Keralam - Malayalam),
Nov. I.
267
Lenin, V.I. 1914 [1977]: "The Right of Nations to Self Determination", Selected Works, vol.
I, Progress Publishers, Moscow, p. 2.
He owed allegiance to the CPI-ML (Red Flag} stream in the state.
PJ. James [ 1996) "On Nationality Question" (undated booklet}, Janakeeya Kala Sahithyavedi,
Kerala, p. 14.
P.J. James [1996), p. I.

146
.'vlunnanipporali publications, which continued the legacy of the erstwhile CRC-CPI
(l'v~L) rejected its bourgeois_ nationalist inclinations and upheld the working class
perspective on nationalities question. They asserted that the working class in India is a
single multinational working class. Further, they held that although India is not a single
national unit, India is indeed a single socio-economic unit and any movement for social
transformation should be directed against the dominant socio-economic structure. They
distanced themselves from K. Venu's approach of exclusive nationalism since the latter
was at the cost ofthe concerns of class struggle. They, however, upheld the right to self-
determination of nationalities, in a Leninist fashion, with a view to bring about a lasting
unity of the nationalities. 271 It may be pointed out that Venu's nationalism boiled down to
a variant of bourgeois nationalism within a peripheral nationality. On the other hand, the
nationalism as espoused by N[unnanipporali group may be considered a variant of the
nationalism of the subaltern clases, led by the working class, with a willingness to ally
with the struggles of the deprived masses in other parts of the country and elsewhere.

Let us examine the problematic of Class-Nationality relationship in Kerala society to


which we would be returning in other chapters as well, since we would consider it
im~rtant to understand the political economy of underdevelopment of the commodity
producing sectors, from a bird's eye-view and to identify the potential social forces that
could usher in a new social order.

V. CLASS-NATIONAUTY INTERFACE IN KERALAM

Linkages between Class and Nationality may not immediately be apparent. Studies on
this subject are few and far between, given the predominance of studies on nationalism
from the angle of language, culture and consciousness. However, it would not be out of
sync to conceptualise anti-feudal, anti-imperialist nationalism as a mode of class struggle
itself. Let us take the case of Keralam.

Historically, it was an anti-feudal, anti-colonial movement of the working class and


peasantry led by the Communist party that raised the demand of statehood for Keralam.
Thus the agitation led by the Communists leading up to the Punnapra-Vayalar firing in
1946 and thereafter, had demanded the end of princely rule and the formation of 'united
democratic Keralam' within an.: Indian Union that would be independent from
colonialism. 272 Thus it may be:-illustrated as a case of anti-feudal, anti-imperialist
nationalism wherein anti-feudal and anti-colonial demands were raised simultaneously.

271
Munnanippora/i, April1997, pp. 7-10.
272
E.M.S. Namboodiripad 1952, pp. 156, 158.

147
Even after the attainment of linguistic statehood in 1956, the productive sectors of the
economy remained underde~eloped, despite the huge inflow of remittances and export
earnings from high value addition cash crops. Corresponding to the stagnation in the
secondary sector,· Keralam continued to have a miniscule modern industrial working
class, although the land reforms largely abolished feudal mode of production relations in
agriculture and working class itself constituted, possibly, the largest chunk of the
economy i.e. including also those in traditional industries, plantation sector and other
agricultural labour, besides those in modern industries. The structural constraints to
development like capital outflow from the state caused deprivation of the labour force
resulting in massive unemployment and outmigration from the state and thus had
'national' dimensions.

Against this scenario, we would argue that self-determination of Kerala nationality at this
stage of social development as an assertion of the right to development-with-equity may
lead to the development of productive forces thereby ameliorating the problems of
unemployment and undesired outmigration thrust upon people through the processes of
underdevelopment. This could be in the interests of the basic producing classes,
marginalised social groups and the broad masses of people in the state. The self-
determination could be in the nature of an internal self-determination within India as a
multi-national country and an 'economic' self-determination of the basic producing
classes and the broad masses of people in the state.

During the Structural Adjustment since 1991, International Financial Institutions began to
negotiate directly with the states (provinces) in India. Thus Asian Development Bank
negotiated terms of its lending to Keralam or the World Bank with Andhra Pradesh. But it
may not necessarily mean a significant weakening of the Centre. The major levers of
economy including the monetary and fiscal policies remain with the Centre. 273

The case of the recently-introduced VAT is an instance in point. Sales tax proceeds has been
the most important source of revenue for the states in India. The initiation of the Value Added
Tax (VAT)system has left the states to their own devices, with respect to their tax revenues.
The Centre haS agreed to meet th~ shortfall in revenues only in the first three years of the
implementation of VAT. As we ~ave already analysed earlier in this chapter, the centrally
'.:1
determined uniform rates of taxes under the VAT system undermines the federal autonomy of
.-·
the states, and rather unconstitutionally so. 274

~7)
Pritam Singh 1999, p. 94.
274
Ashok Mitra 2004: "Centre-State Financial Relations: How Wise will a Nation-wide VAT
be?", http://www.networkideas.org/alt/jul2004/alt05_ VAT.htm (08.04.2006).

148
VI. CONCLUSION

In this chapter, we have sought to analyse the 'regional geography ofaccumu·tation' in the
case of Keralam as a national formation within India, a multi-national country. This was
done both in relation to the operations of Indian and global metropolitan capital, on the
one hand and the 'vertical disparity' with the Indian State in terms of the question of
federal autonomy. National self-determination in the case of Keralam, in the present stage
of social development may be essentially viewed as a question of the assertion of right to
development. We have sought to understand the facets of dependency resulting in
underdevelopment of the productive sectors of the economy. We do not view the Service-
sector propelled development during 1 liberalisation' years as a commendable achievement
unlike several other scholars, since it may be viewed as an accentuation of the
dependency syndrome. Thus it has been pointed out that although there has been
-
significant growth in the producer services, namely, Transportation by other means, and
Banking and insurance, the linkages to production in these cases were external to the
state. Stagnation, particularly in its commodity producing sectors, has characterised the
Kerala economy since mid-l970s, which coincided with the Gulf boom. Keralam has
been a victim of regional inequalities in development during 'liberalisation'. The net
value addition by manufacturing declined in the 1990s, as compared to 1980s and
Keralam has not been able to rectify the lopsidedness of its industrial structure. The
'industrial structure h:ypothesis' is a plausible explanation for the industrial stagnation in
the state. However, the state government, caught up in a paradoxical fiscal crisis amidst a
surfeit of capital within the state economy, is unable to make effective interventions as it
is constrained by the structures of accumulation within the state, particularly, by the
classes that exercise dominant influence upon the economy and those external to the state,
in particular, the Union government/the Indian State and global capitalism. Keralam,
today, has not been able to move away from the international division of labour set in
place by colonialism, that of semi-manufactures and human labour. Ultimately, it is only
through a move-away from the dependency paradigm implied in 'comparative advantage'
theories that a self-reliant base of economic development, based on indigenous resources
and indigenous produ~t markets, be built up .in the state. In our view, the question of
unemployment in the state is rela!ed to the lack of development of productive forces,
which is integrally related to t~e question of the lack of control over the financial
resources of the state. Similarly, it is only through the development of productive forces
that the compulsion to migrate out be ameliorated. We have observed how outmigration
to other parts of India and emigration to foreign countries has acted as a safety valve
against political unrest in the state by reducing unemployment and bringing in remittances
that spruced up the economy.

149
The veritable resource-base of the state, including plantation crops, marine resources and
rare minerals, the massive incoming remittances from the emigrant workers from the state
could not contribute to development of productive forces within the state as they got
drained out of the state through consumption expenditure for commodities imported from
outside the state, through nationalised and commercial banks, through financial
institutions like LIC, GIC, through Stock Exchanges, etc. Remittances and export
earnings, however, boost the foreign exchange reserves of the Government of India and
unfortunately contribute to inflation within the economy of the state, since the state
government has no control over them. The orientation of policies proposed even recently,
as in the 10-point Vision 2010 of President Abdul Kalam was inclined towards
reinforcing this state-of-affairs. One way, the state government can have control over
remittances is by increasing the Credit-Deposit ratio in Scheduled Commercial Banks
(SCBs) within the state and also by scrapping the clause in Article 293 of the Constitution
which proscribes direct borrowals from SCBs by the state government. However, a more
substantial solution to Centre-states financial relations need to be devised through
Constitutional amendments to this effect, thus solving the basic anomaly between states
being overburdened with developmental and other responsibilities while the Centre keeps
its exclusive rights over revenue resources. We have also indicated that the basic issue of
the financial penury of the state can be resolved only if we address the national question
in terms of federal autonomy in the case of Keralam and also the question of Class
justice, which needs to address the questions of both corruption and tax evasion in the
first place. At this stage of social development in India, it would have been much more
advisable that the states have primary control over their own resources rather than the
Centre having to allocate resources to the states, after expropriating their resources.
However, change in this direction can be achieved only through the agency of movements
that genuinely address the nationality contradictions.

By late 1990s, the state government was in a debt crisis with interest commitments higher
than the total loan amount raised. However, with the initiation of neo-liberal reforms, the
question of federal autonomy turned a non-issue in mainstream political circles. The
reasons could have been a perceived shift in the locus of 'real' power from the Union
government to International Financial Institutions; possibility of better terms of trade in
the international market, despite the risk of price volatility; lesser recourse to the use of
Article 356; end of the licensing·system that apparently favoured the Indian big capital
and other factors like alternative sources of financial mobilisation could have been the
reasons behind this change. There are, however, factors that could have aggravated the
contradiction between the Centre and the states such as the initiation of the Centrally
administ~red VAT in place of states-administered sales tax; FRBM Act curbing the pro-

150
active ec?nomic role of the state governments; the signing of international treaties, the
WTO treaty in particular that h<!d major implications for the economies of the states; and
other issues of possible contention such as Article 293, taxation rights in the Service
sector, Fifth Pay Commission recommendations, etc. These issues however, did not give
rise to any major contradiction between the Centre and the states, possibly because of the
convergence in the approaches of the pan-Indian dominant classes and the RDCs on the
question ofneo-liberal reforms.

With regard to the "programme lending" agreement with the Asian Development Bank
(ADB) that was entered into by the then LDF government in 1998, and continued by the
UDF government subsequently, we wo'uld view that the agreement basically had to do
with promoting structural adjustment. There were several alternative means of financial
mobilisation before the state government (apart from agricultural surplus, remittances,
export earnings, etc.) and so it was not a crisis-driven response that lay behind the state
government's decision to opt for the loan; nor was hi.gh interest rate a major cause of
concern about the loan package. However, the stringent conditionalities attached to the
loan package and the dependency that it spelled for Keralam as a national formation were
matters of serious concern. The conditionalities stipulated by the ADB were quite in tune
with facilitating the free and unimpeded operations of private capital. The decision to go
in for the .loan package betrays the inability of even the RDCs to usher ih independent,
self-reliant path of development. Moreover, it may indicate that it is only the subaltern
classes that can possibly achieve this. The ADB loan is also a reflection of how the
'developmentalism' of the neo-liberal agenda may be a discourse of accumulation, not
truly developing productive forces in the peripheral economies and not actually
contributing to human welfare.

Keralam fulfils all the criteria necessary for the status of nationhood and there have been
numerous characterisations to this effect in both academic and non-academic circles.
There have been demands for the self-determination of the nationality ·prior to the
attainment of statehood and prior to the initiation of neo-liberal reforms, but hardly any
after that. We would hold that proposals for the development' of Keralam, without
concomitant structural transformation on both Nationality and Class (seen as a
substantive category related to gender and caste, in particular) are bound to reinforce the
existing hierarchies in social relations. Moreover, the sustainability of the Kerala pattern
of human development without economic development, particularly in the commodity
producing sectors is questionable in a volatile and crisis-ridden world social order today.
An assertion of the right to development of Keralam needs to reckon with the constraints
imposed by the Indian and global metropolitan capital and the Indian State with a unitary

151
constitutional structure.' Demands for a 'share of our own market' as with K. Venu,
instead of a focus on the problems of unemployment, undesired outmigration, etc.,
represented a discourse of accumulation in the interests of the emergent bourgeoisie
within the national formation whereas a lack of appreciation of the nationality
contradiction as with P.J. James, wittingly or unwittingly served the big nation
chauvinism of the pan-Indian dominant classes. Emphasis on a struggle against the
dominant socio-economic structure in India and horizontal linkages with the struggling
forces in the rest of the country may be considered justified. For a pro-people outcome,
the prime social basis and the leading forces in these struggles need to be the subaltern
classes and social groups.

The linkage between Class and Nationality can be much more apparent if we follow a
political economy approach, as against cultural studies approach. Historically, the anti-
feudal, anti-colonial nationalism of the subaltern classes in the state has been a discourse
quite in tune with class struggle itself. Even after the attainment of statehood in 1956, the
national question remains unresolved, albeit in a changed manner since the structural
constraints to development-with-equity persist. Moreover, in spite of the convergence of
interests ofthe RDCs and the pan-Indian dominant classes with respect to globalisation,
the nationality contradiction involving the broad masses of people within the state vis-a-
vis Indian State on the one hand, and global capitalism on the other, seems to have
accentuated under neo-liberal reforms.

152
Chapter IV
Implications of the Neo-Liberal Reforms for Keralam
Class, Nationality and the Globalisation of Monopoly Capital

Class, Nationality and the Globalisation of Monopoly Capital

I. A CRITIQUE OF 'GL,OBAUSATION'

Towards an adequate definition


'Imperialism': the essential attribute
The principal contradiction
lHonopoly capitalism: A balance sheet
The golden epoch
Unmitigated crisis·
The political-ideological baggage
The superstructure of speculative capital
A reflection on the economic collapses of our day
Sltaky, yet not crumbling
"lfistonJ cannot repeat itself'
Triadisation of FDI flows
FDI, still a trickle
A fraternal agony
FDI as buying out of productive capacities
A tragedy of e"ors
. Foreign investment: Pursuing a mirage?
Implications ofFDI in Retail Trade
Implications of tlte proposed 'labour reforms'

II. Focus oN KERALAM - IMPACT- AND IMPLICATIONS OF GLOBALISATION

A. IMPACT
Tlte wages of dependency
Open economy and volatilitiJ in agricultllral trade
Erosion in food self-sufficiency
Economic reforms and its social costs
Pattern of growth
A stillborn alternative?
An accentuation of rentier exchange relations?
'Glocalisation' in the political and culhtral spheres:
The Case of Hindu tva communalism
Plight of the subalterns .

B. IMPLICATIONS

The financial sector


The agricr~lture sector
IN LIEU OF A CONCLUSION

The path of alternative political movements


Self-reliance as the test of good governance
CHAPTER IV

Implicati~ns of the·Neo-Liberal Reforms for


Keralam
rrtie <Trutli is in tlie Wliofe. '- :JfegeP

This chapter deals with the implications of neo-liberal reforms for Keralam. The chapter
has two main parts. The first is a general critique of 'globalisation' in the context of a
Third World country like India. The second part deals with the Kerala-specific aspects. It
covers both the impact that have already been felt and the major implications for our
country in general and Keralam, in particular. This is followed by our concluding
observations. In the title of this chapter, we have opted to designate the phenomenon
under our analysis as 'neo-liberal reforms', rather than 'Structural Adjustment', which is
a term used most commonly by the International Financial Institutions and
'globalisation', which is a fancy term that is in wide currency. The term, 'Structural
Adjustment' implicitly conveyed that the State had, by necessity, to undertake these
measures. 'Globalisation' gives rise to a positive connotation and does not convey the
essential meaning of this process. ?n the other hand, 'neo-liberal reforms' somewhat
clearly indicates the ideological orientation of this process, which is explained further
later in this chapter. Moreover, what we intend to analyse is basically the implications of
neo-liberal reforn1s rather than their impact. Implications are rather futuristic, whereas
impact is something that has already become visible. 2 We would hold that most of the
impact of these reforms is yet to unfold in our country and Kerala state which has,
apparently, been a late reformer.

In the first part of this chapter, we argue that neo-liberal 'developmentalism' has been
incapable of delivering development of productive forces and meet the concerns of
welfare of the broad masses of people while it has involved a redistribution of surpluses
to Indian and global oligopolies. In the second part, we identify the impact of-these
reforms in relation to Kerala state_ in terms of peasant suicides, volatility in the prices of
agricultural commodities, accentuation
,, of rentier exchange relations, growth of fascistic
communal trend and a more repressive
.. State in the political realm, marginalisation of the
subalterns, etc. and go on to understand the crucial implications that they could have for

Hegel as cited in Paul M. Sweezy 1994: "The Triumph of Financial Capital", Oritz, B.S. &
T.D. Gupta (eds), History As It Happened Selected Articles from Monthly Review 1949-1998,
Cornerstone Publications, Jan. 1999, p. 244.
Repercussions should refer to impact/implications for security/insecurity. We do not intend to
deal with this aspect herein.

153
livelihood in the agricultural sector and the sustainability of the economy itself in relation
to the financial sector. In .conclusion, we seek solutions in the realm of alternative
political movements and/or in the realm of the State.

Class, Nationality and the Globalisation of Monopoly Capital

Paul Sweezy once said, "Never has Hegel's dictum "The Truth is in the Whole" been as
true and relewint as it is today. "1 'Giobalisation' is the one Leviathan that leaves its
footmark on every aspect of contemporary human life anywhere in the world from
economy to politics and culture. Capitalism was known to be a globalising system right
from the days of its inception. But i~ is the new globalisation in our times that is the focus
of our analysis here. We would follow the political economy approach of identifying
broad linkages in a framework of totality.-

I. A CRITIQUE OF 'GLOBAUSATION'

Towards an adequate definition

It is important to have an adequate definition of Globalisation. "Globalisation generally


refers to the process whereby capitalism is increasingly constituted on a transnational
basis. not only in the trade of goods and services but, even more important, in the flow of
capital and the trade in currencies and financial instruments. " 4 Or again, "A major
aspect of economic globalization is the combination of free trade and free movement of
capital."5 Two things require particular attention in these characterizations: Of the two
basic components of the production process, namely labour and capital, 'Giobalisation'
herein refers to the increasing mobility only of capital, not of labour. Considering the
entry restrictions to immigration, ''The rules governing the movement of capital and
labour are ... asymmetric." 6 Historically the world has seen free movement of both
capital and labour, prior to 1914. Many say, the world was more globalised then that it is
now. 7

Sweezy 1994, p. 244.


Roben W. McChesney 1998: "The Political Economy of Global Communication" in
McChesney, Roben W., E.M. Wood & J.B. Foster (eds), Capitalism and the Information Age
The Political Economy of Global Communication Revolution, Monthly Review Foundation,
New York, p.l.
Roben Went 2002-03: "Globalization in the Perspective of Imperialism", Science & Society,
vol. 66, no. 4, winter, 473-97.
6
Pulapre Balakrishnan 2003: "Giobalisation, Growth and Justice", Economic and Political
Weekly, vol. 38, no. 26, 26 July, pp. 3166-72, p. 3171.
Ibid.

154
Liberals of diverse shades have argued that with globalisation, the State had 'retreated' 8
and the world had become 'borderless' .9 Even some influential scholars of the Marxist
-
persuasion have argued that the centre-periphery dichotomy has been superseded and the
national question has become redundant under globalisation. 10 Listen to another liberal
characterisation of globalisation: "The term globalization describes a condition in which
the rapid flow of capital, people, goods, images, and ideologies across national
boundaries continuously draws more of the world into webs of interconnections, thereby
compressing our sense of time and space and making the world feel smaller." 11 In a
similar vein, T.K. Oommen says, 'Giobalisation is the unimaginable shrinkage of time
and space'. 12 This· may, however, be considered a techno-centric definition of
globalisation, which is contestable. 'fechnological advancement through the 'new
economy' especially sin~e late 1990s may not logically be passed off as an achievement
of the globalisation of monopoly capital. Technology, Media and Telecommunications
(TMT) Jay at the very heart of the new economy. 13 Technology sector included
Information Technology, Biotechnology and Communication Technologie~ (IT, BT, CT),
besides the newly emerging areas like Nanotechnology. We would hold that the 'new
economy' may more appropriately be considered a technological advance much like the
automobile revolution in early 20th century, for ushering in which labour has been more
instrumental than capital. In the Marxist parlance, technology has rightly been viewed as
'dead labour'. 14

Alternatively, we would hold that globalisation is primarily an economic phenomenon,


associated with capitalism getting constituted on a transnational basis. In other words, the
process is 'Transnationalisation' meaning, the mobility of oligopolistic capital across
national boundaries, but not leading to the creation of an idyllic 'global village'. Or in

Susan Strange 1996: The Retreat of the State: The Diffusion of Power in the World Economy,
Cambridge University Press, Cambridge; cited in Sam Moyo and Paris Yeros 2005:
Reclaiming the Land, Zed Books, London & New York, David Philip, Cape Town, p. 4;
Kenichi Ohmae 1990: The Borderless World: Power and Strategy in the Interlinked Economy,
Collins, London; cited in Sam Moyo and Paris Yeros 2005: Reclaiming the Land, Zed Books,
London & New York, David Philip, Cape Town, p. 4.
10
They include Bill Warren 1980: Imperialism: Pioneer of Capitalism, John Sender (ed.), Verso,
London; and Michael Hardt and- Antonio Negri 2000: Empire, Harvard University Press,
Cambridge, MA.
II
lnda, Jonathan Xavier & Renato R:osaldo (eds.) 2002: The Anthropology of Globalization: A
Reader, Blackwell publishing Lt~,- back cover.
T.K. Oommen 2004: Chairperson's comments in the Session on 'The Impact ofGiobalisation'
in the International conference, "Coping with Globalisation", Centre for Public Policy and
Governance, Institute of Applied Manpower Research, Delhi.
I)
Robert. Brenner 2002: The Boom and the Bubble: The US in the World Economy, Verso,
London, New York, p. 3.
14
Moreover, it has been argued by others that rather than the policies oriented to an open-
economy, it was the protectionism of the 1980s in the IT sector that enabled India to develop
this sector to this extent.

155
other words, there is being no basic alteration of the existing hierarchies among countries
and nations. Capitalism is still nationally organised and hierarchically ordered 15 with the
OECD countries (leading industrial economies in Europe, plus the US, Japan, Canada,
Australia and New Zealand; 24 countries in total) and the United States on top. Thus
according to the World Investment Report (WIR) 2000 from UNCTAD, 90 of the top 100
corporations in the world today are headquartered in the triad of EU, Japan and US. 16 The
Report further reveals that in 1998, only one firm among the top 100 TNCs, Petro Ieos de
VenezUela, which stands at position 91, was headquartered in a 'developing' country.
Daewoo had already left the top 100 list. Such facts, seem to validate the theoretical
claims on the spatial asymmetries in the global accumulation process.

"The internationalization of capital has been accompanied by the proliferation of capital's


original political form." 17 The 'original political form', here refers to nothing other than
the nation-state. "The inevitably uneven development of separate, if inter-related, national
entities has virtually guaranteed the persistence of national forms." 18 Scholarly evidence
in the case of India also suggests that the role of the State has been intensifying over the
first decade of liberalisation despite what the apparent meaning the term 'liberalisation'
might suggest. 19 "Global capitalism is more than ever a global system of national states,
and the universalization of capitalism is presided over by nation-states, especially one
hegemonic superpower."20 The hegemonic superpower today seems to be the United
States with its unchallenged political and military superiority since the Cold war and the
dominance of the dollar on the international currency markets.

So then, our tentative definition would be: Globa/isation means the aggressive self-
expansion ofnationally organised, hierarchically ordered oligopolistic capital.

We could possibly make a useful distinction between market globalisation and military
globalisation (as in Iraq today). _This classification goes by the criterion of the means
adopted for such expansion. Under neo-colonialism, the former seems to be the generally
preferred option. Direct colonial domination is seen to be an "untenable mode of

IS
Ellen Meiksins Wood 1999: "Unhappy families: Global capitalism in a world of nation-
states", Monthly Review, vol. 5 I';' no. 3, July-August, pp.l-13.
lb
United Nations Conference 01'! Trade and Development (UNCTAD) 2000: World Investment
Report (WJR}, Geneva, p.75.
17
Ellen Meiksins Wood 1999, p. I 0.
IS
Ibid, pp. 9.
19
Terence J. Byres (ed.) 1997: The State, Development Planning and Liberalisation in India,
Oxford University Press, Calcutta, Chennai, Mumbai, first published 1994; Barbara Harriss-
White 2003: India Working Essays on Society and Economy, Cambridge University Press,
Cambridge, p. 195.
:o
Ellen Meiksins Wood 1999, p. 9.

156
domination" 21 today but it does not seem to be ruled out yet. The ends of such policy are
still "defense of the privileges _of the Northern elites and their Southern counterparts in a
highly stratified world system". 22

'Imperialism': the essential attribute

'Giobalisation' is a fancy term coined by the erstwhile World Bank economist Joseph E.
Stiglitz and needs de-mystification. Specifying that 'globalisation' is the
transnationalisation of monopoly capital or imperialism in the Leninist sense would
eminently serve this purpose. Here we need to harp back on V.I. Lenin's classic
exposition of the five-fold basic features oflmperialism:

1) Concentration of production and capital leading to creation of monopolies;

2) Merging of bank capital with industrial capital, and the creation of a financial
oligarchy;

3) Exceptional importance to export of capital as distinct from export of


commodities;

4) International capitalist associations sharing the world among themselves 23 ;

5) The territorial division of the whole world among the biggest capitalist powers is
completed. 24

We may further sum up the basic features of imperialism as two-fold, namely monopoli 5
and export of capital. Domination by the rentier finance capital is the distinguishing
feature of imperialism. It is the rent appropriated in the stock markets and other
spc:culative outlets that dominates over profits under the capitalism of oligopolies. This, in
turn, reveals the decadence of capitalism in its oligopolist phase.

Went 2002-03, P' 491-2. ·~·


Ibid, p. 492. .
The mode of sharing the world seems to have undergone a change especially since the end of
the Second World War, with more than one imperialist country accessing markets of any one
of the subject countries, not necessarily through physical occupation as under colonialism but
through native ruling classes amenable to the dominating powers.
Lenin 1917, p.84.
It would be 'oligopoly', more correctly, since 'monopoly' literally means dominance by one
and 'oligopoly' means dominance by a few.

157
The principal contradiction

Global capitalism, in particular: US dominance and hegemony today is considered to be


the most potent threat to the world peoples. It is often conceptualised among radical
circles that there are three fundamental contradictions in the world today:

i) The contradiction between global capitalism and the oppressed nations and
peoples;

ii) The contradiction between the bourgeoisie and the proletariat in the advanced
capitalist countries;
.
iii) The contradiction among advanced capitalist countries and among monopoly
capitalist groups. ·

Of these three, the contradiction between Global monopoly capitalism and the oppressed
peoples and nations26 may be conceptualised the principal one on the world-scale today.
In other words, given the all-encompassing, hegemonic position of global monopoly
capital, it would not be wrong to argue that it shapes and constitutes the character of other
major contradictions on the world-scene and in this sense, it is the principal determinant
on the global-scale. Thus it may shape the character of the contradiction between labour
and capital in advanced capitalist countries, on the one hand, and the contradictions
between the different factions of global monopoly capital, on the other.

Hence the overwhelming importance of understanding the nature of global capitalism and
the character of its present Globalisation. The third kind of contradiction as of now is on a
low key. The competition among imperialist countries is fought out economically rather
than militarily. 27 But a substantial change in the balance of forces might well result in
wars. despite the possession of weapons of mass destruction by various countries. History
teaches us that the struggle for supremacy among major powers is ~ltimately resolved
through war. Thus the development of Germany-EU and Japan pose a threat to US
dominance. And so it may be argued that Lenin's dictum, 'Imperialism means war' has
not been refuted by historical developments.

Monopoly capitalism: A ba~~nce sheet

Capitalism since its inception during the industrial revolution of the mid 18'h century has
ever been a global ising system. A semblance of free competition among capitalist houses
prevailed for over a century. "[C]apitalism in which free competition was predominant,

'Nations' include even the classes that control the State within these countries.
Went 2002-03, p. 490.

158
reached its limit in the 1860s and 1870s" according to Lenin. 28 By the turn of the l91h
century to the 201\ capitalism of the monopoly stage had emerged on the scene. Inter-
imperialist contradictions among factions of monopoly capital organised around 'nation-
states' resulted in the mass carnages of 1914-1919 and 1939-45, namely the first and
second world wars, respectively. One of the recurrent capitalist crises of over-production,
the great depression of the 1930s became the occasion for sparking off classical European
fascisms, namely Nazism in Germany and fascism in Italy, besides others such as in
Spain and France. 'Liberalism engenders fascism' is a still relevant if forgotten lesson.
Depression, war, exploitation, famine and environmental degradation have rightly been
pointed out as the net wages of the monopoly capitalist order. 29

The golden epoch

The post-war Second World War period, 1945-73 is considered to be 'the golden epoch
of capitalism'. The growth was seemingly made possible by the post-war reconstruction
of Europe with the loans extended by US, 'the capitalism without capitalists' 30 of the
Soviet bloc countries, the Keynesian welfare states of the Scandinavian countries, the so-
called 'import-substitution' pattern of capitalist development of the erstwhile colonial
countries of Africa, Asia and Latin America. The new technological advances in the so-
called 'automobile revolution' through the development of mass consumption surface
transportation facilities was a helpful factor during this phase of growth. On the other
hand, globalisation signalled the end of the welfare-State compromise at the centre of
global capitalism and of the national development project in the peripheries. 31

Unmitigated crisis

This party ran into rough weather with the crisis in US economy following the Vietnam
debacle and a host of other economic problems. By March 1973, the US announced the
abolition of the gold standard of fixed exchange system in currency {l ounce of gold =
$35), which was primarily run on the strength of the US economy. Floating exchange
rate system in currency was introduced which paved the way for the enormous growth of
speculative capital in the future. The 'oil-shock' of late 1973 compounded the crisis of
global monopoly capitalism. Oil ·shock meant four-fold increase in oil prices made
possible through the formation of'a cartel by the Organisation of Petroleum Exporting

:s
V.I. Lenin J 917 [ 1986]: Imperialism the Highest Stage of Capitalism, Progress Publishers,
Moscow, p.74.
Cypher 2002, p. 55.
30
Samir Am in 1997: Capitalism in the Age ofG/obalisation: The Management of Contemporary
Society, Zed Books, London and Madhyam Books, Delhi Amin, 1997, p. 17.

159
Countries (OPEC). The crisis since 1973 has been the longest ever crisis of global
capitalism, nevertheless, it has not been as severe as the 'great depression' ofthe 1930s.

The long stagnation in the world economy extended from 1973 to 1995. 32 The
technological advancement as visible in the growth of the 'New Economy' has been
instrun:tental in even temporarily tiding over this crisis, variously called in the media as
recession and stagnation.

The advanced capitalist economies were unable to definitively transcend the long
downturn during the course of the 1990s or even to match their performance of the 1980s
and 1970s, let alone the 1960s and 1950s. The Federal Reserve's intervention as rescue
operation in autumn 1998 helped trigger a new vibrant international cyclical upturn.
When the stock market plunged in the face of collapsing profits in 2000-0 1, the
international economy entered into another crisis -the extension, in a real sense of the
international economic downturn of 1997-98. 33

GAIT, the predecessor of WTO, established in 1947 had only commodity trade under its
purview. But over time. its agenda has got greatly expanded, bringing within its ambit
intellectual property rights (patents), services, investment, textiles, Information
Technology, agriculture ... Rightly has Samir Amin viewed the international financial
institutions, IMF, World Bank and AOB as managerial mechanisms for protecting the
profitability of capital. 34 Robinson and Harris 35 have argued that economic forums such as
IM~, World Bank., WTO, G7 and OECD constitute an incipient transnational State (TNS)
apparatus in formation, a ''global-state-in-the-making". 36 Yet it would be too early to
predict the likely outcome the future holds out.

The political-ideological baggage

Slater (1993) argues that neo-liberal discourse, including monetarist imperatives, is rooted
in possessive individualism. it was the notion of a market man that underlay much of
modem thinking. C.B. Macpherson (1988) in his fascinating study ofthe roots of liberal-
democratic theory, convincingly argued that l7 1h century individualism had an essentially
possessive quality.· As Macpherson (1988: 3) expresses it, 'the human essence is freedom

.'1
Sam Moyo and Paris Yeros· (ed.) 2005: "The Resurgence of Rural Movements under
Neoliberalism", Reclaiming the Land, Zed Books, London & New York, David Philip, Cape
Town, pp. 10, II.
Brenner 2002, p. xiii.
Ibid, pp. xiv, 3.
S. Amin, 1997, back cover.
Robinson, William and Jerry Harris 2000: "Towards a Global Ruling Class? Globalisation and
Transnational Capitalist Class", pp. 11-14, Science & Society, vol. 64, no. I, p. 21.
Jo
Went 2002-03, p. 492-3.

160
from dependence on the wills of others, and freedom is a function of possession'. 37
Hirschman ( 1981) traces ho~ the pursuit of gain and self-improvement of the individual
was associated with rationality and virtue by a wide variety of writers from Adam Smith
to Keynes. 38

It was in the context of the crisis since 1973 with growing unemployment, 'stagflation'
meaning, high inflation plus stagnation that Thatcherism in UK and Reaganomics in the
US emerged since early 1980s.

Robert Brenner says:

The shift to Reaganismffhatcherism throughout the advanced capitalist


economies by the end of 1970s brought unprecedentedly tight credit, as
well as unparalleled austerity under the banner of 'supply-side
economics'. It was intended, most generally, to raise profitability by
further raising unemployment so as to dampen the growth of wages, as
well as by directly redistributing income to capital through reduced taxes
on corporations and diminished spending on social services. But it was
designed more particularly, to relieve the surfeit of capacity and
production in manufacturing ... while clearing a channel to the profitable
expansion of the low-productivity service sector by further reducing
employee compensation. It was aimed, finally, at bringing about a
revitalization of, and thereby shift into, domestic and international
financial sectors... by means of suppressing inflation, as well as rapid
moves toward deregulation, especially the elimination of capital
controls. 39
The specific measures adopted under SAP included: deregulation of national currencies and
prices. commericialisation and privatisation of public sector industries and services, cutting
down social services, withdrawal of support for agriculture, commodification of peasant
agricultural land and 'labour flexibility'. 40 Milton Friedman, F.A. Hayek and Robert Nozick
provided the theoretical resources of Thatcherism-Reaganomics. Milton Friedman in
particular was the economic theorist of the period. Monetarism (supply-side economics)
came to prominence as against Keynesianism's post-war thrust towards deficit financing of
welfare and development expenditure of the State towards creating employment and
demand growth in the economy. IMF loans were attached with the strings of
conditionalities that typically included cutting deficits, raising taxes and raising interest
rates. 41 Thatcherism and Reaganomics in early 1980s got exported to the African and Asian
...
David Slater 1993: "The Political Meanings of Development: In Search of New Horizons" in
Frans J. Schuurman, 1993: "Introduction: Development Theory in the 1990s", p. 97 .
.'S
Slater 1993, p. 98.
Brenner 2002, p. 35.

., Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
Neoliberalism", p. 13 .
Joseph Stiglitz 2002: Globalization and its Discontents, Allen Lane, London (An imprint of
Penguin group).

161
countries, courtesy the World Bank and the IMF through the Structural Adjustment
Programmes (SAP). (In Latin_ America, Structural Adjustment began in 1970s itself at the
behest of the USIIMF.) Thus in weaker countries like Bangladesh and some of the countries
of Sub-Saharan Africa, the SAP began in early 1980s whereas full-fledged structural
a,djustment in India began only in 1991.

The logic of 'no free meal' seemed to represent the spirit of Thatcherism-Reaganomics.
The basic outlook of Structural Adjustment in the third world seems to be also derived
from the spirit of Thatcherism-Reaganism. Thus Margaret Thatcher was never tired of
pronouncing, "You cannot buck the markets. There Is No Alternative." Similarly, even in
I

India, those favouring nee-liberal reforms have advanced the TINA argument since the
initiation ofthe SAP.

International Financial Institutions have resorted to an "instrumentalization" of national


sovereignty for pinning responsibility for the costs of structural adjustment on the
national States. 42 They "have never proclaimed 'global government' but governance, a
vaguism fully compatible with formal national sovereignty and structural dominance". 43

Efficiency [quantitatively measurable] focused on production rather than distributive


justice premised on welfare has been the focus of neo-liberal ideology. 44 This could
probably explain the predominance of quantitative approaches in nee-liberal academics.
Efficiency, competitiveness, growth, and plausibly, the convergence across regions in the
process of development are the positive outcomes that are promised through the process
of globalisation. 45 'Neo-liberaJism' itself has been a misfit and a misnomer by
mechanically seeking to apply the doctrine of liberalism advocated prior to late l9 1h
century under conditions of free competition to conditions of concentration and
domination by oligopolies in the world today.

The superstructure of speculative capital

The crisis since 1973 blocking direct private investment possibilities and the petro-dollars
that were ploughed back into European banks resulted in a massive pool of loanable
capital. So then export of capital n9w increasingly assumed the form of loans extended to

Sam Moyo and Paris Yeros (ed) 2005, p. 13.


Paris Yeros 2002: 'The Politi.cal Economy of Civilisation: Peasant-Workers in Zimbabwe and
the Neo-colonial World', Ph.D. thesis, University of London, London; cited in Sam Mayo and
Paris Ycros (ed.) 2005: "The Resurgence of Rural Movements under Neolibcralism'·,
Reclaiming the Lan·d, Zed Books, London & New York, David Philip, Cape Town, p. 13.
M. Kunhaman 2002: Globalisation A Subaltern Perspective, Centre for Subaltern Studies,
Thiruvananthapurarn, pp. 2021, pp. 60-61.
K.J. Joseph & K.N. Harilal 2006: "Regional Implications of Globalisation: An Analysis of
Kerala", pp. 94-114, in Joseph Tharamangalam 2006: Kerala: The Paradoxes of Public Action
and Development, Orient Longman, New Delhi, p. 95.

162
third world governments. Moreover, it led to an enormous spurt in the operations of
speculative capital. This 'dec;.adent and parasitical' aspect of imperialism was already
visible for Lenin in 1916. Thus he had said:

It is a characteristic of capitalism in general that. .. money capital is


separated from indu.strial or productive capital, and that the rentier who
lives entirely on income obtained from money capital is separated from
the entrepreneur .... Imperialism, or the domination of finance capital, is
that highest stage of capitalism in which this separation reaches vast
proportions. The supremacy of finance capital means the
predominance of the rentier and of the financial oligarchy; it means that
small number of financially "powerful" states stand out among all the
rest. 46
He further says:

Monopolies, oligarchy, the striving for domination and not for freedom,
the exploitation of an increasing number of small and weak nations by a
handful of the richest or most powerful nations - all these compel us to
define it as parasitic or decaying capitalism. More and more prominently
there emerges, as one of the tendencies of imperialism, the creation of the
"rentier state", the usurer state, in which the bourgeoisie to an ever
increasing degree lives on the proceeds of capital exports and by "clipping
coupons". It would be a mistake to believe that this tendency to decay
precludes the rapid growth of capitalism. It does not. In the epoch of
imperialism, certain branches of industry, certain strata of the bourgeoisie
and certain countries betray, to a greater or Jesser degree, now one and
now another of these tendencies. On the whole, capitalism is growing far
more rapidly than before; but this growth is not only becoming more and
more uneven in general, its unevenness also manifests itself. in particular,
in the decay of the countries which are .richest in capital (Britain).'747

This analysis more or less holds true to this day, if we replace the name of Britain with
that of the United States for greater accuracy. Thus Robert Brenner says, "Fed [the
Federal Reserve) was sustaining a new form of artificial demand stimulus by means of
increased private debt, both corporate and consumer, made possible by the rise of equity
prices and the resulting wealth effect, rather than relying on the old Keynesian formulae
based on public deficits."48 "Superfluous productive power" weighs down upon the US
economy particularly after the 1997-98 crisis in East Asia. The foreign buying of US
assets has been increasing over the last two or three years. Foreign ownership of US gross
assets amounts to some 67 per cent of GOP by end of 2000. 49 Reading Brenner, one is
reminded of the great vulnerabifities and volatilities at the very heart of the global
capitalist system, let alone the peripheries.

Lenin 1917, p. 57.


Ibid, p. 117.
Brenner 2002, pp. 175-6.
Ibid, p. 282.

163
The "characteristic feature of imperialism is not industrial but financial capital",
according to Lenin. 50 The difference in the character of the imperial ism of our day from
that of early 20'11 century of Lenin's analysis seems to be rather quantitative than
qualitative. There has been an enormous spurt in the growth of speculative capital during
the preceding century. So now we have a "financialised global accumulation regime",
with marked rentier characteristics. 5 1 Thus Prabhat Patnaik says, "As is well-known, only
about 2 per cent of the cross border capital flows are trade-related, which only
underscores the importance of the globalisation of finance. It is not capital-in-production
but capital-as-finance which has become immensely mobile in the current epoch .... " 52
Going by another estimate, only one out of every seventy dollars that changes hands on
the world currency markets actually pays for trade in goods and services .... the entire
balance finds speculative outlets. 53

A reflection on the economic collapses of our day

One of the seemingly inevitable fall-outs of the gigantic growth of speculative capital has
been spectacular economic collapses. Growth has become much more volatile than ever
before. Do the economic crises in Mexico (1994-95), South East Asia (1997-98), Russia
(1998), Brazil (1998), Turkey (2001), Argentina (2001-02) provide any lessons?
Currency instability and capital flights seem to have been the common thread with all
these crises. The notable fact, however, is that financial indicators show the vulnerability
to crisis but do not guarantee the onset of crisis. They seem to be necessary, but not
sufticient conditions. In 1994, Indonesia, Korea, and Thailand already had ratios of short-
term debt to foreign exchange reserves well in excess of 1.0, but they were not hit by the
'"tequila" shock. 54 As for vulnerability, although Thailand was the most extreme case,
across the region the bulk of the capital inflows were from offshore borrowing by banks
and the private sector. 55 "[F]inancial market liberalisation is the best predictor of currency
crises. This has been true in Latin America in 1980s, in Europe in the early 1990s and in
Asia in 1997."56 The Argentine crisis teaches us that even fixing the exchange rate of the
currency is no guarantee against an economic crisis under neo-liberal reforms. 57

Went 2002-03, p. 482.


Ibid, p. 491.
Prabhat Patnaik 2002a: "Globalization and the Emerging Global Politics", Social Scientist,
vol. 30, no. I 1-12, Nov.-Dec., pp. 3-16, p. 5.
All India People's Resistance Forum (AIPRF) 1996: Symphony of Freedom Papers on
Nationality Question, Papers presented at the International Seminar in New Delhi, p. 4.
Steven Radelet and Jeffrey Sachs 2000: "The Onset of the East Asian Financial Crisis" in Paul
Krugman (ed.); Krugman, Paul (ed.) 2000: Currency Crisis, The University of Chicago Press,
Chicago, London, p. I 33.
Ibid, p. I 17.
Went 2002-03, p. 486. The following anicles are quite useful for an understanding of financial
crises under nco-liberalism: The Editors 2002: "The New Face of Capitalism: Slow Growth,

164
The Atlantic Seaboard, the historic base of global capitalism, plus Japan, the only other
non-colonized country in the rest of the world, constitute the home base of capitalism,
while the rest of the world constitutes the outlying region where capital makes forays for
profit but is on the whole less secure. As a result, capital (especially finance capital of the
era of globalisation which appears highly mobile internationally) demands a higher rate of
return in the outlying region than in its home-base for moving out into, or staying put in
the former.ss There is a hierarchy of currencies in the world economy. At the apex, there
is a dominant currency, as good as gold, which constitutes the safest medium for holding
·wealth. Below this are the currencies of the major capitalist countries which also
constitute a safe medium for holding wealth but are maintained in that status through the
deflation of their domestic economies. At the bottom are the third world currencies,
which do not·constitute s~fe media for holding wealth.s 9

Retaining the confidence of globally-mobile speculative finance becomes the inevitable


obsession of economic policy in the peripheral countries. To this end, the economy has to
be kept constantly deflated and resultantly, it gets bogged down in a pervasive and
worsening demand constraint.60 In a world of globalised finance, the secular tendency for
a capital outflow from the third· world, gives rise to another secular tendency for
exchange-rates to depreciate, even despite deliberate deflation. 6 t There has been a
"reinforcement of the peripheral tendency to crisis"62 under neo-liberal restructuring.

Excess Capital, and a Mountain of Debt", Monthly Review, vol. 53, no. II, April, pp. 1-14;
Ilene Grabel 2002: "Neoliberal finance and Crisis in the Developing World", Monthly
Review, vot 53, no. II, April, pp. 34-46.
The following articles in Monthly Review, April 2002 could be useful in this respect: Joseph
Halevi 2002: "The Argentine Crisis", Monthly Review, vol. 53, no. II, April, pp. 15-23; Luis
Becerra et al 2002: "Argentina: An Alternative Proposal to Overcome the Crisis", Monthly
Review, vol. 53, no. II, April, pp. 24-33.
Prabhat Patnaik 2002: "Globalis'ation of Capital and Terms of Trade Movements", in
Ramachandran, V.K. and Madhura Swaminathan (ed.) 2002: Agrarian Swdies Essays on
Agrarian Relations in Less Developed Countries, Proceedings of the international conference
during 3 to 6 January 2002, Tulika, Kolkata, pp. 94-110, p. 97.
Ibid, p. 100.
Patnaik, P. 2002a, p. II. Neo-liberal economists rather condescendingly speak of State-
intervention and social security in cases of 'market failures'. But it is 'system failures' rather
than 'market failures' that seem:io be the principal concern in these days of capital nights and
economic collapses.
ol
Patnaik, P. 2002, p. 100. For a more detailed description of the arguments ofPrabhat Patnaik,
please refer the section, "The Aspect of Political Economy in National Formation" in Chapter
II.
Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
Neoliberalism", Reclaiming the Land, Zed Books, London & New York, David Philip, Cape
Town, p. 13.

165
Shaky, yet not crumbling

Global monopoly capitalism, no doubt, suffers from anarchy of production and recurrent
crises of overproduction for not being able to find markets i.e. people with purchasing
power. However, it is far from collapsing under its own weight. Studies by Paul A. Baran
and Paul M. Sweezy have pointed out that Marx's "law of the tendency of the rate of
profit to fall" may not be directly applicable to monopoly capitalism. They have instead
proposed a "law of the tendency of surplus to rise'.6 3 since conscious intervention of the
capitalist oligopolies generate surpluses through the measures like, innovation through
Research and Development, marketing and management strategies, outsourcing and
subcontracting of production to the parts of the world where cheap labour is available64
military spending and large-scale speculative financial operations. And so may the system
be abolished, only thr~ugh a conscious intervention of the labouring classes. 65 Yet there is
also a problem of absorption of surplus, idle productive capacities and stagnation. That is
why the momentary triumph of unrestrained capital, abetted by the momentary weakening
of its adversary class is also accompanied by a deepening of its crisis and exposes the
absurd irrationality of the imperialist system. 66 The greater exploitation ofthe countries in
the periphery of the imperialist system through the Globalisation of capital is bound to
reduce the purchasing powe~ of the people and thus constrain the growth of markets
further, which may lead towards a greater crisis of overproduction in future.

"History cannot repeat itself"

During the current phase of the Globalisation of monopoly capital, what could be the
implications of the parasitical and decadent form of monopoly capitalism, with a gigantic
financial superstructure atop the real economy, on a country like India, which has so far
been, going by Paul Baran's observations, one of its most unfortunate victims? 67 The
hypothesis of "convergence" or "catching up" of poorer countries with the advanced
capitalist countries predict three related outcomes, namely, higher growth, and reduction
of both poverty and inequality.68 Apparently, it overlooks the_ overwhelming burden of
monopoly capital weighing down upon the productive forces and peoples of the Third
World. Given the reality of global monopoly capitalism, the countries of the

ol
Paul A. Baran & Paul M. Swet;zy 1966: Monopoly Capital, Monthly Review Press, New York
... Baran & Sweezy 1966, p.125 .
The operations ofNike in China, Indonesia and Vietnam is an instance in point.
6~
John Bellamy Foster 2000, "Monopoly Capital at the Tum of the Millenium", Monthly
Review, April, vol. 51, no. 11, pp. 1-19.
Samir Amin 1998, May, "on Kerala", Monthly Review, vol. 42, no. 8, January, pp. 24-39, p.
282.
1>7
Paul Baran 1957: The Political Economy of Growth, Monthly Review Press, New York.
os
Balakrishnan, P. 2003, p. 3170.

166
peripheryffhird World cannot follow on a similar path of development as did the
advanced capitalist countries: "History cannot repeat itself' in this sense. Moreover,
colonialism/imperialism and bureaucratlcomprador capitalism have been instrumental in
the adapted preservation of pre-capitalist social relations, particularly feudalism or semi-
feudalism, as the former articulated with the, latter and in tum, led to hampering the
development of productive forces in the [under]-'developing' countries.69

Triadisation of FDI flows

Inter-OECD investments have become much more important than export of capital to the
peripheral countries. Triadization is the characterisation of the dominant trend in the
world economy today. 70 "The developed world hosts two-thirds of world inward FDI
stock and accounts for nine-tenths of the outward stock."71 The concentration of FDI
within the Triad (EU, Japan and the US) remained high between 1985 and 2002 at around
80 per cent for the world's outward stock and 50-60 per cent of the world's inward
stock. 72 Mega FDI and trade blocs emerge and are consolidated through regional
agreements. 73

FDI, still a trickle

With the talk about 'East Asian tigers' ·long past since the East Asian crisis engulfing all
the countries in the region except Singapore and Hong Kong, China has often been show-
cased as a model to be emulated for 'emerging. markets'. The FDI inflow into China has
been the highest among developing countries.

Table 4.1:
FDI in India, China & Brazil (US $ i~ crores)

India China Brazil

1988-93 23.4 885.2 153.4

1994-99 1392.3 23820.3 9718.1

Source: World Investment Report 2000, p.286.

The alliance of the Raj with 'reudal zamindars in India as in the Permanent Settlement of
Bengal in 1793, was intended· to win them over as the 'staunch allies of the Raj'. This had
made the zamindars a powerful force to reckon with during the. period after the transfer of
power in 1947. Thus an independent capitalist development seems to have been hindered by
colonial intervention. The US designs to preserve the monarchy in Nepal, etc. can also be
cited as an instance.
70
Went 2002-03, p. 490.
71
UNCTAD 2003, p. 23.
72
Ibid, p. 23.
7)
Ibid, p. 26.

167
Going by the data in World Investment Report 2000, during 1994 to 1999, as given in
Table 4.1 above, China's Foreign Direct Investment (FDI) inflow was 17 times higher
than that of India's. Brazil got 7 times more FDI than India. The total Actual FDI inflow
into India during 1991 to 2000 has been US$2,370 crores (US$23,700 million). 74 India
received only 3.4 "billion dollars each as FDI during 2001 and 2002. 75 By contrast, China
received 46.8 billion dollars and 52.7 billion dollars respectively. 76 FDI stock as
percentage of GOP was 36.2 and 8.3 per cent in China and India respectively in 2002. 17
The cheap and skilled labour in China, the highly regimented system ensuring political
stability, and the desire oflNCs to gain entry into trade-protected 'captive' markets could
have been the factors that attracted FOI into China. 78 World Investment Report 2003 says,
"The large market size and potential,'the skilled labour force and the low wage cost will
remain key attractions [in China]." 79 Apparently, these are not factors that can be
emulated feasibly.

A fraternal agony

The experience of Sub Saharan Africa may be presented as a fraternal agony from another
part ofthe Third World. In terms of capital flows, Sub-Saharan Africa, with the exception
of South Africa, is the part of the world that has participated the least in globalisation.
However, as for the importance of trade in the economy, Africa may be considered very
"globalised". 80 Thus with 29 per cent, Sub-Saharan Africa has a higher export/GOP ratio
than even developed economies. 81 The whole of Africa received only 18.8 million dollars
during 2001 and I 1 million dollars during 2002 as FDI inflows, the lowest among all the

SIA Newsletter, Jan. 2001.


Reverse FDI flows or capital outflows has been taking place in recent years with large
companies like Tata engaging in major Mergers and Acquisitions overseas. It has also been
pointed out that by early 2007, the trend has been of net FDI outflow from India.
7o
UNCTAD 2003, p. 7. It has been pointed out that FDI constituted only about 3 per cent of the
total investments .in the economy in India (S. Swami nathan 2002: Hindu, Oct. 8).
77
UNCTAD 2003, p. 44.
78
It is a notable fact that cross-border M&As were not yet allowed into China. So most of the
investment must'have been through joint ventures involving technology transfers. However,
China's entry into WTO seems to be taking it down the path of dependency.
7Q
UNCTAD 2003, p. 45.
so
Alice Sindzingre 2002: "Institutions, development, and global integration: A theoretical
contribution", December (availaJ:>Ie at www.cean.u-bordeaux.fr/sindzingre.pdf). ·
Sl
P. Balakrishnan 2003, p. 3169; The development debacle in Sub-Saharan Africa, today, is a harsh
reality that is all-too-OOvious. This state of affairs is a far cry from the following statement by the
minister from Nigeria who expressed it as the aim of planning at the first conference of newly
independent African heads of States at Adids Ababa in 1960: "Europe and America took centuries to
reach their advanced development The Soviet Union attained that level through planning in half a
century. We, Africans, will use planning to compress the development process into a decade and
n.'ach similar levels." (Malcolm S. Adiseshiah 1990: "Planning and Economic Growth", pp. 13-19, in
Nair, P.R. Gopinathan (ed) 1990: Economy Planning and Policies, Concept publishing company,
New Delhi, p. 13).

168
regions of the developing world. The corresponding figures for the world as a whole were
823.8 million dollars and 651.2_million dollars respectively. 82

FDI as buying out of productive capacities

The foregoing analysis is not meant to convey the message that 'FDI is gold and you need
to grab it' nor to fall into the naivete of lamenting over the fact that FDI inflow into the
countries in the peripheries has been a trickle. The point that we wish to drive home is
only that productive investments would have been far better than a heightening of rentier
activities under globalisation, even if it meant an erosion of the economic sovereignty of
the host country. It is significant to note that most of the Foreign Direct Investment (FDI)
,
flows in the world today do not lead to the development of productive forces. Thus in
1999, cross-border· Mergers and Acquisitions (M&As) accounted for 83 per cent of the
FDI flows. In the developed countries, M&As accounted for "more than 100 per cent" of
FDI flows in 1999. The Report laments, "[F]oreign acquisitions do not add to productive
capacity but simply transfer ownership and control from domestic to foreign hands. The
transfer is often accompanied by layoffs of employees or closing of some production or
functional activities (e.g. R&D capacities). It also entails servicing the new owner in
foreign exchange." 83 The Report further worries as to "the extent to which M&As (when
compared to greenfield FDI) bring resources to host countries that are needed for
development; the denationalisation of domestic firms; employment reduction; loss of
technological assets; crowding out of domestic firms and increased market concentration
and its implication for competition."84 Erosion of national economic sovereignty is also a
major cause for concem. 85

A tragedy of errors

In Alternative Economic Survey 1991-1998, K.S. Chalapati Rao and M:R. Murthy
observed that although main m,otive of the Indian companies in going for mergers was to
avail new and superior technology (not so much to avail capital), independent transfer of
technology has drasticall;t reduced during liberalisation. Thus approved technical
collaborations declined by 6 per cent for industrial machinery group and by 39 per cent
for machine tools during 1991-95 a5 compared to pre-liberalisation period, 1986-90. 86 As
a result of the removal of FERA restrictions that prohibited more than 40 per cent equity

82
UNCTAD 2003, p. 7.
8)
UNCTAD 2000, pp.7, 14, xxiii.
~
Ibid, p. 14.
85
· Ibid, p. 196.
86
K.S. Chalapati Rao and M.R. Murthy 1999, "Foreign Direct Investments", in Alternative
Survey Group 1999: Alternative Economic Survey 1991-1998: Seven Years of Structural
Adjustment, Rainbow, Delhi, p. 92.

169
by foreign companies, during 1991-97 more than 50 per cent of the total foreign
investments approved were in erstwhile public sector reserved areas, namely, power, oil,
telecommunications, iron & steel and air transport. Broadly defined service sector
accounted for about 30 per cent of the foreign investments. Export orientation of 100
largest TNC partners in India increased marginally from 8 per cent to 9 per cent while
imports nearly doubled from 7 per cent to 13 per cent. As a result, these companies turned
net losers of foreign exchange for the country. 87 Unfortunately, after one full decade of
the repeal of MRTP Act, there hardly remains a competition policy for the country and a
new one is still in the process of evolving.

Foreign investment: Pursuing


, a mirage?

It is crucial to understand the character ofthe foreign investment inflow. The fact remains
that on the average, about 50 per cent of the total foreign investment to India during
1992-93 to 2000-01 has been speculative 'portfolio investments' (i.e. cross-border
purchases of less than 10 per cent of the voting shares of a firm), usually resorted to with
an eye on quick money and tend to resort to capital flights more often than FDI. 88
Purchase of existing productive capacities (euphemistically called, 'brown-field
investment') has characterized a substantial part of even Foreign Direct Investments
(FDI). Thus it has been reported that in the latter part of the 1990s, two-fifths (40 per
cent) of the total FDI inflow into our country came in the form of Mergers and
Acquisitions (M&As). 89 For the sake of definitional clarity, Mergers usually involve
combining of shares of two firms creating a new legal entity 'whereas Acquisitions
involve outright purchase of shares of a firm. Minority acquisitions involve purchase of
I 0 to 49 per cent of a firm's total assets and Majority acquisitions, 50 to I 00 per cent of a
firm's total assets and entails change in control/ownership. MNE-related acquisitions
(take-overs) constituted 70 per cent of the total number of take-overs (i.e. 223 out of 318)
in India during 1995-2000.90 It has also been pointed out that two-third of all MNE-
related M&As have been nothing but buying out of already existing joint ventures. 91 The

87
Ibid.
88
BoP data from RBI Bulletins;-:Portfolio investments include Global Depository Receipts
(GDRs), Foreign Institutional Investments (Fils), offshore funds and others.
89
conomic Times 1999,21 June as quoted in Beena, P.L., 2001, August 16-31."An Overview of
the Mergers and Acquisitions during the post Liberalisation Era", FICCI Business Digest,
Voi.XVI, Issue 16. Instances of M&As abound especially in consumer industries. Eg:
Acquisition of Uncle Chips from Amrit Agro-lndustries by Pepsi in 2000, acquisition of a
public sector enterprise, Modem Foods by Hindustan Lever, affiliate ofUniliver, etc.
90
P.L. Beena 2001.
91
Nagesh Kumar 2000: "Mergers and Acquisitions by MNEs: Patterns and Implications",
Economic and Political Weekly, vol. 35, no. 2, 5 August, pp. 2851-59.

170
big-fish-swallowing-small-fish. syndrome has also been an apparent characteristic of the
latest phase of corporate take-pvers in India since mid-1990s under 'globalisation'. 92

There has been much euphoria in recent years about India being a destination for
Business Process Outsourcing (BPO), particularly in the Information Technology (IT)
industry. However, presently, the IT industry in the country employs at the most a
minuscule number of 500,000 people and contributes to only 1-2 per cent of the GDP. 93 It
is widely known that loans extended by the international financial institutions like the
IMF, World Bank and ADB have stringent neo-liberal conditionalities attached.

The instances of 'green-field investment' 94 , creating new productive capacities, have been
-
few and far between. Even infrastructural projects like that ofEnron in Maharashtra, AES
in Orissa and Cogentrix in Kamataka meant siphoning off huge revenues from the
country through high pricing and other rentier and exploitative means. As Moyo and
Yeros argue, "The most cynical claim of all has been that structural adjustment has been
'development' .... " In other words, it claims that the abandonment of endogenous
industrialisation project in favour of agriculture with export orientation to saturated and
luxury markets could deliver Africa, Asia and Latin America from underdevelopment. 95
So then, the question arises: Is global monopoly capitalism in its present decadent state
capable of truly developing the productive forces in our native economies, given the great
spatial asymmetries in its growth process? In other words, is neo-liberalism capable of
fulfilling its professed aim of delivering development (i.e., efficiency, competitiveness,
growth. and plausibly, the convergence between regions that they promise) in the
peripheries ofthe world capitalist system?

Let us consider the viewpoint ofDreze and Sen who have been unambiguous defenders of
globalisation. Taking stock of the reform efforts of the 1990s, Dreze and Sen say, "These
include, on the positive side, constructive developments such as the remarkable success of
information technology and software production and services in India, and on the other,
the bewildering accumulation of gigantic, uncoordinated and ·~mderpurposed' food

The big capital has always enjoyed a privileged position vis-a-vis the intermediate' classes in
India's. macro-economy. Evidence indicates how the metropolitan capital has cornered
massive share of public resour~,es by virtue of their political and economic clout.
Q)
C. Rammanohar Reddy 2003: "Is the euphoria justified?", Hindu, Macroscope, 8 November.
'Green-field investments' are FDI that create new productive capacities by bringing in capital
from outside the country.
Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
Neoliberalism", Reclaiming the Land, Zed Books, London & New York, David Philip, Cape
Town, p. 18. The case of export curbs on textiles & clothing from South Asia in EU & the US
may be instructive on the limits to export-oriented growth in the peripheries (P.L. Beena 2006:
"Limits to Universal Trade liberalization; The Contemporary Scenario for Textiles and Clothing
Sector in South Asia", Working Paper 379, Centre for Development Studies,
Thiruvananthapuram).

171
stocks, amidst continuation of the severest incidence of undernourishment in the world.
There are also major developments of a more political nature such as the nuclear tests of
May 1998 and the consolidation· authoritarian and communal tendencies." 96

In the 2002 edition c;>ftheir book, 97 Dreze and Sen do not wholeheartedly back neo-liberal
reforms as they did in 1995. They, as also many other supporters of the reform, are rather
tempered by the reality that reforms have failed to deliver on many counts. By contrast, in
the 1995 edition, they had said, "What needs curing is not just 'too little market' or 'too
much market'. The expansion of markets is among the instruments that can help to
promote human capabilities, and, given the imperative need for rapid elimination of
endemic deprivation in India, it would be irresponsible to ignore that opportunity."98

A related question to the one we raised above is about employment. Will neo-liberal
reforms with its capital-intensive modus operandi create more jobs? The employment
scenario during the SAP of 1990s presented a bleak picture as has been shown by the
'Special Group on Targetting 10 Million Jobs/Year' set up by the Planning Commission,
which has submitted its report in 2002. 99 The report shows that job creation in 1990s was
3 times lower than in 1980s. GOP growth in 1980s was 5.2 percent which has enhanced
to 6. 7 percent in 1990s. However, by contrast, employment growth which was 2.8 percent
during 1983-93 dipped to just over one-third, at 1 percent during 1999-2000. This should
be a grave matter of concern since 7 million new job seekers enter the job market in India
every year and 35 million are already unemployed. Regional variations in unemployment
in 1990s also need to be taken note of. Thus Himachal Pradesh has it at the lowest at 3 per
cent and Assam with 22 per cent at the highest. Kerala and West Bengal also come close
to the highest bracket on the unemployment front. 100

Implications of FDI in retail trade

In late January 2006, the Government of India permitted FDI in retail trading sector to the
tune of 51 per cent, which pem1its the foreign corporations to hold controlling stakes over
particular enterprises. 101 The decision had followed intense lobbying by leading

Jean Dreze & Amartya Sen 2002: India: Development and Participation, Oxford University
Press, Oxford, first published 1996, p. vii.
Jean Dreze & Amart.ya Sen 2002: India Development and Participation, Oxford University
Press, Oxford, first pub. 1996. ':;
QS
Jean Dreze & Amartya Sen 1995: India Economic Development and Social Opportunity,
Oxford University Press, Delhi, p. 203.
As quoted in Bhavdeep Kang, "Labouring under a misconception", Outlook, May 27, 2002.
100
As quoted in Bhavdeep Kang, "Labouring under a misconception", Outlook, May 27, 2002.
Points to be added on employment under liberalisation from EPW article and IJLE article by
Bhaumik.
101
Rupali MukherjeerrNN 2006: "Retail FDI: Brands eye expansion", Times of India. 26
January 2006, New Delhi edn., p. 19; Times News Network 2006: "Global brands can now
own stores in India", Hindustan Times, 25 January 2006, New Delhi edn., p. I.

172
corporations in retail trade such as Wal-Mart. Wal-Mart chief, John B. Menzer had met
the Prime Minister, Manmoha~ Singh himself on May 2005. 102 Transnational retail giants
such as Wal-Mart, Target, Carrefour, Marks & Spencer, Giordano, Benetton, Christian
Dior, Tag Heur, Nine West and Macy's are expected to take advantage of this measure of
opening up of the Indian economy by setting up retail chains under their contro1. 103
Transnational brands such as Nike, which has acquired Reebok, Samsung, LG and
Adidas, the sports goods major have already been doing brisk business in India through
the franchisee route and therefore did not seem excited about the new dispensation. 104 The
left parties had rightly opposed FDI in retail sector on grounds that it would displace local
kirana stores, destroy employment for the self-employed small traders and create
oligopolist market structure. The CPI General Secretary, A.B. Bardhan pointed out how
.. _ Mr_ Manmohan Singh himself had opposed the proposal when he was in opposition, on
grounds that it would destroy rather than create employment. 105 Of late, there have also
been proposals for permitting 100 per cent FDI in the retail sector and it was pointed out
by CITU president, Dr. M.K. Pandhe that this single measure could threaten the
livelihood of forty million (four crore) people dependent on this sector. 106

The expansion of the sphere of casual employment is already visible by the Voluntary
Retirement Schemes and the 'new exit policy'.

Implications of the proposed 'labour reforms'

The core issues of'labour reforms' were spelt out by T. Damu of the Tata group as wage
policy, employment security, labour redundancy, etc. 107 As for wage policy, the
capitalists and the pro-market lobby demand that wages should be flexible, linked to
productivity and profitability of the firm. As for employment security, it is argued that
excessive job security has affected worker productivity and efficiency. A policy of hire
and fire is advocated. As for 'labour redundancy', 16 per cent of the organised sector
(public and private sectors together) workers are estimated to be 'redundant' or surplus. 108
Although it is somewhat evident that labour in India is insecure, the Economic Survey

101
Hindu 2005: "Wal-Mart chief seeks FDI in retail sector", 13 May, Thiruvananthapuram edn.,
~~~ . .
103
Rupali MukherjeeffNN 2006: "Retail FDI: Brands eye expansion", Times of India, 26
January 2006, New Delhi edn.,'p. 19; Times News Network 2006: "Global brands can now
own stores in India", Hindustan_Times, 25 January 2006, New Delhi edn., p. I.
10.0
Ibid. .
lOS
Hindu 2005: "Wal-Mart chief seeks FDI in retail sector", 13 May, Thiruvananthapuram edn., p. 16;
Times News Network 2006: "FDI not to hurt local retail outlets", Times of India, 25 January, New
Delhi edn., p. 18. ·
100
http://www.hindu.com/2006110/31/stories/2006103111780400.htm, "CITIJ seeks law to cover IT
workers".
107
T. Damu (Tata group), "'It is time to liberalise labour legislation'", http://www.tatacom/
0_articles/speakers_forum/2002060 l_t_damu.htm
lOS
Ibid.

173
2005-06 pointed out, "Indian labour laws are highly protective". 109 This is indicative of
the current policy direction ofJhe Government of India.

Let us make a little note on the politics of the language employed in this parlance.
'Labour reforms' carries more or less a positive connotation and acceptability as all
'reform' usually do since they indicate some change. However, the change may not
always be in a desirable or pro-people direction. "Labour flexibility" is the term
commonly_ employed in business and policy circles for the greater labour insecurity that
would result from 'labour reforms'. More than being a euphemism, it is notable that a
term used to designate the property of certain material objects such as rubber or elastic is
being used for labour who are basically human beings. In the logical framework of
capitalism, labour is a 'factor of production' along with capital and concerns of human
welfare can only take a back seat in the relentless drive for accumulation.

The Second National Commission on Labour (SNCL) headed by Ravindra Varma had
presented its Report to the then Prime Minister Atal Behari Vajpayee on 29 June 2002. 110
Set up in l999, by the National Democratic Alliance (NDA) government, the NCL had
the twin objectives of reviewing the existing labour laws in the organised sector and
suggesting comprehensive legislation to ensure a basic level of protection to workers in
the unorganised sector. 111 The crucial importance of the Commission can be guessed from
the fact that it was set up following a long interval after the First National Commission on
Labour way back during 1966-69. The Commission has called for a single Law an
Labour Management Relations incorporating the amended provisions of the ID Act, TU
Act, etc. 112 As of now, the recommendations of the Commission are pending legislation,
either as separate a111endments or as fresh legislation.

The major amendments included the repealing/amending of Chapter V B of Industrial


Disputes and Redressal Act 1947 (10 Act), which signal a 'flexible exit policy'. This
was set to be achieved through the Industrial Disputes (Amendment) Bill, 2002. As per
the recommendation of SNCL, for closure of units employing less than 300 workers,
obtaining government permission is made a mere formality that can be fulfilled after one
month of the actual lay-offs. 113 25 .'K' of V B of the original Act had made it mandatory
for all firms employing more than 100 workers to procure government permission before
'"j

10'>
As cited in Ashok Dasgupta 2006: "Survey for bold steps to expedite labour reforms", Hindu,
28 February, Thiruvananthapuram edn., p. I.
110
The Report is available at: http://labour.nic.in/lcomm2/nlc_report.html.
Ill
T.K. Rajalakshmi 2002: "Loaded against labour", Frontline, volume 19, issue 16, August 3 -·
16, http://www.hinduonnet.com/flineltl1916/19160990.htm.
T.K. Rajalakshmi 2002.
Ill
Ibid.

174
the closure. 114 The SNCL required the employer to apply for permission 90 days before
the closure. But if the govern!Jlent fails respond within 60 days of the receipt of such an
application, permission would be deemed to have been granted. Any disputes that may
arise are to be left to the Labour ,Relations Commission. 115 25 N of V B had required the
employers to give a three months' notice of retrenchment or pay three months' wages
instead} 16 SNCL scaled it down to two months. 117 An obvious implication of such a
·flexible exit policy' would be reduction in the number of protected jobs, and
casualisation/terminating workers at will as has also happened in other countries where
SAP has been carried out. Observers had pointed out that "the slightest freeing of the
labour market will se~ an avalanche of retrenchment" 118 that could give rise to serious
political repercussions. Subject to co~ditions, ID Act, 1947 had recognised the right of the
employees to resort to strike as a-weapon of collective bargaining. However, an important
recommendation by the SNCL has been for the strike ballot in the case of essential
services. The strike ballot is much-detested by workers for being liable to be used by
managements to create divisions in their ranks. According to SNCL, strikes can be called
only by a trade union, which is a recognized negotiating agent (i.e., a union whose
authority is endorsed by 66 per cent of the workforce), that too only with the support of
5 I per cent of the workers in a strike ballot. 119

An Amendment to the Trade Unions Act, 1926 was already passed in the monsoon
session of Pari iament in 2001, despite opposition from the labour unions. 120 Earlier, it was
sufficient to have seven workers in a unit to start a trade union. The amendment stipulates
that it requires 10 per cent of the workers of a unit to apply for registration. This has also
been in tune with what SNCL recommended in its Report submitted later. 121 The
amendment makes the registration of smaller trade unions extremely difficult. SNCL had
also opposed people not employed in a unit heading trade unions. 122 Such stringent
restrictions on the formation and registration of trade unions could be considered clearly
violative of the right to freedom of association under the Fundamental Rights under

H. A. C. Poppen, Legal Update - 2002 Labour Law Update 2002, National· Institute of
Personnel Management, Kochi, June 2002.
II$
T.K. Rajalakshmi 2002: "Loaded against labour", Frontline, volume 19, issue 16, August 3-
16, http://www.hinduonnetcoll)~tlinelf11916119160990.htm.
II&
H.A.C. Poppen, Legal Update - 2002 Labour Law Update 2002, National Institute of
Personnel Management, Koch:i; June 2002.
117
T.K. Rajalakshmi 2002.
118
Prem Shankar Jha 2002: Hindu, 9 July; as cited in W R Varada Rajan 2002: " Unitedly Rally
To Defeat Anti-Labour Policies", Vol. 26, no. 29, July 28, http://pd.cpim.org/2002/
july28/07282002_citu.htm.
II<>
T.K. Rajalakshmi 2002.
•:o Ibid.
T.K. Rajalakshmi 2002.
Ibid.

175
Article 19(c) of the Indian Constitution. The initiation of 'labour reforms' by the Centre
has been oblivious of the provision that labour is a subject in the Concurrent list requiring
consultations with the state governments as well. This was pointed out by the ministers of
labour from various states, cutting across political affiliations, during the annual Indian
Labour Conference, a tripartite forum of the representatives of labour unions, industries
and the government held in September 2002. 123

The definitional amendment of 2 (a) in Contract Labour (Regulation and Abolition)


Act, 1970 is intended to regulate rather than abolish the ubiquitous practice of contract
labour. SNCL had recommended that although contract labour may not be employed in
core production or services, the Commission okays its temporary employment even in the
core sectors to meet sporadic, seasonal demands. It may, in effect, serve to reduce the
number of protected/secure jobs in the organised sector and increase the casualisation of
labour in order "to help the cost-cutting and competitive efforts of the employers". 124

The fresh moves concerning this legislative amendment by the UPA government has been
to ensure accountability of the labour contractor for meeting the provisions of labour law
whereas the principal employer of such labour would be spared. The amendment would
avoid the need for licensing and there would be no restriction on the registration of
companies that provide contract labour. The registration of those violating labour laws
\VOuld be cancelled. 125 The effort to regulate the contractor-workers interface and spare
the principal employer may be interpreted as an effort to facilitate unhindered the drive
for accumulation of the apex capital whether Indian or global. We would hold that
ultimately, better terms and conditions can be provided to workers only if there is
regulation of the principal employer-contractor interface.

The provision for statutory minimum wages and certain benefits for contract workers and
legalisation of employers-contractors-workers relationship could tum out to benefit the
working class in an interim period. SNCL does recommend social security measures for
workers in the unorganised sector. However, the SNCL Report does not mention the
source of funding of these schemes. 126 In a major move, the Government of India is

W R Varada Rajan 2002: "Indian Labour Conference: Trade Unions Unitedly Challenge NDA
GovtN, People's Democracy, Vol. 26, no. 39, October 6, http://pd.cpim.org/
2002/oct06/10042002 citu.htm.
1:!4
Hindu 2001: '"Judiciary hurting the working class"', September 08,
http://www .hinduonnet.com/ 200 l/09/08/stories/0208000m. htm.
I!S
Alok Mukherjee 2006: "Government studying fresh reforms package",
http://www .thehindubusinessline.com /2006/05/24/stories/2006052404590 I OO.htm, (URL
dated 24/05/2006). See also Hindu 2003: "GoM on labour reforms agrees to do away with
licensing", Thursday, Mar 13, http://www.hinduonnct.com
/2003/03/13/stories/20030313060811 OO.htm.
T.K. Rajalakshmi 2002.

176
planning to exempt certain industries such as Information Technology, several areas of
infrastructure, health, education, export-oriented units, maintenance and repair and many
other menial services from the purview of the Contract Labour Act, 1970. 127 The
amendment is expected to do away with the distinction between the ·core' and ·non-core'
sectors thereby allowing contract labour in many sectors. 128

Two separate legislations are being proposed for the unorganised sector: the
·unorganised Sector Workers (Conditions of Work & Livelihood Promotion) Act, 2005'
concerning conditions of employment of workers who work for an employer and the
•unorganised Sector ·Workers' Social Security Bill, 2005' intended to ensure social
security, including the right to liv~lihood of the self-employed who constitute a large
section of the workforce. The National Commission for Enterprises in the Unorganised
Sector (NCEUS) and the National Advisory Council (NAC) chaired by Sonia Gandhi are
involved in drafting the Bills in question. The legislations may be considered as a
response to the growing discontent of the labourforce on the one hand and the need to
recoup the eroding legitimacy of the State under neo-liberal reforms.

The official rationalisation of the policy has been that it will formalise the informal sector
and ensure statutory benefits such as provident fund and medical benefits under the
Employees' State Insurance Corporation (ESIC). 129 The implementation machinery,
J

however, has remained toothless to this day as is evident from the fact that even the
Minimum Wages Act 1948 remains unimplemented as yet, even as the legislation has
been in operation for the last 58 years. Unorganised labour constitutes about 93 per cent
ofthe total labour force. 130 SNCL had also acknowledged that 91.7 per cent of the Indian
labour force is in the unorganised sector, only 8.3 per cent being in the organised sector,
mainly with the public sector. Only about 3 per cent of the workforce is unionised. 131
Considering the intense insecurity of labour in the sprawling unorganised sector, reforms
in this sector has been long overdue. With the consistent reduction in social welfare
expenditure by the State, ensuring a subsistence level of remuneration to workers in this
~

sector could have become a necessity for the very legitimacy of the system. Moreover, the
positive measures for labour, as part of labour reforms should be seen, as a part of the

Ambarish Mukherjee & Deepak Goel 2005: "Govt may allow contract labour in IT, select
sectors Excluded industries may be placed in a separate schedule",
hup://www.thehindubusinessifne.com/2005/IO/ 16/stories 120051016027901 OO.htm, URL
Dated: 16/10/2005.
l::ll
Hindu 2003: "GoM on labour reforms agrees to do away with licensing", Thursday, Mar 13,
http://www.hinduonnet.com/2003/03/13/stories/20030313060811 OO.htm.
1::<>
Ambarish Mukherjee & Oeepak Goel 2005.
uo Barbara Harriss-White 2003: India Working Essays on Society and Economy, Cambridge
University Press, Cambridge, p. 17.
Ul
Ibid, p. 240.

177
policy response of the State towards the many workers' struggles under neo-liberal
reforms. These .could be the rationale for policy reforms in this direction. The admittedly
'jobless growth' during the"process of neo-liberal reforms also could have warranted
initiatives such as, 'National Employment Guarantee Programme'.

During the NDA regime, Bonus Act 1965, Gratuity Act 1972 and the Maternity
Benefit Act 1961 were proposed to be amended to further reduce employee benefits.
They are pending amendment under the UPA regime.

Other recommendations by SNCL include "varying scale of compensation given to


workers in sick and. profit-making units". 132 Other pejorative recommendations from the
viewpoint of labour include an increase in the number of working hours from 8 hours to 9
hours a day subject to a cap of 48 hours per week and a decrease in the number of
ho-lidays. 133 Similarly, the Commission also suggested that supervisory personnel,
irrespective of wages be taken out of the purview oflabour laws.' 34

Some of the commendable recommendations by the SNCL have been that a worker be
given permanent job status after two years of employment and a rejection of the demand
from employers for exempting export processing zones and special economic zones from
the purview of labour laws. 135

Casting a shade of d~ubt on the status of the SNCL as an independent Commission of


inquiry, many of the recommendations by the SNCL have been anticipated, as in the
media and the Budget speech of Yash want Sinha, the Finance Minister in 200 I. The
legitimizing arguments advanced for pursuing such policies of 'labour reforms' run thus:
·Flexible labour laws could create more employment, lead to greater growth, attract
foreign investment,' etc. 136 However, these reforms could in most likelihood lead to
creating general insecurity of labour. Even as an increase in the number of casual jobs
results, job security would be undermined and the increasing use of labour displacing
technologies would constrain further employment prospects. The new exit policy for
terminating labour at will and the curbs on the right to strike through an am'endment to the
Industrial Disputes Act and the amendment to Trade Unions Act make the legal
organisation and struggle by labour immensely more difficult. These can be considered as

t.•: T.K. Rajalakshmi 2002: "Loaded against labour", Frontline, volume 19, issue 16, August 3 -
16, http://www.hinduonnet.com/nineltl1916119160990.htm.
133
Ibid.
W R Varada Rajan 2002: " Unitedly Rally To Defeat Anti-Labour Policies", Vol. 26, no. 29.
July 28, http://pd.cpim.org/2002/july28/07282002_citu.htm.
T.K. Rajalakshmi 2002.
uo Thus, the labour reforms, according to Vajpayee, could fulfil the objective of achieving
growth with the creation of more jobs. (T.K. Rajalakshmi 2002).

178
serious attacks on the hard-earned rights of labour in our country, meagre though they are.

While the measures towards 'labour flexibility' in the organised sector could further
'redistribute surpluses to capital', the measures of regulation in the unorganised sector
that are long overdue could be a step-forward towards subsistence-level remuneration to
the workers in this sector. However, pitting the workers in the unorganised sector against
those in the organised sector can only be seen as a divisive tactic employed in order to
carry forward the measures of labour insecurity in the organised sector. Even if the
workers in the organised sector are characterised as the labour aristocracy within the
broad category of labour, neo-liberal reforms has prepared the material basis for greater
unity between the workers in the organised and unorganised sectors.

The advocates of reforrri contend that the 'rigid' labour laws and excessive employment
security in India hamper competition in today's globalised market economy. But it may
also be recalled that India's labour force is one of the most insecure ones in the world;
with 92 per cent employed in unorganised/informal sector, with low levels of
unionisation; in terms of real incomes, one of the lowest paid in the world, with hardly
any social security benefits; yet with internationally competitive quality of work in
several spheres. India's indisputably low cost labour cannot constitute the foundations of a
globally competitive economy under liberalisation, says Barbara Harriss-White. 137 This,
in itself, should constitute a convincing enough rationale, even for the advocates of pro-
market reforms, for a much more pro-labour orientation to the labour reforms being
pursued.

The analysis m the above sections is to indicate that the 'developmentalism' as


agwessively being promoted by International Financial Institutions like the World Bank
may merely be a discourse of accumulation, not actually leading to human welfare. 138
The populist argument, 'First let us make the pie before sharing it out' turns out to be
counterfactual in· the light of the fact that even societies with high 'economic

IJ7
Barbara Harriss-White 2003: India Working: Essays on Society and Economy, Cambridge
University Press, Cambridge, p. 42.
138
So then, from the perspective of independent, self-reliant development, do we need even the
FOI at all? One might say, within the framework of capitalist development, taking over of
existing productive assets may be useful only if it acts as "life-preservers" for local firms for
which the only realistic al.ternative is closure (United Nations Conference on Trade and
Development (UNCTAO) 2000: World Investment Report (WIR) , Geneva, p.l96). For a
country, which is utterly bankrupt, such FOI may be useful as a saving device to keep alive
productive capacities (W/R 2000, p. 201). The so-called 'green-field investments' may also be
allowed subject to a proper competition policy under a capitalist framework.
The advances in Information Technology have often been paraded as an achievement of the
globalisation of capital. One could ask, why not view it as a technological advance for which
labour has been more instrumental than capital, much like the automobile revolution of an
earlier phase?

179
development' do not often have the corresponding levels of 'human development'.
Capitalist development h~ only tended to accentuate disparities as many studies have
shown. A comparison of the development trajectories of Keralam and the neighbouring
state ofTamil Nadu should be evidence enough to substantiate this argument. Despite an
impressive development of industrial sector, Tamil Nadu has shown a dismal
performance in terms of the wages and well-being of the workforce. On the other hand,
Keralam, which suffered a stagnation of the commodity-producing sectors, has been
attracting the labourers from Tamil Nadu mainly because of the better money wages it
offered. It should be curious that there is outflow of labour from a state where production
has developed to a state where production has not developed.

II. fOCUS ON KERALAM - IMPACT AND IMPLICATIONS OF


GLOBALISATION

The development experience of Keralam has often been projected as a 'model' in terms of
the Physical Quality of Life Index (PQLI). We have already engaged in a critique of this
at the outset in Chapter I. Besides the PQLI, high incidence of educated unemployment,
massive outmigration, an early export orientation in agriculture, import dependence on
food. high levels of unionisation of labour, 139 underdevelopment of the productive sectors
of the economy, the importance of remittances in the economy, disproportionately high
growth of the service sector and not the least, the paradox of an acute fiscal crisis co-
habiting a surfeit of capital in the economy can be identified as the specificities of the
trajectory of development in Keralam. Impact of Globalisation already visible and
Implications for the future are being dealt with separately, although they may not always
be mutually exclus.ive. Apparently, implications for the future seem to far outweigh the
impact that has already been felt. Thus the lifting of Quantitative Restrictions (QRs) in
trade is one area where the impact ofGiobalisation could have been felt definitively.

A. IMPACT

The wages of dependency

It was a dependant paradigm of development that was pursued since the transfer of power
in 1947, whereby the country had to depend on global capitalism for capital, technology
and markets. It was this paradigm of dependency that was accentuated with the Balance
of Payments crisis in 1990, which could be viewed as an aspect of the crisis of the big

I)Q
As is known, it has resulted in higher returns to labour in money wages and at times, also in
restrictive labour practices, as with loading-unloading activities.

180
capital in India. Globalisation signalled "an unprecedented degree of dependence" 140
since the end of colonialism. The 'economic reforms' since 1991 signalled the
abandonment of the so-called 'import substitution pattern of development' and the huge
market of India had to be opened up to the foreign TNCs.

The serious implications of a Structural Adjustment loan from the Asian Development
Bank (ADB) a,nd the outflow of investible surpluses from the state, having the highest
consumer expenditure in the country today have already been discussed in Chapter III.

Open economy and volatility in agricultural trade

One area where the impact of Gl9balisation could have been definitively felt was on the
trade front where Quantitative Restrictions (QRs) -were lifted on all commodities
(including food grains) already in 2001, although the deadline of the WTO was 2003.
Greater openness to the global economy brings in a multiplicity of variables over-
determining the prices of commodities, bringing in its wake greater volatility. Even
before this, the free trade agreement between India and Sri Lanka (SAFfA - South Asian
Free Trade Agreement) concluded in 1998 had already threatened the plantation economy
in the state, given the similarity in crop patterns between Keralam and Sri Lanka. The
predominantly plantation economy of Keralam had production for external markets right
from the colonial days. Perhaps, the impact of the lifting ofQRs was most acutely felt in
the state particularly with respect to volatility in the prices of plantation crops. The share
of Keralam in the cash crop production in the country shows how externally-oriented the
economy of the state is: Keralam accounted for 92% of natural rubber, 70% of coconut,
96% of pepper, 70% of cardamom, besides several other minor spices. 141 Latest figures
show that Keralam accounts for 92 per cent of the rubber production, 78 per cent of the
cardamom production, 20 per cent of the coffee production. and 6 per cent of the tea
production in the country. 142 The share of the state in coconut production in the country
has substantially declined to 48.4 per cent in 2003-04. 143 As for pepper, the state has a
near ~onopoly of its production in the country at 98 per cent. 144

140
Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
Neoliberalism", in Reclaiming the Land, Zed Books, London & New York, David Philip,
Cape Town, p. 13. _ ..
141
Damodaran, A.D. & V. Govindarajulu 1994: "Ecstasy and Agony of Kerala Development
Model", pp.l-3, International Conference on Kerala Studies (ICKS) -Abstracts, vol. 2, AKG
Centre, Thiruvananthapuram, p.2.
142
Government of Kerala 2006: Economic Review 2005, State Planning Board, Thiruvananthapuram,
p.67.
14)
Based on Ibid, 'Table - 4.8: Area, Production and Productivity of Coconut in Kerala and
India', p. 61.
144
Government of Kerala 2006: Economic Review 2005, State Planning Board, Thiruvananthapuram,
p. 62.

181
The sharp rise and fall in the prices of rubber in the 1990s should be instructive. Thus
during 1995-96, rubber prices peaked and came down to about half of it in 1998-99. The
lifting of QRs in deference to the conditionalities of WTO, rubber being brought under
Open General Licence and the fall in the currency values of rubber-producing East Asian
countries are believed to be among major factors that created such volatility in prices of
this commodity.

Utsa Patnaik's hypothesis is that for most commodities, it is not 'overproduction' in the
sense of high rate of growth of output in excess of population growth that explains stocks
accretion and price fall today, unlike in the 1920s. Rather the major factor has been the
cumulative effects of global demand deflation. 145 ,And this sounds quite plausible.

Table 4.2: WPI of Selected Commodities in India•

Year Coconut fresh ' Rubber e.condiments & Spices Rice


1990-91 220.5 143.0 284.6 178.3
1991-92 308.3 144.4 417.7 217.1
1992-93 337.6 175.7 514.2 248.6
1993-94 280.9 171.7 447.3 266.4
1994-95 260.9 240.9 438.6 294.1
1995-96 284.1 348.7 453.6 315.6
1996-97 355.1 326.0 514.5 347.1
1997-98 392.3 237.4 559.2 365.2
1998-99 365.1 198.1 667.2 398.3
"' 1981-82 is the 'base year with a value of 100 assigned.

Source: Government of India: Economic Survey, Ministry of Finance, New Delhi.

The fluctuations in the prices of the two most important agricultural commodities of
Keralam - rubber and coconut - should be clear enough from the above table. The
fall/fluctuation is rather sharp in the case of rubber. The price of spices has steadily and
remarkably gone up, despite some fluctuations. Keralam found itself at a very
disadvantageous position in its terms of trade with the rest of India during the pre-
liberalisation era. However, the global markets seemed to offer possibilities for relatively.
better terms of trade for the cash crop products from the state.146 Yet, the volati I ity in the
prices of these cash crops puts a question mark on the sustainability of the pattern of
agricultural production for external markets that is mainly based upon them, particularly
in the context of the new openness under the WTO regime. On the other hand, the price

14~
Patnaik, U. 2002, p. 123.
146
This could be one reason why even the feeble demands for national self-determination of
Keralam of the previous decades did not resurface since the early 1990s. The Malayalee upper
classes seemed to have benefited from the relatively advantageous terms of trade with the
international market during the post-liberalisation years.

182
of rice, the staple diet of the people in the state has more than doubled during the 1990s.
Unfortunately, for the people of the state, the dependence on food grains has also gone up
during the 1990s:-147

Erosion in food self-sufficiency

In Keralam, the area under food grains declined by 37 percent and output by 33 percent
during 199Qs. 148 The food deficit in Keralam in the case of rice, was at 50 to 55 percent in
early 1950s to mid 1970s i.e. until after the land reforms legislation in 1970. The deficit
has steadily increased and in 1998-99, rice production in the state has declined to only
around 20 percent of its consumption requirements i.e. 7.3 lakh tonnes. In other words,
Keralam has ceased to be a food grain producing state of any significance. 149 The
accentuation of dependence on external markets does not seem to bode well for Keralam
in the long run.

Economic reforms and its social costs

The question of 'jobless growth' requires serious consideration. Will neo-liberal reforms
with its capital-intensive modus operandi create more jobs and thus contribute to human
welfare? The special group on targeting ten million jobs per year set up by the Planning
Commission has put the employment growth rate in India.during the liberalisation of the
1990s as three times lower at I per cent as compared to 2.8 per cent during 1980s. On the
employment front, Keralam was among the worst sufferers along with Assam and West
Benga1. 150 Utsa Patnaik points out that at the all-India level, rural employment grew only
at 0.6 per cent. in the 1990s compared to 2.0 per cent in the 1980s. 151 Going by NSSO
estimates, as per the table below, the Rural employment growth rate during 1983 to 1987-
88 was 1.36 per cent which sharply declined to 0.58 per cent during 1993-94 to 1999-
2000. The urban employment growth rate also declined from 2.77 per cent to 2.27 per
cent during this period. This is of crucial concern since the vast majority of the people in
this country subsist on agriculture. There has been a deceleration in the growth of
employment in Kerala state as well during the 1990s. Thus employment growth was at
0.4 per cent per annum during the 1990s, down from 1.5 per cent prior to that. 152 The

147
On the part of the Kerala government and the dominant classes that prevail upon it, the shift to
cash crop production could have been a conscious decision, given the relatively better terms of
trade under the liberalised regime, particularly under the WTO.
148
Kannan, 2000, p. 4.
149
Ibid, pp. 5-6.
ISO
Bhavdeep Kang 2002, "Labouring under a misconception", Outlook, 27 May.
lSI
Patnaik, Utsa 2002: "Deflation and Deja vu Indian Agriculture in the World Economy" pp.
94-110, in V.!(. Ramachandran and Madhura Swaminathan (ed.), p. 118.
151
P.O. Jeromi 2003: "What Ails Kerala's Economy", Economic and Political Weekly, 19 April,
vol. 38, no. 16, p. 1598.

183
expansion of the sphere of casual employment is already visible by the voluntary
retirement schemes and the 'new exit policy'.

Table 4.3: Growth Rates of Employment (percentage change per annum)

Period Rural Urban


1983 to 1987-88 1.36 2.77

1987-88 to 1993-94 2.03 3.39

1993-94 to 1999-2000 0.58 2.27

Source: Based on NSS employment rates and Census population figures; As cited in
Prabhat Patnaik, C.P. Chandrasekhar and Jayati Ghosh 2004: "The Political Economy of
the Economic Reform Strategy: The Role of the Indian Capitalist Class", pp. 89- I 05, in
Manoranjan Mohanty (ed.) 2004: Class, Caste, Gender: Readings in Indian Government
and Politics, Sage publications, New Delhi, Thousand Oaks, London, p. 99.

Note: Employment here refers to all workers (principal status and subsidiary status).

During 'liberalisation', the tale of over-flowing granaries and the decision of the Central
government to export foodgrains abroad for foreign exchange rather than distribute it to
those dying of starvation is a telltale of cold-blooded formulation of policy priorities and
the immense human suffering resulting therefrom. It was under pressure from the courts
that the Government of India had initiated some hesitant steps to distribute the grains to
the st~rving sections. ''The combination of targeting, as opposed to earlier universal
access, and raising of issue prices, given the background of a continuing contractionary
tiscal stance, has contributed to the present situation of a massive build-up of foodstocks
while more people go hungry and starvation deaths are reported from tribal areas." 153
Thus 32 starvation deaths of Adivasi people were reported in July 200 I.

Growing indebtedness has resulted in a number of suicides among peasantry across the
state in recent years. The crisis in the plantation economy with falling prices has also
made the plantation workers highly vulnerable. According to unofficial sources, 871
farmers have committed suicide in the entire state ofKerala from May 2001 to December
2003. In Wayanad alone, during the three years from mid-2001 to mid-2004, 94 peasant
suicides were unofficially reported. 154 The official estimates for farmers' suicides shows
that only 193 farmers have committed suicide during 2001 to August 2004, including ISO

Ursa Patnaik. 2002, p. 139.


P. Krishnaprasad 2004: "Mounting Sucides: Urgent Need To Save Wayanad Farmers",
People's Democracy, 19 July; as available at http://www.countercurrents.org/gl-
prasad200704.htm.

184
of them in Wayanad district. 155 However, other official estimates for suicides in general
provides that during the year 2003, out of the 9438 persons who resorted to suicides in the
state, 1583 were self-employed engaged in farming/agricultural activity and 1520 of these
agriculturist victims were male. 156 Similarly, in 2002, 1533 agriculturists ended their own
lives and in 200 I, 1035 agriculturists took their own lives. 157

Against the backdrop of peasant suicides, it is worth mentioning the discriminatory policy
followed by banks, the prime among formal credit institutions towards the agriculture
sector in contrast to their favourable attitude towards their urban clients. Union Finance
minister under NDA government had stated in parliament in the year 2002 that the
industrialists [the big capital] had ."eatcm up" one lakh crore rupees from the banks. 158 On
the admission of the Union Finance minister under UPA government, Mr. P.
Chidambaram in parliament on 28 April 2005, ''the big industrial companies/borrowers
have been the top defaulters" with respect to the Non-Performing Assets (NPA) of public
sector banks. He further stated that the names of big defaulters cannot be published as
there was a provision in the Reserve Bank of India Act that mandated confidentiality. 159
This is in sharp contrast to the well-publicised and humiliating auctioning by banks of
confiscated assets of pauperised peasants in rural areas in the country. Moreover, the
fanners are having to pay an interest of 14 per cent for a tractor loan, besides mortgaging
their land whereas car loans are available to the urban middle classes and the rich at 8.25
per cent "for the asking". 160

While in many other parts of the country, the question of peasant suicides was a
phenomenon primarily associated with the 'cotton crisis', in Keralam, it has mainly been
a 'p~pper and coffee crisis', particularly in the cash-crop growing hill districts of
Wayanad and Idukki. Keralam enjoyed near monopoly over the pepper production in the
country with 96 per cent of the total and the state also accounted for 23 per cent of the
total coffee production in the country during 2003-04. The quality of pepper produced in
the state is of very high quality while that of coffee was mostly the inferior Robusta
variety. The export intensity (quantity of export as a proportion of total production) of
pepper from the country ranged around 30 to 40 per cent and that of coffee, above 80 per

ISS
Department of Economics:and Statistics, Kerala 2005: Statistics for Planning 2005, "Farmers
committed suicide from 2001 to August 2004", table 7.9.
ISO
Ibid, "Age and Sex wise Profession profile of suicide victims", table 7.3.
157
Ibid.
1~8
Hindu 2003, "Industrialists favoured at cost of fanners: Ajit Singh", 16 April, Thiruvananthapuram
edn.
Hindu 2005: "Big industries are top defaulters", 29 April, Thiruvananthapuram edn., p. 14.
11>0
Hindu 2003, "Industrialists favoured at cost of fanners: Ajit Singh", 16 April, Thiruvananth:~purnm
edn.

185
cent during I 997~98 to 2003~04. 161 In 2003~04, Wayanad contributed I 8 per cent of the
pepper production and 86 per cent of the coffee production in the state while ldukki
contributed 53 per cent of the pepper production and I I per cent of the coffee production.
A positive correlation was observed between export intensity on the one hand and
agrarian distress on the other. Thus in real terms, the price of pepper recorded a fall of 69
per cent between 1997~98 to 2003~04 and that of coffee fell by 59 per cent. The export
intensity of rubber was the lowest and correspondingly, its price volatility was also at its
lowest. Similarly, a positive correlation is noted between the proportion of the labour
force dependent on agriculture in particular districts and the incidence of suicides. Thus
Wayanad is home to 12 per cent of the agriculture~dependent population in the state
although the share ofthe.district in the population of the state was merely 2.5 per cent and
Wayanad accounted for 47 per cent of the farmers' suicides in the state. The sample
survey done by Mohanakumar showed that it was the 'peasantry' with low level of assets
who resorted to suicides and not 'farmers' in .general. Thus the average landholding size
of the deceased farmers was merely I. 72 acres. It has been rightly argued that attempts at
classifying the purposes on which the loans have been taken into treatment~related,

marriage~related, repayment of outstanding debt, etc. only served to depoliticise the basic
issue because it is being overlooked that the peasants used to meet all these expenses out
of the surpluses generated from agriculture. Crop losses as in 2002 and 2003 may rather
be seen as overdetermining factors rather than the principal factor that led to peasant
suicides. With the foregoing arguments to support them, there is force to the conclusion
of Mohanakumar and Sharma that the issue of peasant suicides should be seen as
occasioned by the price crisis, which is a fallout of the neo~liberal policies. 162 The issue,
therefore, cannot be addressed symptomatically in relation to ensuring formal institutional
credit and providing "alleviatory sops'' but calls for changing the very macro~policies

related to ta..xes, prices and imports so as to address the plight of the farmers on a
sustainable basis. This could very well be interpreted as a prescription to transcend the
framework of neo~liberal reforms as peasant suicides may be seen as a clear enough
fallout of these' reforms.

Pattern of growth

It is worth noting that Keralam received only I .07 per cent of the total industrial
investment proposals in the cou.ntry and merely 0.3 per cent of the total Foreign Direct
Investment (FDJ) received by the country during August 1991 to April 2000. 163 This is

161
S. Mohanakumar & R.K. Sharma 2006: "Analysis of Farmer Suicides in Kerala'', pp. 1553-58.
Economic and Political Weekly, 22 April, vol. XLI, no. 16, pp. 1554, 1556.
lbl
Ibid, pp. 1554~57.
loJ
Subrahmanian & Azeez 2000, p. 22.

186
rather depressing for the productive sectors of the state that tops the list in terms of per
capita consumer expendi~ure in the country. This also calls our attention towards the great
unevenness of the process of growth during 'liberalisation'.

According to Dreze and Sen, in 1980s, the quickening tempo of growth in India occurred
in keeping with the faster growth rates aJI around us. In the 1990s, the tempo has been
marginally higher than in the 1980s, but in a world that had slowed remarkably. 164 They
say that the percentage growth rate of real per-capita SOP per year in KeraJam was 2.3
during 1980 to 1990-91 and an impressive 5.0 during the liberaJisation years of 1992-93
to 1998-99. The corresponding figures at all-India level were 3.3 and 4.4 respectively . 165
,
According to a different estimation, the annual growth rate of Net Domestic Product
(NDP) in the state during the SAP years of1991-92 to 1997-98 (as on table below) is 6.05
percent. This is somewhat impressive as compared to the figure for 1980s, which was less
than 5 per cent and for 1970s, less than 3.5 percent only. The growth rate during 1990s is
also slightly higher than the 5.64 per cent at the all-India level. If the remittances from
emigrants is also included, the picture could look more positive. It is important to note
that CSO's NDP estimates do not include remittances. 166

However, it is important to look at the sectors of growth in order to understand the actual
character of the growth pattern in 1990s. Going by the data from Central Statistical
Organisation, the total sector-wise contribution to Gross State Domestic Product (GSDP)
in Keralam during 1998-99 was 59.72 percent for service sector, 26.6 percent for
agriculture sector and 13.51 percent for manufacturing and mining (with mining
contributing only 0.21 percent of SOP) (CSO, undated). During 1991-92 to 1996-97,
service sector has recorded the highest growth rate at 7.91 percent, even higher than the
6.47 percent at the all-India level. Growth of industry is less (5.04 percent) than that of all
India (6.85 percent). Growth rates of agriculture in Keralam at 5.86 per cent is
significantly higher than the corresponding figure of 3.17 per cent at the all-India level. 167
The higher figure for agriculture could be owing to the better prices in the international
market, fetched by the spices and other cash crops produced by Keralam, despite sharp
fluctuations.

164
Dreze, Jean & Amartya Sen 2002: India Development and Participation, Oxford University
Press, Oxford, first published 1996, p. vi.
loS
Dreze & Sen 2002: Table A.3, Part I: Income-related indicators, For 1980s: Based on
Ahluwalia 2000: 'Economic Performance of States in Post-reforms Period', Economic and
Political Weekly, 6 May, table I and census data. For 1990s: Based on unpublished CSO data
supplied by Planning Commission.
106
Subrahmanian & Azeez 2000, p. 6.
167
Ibid, p. 7.

187
As for the sectoral contribution to total NDP growth during 1991-92 to 1996-97, services
occupies an overwhelming 59.05 percent, up from 50.70 per cent during 1981-82 to 1990-
91. The share of industry has markedly declined from 17.43 per cent to 11.68 per cent;
even the share of agriculture has marginally declined from 31.87 per cent to 29.27 per
cent, during the corresponding period. The overall picture shows that the commodity
producing sectors are faring badly, even as the service sector is surging ahead. Herein
construction is included in the service sector. But even when construction is excluded
from the service sector, it occupies the largest share (45 percent) in NDP growth during
1997-98. 168 This pattern of growth is a cause for concern since growth in tertiary sector,
not backed up by the development of the productive sectors of the economy, is usually
considered to be of a rather volatile kind. The disproportionately high growth of the
service sector may be conceptualised with reference to the nature of growth in the
peripheral nationalities under globalising finance. 169 However, in the case of Keralam, the
inflated growth of the service sector is generally attributed to the role of remittances in
the economy since the mid-1970s.

A stillborn alternative?

·There Is No Alternative' (TINA) is a commonplace argument advanced in legitimising


the policies of Structural Adjustment. However, one might argue, from a framework of
independent, self-reliant development under an anti-imperialist framework that 'There
Are Many Alternatives' (TAMA) to the externally dependent, export-led growth. The
classic Soviet Ind~strialisation debate 170 focused on the feasibility of utilising the surplus
generated from agriculture itself towards the industrialisation and development of
productive forces in most economies. In the case of a region like Keralam, the huge

lt>S
Ibid, p. 8.
169
Thus Brenner viewed that 'supply-side economics' not only aimed at raising profitability and
directly redistributing income to capital, but was more particularly aimed at relieving surfeit
capacity in manufacutring «while clearing a channel to the profitable expansion of the low-
productivity service sector by further reducing employee compensation.11 Further it was aimed
at the revitalization of the financial sector (Brenner 2002, p. 35). It may be conceptualised that
in the peripheral nationalities, globalising finance fails to develop the productive forces
whereas the operations of finance capital may lead to a ballooning of the service sector. This
would, however, require further substantiation.
170
For the Soviet Industrialisation Debate, please refer, V.I. Lenin [undated] Collected Works,
vol. 3, Moscow; N.I. Bukharin 1983: Transition to Socialism, R.B. Day (ed.), Spokesman,
London; R.W. Davies 1980: The Socialist Offensive: The Collectivisation of Soviet
Agriculture. 1929-30, Macmillan, London; Maurice H. Dobb 1960: Soviet Economic
Development Since 1917, Routledge & Kegan Paul, London, 5'h edn.; E.H. Carr 1970:
Socialism in One Country, 1924-26, vol. I, Harmmondsworth, Penguin Books; Evgeny
Preobrazhensky 1965: The New Economics, Clarendon Press, Oxford; E.H. Carr and R.W.
Davies 1974: Foundations of a Planned Economy, 1926-29, vol. I, Harmmondsworth.
Penguin Books; Nirmal Kumar Chandra 1992: "Bukharin's Alternative to Stalin:
Industrialisation Without Forced Collectivisation", Journal of Peasant Studies, vol. 20, no. 1.
October, pp. 97-159. ·

188
remittances and export earnings from marine resources, besides cash crops could have
provided sufficient capital towards industrialisation. 171

An accentuation of rentier exchange relations?

Marx had termed the process of forcibly depriving the producer from the means of
production as primitive accumulation. He considered it as characteristic of the early
stages of capitalist development. 112 We would, however, hold that primitive accumulation
is not specific to only the early stages of capitalist development but that it takes place
under capitalism of the imperialist stage to a significant extent. 173 Further, Anne Kruger
had, in a much-cited paper, spoken of a rent-seeking society under the general policy
environment of import substitution.J74 Evidence points to the direction that rent-seeking is
not specific only to import-substitution pattern of development. It is probably much mor~

characteristic of a neo-liberal order.

Barbara Harriss- White (2003) critically borrows the concept of Intermediate Classes (ICs)
from Michal Kalecki. She seeks to expose how the ICs have managed to hold out as a
distinctive "class force", 175 operating above all, in informal and black economies. She
says, "Outside India's metropolitan cities the economy is dominated by the intermediate
classes, a loose coalition of the small-scale capitalist class, agrarian and local agribusiness
elites, and local state officials." 176 The ICs thrive at the expense of the consumers, labour
and the State. They benefit immensely through fraud and tax evasion. She further argues
that they engage in the politics of policy implementation as against the politics of policy
formulation particularly in the sphere of the local State, often resorting to quiet
sabotage. 117 Without buying her arguments viewing the ICs in isolation from the
operations of the metropolitan capital and not considering the primary influence of the
State and the oligopolies, we could grant that the ICs do play an important role in the
various states of India. 118 We could consider them as powerful interests at the regional
level that are of a historically non-monopoly character at the all-India level.

171
For critical remarks on the Soviet industrialisation debate, see Chapter Ill, see Section Ill:
'The ADB bondage .. .'.
17:!
Karl Marx 1867 (1954): Capital: A Critique of Political Economy, vol. I, Progress Publishers.
Moscow, first English edn. 1887, first German edn. 1867, pp. 667-70.
Iraq under American occupation should be a patent example.
Anne 0. Kruger 1974: "Th~ Political Economy of the Rent-Seeking Society", American
Economic Review, vol. 64, pp. 291-303.
17$
Barbara Harriss- White 2003, p. 44.
176
Ibid, p. 24 I.
177
Ibid, p. 241.
178
For an exhaustive critique of Harriss-White's work on the informal economy, please refer
Sebastian, Gilbert 2003: "Reining in the Lesser Lords Social Structures of Accumulation in
India's Informal Economy", Review article, Indian Journal of Labour Economics, vol. 46, no.
2, April-June 2003, Review Article on Harriss-White, Barbara 2003. For a revised briefer

189
Over the years, the informal economy in Keralam came to be dominated by a system of
rentier exchange relations. Mafiosi of various kinds- forest mafia, contract mafia, liquor
mafia and sand mafia, besides the political mafia - have been deriving undue, illegal
benefits from the State. The key role in these activities of the intermediate classes within
the state cannot be overlooked. Smuggling away of forest resources, particularly of
sandalwood (it being a legal resource of the maharaja) was an illegal activity
clandestinely pursued since the days of the princely states. Liquor lobby too has been a
powerful interest in modern Kerala history. 179 With regard to the liquor lobby, very
recently, the Assembly Committee on Public Accounts maintains, "[I]ndiscriminate stays
were allowed in the revenue recovery cases relating to excise in spite of the financial
°
constraints of the state"} 8 Construction contract became a major business with the Gulf
boom since 1970s. With the government ban on sand mining from the riverbanks very
recently, owing to environmental reasons, sand mining also became a major source of
illegal income, with housing construction having become a booming business. The
structure of liberal democratic politics requiring mobilisation of mass support, also
brought into being political intermediaries (including the leadership of trade unions
affiliated to mainstream political parties), who have been rentier in orientation.

In Kerala history since the colonial days, trade has domin~ted over productive activities.
The trader classes organised under Vyaapaari Vyavasaayi Ekopana Samiti have had
significant influence on the government. Even though the Kerala state has been a huge
market for gold consumption, the sales tax revenue from the sale of gold in the state is as
low as 32 crores a year whereas it could have been five to six times this amount had there
been stringent tax vigilance! 81 Neo-liberal reforms since I 99 I seems to have only
accentuated these rentier exchange relations in a state like Keralam where the productive
forces have hitherto remained relatively underdeveloped.

Does a process akin to what is happening in the political and cultural realms (as described
in the next section) re-enact itself in the sphere of the 'economic base' as well? Thus local
moneylender and trading capital on the one hand, and imperial capital on the other, were
both viewed as concentrating on the circulation process more than on the productive

version, please refer Sebastian, Gilbert 2004: "The India of the 88 per cent", frontier, vol. 36.
no. 42, 9-15 May 2004, pp. 5-8. Review on Harriss- White, Barbara 2003.
Alummoottil Channaar was a powerful liquor contractor in early 20'h century, drawn from th~:
ritually lower castes.
ISO
Hindu 2003, February 12.
lSI
K. Ravi Raman 2004: "The Asian Development Bank loan for Kerala (India): The adverse
implications and search for alternatives", Working paper 357, Centre for Development
Studies, Thiruvananthapuram, p. 37.

190
process. 182 It may also be recalled that the first wave of foreign capital inflow into the
country under colonialism had led to the conservation of the pre-capitalist social
relations. 183 So then, does SAP accentuate the relations of informal economy?

An instance of the accentuation of rentier exchange relations can be seen in the fact that
certain natural resources, which were hitherto not commodified to any significant extent
are sought to be commodified. Concerted attempts at commodification of drinking water
in the state is an example, par exce/lence. 184 In this context, Colin Leys' observations on
the requirements for a non-market field to be transformed into a market field are worth
noting: First, the goods or services in question should be reconfigured so that they can be
priced and sold. Second, people ,must be induced to want to buy them. Third, the
workforce involved must be transformed from one working for collective aims with a
service ethic to one working to produce profits in the market. Finally, the capital needs to
have the risk underwritten by the State. 185
~

Liberalisation has witnessed a series of known scams and many unknown ones so far,
beginning with the Securities scam by late Harshad Mehta in early 1990s to the Tehelka
scam recently at the all-India level. In Kerala state, there have been several scandals from
encroachments offorestland 186 to illegal sand mining. One may hazard the generalisation
that privatisation of privileges and liberalisation of corruption, have apparently been the
hallmarks of the privatisation-liberalisation drive in India.

It should be clear that it is not merely the non-monopoly capitalists within the informal
economy who are involved in such rent-seeking activities. The apex capital - both Indian
and global- seems to be a far more cohesive and influential class force with enormous
influence on the State.' 87 The state government has leased out 1,08,695 acres of
government land at nominal rates to private plantations. While it may be granted that such
huge concessions to the plantation sector was thought of as necessary for the growth of
the plantation economy, it would be difficult to justify the continuance of this practice if
we take into account the crisis in the plantation sector as a result of the fall in prices,

IS:!
R.S. Rao 1995 1995: Towards Understanding Semi-Feudal. Semi-Colonial Society, D.
Narasimha Reddy (ed.), Perspectives, Hyderabad, p. 76.
ISJ
~S. Rao 1995, pp. 75-76. ,..
ISO
Latheef Kizhisseri 2003: '.'Daridrarkku kudivellam ethikkumpol", Madhyamam weekly,
August I, pp. 25-27; Sarah Joseph 2004: "Kudivellavum sthree neethiyum" (Drinking water
and gender justice- Malayalam), Mathrubhoomi weekly, February I· 7, pp. 14-21; P.S. Prasad
2003: "Jala prabhukkal varavaayi", Madhyamam weekly, July II, pp. 19-21; Vandana Shiva
2004: "Jalathinte vila", Mathrubhoomi weekly, January 11-17, pp. 32-33, 60-61.
IS~
Colin Leys 1977: Rise and Fall of Development Theory, James Curry, London, p. 4.
I So
See the section,' Land grabs' in Chapter V.
187
We have detailed the instances in the sub-section on land-grabs in Chapter V and in the
section, 'Identifying the dominant classes in Keralam' in Chapter VI.

191
erosion of the food self-sufficiency of the state and the high incidence of landlessness
among the poorer agrarian sections in the state.

Many of the projects that were showcased at the Global Investors' Meet (GIM) at Kochi
in early 2003, betrayed such rentier orientation. For instance, land, as real estate and
exploitation of natural resources were the preferred investment options. 188 Initially, even
rivers were showcased for sale 189 but these proposals had to be withdrawn following
popular protests. GIM had the target of luring in foreign investment worth Rs.SO,OOO
crore. However, in the end, it was amply clear that not many investment proposals had the
intention of engaging in genuinely productive activities. It is apt to cite Mayo and Yeros
here, "[N]eo-liberalism is clearly ~n a weaker footing now than it was a quarter-century
ago, having failed to deliver 'development' and ultimately suffered ideological defeat." 190

Coca-Cola plant set up in March 2000 created near-drought conditions by depleting


ground water at Plachimada in Palakkad district and even sold out as fertilizers hazardous
waste including known carcinogen cadmium, and lead that is fatal in children. 191 The Left
Democratic Front (LDF) in government had sanctioned the establishment of the plant
initially and the United Democratic Front (UDF) in government was adamant to permit
their continued operations, despite popular protests. In response to the writ-petition filed
by the local village panchayar, on 16 December 2003 the High Court and subsequently
the Kerala government directed the company to close down the plant temporarily. 192

The moves to sell the public assets such as the shares of PSUs within the state into private
hands also seem to indicate an accentuation of such exchange relations. Many a Public
Sector Undertaking (PSU~) has been sold out below the market price particularly under
the National Democratic Alliance government at the Centre. After all, is it not the blood
and sweat of the toiling masses over so many years that is embodied in the PSUs? (By
implication, sickness or profitability was not the criterion for privatisation.) Thus there
have been moves to privatise the government-owned company, Kerala Minerals and
Metals Limited (KMML).

ISS
The land at Muthanga was initially designated for sale at the Global Investors' Meet.
ISQ
Santhosh Babu 2003: "Periyaar vilppana: vilkkunnathu manushya jeevitham", Madhvamam
weekly, January 31, pp. 16-1'7. .
IQO
Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
Neoliberalism", in Reclaiming the Land, Zed Books, London & New York, David Philip,
Cape Town, p. 55.
British Broadcasting Corporation (BBC) 2003: http://news.bbc.co.uk/2/hi/south asia
/3096893.stm.
British Broadcasting Corporation (BBC) 2003a: http://news.bbc.co.uk/2/hi/south asia
/3325557.stm.

192
The recent State policy is bent on de-nationalising and privatising extractive industries
like mines, which were nationalised in most countries soon after the transfer of power
.
from colonialism. An instance can be had from the recent moves by the UDF government
in Keralam for mineral sand mining, despite warnings of environmental hazards. In late
April 2003, the Kerala Minister for Industries, P.K. Kunhalikkutty had announced in the
Assembly that a 17-km stretch of state-owned land from Valiyazhikkal (Kayamkulam
estuary) to Thottappilly in Alappuzha district would be leased out to Kerala Rare Earths
and Minerals Limited (KREML), a joint sector company 193 , to conduct mineral sand
mining for twenty years. The controlling stake in KREML is held by the private
company, Cochin Minerals and Rutiles Ltd (CMRL). "The unprecedented haste with
which the lease was awarded evoked suspicion.',. 94 The proposed mining was primarily
for extracitng ilm_e~i!e. The r~c~nt Tsunami disaster had affected this area and is evidence
enough that the mining proposal was totally ill-conceived. This stretch is highly erosion-
prone experiencing sea rage even in summer. Its proximity to the Veinbanad lake- the
largest water body in Keralam and the adjoining Kuttanad marshlands, below the sea
level, known as 'the rice bowl of the state' is indicative of its highly fragile eco-system.

Moreover, government policies and the operations of certain voluntary organisations,


apparently, facilitate global capitalist forces to pirate biodiversity resources. 195

The government has set up Special Economic Zones at Kochi. This would be a foreign
enclave ("deemed foreign trade territory") on the Kerala coast, with hardly any legally
guaranteed rights for the labour. The goods produced therein would be imported into the
country. Moreover, huge tax concessions are also envisaged for corporations in SEZs,
which could cost the public exchequer a loss of crores of rupees in tax revenues. Foreign
and Indian big vessels have been given a free hand to engage in fishing operations in
Indian waters, depleting fisheries.

The controlling stake in KREML is held by the private company, Cochin Minerals and Rutiles
Ltd {CMRL), although Indian Rare Earths Ltd {IRE), a central public sector undenaking, and
Kerala State Industrial Development Corporation {KSIDC) hold 20 per cent and 26 per cent
equity stake in it, respectively:
..... Sreedevi Jacob 2003a: http://www.indiatogether.org/2003/aug/env-kermining.htm {as on
09.01.2004); Sekhar, L.K anchayadev S.K. 2003: "Karimanal (Mineral Beach-Sand) Mining
in the Alappuzha Coast of ~erala- A People's Perspective" in Manin J. Bunch, V. Madha
Suresh and T. Vasantha Kumaran (eds.), Proceedings of the Third International Conference
on Environment and Health, Chennai, India, 15-17 December,
www.yorku.ca/bunchmj/ICEH/proceedings/Sekhar L ICEH papers 470to488.pdf
(09.01.2005).
IQS
P.K. Prakash 2002: Aff)ladheenappedunna Bhoomi: Adivasi Bhoomi Prasnathinte
Charithravum Rashtriyavum {Land Alienation: The history and politics of Adivasi land issue
- Malayalam), Jayachandran friends circle/Pappion, Kozhikode.

193
Following have been suggested as some of the major tasks to be implemented in the
second phase of the economic reforms in the state: Introduction of leased and contract
farming, Restructuring or" state level public sector enterprises, Power sector reforms,
Fiscal reforms, Taxation reforms, Pension reforms, Limiting the growth of government
employees. 196 These measures may spell more dependency for the state and not lead to
any significant development of the productive forces.

The question then arises, why rentier exchange relations get accentuated under SAP? We
would argue that it has to do with the nature of capitalist development under the rentier
and decadent global monopoly capitalism of the present phase. Marx had already
indicated the tendency for 'primitive accumulation' in the colonies. 197 Lenin spoke of the
parasitic and rentier character, of capitalism of the imperialist stage in general and also of
the "rentier state" in the richest or most powerful nations. 198

'Giocalisation' in the political and cultural spheres: The Case of


Hindutva communalism

"Giocalization" is a term used by Ronald Robertson to denote the interface between the
global and the local. 199 In the realm of culture, Globalisation of Monopoly Capital seems
to indicate a 'feudal-imperialist confluence' parellel to a process akin to it in the
economy. To take an ironic instance, imperialist patriarchy seems to co-exist with feudal
patriarchy in a country like lndia. 200 There is, apparently, the pervasive persistence of pre-
capitalist cultural forms, and their accentuation - particularly in the political and cultural
realms - with the deepening of the globalisation of monopoly capital under SAP. The
following observation speaks thus about the coexistence of the cultural forms
characteristic of different stages of social development: "The piling up of unsublimated
and unresolved social and mythical forms therefore provides a perverse and fantastic
depth, like that of an old abandoned well with foul water: this abyss of the past has been
mobilised by market capitalism and the rightist forces to disastrous effect in South

P.O. Jeromi 2005: "Economic Reforms in Kerala", 23 July, Economic and Political Week(v,
vol. 40, no. 30, 23 July, pp. 3267-77.
'"' Karl Marx 1867 ( 1954): Capital: A Critique of Political Economy, vol. I, Progress Publishers.
Moscow, first English edn. 1887, first German edn. 1867, pp. 716-24.
•~s
V.I. Lenin 1977 (1914): "The Right ofNations to Self Determination", in V.I. Lenin, Vol. I.
1914,pp. 568-617,pp. 93-102,117.
'"" Yogendra Singh 2004: Ideology and Theory in Indian Sociology, Rawat publications, Jaipur
& New Delhi, p. 217.
:oo Thus we have the co-habitation within the same society of feudal-casteist patriarchal practices
like Sati on the one hand and beauty peagantries commodifying the beauty of women on the
other; or for instance, even as educated women are confined to kitchen and nursery, not being
allowed to participate in 'outside work', there is the vulgar commodification of women's
beauty in commercial advertisements.

194
Asia." 201 Liberalisation in India has been accompanied by an upsurge in religiosity. 202
This often indicates a rise _in communal spirit, rather than a surge in spirituality. Falling
back on the resources of the hierarchical culture ofthe pre-capitalist society seems to help
legitimate the emergent hierarchies of the new society as well.

Keralam witnessed the rise of coalitional politics since the 1960s. Christian and Muslim
sections primarily constituted the social support-base of the UDF coalition. Eventually,
the mainstream left parties too were drawn into the politics of community/identity. Over
the decades, castes and religious communities have provided a stable social basis for a
peculiar variety of identity politics in the state, enabling cross-class mobilization in
dominant class politics.

Thus CPM became the biggest 'Hindu party' in the state, wittingly or unwittingly banking
on a secular Hindu identity in general and Ezhava identitr03 in particular. Of late, along
with the decline of the left parties, communal spirit seems to be on the rise.

The retaliatory communal attack killing of nine persons, eight of them Hindu, and
injuring 16 others, including a woman at Marad, a fisher people-dominated locality on the
sea-coast in Kozhikode district on May 2, 2003 by Muslim extremists, had greatly
vitiated the communal atmosphere in the state subsequently. The communal incidents at
Marad was preceded by communal tensions on a lower scale at Naadaapuram, Paanur.
Taikal and Pathanamthitta. 204 It has been clear from the subsequent enquiries that the
police and the State had maintained a criminal passivity despite having had clear-cut
intelligence information that a reprisal attack could take place since the State had failed to
take action on an earlier round of communal riot that took place in the first week of
January 2002. 205 Thus the Inspector General of Police (Intelligence) had sent a written
communication to the Commissioner of Police, Kozhikode city under the subject.
"Developments in Marad ... " on 18 January 2003, i.e., more than three months prior to
the attack on May 2. 206 It was the killing of a local Muslim leader, Aboobacker Koya, in
the previous riot that had created a strong feeling of communal vengeance among a

:oe Saroj Giri 2004: "Against 'Reality': The Maoists in South Asia ...
http://www. i llegalvoices.org/knowledge
/general articles/against reality the maoists in south asia.html (as on 3 January 2005).
:o: Harriss-White 2002, p. 245.--
:oJ
Ezhavas are a powerful Backward Caste, which has historically been the backbone of the
'left' movement in the state.
K.N. Panikkar 2003: "Communalising Kerala", Hindu, 13 May.
G. Sekharan Nair 2005: "Marad: Rahasaanveshana vibhaagam moonnu maasam munpu
munnariyippu nalki" (Marad: The Intelligence Department had given warning three months
back- Malayalam), Mathrubhoomi, 7 February, p. I.
Copy of the letter is shown along with the news item, G. Sekharan Nair 2005: "Marad:
Rahasaanveshana vibhaagam moonnu maasam munpu munnariyippu nalki" (Marad: The
Intelligence Department had given warning three months back- Malayalam), Mathrubhoomi.
7 February, p. I.
. section of the Muslim community in the locality207 that led up to the killings in mid-2003.
500 Muslim families had tQ flee from Marad after the killings fearing reprisals and their
rehabilitation was unduly delayed. The Sangh parivar had cashed in on the incident to
unleash a vicious communal propaganda statewide demanding a CBI inquiry although a
judicial inquiry was already on.

The number of RSS 'shak.has' in the state has increased from 4,300 in 2001 to 4,800 in
2004. Its organisers claim that the 'Sangh' is active in all the 14 districts of the State. The
Kshetra Samrakshana Samiti, a unit of the Sangh Parivar with the declared aim of
"building a temple-based organised society" and a "temple-based way of life", has gained
substantial control of the management of the day-to-day affairs and conduct of festivals of
a number of temples in the state. Perhaps, the Bharatiya Vidya Niketan that is involved in
education is the most prominent and effective Sangh Parivar organisation. It runs about
375 schools in all the districts with no government support. In January 2004, P.
Parameswaran, director of the Bharatiya Vichara Kendram says, the Sangh Parivar
believes that the present climate is ideal for its growth in Kerala. "A new spiritual
climate" is developing in the State; that the number of 'spiritual gurus' is growing in
Kerala; that the number of believers too is growing and the sound of criticism has
vanished. 208 One might well say, these are indications of an unfolding 'passive
revolution'. An upsurge in "organised religiosity" was seen across religious communities.
Thus street processions have become common unlike 20 years back. According to K.N.
Panikkar, historian and prominent scholar on communalism, communalisation of Kerala
society has been going on particularly since the demolition of Babri Masjid on 6
December 1992. Thus Muslim communal organisations, National Development Front
(NDF) and [slamic Service Society (ISS) were formed by those sections that were
dissatisfied with the pacifist stance of the Indian Union Muslim League (IUML). The
latter was formed as a militant outfit counter to RSS under the leadership of Abdul Nasser
Madani, which was later converted into a political front, People's Democratic Front
(PDP): A fairly large section of the population has become ideologically cqmmunal and
yet communalism has not yet emerged as a political alternative. The interspersed
distribution of religious communities in the demographic pattern of the state contains the
potential to "promote secular consciousness by creating a shared common space in daily
life". At the same time it contaiis the potential for greater violence in case of a communal

!07
Hindu 2003: "Communal polarisation led to Marad violence", 20 December, Saturday,
Thiruvananthapuram edn., p. 5; and G. Sekharan Nair 2005: "Marad: Rahasaanveshana
vibhaagam moonnu maasam munpu munnariyippu nalki" (Marad: The Intelligence
Department had given warning three months back- Malayalam), Mathrubhoomi, 7 February,
p. I.
208
Viswanathan, et at 2004. The figure for 2001 is the same as is provided in Organiser, March
25; as cited in K.N. Panikkar 2003: "Communalising Kerala", Hindu, 13 May.

196
conflict. On the other hand, ghettoisation as a result of communal tensions can "intensify
communal hostility". 209

There are historical indications of the pan-Hindu identity itself to have been formed
primarily as a colonial construct in spite of the prevalence of a caste-ridden hierarchical
society, in the process of constructing the 'social other'. There are historical indications of
the pan-Hindu identity itself to have been formed primarily as a construct of colonial
modernity in spite of the prevalence of a caste-ridden hierarchical society, in the process
of constructing the 'social other'. 210 The "calm legalism" of Sankara in the eighth century
is revealing: "[A] born Sudra has no right to knowledg~". 211 Examining the colonial
administrative writings, the rryissionary and social reform discourses, (Late) M.
Muralidharan concluded that the Hindu identity in Keralam was a construct of colonial
modemity. 212

We would hold that viewing the Hindutva movement in India from the angle of a mere
communalism-secularism binary could turn out to be grossly misleading. Conversely
looking at its basis in political economy or more specifically, the 'class basis of
communalism' could be more enlightening. 213

ln 1935, Georgi Dimitrov et al had defined fascism as "the open terrorist dictatorship of
the most reactionary, most chauvinistic, most imperialist elements of finance capital." 214
But in a country like India, which is supposedly under the yoke of imperialism, the
characterisation, 'most imperialistic' in the above definition does not stand its test. So
then, the imperatives of global capitalism of generating surpluses from the peripheries of
the world system and the economic interests of the Indian big capital being intertwined
with that of global capitalism, particularly under globalisation may be considered
immensely significant factors that shape the 'class basis of communalism'. Moreover, the

K.N. Panikkar2003: "Communalising Kerala", Hindu, 13 May.


See Muralidharan M. 1996: "Hindu community formation in Kerala: Processes and structures
under colonial modernity", Sowh Indian Studies, July-December.
:II
Brahma Sutra Bhashya, 1.3.34; as cited on Muralidharan M. 1996, p. 245.
See Muralidharan M. 1996: "Hindu community formation ·in Kerala: Processes and structures
under colonial modernity", South Indian Studies, July-December.
:u Gilbert Sebastian 2005: "Conceptualizing the Fascistic Trend in Contemporary India", Paper
presented at the International Conference: "Politics, Reform and Prosperity- Quantitative and
Qualitative Perspective on Contemporary India", 26-27 December, Centre tor Studies in
Social Sciences, Calcutta (Article under Publication); Gilbert Sebastian 2002:
"Conceptualising the Indian Variant of 'Fascism'", Paper presented at Contemporary South
Asia seminar, Queen Elizabeth House Oxford on 30 May 2002; Gilbert Sebastian 2000:
"Towards Understanding the Indian Variety of 'Fascism"', Paper presented at the seminar on
fascism organised by Centre for German Studies Study Forum at Jawaharlal Nehru University,
New Delhi, 6 October.
Georgi Dimitrov 1972: Selected Works (in 3 vols.), vol. 2, Sotia Press, Sofia.

197
linkages of the Indian ·big capital, apparently the hitherto leading class in the combine of
dominant classes in the cQuntry, with the non-capitalist classes and social forces in the
countryside also seem to shape the character of the communal majoritarian movement in
the country. This movement may more appropriately be designated as a fascist movement
because it agrees, in essence, with many of the characteristics of fascist movements in
general, such as, a chauvinistic nationalism based on a reactionary majoritarianism and
the presence of semi-autonomous civil society groups as militant outfits. 215

Communalism pre--empts the possibility of a united fight by the people of India against
\
imperialist Globalisation. This is unlike the united fight of both Hindus and Muslims
against British colonialism in the Great Indian Revolt of 1857. Today we find the ironic
coexistence of two contrasting trends: One seeks to remain "within what Bourdieu called
. -- - --
the economistic logic of the market and accept capitalist globalisation as almost a natural
process."216 The other is supposed to counter this by taking a revivalist stance of talking
about a happier past or "forgone culturalist essence which defines our true character. But
these two positions do not really clash: they often coexist and this is where the present
cohabitation between capital and assertion of[communal] difference has to be located". 217

Viewed from another angle, here in India, we, apparently, have the anachronism of a
'comprador fascism', wherein aggressive refeudalisation in the cultural realm is matched
by the belligerence of the neo-liberal agenda in the economic sphere. 218 The 'comprador'
character of the Indian variant of fascism .could be traced back historically as the
Hindutva camp never took an active part in the anti-colonial struggle. Given the
·comprador' character of this kind of fascism and the multiplicity of the contradictions
that shape its character, the Indian variety of fascism-in-the-making may be more akin to
similar other Third World fascisms than with its classical European counterparts. 219

Any political party of the coalition of dominant classes could turn fascistic on being faced
with crisis. Yet the Sangh parivar in general and the RSS in particular should be marked
out for a specifically clear-cut communal fascist agenda. The present stage of the fascist
movement in India may be termed as 'fascistic communalism' existing and evolving
wherein it is communalism in ess~nce with fascist potentialities to it whereas only with a

Gilbert Sebastian 2005; Gilbe"rt Sebastian 2002; Gilbert Sebastian 2000.


Giri 2004.
Giri 2004.
Gilbert Sebastian 2005; Gilbert Sebastian 2002; Gilbert Sebastian 2000.
Ibid.
Prabhat Patnaik (2003: "Giobalised Finance and Third World Fascism", Marxist Samvaadam
(Marxist Debate- Malayalam), vol. 7, nos. 23-24, Jan.-June, A.K.G. Patana Gaveshana Kendrom,
Thiruvananthnpuram, pp.2&-42} also tends to view the 1-!indutvn movement in India as a third
world fascist movement, pp. 27-28, 39.

198
full-fledged fascist State in India could this movement be characterized 'communal
fascism'. 220

We would hold the international prescription for fighting fascism, namely, 'broad
alliances and militant struggles' to be valid even in the case of India. The deep-rootedness
of the contradictions in Indian society and the contradictory social base of fascism even in
India could make it easier for a fascist movement to be defeated even in our country.
However, given the unusually long gestation period of communal propaganda, one cannot
take for granted the disastrous potential of the communal ideas that have been instilled
into mass consciousness ever since the colonial period. This is particularly so because
communal or fascistic ideas could. turn a material force in itself as they grip the minds of
the masses, and turn quite autonomous from the original material/economic interests that
the dominant classes supposedly wanted to promote. So then, the fight at the
cultural/ideological realm is to be taken seriously since communalisation of people's
minds is, indeed, a potent threat to be reckoned with by the democratic forces. 221 Here, we
do not agree with Prabhat Patnaik who says, "The route to overcoming communalism lies
paradoxically through the mobilization of the people on their livelihood issues. which on
the face of it have nothing to do with communalism. " 222

The rise of 'fascistic communalism' in India could be evidence enough of the uneasy
relationship of the neo-liberalism with the pursuit of democracy. 223 Moreover, there is
apparently a broad consensus among all pro-establishment political parties (LDF, UDF
and the NDA) on two counts: (i) pursuing the path of nco-liberal reforms and (ii)
containing any movements of resistance that might emerge. 224

The expanded realm for 'glgbal civil society movements' or funded NGOs does not seem
to signify an expansion of democratic space. The success of the Decentralised planning in
Keralam (panchayati raj) seems to be that what was achieved through the voluntary
organisations (NGOs) elsewhere was achieved here through the party structure of an
established revisionist party within the Communist movement. This is not to overlook
certain obvious benefits like bringing certain tangible benefits to the people, reducing the

~:o
Gilbert Sebastian 2005; Gilbert Sebastian 2002; Gilbert Sebastian 2000.
::1 Ibid.
Prabhat Patnaik 2003: "Giobalised Finance and Third World Fascism", Marxist Samvaadam
{Marxist Debate - Malayalam), vol. 7, nos. 23-24, Jan.-June, A.K.G. Patana Gaveshana
Kendram, Thiruvananthapuram, pp.26-42}, p. 41 (emphasis original).
Thus the peoples of both the most populous countries (rather the potentially biggest markets) of
Asia, namely, China and India have apparently witnessed a curtailed space for democracy during
SAP. For a review of the political atmosphere in rural China, see Yang Lian 2005: 'Survey on
Chinese Peasants: The Dark Side ofthe Chinese Moon', New Left Review, no. 32, pp. 132-42.
The unity of the 'mainstream' parties was witnessed during the suppression of the Adivasi
land struggle at Muthanga on 19 February 2003.

199
hold of the bureaucracy at the local level and ensuring the participation of the local people
in the planning and implementation of local development programmes. Nevertheless, the
self-help movements have in a way complemented the Globalisation of monopoly capital
by relieving the neo-liberal States and oligopolies of the burden of social welfare
expenditure, by ensuring the self-exploitation of the poorer classes. 225

The difference between UDF and LDF got nearly obviated by 1980s itself. The UDF was
not averse to the ideals of a welfare State. Apparently, CPM is giving up on long-held
political line i.e.; a Revisionist Re-distributive Politics without emphasis on social
transformation. Since late 1990s, the CPM seems to be on the way to becoming a 'civil
society movement' funded and controlled
, by the powers-that-be. 226 Ostensibly, what is
being advocated is a model of 'de-politicised development' and welfare, which is not
··pitted against the neo-liberal agenda.

Plight of the subalterns

Admittedly, there are processes that globalisation engenders that have quite refractory
effects, reminiscent of Marx's writings on the impact of colonialism in India. Thus in the
cultural realm, the new phase of Globalisation seems to have opened up certain avenues
of deliverance for some historically marginalised sections like Dalits in a country like
India. Even while not overlooking the dangers of economic globalisation, Kancha Ilaiah
observes that in India historically, "Productive culture was defined as impure and the
ritual consumerist culture constructed as pure and great ... Cultural globalisation negates
the Brahminic myth of purity and pollution and liberates the Dalit-Bahujans ... what is
condemned at home becomes, in a globalised culture, a positive commodity for sale.
Their condemned self becomes respectable." 227 Yet the apparent liberation comes into
view as part of a great homogenisation.

Listen to the authority of Joseph Stiglitz: "Abandoning globalization is neither feasible


nor desirable. Globalization has brought huge benefits- opportunities for trade, increased
access to markets and technology, better health care, and an active civil society seeking
for more democracy and greater social justice". 228 Local accounts speak of a reality far

225
James Petras 1997: "Imperialism and NGOs in Latin America", Monthly Review, Dec. vol. 49,
no. 7, pp. 10-27; James Petrns:& Henry Veltmeyer 2001: Globalization Unmasked, Madhyam
Books, New Delhi. ._
2:!b
Having faced erosion in its political-ideological line, even under neo-liberal reforms, the CPI-
M in India lacks clarity on the 'comprador' character of the Indian big capital; or on the need
for the country to withdraw from WTO or on the relative futility of the 'developmentalism'
that seeks to lure in FDI. The depoliticised local developmental initiatives under the leadership
of Thomas lsacc at Maaraarikulam in Alappuzha district have been hailed by the dominant
faction of the CPI-M leadership recently.
2:!7
Kancha llaiah 2003: "Cultural globalisation", Hindu, edit page, 22 February.
221
Stiglitz 2002, p. 214.

200
removed from these abstractions. It should not be forgotten that what is happening is
unequal trade - the removal of Quantitative Restrictions has led to the markets of the
Third World being flooded· with goods from the global metropolis, with implications of
huge volatilities in prices, causing disincentive to local commodity producers, etc.
Studies by Vandana Shiva and several others have shown that the TRIPs regime under
WTO has been quite discriminatory as to strip the peripheral countries of their
tec)1nological know-how and the dissemination of frontier technologies in these countries
remains questionable. The State has been abdicating its welfare functions in areas like
health care. The proliferation of global civil society movements do not seem to signify an
expansion of democratic space. The self-help movements have in a way complemented
the Globalisation of monopoly capital by relieving the neo-liberal States and oligopolies
of the burden of social welfare expenditure, by ensuring the self-exploitation of the poorer
classes. 'Imperialist globalisation' means prosperity for a small, upwardly mobile
minority and misery for the rest. 'The market excludes the poor, the state oppresses
them". 229 Despite what the apparent meaning the term 'liberalisation' might suggest,
evidence suggests that the role of the State has been intensifying over the first decade of
' liberalisation. 230 The State "has been 'restructured' to the requirements of international
capital. The state has been employed systematically to lift barriers, to deepen the
commoditization of social life, and to enforce the new order by coercive means." 231 The
suppression of Adivasi landless agitating for land at Muthanga on 19 February 2002 and
the suppression of Adivasis struggling against displacement at Kalinga Nagar in Orissa
more recently could be considered as instances of how under globalisation, as Kunhaman
says, "the State oppresses the marginalised even as the Market excludes them for want of
marketable skills and assets'. 232 At least one Adivasi by the name Jogi was shot dead by
the police on the spot and two others were killed in custodial violence by the police
subsequently. 233 It is significant and notable that long after the State has given up on the
land question, the demand for land as an asset for livelihood tops the list in the
consciousness of marginalised social groups like Dalits and Adivasis and other sections of

Kunhaman 2002, p. 23.


~JO
Barbara Harriss-White 2003: India Working.' Essays on Society and Economy, Cambridge
University Press, Cambridge, p. 195.
Sam Moyo and Paris Yeros (ed.) 2005, p. 10; Samir Amin 1997: Capitalism in the Age of
Globalization, Zed Books, London.
Kunhaman 2002, pp. 23, 48; Incidentally, Muthanga was pan of the Nilgiri biosphere reserve.
It was Adivasis who were displaced from localities like Tholpelly who set up their huts at
Muthanga. A large part of the Muthanga forests were handed over to Birla and eucalyptus
trees were planted there. Subsequently, the trees were cut down and having lost bio-diversity,
the land remained barren. This was the land that the Adivasis had chosen for selling up their
huts.
P.K. Prakash 2004: .. Muthanga vaarshikathil uyarunna chodyangal", (The questions that .arise
in the wake of the Muthanga anniversary- Malayalam}, Madhyamam weekly, 27 February, p.
23.

201
deprived masses, even in Keralam which is believed to have had the best of land reforms
in the country. 234

Studies on the impact of globalisation on women's employment in India has shown how
women have lost jobs to men for reasons of technical efficiency and productivity.
Increased informalisation has also made women's employment more insecure and
withdrawal of welfare measures including maternity care have adversely affected them. 235
Increasing number of women are participating in 'socially productive work' ('outside
work') during SAP but this increase has been only in the informal sector and at the cost of
men workers. Poverty-induced participation by women in social production may place
additional burden· on women llf!d may not be considered liberating, as it may not free
them from the traditional work-burden in the kitchen and nursery. The market seeks to
commodify the labour power and beauty of women. So beauty increasingly becomes a
marketable commodity rather than an aesthetic experience. 236

Under the largely efficiency-seeking, capital-intensive operations under SAP, unskilled


workers tend to lose employment even as the skilled ones may enjoy better salaries. Thus
upgrading of the defibering activity in the coir yarn-producing sector in Keralam during
late 1990s, increased productivity and improved physical conditions of work but reduced
employment to one-fifth although the sector continued to employ workers from "low" and
'·out" castes predominantly. Employment opportunities of women workers were reduced
even more, as men were preferred for operating the machines. 237 Under the policy of the
so-called 'State minimalism and Market maximalism' the state is withdrawing precisely
from those areas which have direct bearing on the existence of subaltern [deprived)
sections like women, Dalits and Adivasis. 238 We have already noted in Chapter I how
even states like Punjab, which gave low priority to the social sector, have been overtaking
Keralam in social sector expenditure in the late 1990s. Apparently, the intensified
exploitative drive as a generalised onslaught on the whole society could edge out and
marginalise yet again, the already vulnerable sections, as they are already on the brink.
The resource capacity of the State might be increasingly getting eroded and yet the State

2J.a
In fact, land is the primary demand around which the Naxalite movement, i.e., the Maoist
movement in India has organised impoverished masses on a wide scale on large tracts of the
mainland India.
2JS
lndu Agnihotri 1995-96:, . "Gender and Development: Need for a More "Engendered
Alternative Development Plan", Alternative Economic Survey 1995-96; Nandita Shah et at
1994: 'Structural Adjustment, Feminisation of Labour Force and Organisational Strategies',
Economic and Political Weekly, vol. 29, no. 18, 30 April, pp. WS 39-48.
2lb
Kunhaman 2002, pp. 61-62,23.
2J7
K.T. Rammohan & R. Sundaresan 2003: "Socially Embedding the Commodity Chain: An
Exercise in Relation to Coir Yarn Spinning in Southern India", pp. 903-23, World
Development, vol. 31, no. 5, pp. 919-20.
238
Kunhaman, 2002, p.44.

202
continues to occupy a central place in the imagination of deprived? 39 However, the neo-
liberal agenda has, while effectively protecting the interests of large capital over those of
common citizens, deny them opportunities for productive employment and access to
public goods, leading to the deterioration of their living standards. 240 Utsa Patnaik has an
interesting observation why it happens: Although mass-income deflationary policies were
implemented less intensively in India, under pressure from mounting domestic
opposition, due to low initial incomes, the impact of these policies on the poorer majority
has been severe. 241

There have also been instances of resistance from the subaltern sections since the early
1990s. Thus ethnic identity-based political struggles of the deprived has been one of the
significant patterns of resistance witnessed during 'liberalisation'. Adivasis who
constitute just over one per cent of the Kerala society and also the lowest bottom of the
social ladder in the state, have organised themselves into land struggles and mass protests
under the leadership of the Adivasi Gothra Mahasabha (AGMS) led by C.K. Janu and
Geethanandan. AGMS has based themselves on the conception of a just and secular
Adivasi identity. Conscious sections among Oalits have also articulated their concerns
about landlessness, giving the slogan, "From colonies to agricultural land". The
Naxalites, particularly under the leadership of CPI-ML (Naxalbari) and of late, CPI
(Maoist) have also been making inroads based on a more inclusive political programme
particularly among the deprived Adivasi and Dalit sections and impoverished sections
from among other communities ..

There have been protests, rather feeble though, from women's organisations against the
proliferation of sex rackets thriving in the state. Muslims,·a religious minority, has been
quite articulate in their concerns against the rise of fascistic Hindutva communalism in
the state and against the aggressions of imperialism on the world scale, as through the
high profile MaadhyaJ!lam weekly. Thus non-Muslim League radical forces have been
gathering momentum in the state, sometimes with shades of minority communal
orientation, as in the case of People's Democratic Party (PDP).

:!39
Stuart Corbridge & John Harriss 2000: Reinventing India: Liberalisation, Hindu Nationalism
and Popular Democracy, Cambrdige University Press, Cambrdige.
240
C.P. Chandrasekhar & Jayati Ghosh 2005: "The Death of Fiscal Federalism?". pp.l75-78, in
A.K.G. Centre 2005: International Conference on Kerala Studies (ICKS) - Abstracts,
Thiruvananthapuram, vol, 2, 9-11 December, p. 21.
Utsa Patnaik 2002: "Deflation and Deja vu Indian Agriculture in the World Economy" in V.K.
Ramachandran and Madhura Swaminathan (ed.), pp. 94-110, and discussion on p. 122.

203
B. IMPLICATIONS

Most importantly, the reforms in the financial sector and the agriculture sector could have
the most hazardous implications.

The financial sector

The financial sector reforms brings with it fears of an economic collapse like the
preceding ones in South East Asia and elsewhere. So far, India has had the strong points
of not having capital account convertibility, having sufficient foreign exchange reserves,
having most of the banking and insurance sectors in government hands. But the
"dangerously high national debt". has set alarm bells ringing. The Prime Minister
Manmohan Singh announced a proposal that India is now ready to go in for capital
account convertibility, i.e., the full convertibility of the rupee. 242 The Reserve Bank of
India constituted a committee under the chairmanship of former RBI Deputy Governor,
Dr S. S. Tarapore, to suggest a road map to full convertibility, as the first Tarapore
committee had done in 1997.24 l Concerned economists have been prompt in expressing
their grave apprehensions about this move. Krishnaswamy eta/ rightly pointed out that
the implications of the move would be to deregulate the inflow and outflow of capital and
that the advantage that India enjoyed of having capital controls in place against the
contagion effects of South-east Asian economic crisis would no longer exist. 244 As for the
class dimensions of the issue of capital account convertibility, 160 economists in the
country, including Prabhat Patnaik argued that "the danger was all the more as it would
no longer be only non-resident investors who would be able to repatriate their funds, but
also Indian residents who would be free to take out any amount of domestic wealth". 245
They cited the instance of the massive build up of Latin American debt in the 1970s and
'80s, owing to repatriation of wealth by the resident rich whereas the working poor had to
bear the burden of debt-servicing and loan conditionalities. Citing the instance of China,
which had strong capital controls and yet huge FDI inflows, they further argued that the
measure was not necessary even from the angle of attracting FDI. 246 If there are take-
overs of Indian and especially state banks and further disinvestments of insurance sector,

Oommen Ninan 2006: "Capital account convertibility in full will help India: Manmohan•·,
Hindu, 19 March, http:l/www .hfrtdu.com/2006/03119/stories/2006031908850 I OO.htm.
Bhanoji Rao 2006: 'Capital Account Convertibility: Stop, look and go slow', 04 April 2006,
Hindu Businessline,
http://www .thehindubusi nessI ine.com/2006/04/04/stories/20060404002 I I 000. htm.
K. Krishnjl.Swamy; A. Mitra, S. Shukla, S. Shelly, A. Bagchi and N. Chandra 2006: 'A
Dangerous Measure', Economic and Political Weekly, vol. XLI, no. 13, p. 1222.
Hindu 2006: "Economists oppose full capital account convertibility", 29 March,
http://www.hindu.com/2006/03129/stories/2006032906631300.htm.
Ibid. .

204
the country could lose control over its financial sector. So economic crisis may well be
considered as a Damocles' sword hanging over the Indian economy.

The agriculture sector

The liberalisation of agriculture sector, particularly under WTO conditionalities, raises


fears of loss of livelihood and food security of the overwhelming majority of Indians who
live in rural areas. Moves have been afoot in Keralam (as with the LDF government
during 1996-2001) to legalise land-leasing practices without jeopardising the interests of
the landowners. Ceiling limits on land are being repealed in various states. Agri-business
TNCs like Cargill-Monsanto (US), Pioneer High-Bred International (US), Seed-tech
·International (US), Hindustan Lever (UK), lTC (UK), Hoechst (Germany), Ciba Geigy
(Switzerland) could dominate the agriculture sector. Monopoly over seeds, the most
critical input in agriculture is already being sought after by agri-business corporations.
The innovation of terminator seeds ("suicide seeds") seems to have set the trend with
corporations like Monsanto, Novartis, Zeneca, Pioneer Hi-Bred and Du Pont in the lead.
Patents on life forms (plant, animal and even human organisms) have been permitted
under WTO. Patenting plant genes could ultimately lead even to famines. Export-oriented
agriculture seems to concentrate on horticulture, floriculture and acquaculture, besides
food processing and could seriously undermine food security as a result. In 1996, Samir
A min rightly· said, "[T]he capitalist path in agriculture produces gigantic masses of
surplus people, who - given the current state of technology - cannot find employment in
industry the way they could in the 19'h century Europe. History does not repeat itself." 247

IN LIEU OF A CONCLUSION

The path of alternative political movements

There can be no gainsaying the need to resist Imperialist Globalisation considering the
sheer irrationality and inhumanity of the system. It is indeed an uphill task to build
alternate societies. What is considered unachievable in the realm of State policy may be
achievable in the realm of alternative political movements. We need to have critical faith
in the creativity of the masses and in organised political movements. "[T]he advance of
capitalist production develops a working class which by education, tradition and habit
looks upon the requirements of that mode of production as self-evident natural laws",

As quoted in Kunhaman 2002, p. 45.

205
says Marx_Hs So then, we need to garner the courage to transcend the limits of practicality
that bourgeois thought imposes upon us. 249

It would be a crude naivety and gross lack of historical sense to consider the current phase
of Imperialist Globalisation as irreversible and therefore a process that we need to
inevitably cope with. It would be more appropriate to consider it as a stage of history that
we are currently experiencing. Or else, we would be falling into the naivety of the
nineteenth century Indian intellectuals who under the influence of the liberal ideologies
disseminated by colonial rulers welcomed and legitimised the British colonial rule as a
'divine dispensation'. They pinned their hopes on liberal and constitutional principles
under the &j and criticised it on grounds of administrative lapses, civil liberties or at
best, the infringement of the divine truSt. Nevertheless, reality was far removed from such
an ideal construct, Shameless corruption, Draconian l_egislations like the Press Regulation
that Rammohun Roy appealed against and the drain of wealth that Veeresalingam
deplored had characterised this reality. 250 We may recall that already by the early
twentieth century, the approach of the mainstream Indian intelligentsia towards colonial
rule had undergone a sea-change.

Alternative political movements, decline to take up the burden of governance within the
existing system and yet their contributions to making a better human society should not
be underestimated. Economic boycott and more specifically, boycott of the goods of
rentier metropolitan capital - both foreign and Indian - could be a passive, yet effective
tool to begin with. In fact, pressure should be brought to bear on the State to reserve low
technology products (like soap and candles) for cottage industries nm by small
entrepreneurs so as to provide livelihood to many.

In the latest phase of imperialism, with speculative capital flows far outweighing real
productive capital flows, and with ·~y-by-night capital' capable of laying economies in
shambles overnight, the real fight against the ~lobalisation of monopoly capital might lie
in Class struggles whereby people take control of the real productive resources, land,
-
forests, water, marine resources and other sources of indigenous capital, thus trying to
build up an independent, self-reliant economic base for the country. Nevertheless,
people's political movements also have to squarely face up to the reality that the failure of
socialist experiments took place __ primarily from internal degeneration, with the
development of organisational bureaucracies within and eventual capitalist restoration.

:.aa
Marx 1977: Capital: A Critique of Poltical Economy, vol 1., trans. Ben Fowkes, Vintage, New
York, p. 899.
Samir Am in 1998, May, "on Kerala", Monthly Review, vol. 42, no. 8, January, pp. 24-39.
K.N. Panikkar 1995: Culture, Ideology, Hegemony Intellectuals and Social Consciousness in
Colonia/India, Tulika, New Delhi, Madras, pp. 22-25.

206
Nationality struggles· of subject nationalities aimed at taking control of the markets and
productive resources within a given national territory may also be capable of resisting
Global Monopoly Capitalism. Yet we have to take into account the history of capitulation
to Global Capitalism of almost all the nationality movements after the Second World
War, especially because they did not have clear-cut anti-imperialist programmes. Social
liberation movements ofwomen, dalits, adivasis and minorities in India and of the blacks
and other ethnic minorities in some other parts of the world also hold out prospects of
justice and social equality. And yet many ofthese social liberation movements have gone
astray, due to their failure to integrate their struggles with class struggles pitted against
the classes .controlling State, and Global Capitalism.

Notwithstanding the shortcomings, Class struggles, National liberation struggles, Social


liberation struggles and other democratic movements remain the four great positive
legacies of the Enlightenment towards making a better human society. 251

Self-reliance as the test of good governance

We would not like to overlook that there are even certain positive aspects of the current
drive of Globalisation. There has been some job-creation in the peripheral countries
through Outsourcing/subcontracting in certain sectors like Information Technology in
India. Nevertheless, the job creation was rather meagre in comparison to the total labour
force employed in these economies. The global integration of the economy seems to
benefit the skilied labour, at least in the short term, in terms of more opportunities and
better remuneration. However, the unskilled lot face exclusion from the production
process an.d marginalisation. With their focus on efticiency, the forces of globalisation
may seek to ensure greater accountability from the workers and the intermediate classes
by instituting a 'rule-based regime of accumulation'. Yet it would be done with a view to
boost the surpluses of the metropolitan capital and establish their hegemony. In the
cultural realm, globalisation apparently, does away with the casteist culture of purity and
pollution and thus formally liberates the oppressed castes albeit as a part of the great
homogenisation in the global marketplace.

In spite of these commendable features, in our foregoing analysis, we have tried to argue
that Globalisation means the aggressive self-expansion of nationally organised,
hierarchically ordered oligopolistic capital. The aggressive forays of oligopolistic capital,
given its current decadent character, is being unable to truly develop the productive forces
and contribute to human welfare in most parts of the underdeveloped world.

It is worth recalling the incisive slogan of Mao Zedong: "Countries want independence,
nations want liberation, people want revolution."

207
On the world-scale, 'Triadization' of fDI has been a major trend. In most peripheral
countries, not only is FDI still a trickle but even 'greenfield investments' have belied
expectations. A substantial" portion of FDI has involved in buying out of existing
productive capacities. A huge superstructure of speculative capital atop the real
productive base of the global economy 52 has made the economies of the underdeveloped
world highly susceptible to financial crises involving currency crises and instantaneous
capital outflows. Viewed in this light, the 'developmentalism' ofConvergence theories and
neo-liberalism look more like 'discourses of accumulation' rather than reflecting the actual
state of affairs.

Evidence from Keralam indicates ,how Globalisation has accentuated rentier exchange
relations and created jobless growth, vulnerable tQ global market forces. There has also
been an accentuation of dependency of the state on external market forces, as is evident in
the decline in food crop cultivation, development of the service sector disproportionate to
the development of commodity-producing sectors, etc. An accentuation of the undesirable,
including that of pre-capitalist trend is witnessed in the political and cultural realms.
Finance and agriculture deserve the utmost importance from the perspective of self-reliance
because the implications of globalisation in these sectors could be disastrous. Exclusion and
repression of the hitherto marginalised sections under globalisation is a cause for serious
concern. It is significant and notable that land as a means of livelihood still remains the
uppermost in the demands of the impoverished rural populace, long after the government
has given up on the land question.

It is incumbent on the policy makers to take note of these facts of developmental impotence
and volatile growth. The thrust of the policy orientation of the State needs to be to achieve
·self R~liance', particularly in the financial sector and in the primary sector. We would
view self-reliance as essentially different and radically greater than the policy of' Import
Substitution'. In this context, as against the policy of mindless disinvestment, the
preservation of public assets is the responsibility of any government worth its name. As
against the policy of 'chasing after' and luril)g in FDI, dome,stic investment should be given
the pride of place if the country is to achieve self-reliance. Abandonment of endogenous
industrialisation project in favour. of export orientated agriculture cannot constitute an
escape route from underdevelop~~nt for the national formations in the peripheryffhird
World primarily because it repro?_uces the dependency syndrome in a world order that is
increasingly unstable both economically and politically.

Paul Sweezy calls it "financial superstructure" (Sweezy 1994 ( 1999), p. 249).

208
We would also like to emphasise the crucial need for regulatory measures with an
orientation towards self reliant economic growth. 253 The economy needs regulation,
particularly under liberalisation. Among such regulatory policy instruments, probably,
competition policy is the most important one. 254 Another desirable regulatory instrument
is corporate governance, which needs to be put into operation, particularly with a view to
protect middle class shareholders against financial embezzlement by corporate interests.
The unregulated operations of multinationals in the Special Economic Zones should be
considered a matter of serious concern.

Finally, it would be apt to end with the words of John Maynard Keynes, someone with no
great radical credentials: "I sympathize, therefore, with those who would minimize, rather
than those who would maximize, economic entanglement between nations. Ideas,
knowledge, art, hospitality, travel - these are things which should of their nature be
international. But let goods be homespun whenever it is reasonable and conveniently
possible: and above all, let finance be primarily nationa1." 255

The vi,tal need for regulation is underlined by the following example: A survey conductec! by
LBS-NCAER during 2001-02 on 'Entry Strategies of MNEs in India during 1990s' sent
questionnaires to the addresses of finns provided by the Department of Company Affairs,
Government of India. Only 2,500 firms were listed there. I ,000 questionnaires were returned
as the addressees could not be found. This meant that the Government of India has not been
able to keep minimum information on even the existence of these firms (P.L. Beena 2004:
"Towards Understanding the Merger-Wave in the Indian Corporate Sector: A Comparative
Perspective", Working Paper 355, Centre for Development Studies, Thiruvananthapuram,
January). Another example that points to need for regulation is that the contracts assigned to
corporations hardly ever goes beyond a IS-year period in China, whereas in India, it is often
90-year contracts that are assigned (P.L. Beena, personal communication). See also, George
Rosen 1992: Contrasting Styles of Industrial Reform: China and India in the 198()s,
University Of Chicago Press, Chicago.
See, Pradeep S, Mehta 2006: A Functional Competition Policy for India, Academic
Foundation.
:~s
As quoted in Longworth 1998, p. 47; Went 2002-03, p. 476.

209
Chapter V

A Structurai-Locational Analysis of Classes and Social


Groups in Keralam and their Political Orientation
I. 'SOCIAL STRUCTURES OF ACCUMULATION' IN KERALAM

II. HISTORICAL CONSTITUTION OF DOMINANT CLASS fORMATIONS IN

KERALAM
III. THE MICRO-LEVEL IMPACT OF MIGRATION

IV. CHANGING POVERTY LEVELS IN KERALAM

V. CLASS RELATIONS IN AGRICULTURE AND THE lAND QUESTION


Agriculture as the Priority Sector
Food Grain Production
Re-examining the Impact of Land Reforms in Keralam
Abolition ofintermediaries: A non-starter
The RelativeSuccess ofTenanry Reforms
A Failed Ceiling Reform
An Agrarian Transition from Below
Decline ofFood Econonry and Other Banefu/After-efficts ofLand Reforms
The unfinished agenda of land reforms
A reflection on the mode of production
The Land Question and the Agrarian Classes
Landlessness and Land Concentration in Contemporary Keralam
Landgrabs
VI. CASTE-CLASS INTERFACE IN KERALAM
Adivasis: Demographic and Landlessness Profile
Dalits: Profile of their Ecoribmic Status
The Socio-economic Location ofDalits and Adivasis among Agrarian Classes
Landlessness profile of Da/its and Adivasis vis-a-vis All Agricultural Labour
Households
Fisher community
The Status of Religious Minorities in the State
Migrant Labourers within the State
VII. GENDER AND ITS INTERFACES WITH CLASS WITHIN KERALAM

VIII. CLASS-NATIONALITY INTERFACE IN KERALAM

IX. CLASSES, SOCIAL GROUPS AND THEIR POLITICAL OUTLOOK

X. SUMMARY AND CONCLUSIONS


Chapter V

A Structurai-Locational Analysis of Classes


and Social Groups in Keralam
1
Socieh; chooses its expendables. 1

-Jean Paul Sartre1


Following the general introduction to this chapter, we first seek to locate the prime
'Social Structures of Accumulation' in Keralam by taking a macroscopic view of social
contradictions in the state. We, then, briefly mention the character of the coalition of
dominant classes as it had historically developed in the ~tate. We touch upon the impact
of labour migrating out of the state particularly since the mid-1970s. We take a brief
overview of the changing poverty levels in the state. Then we come to a core focus of this
chapter, namely, 'Class Relations in Agriculture and the Land Question'. We recognise
the legitimate place of agriculture as the priority sector and the vital importance of food
grain production within agriculture. We, then make a detailed Re-examination of the
impact of land reforms in the state: the abolition of intermediaries being a non-starter, the
relative success of tenancy reforms and the failure of ceiling reform and designate the
land reforms in the state as an 'Agrarian Transition from Below', after the broad, two-fold
classificatory framework of T.J. Byres. We note the decline of food economy and other
baneful after-effects of the land reforms and harp on the stili unfinished agenda of land
reforms. We also do not hesitate to make a contemporary reflection on the mode of
production in the state. Subsequently, we make an empirical examination of the Land
Question and the Agrarian Classes, in relation to the landholding pattern in the state. We
make particular focus on the incidence of landlessness and land concentration in
contemporary Keralam based on Rural Labour Enquiry Reports that bank on National
Sample Survey (NSS) rounds. Further, we also focus on the incidences of landgrabs in
recent years by powerful. interests in the state, which are by no means a marginal
phenomenon. Thereupon, we seek to examine in some detail the caste-class interface in
the state, with particular focus on the agricultural labour participation and landlessness
profile of Adivasis and Dalits, admittedly, the lowest in the socio-economic ladder vis-a-
vis other agrarian sections. Onq again, we bank on Rural Labour Enquiry Reports here
making a comparison betweenJhe post-land reforms phase and the contemporary phase in
both Keralam and India as a whole. In a sketchy manner though, we also examine the
class dimensions and non-class specificities of the deprivation/marginalisation faced by

Jean Paul Sartre, as cited in Ronald J. Herring 1983: Land to the Tiller: The Political Economy
ofAgrarian Reform in South Asia, Oxford University Press, Delhi, p. 5.

210
other deprived social groups, namely, the fisher community, religious minorities and
migrant labourers within _the state. Thereafter, we examine in some detail gender and its
interfaces with class within the state. We also do not leave out of purview the Class-
Nationality interface in Keralam, a recurring theme throughout this thesis. Before
drawing the conclusions of this chapter, we also make an overview of classes, social
groups and their political outlook. This may be considered the skeletal form of this rather
complex chapter.

To begin with, a structural-locational analysis of Class is considered to be the rather


conventional mode of class analysis. And yet we would hold that it is an indispensable
method. It is the class-in-itself approach in Marx's own category of analysis. Following
the analogy of the high-profile Computer Science of our times, we would call it the
'hardware' of class analysis. It is an analysis of the economic position of classes. We
would hold that this should be the point of departure of class analysis. Class-in-itself
holds within itself the potential to engage in class-for-itself struggles and indeed, turn into
class-for-itself. Mao Tse-tung, himself the most renowned revolutionary in the Third
World, made his class analysis on the basis of a distinction between "economic status" of
classes and "attitudes towards the revolution". 2

To underline the importance of the 'hardware' of Class analysis, it is crucial in the


context of India to· distinguish between a vertically integrated coalition of classes as may
be constituted by the orientation of public policy namely, a 'benefit coalition' from a
Class (A more detailed analysis of 'benefit coalition' is made in Chapter VI). Nor can an
elite-led mobilisation within a particular Weberian -status group like caste be passed off as
a class struggle, under normal circumstances. It is important to enquire not only about
struggles taking place but also about their socio-economic basis and their political
orientation.

How does the overall development of underdevelopment/dependant development of


Keralam as a Nationality have an overriding constitutive effect upon the formation of the
Classes (seen in relation to castes) within it? A prime focus of this study is intended to be
I •

the Class-Nationality interface in the case of Keralam as these two social categories may
be identified as the principal ones, at this stage of social development of Keralam,
shaping, in tum, gender, caste, community relations and also the human-nature
relationship.

Mao 1965: "Analysis of the Classes in Chinese Society", Selected Works of Mao Tse-tung,
VQI. ).Foreign Languages Press, Peking, first published 1926, p. 13. For details on this, see the
section,' A Critique of the Review by Camfield' in Chapter II.

211
Both Class and Nationality are held to be SSAs herein. Class analysis is being attempted
as a study of the historica,.l process of the political struggles of the masses, and not merely
by defining classes by their economic position or position in the production relations. 3 A
'scientific' class analysis should entail a close study of the historical process of the
struggles of the masses for freedom, democracy and socialism, rather than merely
defining classes by the criterion of a "defined range of income" or the position in the
production relations. 4 Hence, we would also seek to examine how caste/community
identity provided the social basis for cross-class mobilization through a peculiar variety of
identity politics propelled by the dominant classes in Keralam over the years.

I. 'SOCIAL STRUCTURES 0~ ACCUMULATION' IN KERALAM

We have examined in detail the theoretical dimensions of the 'Social Structures of


Accumulation' (SSA) approach in Chapter II. As we apply it in a study on the political
economy of Keralam, our prime points of focus are Class and Nationality and their
mutual interface. This is because these two social categories may be identified as the
principal 'Social Structures of Accumulation' (SSA), at this stage of social development
of Keralam, shaping, in turn other SSAs, namely, gender, caste, community relations,
besides space and also the human-nature relationship. {As labour is the sole producer of
value a Ia Marx, it is only rightful that we consider Nationality itself as a Social Structure
of Accumulation (SSA), from the vantage point of the labourers or the basic producing
classes.)

We have examined the constitution of the Kerala nationality in terms of its political
economy in Chapter III. We have further examined the implications of Globalisation in
Chapter IV. The formation of classes and social groups within the nationality is to be
viewed as integrally linked to the dynamics at the macro-level that we have examined in
these preceding chapters. At the conceptual level, the macro-level forces at work shaping
and constituting the hitherto inegalitarian society may be identified as: global monopoly
capitalism with its overwhelming and ever-deepening impact under globalisation, the
Indian big capital that has apparently struck a cosy alliance with the former and the Indian
state, where these forces along with the semi-feudal forces in India's countryside hold
dominant influence. The emerging society can be identified as a primarily class-divided
society, albeit a class society assuming national and global dimensions. Hence the
importance of Class and Nationality as categories of social analysis needs to be

'This is taking cue from E.M.S. Namboodiripad 1973, "On "Intermediate Regimes", Economic
and Political Weekly, December I. p. 2136.
E.M.S. Namboodiripad 1973, "On "Intermediate Regimes"", Economic and Political Weekly,
December I. p. 2136.

212
underscored. We need to examine the crucial links between Class and non-class
:>ubalternity in general an~ Class and Nationality in particular.

Our inquiry is also directed towards locating what is happening to the marginalised social
groups of the traditional society under the new dispensation. As we have already
I

discussed in Chapter IV, the already vulnerable sections of the traditional society bear the
brunt and get further marginalised under the intensified exploitative drive under
globalisation, which is apparently a generalised onslaught on the broad masses of the
population.

If we embark on a class analysis of most Third World societies, we find working class
and peasantry as the two most basic classes, with the peasantry as a numerical majority in
most cases. Besides, petty bourgeoisie or the amorphous collection of middle classes
(ranging from white-collar workers to small and middle trading interests) also constitutes
an important section of the broad masses of people. Among the dominant classes, it is
common to find big capital that developed under colonialism and a remnant semi-feudal
class in the countryside.

The oppressed non-class social entities, in the case of India may, mainly be identified as
oppressed nationalities and the marginalised social groups, viz. women, Dalits, Adivasis,
fisher people and minorities (religious and linguistic). In the advanced capitalist countries
of the West, race and gender are the principal non-class categories. As we have observed
earlier, these non-class categories can also be related to the process of surplus
accumulation and designated as Social Structures of Accumulation (SSAs). The
individuality of the non-class contradictions involving these non-class social entities
needs to be duly recognised. In other words, these non-class contradictions cannot be
mechanically reduced to a class angle.

Any agenda for a ·democratic transformation of the social order must also take into
account the political outlook and level of consciousness of the various classes and social
groups in society and identify the possible allies and rivals in the event of a struggle for
such social transformation. In its most generalised form, contradictions that could lead to
the democratic transformation of society may be brought under the following heads:
class, nationality, gender, caste, .community and environment. Except the one mentioned
last, viz. environment, all other: contradictions have to do with the contradictions within
human society. Environment, here, refers to the contradiction between human beings and
nature. Contradictions within human society and between human beings and nature may
be conceptualised as the two most fundamental contradictions. In a capitalist society, or
more significantly, in a world-order dominated by the capitalism of oligopolies, the

213
principal aspect of the human-nature contradiction can also be seen as an intra-societal
contradiction. In the fierc:e competition among capitalist monopolies to outbid the others,
nature turns out to be the biggest casualty. It is the struggle of the oppressed classes with
a view to overhaul the system of production for profit in the market with production for
human needs that could alleviate the problem of overexploitation of nature leading to
environmental degradation. Hence, at this stage of social development, our emphasis can
rightly be on the contradictions within human society itself. 5

With such a generalised view of contradictions in human society at large and third world
and Indian societies in particular, we could proceed towards analysing the specificities of
the classes and social groups in the society under our focus i.e., Keralam. We have
considered the year, 1970 as a landmark since this is widely considered to be the year that
marked significant re-alignment of classes within Keralam, through the land reforms.

Towards understanding classes and social Groups formations in Keralam, we would first
try to understand dominant class formations, and in particular, the development of trading
classes, through a brief glimpse back into Kerala history. We would look at the
implications of migration on class/social relations in the state and survey the poverty
estimates on Keralam. Much more importantly, agriculture being the principal productive
sector within the state, we would try to locate, in some detail, the agrarian classes with
reference to the land question in the contemporary scenario. Further, we shall go on to
identitY the specificities of the oppression on non-class social groups, etc.

II. HISTORICAL CONSTITUTION OF DOMINANT CLASS fORMATIONS IN


KERALAM

First of all, let us briefly mention the historically handed down dominant class formations
within the state, with particular reference to the trading classes:

Among the major elements of the colonial transformation in Keralam, the pos1t1ve
features may be briefly mentioned as below: abolition of slavery, inauguration of an era
of formal caste equality, introduction of a modem legal system and public administration,
creation of an English educated elite, monetisation of the economy, introducing private
ownership over land and other resources, restructuration of the dominant labour process
"
by introducing wage labour. ~nd commodity production through commercialisation of
agriculture and setting up of industries, development of transport and communication
networks, development of overseas trade, and creation of nouveaux riches sections,
however weak, even from among the lower castes (except from among the slave castes).

Gilbert Sebastian 2004: "Tsunami and Other Disasters How 'Natural' are These Natural
Calamities?", Indian Journal of Human Rights, vol. 8, Jan.- Dec., pp. 39-56.

214
Among the pernicious fallouts of the colonial transformation were: The ecological ruin
brought about by the encroachment of forests, first, for the cultivation of timber and
subsequently, for setting up plantations,6 the decline of traditional indigenous crafts like
pottery and the abolition of matriliny' and the cross-caste, pan-Hindu community
formation of a regressive character8, both under the influence of colonial modernity.

Apart from the other transformations that came about under colonialism in the economic
sphere, overseas trade also picked up in a manner hitherto unprecedented. Corresponding
to this transformation, trading sections developed. 9

Census of 1891 in Thiruvithamkoor had clearly shown emergence of significant non-


agricultural sections in Thiruvithamkoor society by late 191h century. 10 Among males
engaged in different classes of occupation, industrial class constituted 17 per cent and
commercial class, over 6 per cent. Agricultural sections constituted over 42 per cent of
the total. 11 It may be recalled that in the agriculture sector, plantations were already begun
to be established on a large scale by late 19111 century. 12 In subsequent Kerala history, the
plantations came to dominate the agriculture sector and the trading classes came to

" K. V. Kunhikrishnan 2006: "Observations on Environmental History: The Case of Kerala··.


Paper presented in the International Seminar on Kerala History, March 16-18, Theme Papers
and Abstracts, Kerala Council of Historical Research, Thiruvananthapuram; K.T. Rammohan
1996: Material Processes and Developmentalism Interpreting Economic Change in Colonial
Tiruvitamkur, 1800 to 1945, Ph.D. Disset1ation submitted to the University of Kerala, Centre
for Development Studies, Thiruvananthapuram.
Susan Thomas 2006: "Defining the Self: Nairs and the Reform Discourse'', Paper presented in
the International Seminar on Kerala History, March 16-18, Theme Papers and Abstracts.
Kerala Council of Historical Research, Thiruvananthapuram; Arunima, G. 2003: There Comes
Papa: Colonialism and the Transformation of Matriliny in Kerala. Malabar c. /850-19./0.
Orient Longman, Hyderabad; Saradamoni, K. 1999: Matriliny Transformed: Family. Law and
Ideology in Twentieth Century Travancore, Sage Publicmions, New Delhi; etc.
M. Muralidharan 1996: "Hindu community formation in Kerala: Processes and structures
under colonial modernity", South Indian Studies, July-December.
There was demand for coconut products in America and Europe. Thus in the large southern
princely state of Thiruvithamkoor, between 1870 to 1890, export of coconut products more
than doubled. The value of coconut products like copra and other fibre articles rose from
rupees 30.43 lakhs in 1871 to 68.59 lakhs in 1891 (P. Chandramohan, Social and Political
Protest in Travancore: A Study of the SNDP Yogam (/900-1938), M.Phil. dissertation,
CHS/SSS, Jawaharlal Nehru University, New Delhi, 1981, p. 50).
10
The present Kerala state was constituted on I November 1956 out of the large southern
· princely state of Thiruvithamkoor (Travancore), a small central princely S!ate of Kochi
(Cochin) and the Malabar region that was under direct colonial rule as part of the Madras
province. Thiruvithamkoor and Kochi were under indirect colonial rule through the British
residents stationed in these states.
II
Based on Census of Travancore 1891, p. 578; cited in P. Chandramohan 1981: Social and
Political Protest in Travancore: A Study of the SNDP >'ogam (1900-1938). M.Phil.
dissertation, CHS/SSS, Ja_waharlal Nehru University, New Delhi.
I~
Thus the first coffee plantation was established in 1862 by J.D. Munro on Hope estate and in
1864, a tea plantation was started in the government gardens in Peerumedu. The largest
plantation companies, Kannan Devan Hill Produce Company was registered in 1878 and
Anglo-American Direct Tea Trading Company in 1897 (P. Chandramohan, p. 47). In Malabar
region, East India Company had already started a spice plantation as early as in 1797 at
Anjarakkandy (R. Prakasam, 1978: "Keralathile Thozhilali Vargavum Thozhilali
Prasthanavum Roopam konda Kalaghatam" in G. Priyadarsanan (ed.), 1978: SNDP >'ogam

215
dominate· over the economy as a whole. Economic historian of the industrial sector,
Raman Mahadevan had ill a well-documented piece, traced the beginnings of industrial
development in Thiruvithamkoor in the context of colonial rule. 13 We would, in turn, like
to suggest as an "ad hoc hypothesis" 14 that the native trading classes in the state that
developed under colonialism and in nexus with it were likely to have been of a
'comprador' character, meaning that these trading classes were not merely 'agents' of
colonialism/global capitalism but that they had their interests historically intertwined with
the interests of the latter. Quite akin to many of the colonised regions of the world, they
have been much less intent on developing the productive sector of the economy by
engaging in productive activities,. rather were engaged in the easy route of enriching
themselves through trade. 15 Over 'the years, the trading classes in the state have also built
up a powerful pressure group under the name, Vyapari Vyavasayi Ekopana Samiti, which
is a vertically integrated coalition of classes. 16 This can more easily be understood from
the contemporary scenario wherein the Regional Dominant Classes (RDCs) 17 that are
dominant within the national formation ofKeralam did not have a problem in opting for a
Structural Adjustment loan from the ADB. 18

Ill. THE MICRO-LEVEL IMPACT OF MIGRATION

At the state level, there were altogether 3. 75 million migrants, with an estimated 6.35
million households in 1998, which meant that about 40 per cent households in the state
had at least one migrant in them. 'Outmigrants' are those \vho migrated out to other parts
of India and 'emigrants' are 'external migrants' who migrated out of the country. Out of
the 3.75 million migrants in 1998, 1.70 million were persons who had returned back; and

Platinum Jubilee Smaraka Grantham. (Malayalam), SNDP Yogam Platinum Jubilee


Celebration Committee, Kallam, p. 327).
13
Raman .Mahadevan 1991: 'Industrial Entrepreneurship in Princely Travancore' in S.
Bhattacharya (ed) 1991: The South Indian Economy: Agrarian Change, Industrial Structure
and State Policy C. 1914-1947, Oxford University Press, Delhi. See also K.T. Rammohan
1996: Material Processes and Deve/opmentalism Interpreting Economic Change in Colonial
Tiruvitamkur, 1800 to 1945; Ph.D. Dissertation submitted to the University of Kerala, Centre
,. for Development Studies, Thiruvananthapuram.
The notion of "ad hoc hypothesis" comes from Paul Feyerabend (1978: Against Method, Verso,
London, pp. 12, 93) who strongly argued for "scientific practice" as a playful activity. More on this
in Chapter VI in the section"on "Civil Liberties Perspective".
15
For an exposition of the 'comprador' character of the Indian big capital, supposedly, the
leading class in the dominant class combine in India, please refer Suniti Kumar Ghosh 2000:
lo
The Indian Big Bourgeoisie, New Horizon, Calcutta.
Recently, they have held several mass demonstrations against the implementation of Value
Added Tax (VAT) in the state.
17
More on the historical development of RDCs under the section, 'Secondary Sector' in Chapter
Ill.
IS
For detailed analysis of the implications of the ADB loan to the state, see Chapter Ill.

216
again, 1.65 million were internal migrants i.e., within the territory of India. The number
of return out-migrants w~ higher by 39 per cent of the out-migrants. 19

The major place of origin of out-migration was central Thiruvithamkoor: Alappuzha and
Pathanamthitta districts each accounting for 13 per cent of the total. The secondary
location was Thrissur district with 14 per cent of the total. The principal place of origin of
the emigrants from Keralam is the Malappuram-Thrissur area. Malappuram contributed
one-fifth of the total. Thiruvananthapuram was next in the order, but only with 10 per
cent of the total. 20

51 per cent of the emigrants were from Muslim households and Muslim households
received 50 per cent of the remittances. Malappuram, a very backward, Muslim majority
district contributed the largest number of emigrants and overseas remittances. 21 13 per
cent Ezhavas, 12 per cent Syrian Christians, 8 per cent Latin Christians, and 8 per cent
Nairs. No such skewed distribution is seen among the out-migrants. 22 Emigration and out-
migration have, apparently, been important factors for individual and family social
mobility. But it has benefited little for the marginalised communities like Dalits and
Adivasis.

A case study of two districts, Alappuzha and Kasaragod, by Kerala Migration Study
(KMS) showed that whereas the outmigrant households have an average of 87 cents and
emigrant households, 64 cents per household landholding, non-migrant households had
only 57 cents. 23 This might indicate that only those who had relatively better economic
conditions were able to take advantage of migration, with land apparently being the
principal productive asset.

KMS showed that 80 per cent of Kerala emigrants had no formal technical education,
'with only 20 per cent having a certificate, diploma or degree in technical education. Most
of the emigrants seem to have worked as construction labourers, under very bad working
conditions. Remittance per emigrant, 'literate without schooling' was Rs. 14 thousand and
those with a degree was Rs. 47 thousand. 24

I~
K.C. Zachariah; E.T. Mathew; S. lrudaya Rajan 2003: Dynamics of Migration in Kerala
Dimensions. Differentials and Consequences, Orient Longman, New Delhi, p. 382.
K.C. Zachariah, eta! 2003, pp. 387, 384.
K.C. Zachariah, E.T. Mathew, S. lrudaya Rajan 2000: ··socio-economic and Demographic
Consequences of Migration in Kerala", Working Paper No. 303, Centre for Development
Studies, Thiruvananthapuram, May, p. 49.
K.C. Zachariah, et a/2003, p. 393.
K.C. Zachariah, eta/, 2000, p. 31.
Ibid, p. 48.

217
IV. CHANGING POVERTY LEVELS IN KERALAM

In early 1980s, the consumption poverty in Keralam was as serious as in other parts of
I
India. Thus in 1983, incidence of poverty in the state was 40.42 per cent i.e., at par with
the all-India figure of 44.48 per c~nt. 25 Dreze and Sen had pointed out that even in 1987-
88, the incidence of poverty in Keralam was very similar to that in Uttar Pradesh and
Keralam and was very close to the all-India average. 26 By 1993-94, the figure fell to
25.43 per cent in Keralam i.e., well below the all-India average of 35.97 per cent, which
also had declined by about 6 percentage points over the decade. Supposedly, 1990s
witnessed a rapid decline in poverty and by 1999-2000, the incidence of poverty in the
state was merely 12.72 per cent with a corresponding all-India figure of 26.1 0 per cent. It
is admitted, however, that the figure was not comparable to the figures for earlier years. 21
The factors that might have led to any possible reduction in poverty level are not entirely
clear. D. Narayana (2003) holds the view that urbanisation and diversification into non-
farm employment has greatly to do with decline in poverty rates. He argues that during
1981-91 the process of urbanisation gathered momentum and this period also witnessed a
corresponding sharp reduction in poverty. 28

Keralam is one of the five states with the least incidence of poverty (as per the 45 1h round
of NSS 1993-94 figures) but the problem of hunger persists. Households having two
square meals a day was the lowest in Keralam among 17 states both in 1983 and 1993.
The calorie intake in Keralam was just 1965 calories as against 2400 for all India in 1993-
94. However, it may be argued that the diversified nature of food availability and the
habit of eating out might account for the disparity in figures with National Nutrition
Monitoring Bureau (NNMB) data in 1988-90 that shows Keralam's average calorie intake
as 2140 calories. 29 Given the benign climatic conditions, the need for calorie intake was
also considered low in Keralam.

Government of India 2002: National Human Development Report 2001, Planning


Commission, March; As c;ited on D. Narayana 2003: "Persistence of Deprivation in Kerala",
in CEPA, IMCAP and SLAAS (ed.) 2003: Poverty Issues in Sri Lanka, Centre for Policy
Analysis, Colombo, pp. 26, 36.
D. Narayana 2003, p. 27.
Government of India 2002: National Human Development Report 2001, Planning
Commission, March; As cited on D. Narayana pp. 26, 36.
:s D. Narayana 2003, p. 3 I.
K.P. Kannan 2000: Food Security in a Regional Perspective A view from 'Food Deficit·
Kerala. Working Paper no. 304, Centre tbr Development Studies, Thiruvananthapuram,
Keralam, India, July, pp. 4-5

218
At all-India level, Abhijit Sen had spoken ofthe use of criteria in measurement of poverty
that were inconsistent with earlier periods. Hence, according to him, it would not be
ossible to speak of a reduction in poverty during the 1990s. 30 Utsa Patnaik had pointed
out that going by the last NSS survey which uses the same reference period as the earlier
ones, in 1998 poverty affected 45 per cent of the rural population, much higher than a
decade ago. 31 In any case, it was to be expected that the State withdrawing from its social
welfare functions under neo-liberal reforms could mean an increase in levels of
deprivation for the already marginalised sections. 32 One motivation for showing a decline
in poverty level since 1990s could be to indicate that liberalisation has not resulted in an
increased incidence of poverty. Moreover, reduced poverty level in the states could
reduce. the need for Central transfers to the states on this count. These could be the
plausible political motivations for adopting indicators in poverty data that are not
consistent with the earlier periods.

V. CLASS RELATIONS IN AGRICULTURE AND THE LAND QUESTION IN


KERALAM

Further, let us look at the classes in agriculture, the principal productive sector within the
state, with particular reference to the land question of the agrarian classes. The question
has huge relevance in the context of the enormous hunger for land by the subaltern
classes and social groups in the state. 33 We would further rely on this hardware of Class
analysis in order to contextualise the cases of Adivasi and Dalit land struggles in Chapter
VI.

It has been a significant aspect of the Indian economy that despite the impressive growth
of the manufacturing and services sectors, there has not been a marked decline in the
workforce employed in agriculture and allied activities. 34 At all-India level, agriculture
still rem~ins the largest single sector. While its share in the economy shrank from 41 per

:;o
Abhijit Sen 2002: "Agriculture,,Employment and poveny: Recent Trends in Rural India··, in
V.K. Ramachandran and Madhura Swaminathan (ed.) 2002: Agrarian Studies Essays on
Agrarian Relations in Less Developed Countries (Proceedings of the international conference
during 3 to 6 January 2002), Tulika, Kolkata. This has variously been sneered at by lt:ft wing
scholars as 'statistical jugglery' or as Amiya Bagchi put it, ·statistical massaging'.
Utsa Patnaik 2002: "Deflation and Deja vu Indian Agriculture in the World Economy .. pp.
Ill-50, in V.K. Ramachandran and Madhura Swaminathan (ed.) 2002: Agrarian Swdies
Essays on Agrarian Relations in Less Developed Countries, Proceedings of the international
conference during 3 to 6 January 2002, Tulika, Kolkata, p. 139.
More on this in Chapter IV.
3.l
More on the notion of'subaltemity' and land hunger in Chapter VI.
•• 4
P.S. Appu 1996: Land Reforms in India: A Survey of Policy. Legislation and Implementation,
Vikas publishing House Pvt. Ltd., New Delhi, p. 196.

219
cent in 1965 to 29 per cent in 1994/5 its share in total employment hardly changed from
73 per cent in 1921,36 p~rsisting still at 73 per cent in 1965 to 67 per cent in 1994. 37
Keralam presents a different scenario in this respect. Thus, according to C.T. Kurien, one
significant statistic about Keralam is that the percentage of agricultural workers
(including both cultivators and labourers) in the total workforce of the state is just 37.8
per cent in 1991 as compared to 66.5 per cent for aii-India. 38 Writing around mid-1990s,
Thomas Isaac & Michael Tharakan say that non-agricultural employment in Keralam
accounted for 45 per cent of the workforce even in rural areas. 39 Similarly, Mridul Eapen
says that over the years, there has been significant expansion of non-agricultural activities
in rural areas, from a little over one-third of the workforce in 1971 !O almost 50 per cent
40
by 1991. Nevertheless, the ofher side of the same picture is that in rural areas,
agriculture is the single sector that still employed more than 50 per cent of the workforce
in 1991.

According to Central Statistical Organisation (CSO) estimates, the total sector-wise


contribution to Gross State Domestic Product (GSDP) in Keralam during 1998-99 was
59.72 percent for Service sector, 26.6 percent for Agriculture sector and 13.51 percent for
Manufacturing and Mining (with Mining contributing only 0.21 percent ofSDP). 41

Based on CSO data, during 1991-92 to 1996-97, the Service sector in the state recorded
the highest growth rate among the sectors at 7.9 per cent, even higher than the
corresponding all-India figure, which remained at 6.5 per cent. Agriculture grew at 5.9
per cent in the state, i.e., marginally higher than 3.2 per cent at all India level and the
corresponding figures for Industry were 5 per cent for Keralam and 6.9 per cent for all
India. As for the sectoral contribution to total NDP growth in the state during 1991-92 to
1996-97, Services occupied an overwhelming 59 per cent. The commodity producing
sectors of the economy in· the state were faring badly, even as the Service sector was
surging ahead. Thus the corresponding contribution of Agriculture to the total NDP
growth was only 29.3 per cent and that of Industry only 11.7 per cent. Herein the

The share of agriculture in the total GNP has been steadily falling. In 1947, it was 60 per cent.
It came down to 45 per cent in 1971 and further fell to 31 per cent in 1991 (P .S. Appu 1996, p.
196). .
P.S. Appu 1996, p. 196.
Barbara Harriss-White 200"3': India Working: Essays on Society and Economy, Cambridge
University Press, Cambridge, p. 19.
J8
C.T. Kurien 1995, pp. 60-61.
JQ
Thomas Isaac, T.M. & P.K. Michael Tharakan 1995: "Kerala, The Emerging Perspective:
Overview of the International Congress on Kerala Studies", Social Scientist, Vo1.23, Nos.J-3,
Jan.-March, p.l3.
Eapen, Mridul 2003: "Rural Industrialisation in Kerala: Re-Examining the Issue of Rural
Growth Linkages", Working Paper 348, Centre for Development Studies,
Thiruvananthapuram, July, pp. 11-12 .
•• Central Statistical Organisation (CSO) 2002: Based on .. GSDP of Kerala (At constant
prices)", as cited at www.indiastat.com ( 19/0612002).

220
booming activity of construction is included in the Service sector. But even when
construction is excluded from the Service sector, it occupied the largest share (at 45 per
42
cent) in N DP growth during 1997-98. This pattern of growth may be considered a cause
for concern since growth in the Tertiary sector is often regarded to be of a rather volatile
kind when it is unmatched by a corresponding growth in the commodity-producing
sectors within the economy. 43

Following NSSO estimates for employment and Union Planning Commission figures for
income, Human Development Report 2005 for Kerala state provides that as of 1999-2000,
Agriculture contributed 26 per cent of the total income in the Kerala economy as against
28 per cent at all-India level and it contributes only 32 per cent in employment as against
60 per cent at all-India level. 44 This is indicative of the decline of the primary sector of
the economy, which could have provided the very foundation for a self-reliant economy
for the national formation. The concerns it raises are ever more serious on this count
against the backdrop of the great volatilities brought in during an era of globalising
finance.

Rural Labour Enquiry 1999-2001 indicates that 30.8 per cent of the Rural Labour
Households (RLH) in the country had agriculture as their 'usual occupation' whereas the
corresponding figure in Kerala state was just about half this figure at 14.7 per cent. The
16 per cent of non-agricultural labour within the RLH for Keralam is the second highest
in the country after 17 per cent for Rajasthan. The other states in the high range in this
respect are Tamil Nadu with over 10 per cent, Haryana with ab~ut I 0 per cent and Punjab
with over 9 per cent (Table A.l3 in Appendices).

1
The secondary sector in 1999-00 contributes only 19 per cent in the total income as
against 24 ·per cent at aH-India level and an impressive 28 per cent in employment as
against only 16 per cent at all-India level. 45 It is the tertiary or service sector that
contributed an ove~whelming 55 per cent of the income in the Kerala economy as against
-l8 per cent at all-India level and 40 per cent of the employment in the economy as against
only 24 per cent at all-India level. 46 The share of employment in the agricultural sector in

Subramaniam a.nd Azeez 2000, pp. 7-8.


Also refer: P. Mohanan Pillai & N. Sha.nta 2005: "Long Term Trends in the Growth and
Structure of the Net State.Domestic Product in Kerala", Working Paper No.376, Centre for
Development Studies, ·Thiruvananthapuram, October; and K. Pushpangadan 2003:
"Remittances, Consumption and Economic Growth in Kerala: 1980-2000", Working Paper
No. 343, Centre for Development Studies, Thiruvananthapuram, March.
Government of Kerala & Centre for Development Studies 2005: Human Development Report
2005: Kerala, prepared by the Centre for Development Studies, Thiruvananthapuram and
published by the State Planning Board, pp. 46-48.
Government of Kerala & Centre for Development Studies 2005: Human Development Report
2005: Kerala, pp. 46-48.
Ibid . .

221
the state has come down from 49 per cent in 1993-94 to merely 32 per cent in 1999-00
marking a decline of 17 p~r cent. In spite of all these, the fact remains that agriculture in
the state still remains the single largest/principal commodity-producing sector.
Apparently, it is agriculture that provides livelihood to the largest segment of the deprived
classes and social groups within the state. For these reasons, agriculture or the priority
sector as it is rightly called could be neglected only at great peril. Keralam is not one of
the highly urbanised states of India. Nevertheless, the level of urbanisation has risen from
15.11 per cent in 1961 to 25.97 per cent in 2001. 47 This also means that 74 per cent of the
population in Keralam live in rural areas.

In spite of being the state having had one of the best land reforms in the country, largely
abolishing feudal mode of land relations, Keralam even today, is in the top bracket in
terms of lancl"concentration and has a significant percentage of the landless. 48 Again, in
the opinion of C.T. Kurien, the lower rates of employment in agriculture sector in
Keralam vis-a-vis all-India level may signify a movement of people away from
agriculture in the state. 49 Thus, on the recent visits of this author to his home-village in
the remote cash-crop growing hills of the northern district of Kannur in the state, those in
the neighbouring agricultural households spoke of the prospects for a white-collar or even
a non-agricultural employment as an "escape" route. The Situation Assessment Survey of
the National Sample Survey Organisation has revealed that 48 per cent of the farmers
were indebted and that 61 per cent of them in rural India were prepared to abandon
agriculture. 59 It could be the adverse terms of trade and the general neglect of agriculture
that make people perceive it this way. Volatile prices, often falling prices, of agricultural
commodities coupled with high money wages have, apparently, been strong disincentives
to cultivators. The share of cultivators [as proportion of the total workforce in the state],
had come down from 17.8 per cent in 1971 to 12.24 per cent in-1991 51 and further
declined to 7.2 per cent in 200 I, as per the Census figures cited in table 5.1. Out of the
3 7.8 per cent of the agricultural workforce in 1991, the share of agricultural labourers is
25.55 per cent, double the percentage of cultivators, i.e. 12.24 per cent. The relative share
of agr-icultural labourers vis-a-vis cultivators only increased marginally in 200 I over 1991
as in table 5.1. The agricultural labourers are, in the main, supposed to find employment

Government of Kerala 2000: Economic Review 2000, State Planning Board,


Thiruvananthapuram and. Government of Kerala 1993: Statistics for Planning 1993,
Department of Economics ·and Statistics, Thiruvananthapuram; as cited in D. Narayana 2003:
"Persistence of Deprivation in Kerala", in CEPA, IMCAP and SLAAS (ed.) 2003: Poverty
Issues in Sri Lanka, Centre for Policy Analysis, Colombo, Sri Lanka, pp. 31, 41.
48
C.T. Kurien 1994: "Kerala's Development Experience: Random Comments about the Past and
Some Considerations for the Future", Social Scientist, Vol.23, Nos.l-3, Jan.-March 1995.
49
C.T. Kurien 1994, p. 60.
so S. Mohanakumar & R.K. Sharma 2006: "Analysis of Farmer Suicides in Kerala", pp. 1553-58,
Economic and Political Weekly, 22 April, vol. XLI, no. 16, p. 1553.
51
C.T. Kurien 1994, p. 60.

222
from the cultivators owning tiny plots of land. So there is basis for a sharp contradiction
between the cultivators and labourers. Census estimates show that agricultural workforce
as proportion of the total" workforce further declined to a new low of 23.3 per cent in
200 I, marking a decline in the share of both agricultural labourers and cultivators, each
by over one-third.

Table 5.1: Comparative Picture of Categories ofWorkers by Percentages 1991 & 2001

1991 2001
Other Workers 59.6 73.2
Household Industry 2.6 3.5
A~icu/tural Labour 25.6 16.1
Cultivators 12.2 7.2
Based on Census oflndia 2001: Provisional Population Totals: Kerala, Paper 3 o/2001;
Series 33, 'Distribution of Workers and Non-workers, p. 78.

That agriculture is not being able to provide employment is, perhaps, the reason for the
high incidence of non-agricultural pursuits even in rural areas. 52 This may be seen in
relation to the high levels of land concentration discussed in a subsequent section on land
relations. 53 Over the years, agriculture has fallen into dire straits. Case studies have shown
that despite increase in money wages, the agricultural labourers in certain areas live in
utter penury. For instance, a study by Joan P. Mencher among agricultural labourers in
Kuttanad, shows that they have fewer days of work than decade ago. 54 It needs
examination whether the position of the 'actual tillers on land' has been rendered more
insecure with land reforms. With the liberalisation of agricultural trade during the post-
WTO years, i.e. with effect from January 1, 1995, there has been a serious price crisis of
agricultural commodities. This has particularly affected the cash-crop dominated areas
Iike Wayanad district. During the first five years of the decade of 2000s, around 1500
pauperised (indebted) peasants committed suicide, mainly in the districts of Wayanad and
Palakkad. 55

The turning away from agriculture, may also be viewed as the result of the white-collarisation
of culture, which in turn, is a possible effect of the dominance of the Service sector in the
economy. Even when sections of erstwhile agrarian people turned away from agriculture,
there was, apparently, a majority of the sections such as Dalits and Adivasis who were actual
tillers of land and did not have land in their possession.
SJ
See the sections, 'Land Question and the Agrarian Classes' and 'Landlessness and Land
Concentration in Contemporary Keralam' later in this chapter.
-$4
Joan P. Mencher 1990: "The Lessons and Non-Lessons of Kerala: Agricultural Labourers and
Poverty", Economic and Political Weekly, vol. 25, no. I, 6 January. See also her abstract in
AKG Centre 1994: International Conference on Kerala Studies (ICKS) - Abstracts,
Thiruvananthapuram, vol. 2, p. I.
ss G. Prabhakaran & A. Harikumar 2006: "Paddy, politics and the Kerala fanners", Hindu, II
April 2006, Thiruvananthapuram edn., p. 14. A more detailed analysis of farmers' suicides has
already been done in Chapter IV.

223
Agriculture as the Priority Sector

Agriculture is rightly claSsified as the primary sector of the economy, particularly when
self-reliance is marked out as a prime goal of economic development in the country. It is,
often, the surpluses generated from agriculture that contribute to growth in the other
sectors of the economy, namely Industry and Services. There could also often be
developmental linkages between Agriculture and these sectors. They were consciously
sought to be built up during the days of planned economic development. 56 Agriculture
may be considered the very base of developmental activities even while industry might
take the lead. Being the two commodity-producing sectors, Agriculture and Industry
rightly have the pride of places as the Primary and Secondary sectors.

Keralam has been one state where agricultural production was oriented to external
markets right from the beginning, perhaps more than any other state in India. The growth
of plantations since the colonial times is a case in point. Today, agricultural land is
increasingly becoming an object of speculation by the real estate business, signalling
quite an undesirable trend for the basic producing classes in agriculture sector. This may
be considered to be the state of affairs that emerges out of the superficial abundance of
capital (from domestic sources as well as foreign remittances) that is not ultimately being
used for productive purposes within the state.

Food Grain Production

Within the primary sector, food production may be identitied as the crucial productive
activity. Food production is not only essential for human survival but food self-
sufticiency of a region, nationality or country may be considered the very demarcator of
its relative independence from the powers-that-be at the global level.

According to 1991 census, Keralam had 3.4 per cent of India's population, but produced
only 0.6 per cent of the total food grains in the country. The average per capita food grain
production in Keralam between I 989-92 was 38 kg., compared to the all-India average of
203 kg. 5 7 More than 80 per cent of the food grain requirements of Keralam in 199 I were
met through imports. This is inclusive of the imports by private traders. 58

If planning was a safeguard against the anarchy of production and the crisis of overproduction
during the yester-years, we would view that planning and the goal of self-reliance are ever-
more important in an age of nco-liberal reforms marked out by great volatilities such as price
crises, economic crises and their contagion effect all across the world.
57
C.T. Kurien 1994, p. 59.
~8
B.A. Prakash, 1994, p.l8. There are also other food items like vegetables, eggs, meat, etc.
which are being imported. Thus for more than 60per cent of its food requirements, Keralam
depends on other states (T.G. Jacob, 1998).

224
Food grain production declined sharply since the 1980s, at the rate of 2.06 per cent, as
compared to only 0.2 per _cent rate of annual decline during the 1970s. 59 The area under
food grains has fallen from around 40 per cent in early 1970s to 18 per cent today. The
decline in food grain output has been at the rate of minus 1.89 per cent per annum during
the 14 years ending in 1996.60 Similar decline in production has also occurred with other
food products like tapioca

The area under food grains in the state declined by 37 per cent and output by 33 per cent
during the 1990s. The food deficit in Keralam in the case of rice, the main staple diet, was
at 50 to 55 per cent in early 1950s to mid 1970s i.e. until after the land reforms legislation
in 1970. The deficit has steadily increased and by the end of 1990s, it stood at more than
75 per cent. Keralam contributed ·only 1.3 per cent of the total rice production at all-India
level till mid-seventies when Keralam accounted for 4 per cent of India's population; by
the end of 1990s, it came down to merely 0.5 per cent and its share of population declined
to 3.3 per cent. 61 Going by latest figures, a.lthough rice is the staple diet in Keralam, the
state annually produces only three weeks' requirement. 62 In 1998-99, rice production in
the state has declined to only around 20 per cent of its consumption requirements i.e. 7.3
lakh tonnes. In other words, Keralam has ceased to be a food grain producing state of any
signitlcance. 63

Going by Table 5.2, there was sharp decline during 1990-91 to 2003-04 in the cropped
area of paddy and tapioca, the two important food crops produced by the state. The
decline in the cropped area of paddy was to the tune of -49 per cent and that of tapioca
was to the tune of -36 per cent. The rate of decline in the area under food crops is rather
startling and is perhaps, unmatched by precedents elsewhere. The highest increase among
crops in cropped area was noticed in the case of the horticultural crop, 'Banana and other
plantains' to the tune of67 per cent. However, this may not be considered a substitute for
paddy/rice, which is the staple diet. Nevertheless, it may be considered as an encouraging
signal as far as the concerns of food production in the state is concerned. On the other
hand, the cropping area under vegetables declined by -22 per cent which should be a
cause for concern.

C.T. Kurien 1994.


M.'A. Oommen 1996: "Working towards a Sustainable Kerala/lndia", Presidential Address in
lnternationar-Conference on "Kerala's Development Experience: National and Global
Dimensions", Institute of Social Sciences, 8-11 December, New Delhi, p. 6.
61
K.P. Kannan 2000, pp. 4-5.
o: Prabhakaran & Harikumar 2006, p. 14.
K.P. Kannan, 2000, p. 6. See also Pulapre Balakrishnan 1999: 'Land Reforms and the
Question of Food in Kerala', Economic and Political Weekly, vol. 34, no. 21, 22 May, pp.
1272-80 OR Pula pre Balakrishnan 200 I: "Land Reforms and the Question of Food in Kerala''
i11 Thorner, ·Alice (ed.) 2001: Land, Labour and Rights, Tulika, New Delhi, pp. 202-31.
Decline in the cropped area of food crops corresponding to a rise in that of plantation crops is
discussed further in the section, 'Decline of Food Economy and Other Baneful After-effects of
Land Reforms' under 'Re-examining the Impact of Land Reforms in Keralam', later in this
ctiapter.

225
Table 5.2: Cropping Pattern in Keralam (1990-91 to 2003-04) (area in 00 ha)

I 2 3 4 5 6
Area in Area in %Change
Crop %Share %Share
1990-91 2003-04 (5-3)
Cardamom 669 2.22 (9) 442 1.50 (II) -33.93
Coconut 8700 28.81 (1) 9850 30.41 (I) 3.28
Paddy 5595 18.53 (2) 2873 9.72 (4) -48.65
Rubber 4116 13.63 (3) 4784 16.19 (2) 16.23
Vegetables 2211 7.32 (5) 1729 5.85 (6) -21.80
Pepper 1685 5.58{6) 2164 7.32 (5) 28.43
Tapioca 1465 4.85 (7) 942 3.19(9) -35.70
Coffee 751 ,
2.49 (8) 847 2.87 (10) 12.78
Banana & Other 656 2.17 (10) 1094 3.70 (7) 66.77
plantain
Areca nut 648 2.15 (11) 1025 3.47 (8) 58.18
Tea 346 1.15 (12) 383 1.30 (12) 10.69
Ginger 141 0.47 (13) 85 0.29 (14) -39.72
Coca 119 0.39 (14) 94 0.32 (13) -21.01
Other crops 3098 12.47 (4) 4097 13.87 (3) 32.25
Gross cropped area 30200 100 29544 100 -2.17
Source: Statistics for Planning 2001, Column 2, pp. 35-36; and Agricultural Statistics 2003-04, Column 5;
as cited in S. Mohanakuniar & R.K. Sharma 2006: "Analysis of Farmer Suicides in Kerala", pp. 1553-58.
Economic and Political Weekly, 22 April, vol. XU, no. 16, p. 1554.

Note: We have added the ranking in the brackets.

The reasons for decline in food grain production may be the explicit bias in State policy
since the land reforms 'in favour of cash crops (eg: no ceiling limit on land under cash
crop plantations, and the relative absence of subsidies for food crops), the higher returns
yielded from cash crops; the higher cost of inputs like labour on food grain production.
etc. A majority of the irrigation projects in the state have been pending for over twenty to
twenty-five years. As for water control measures beyond irrigation like water-shed
management, hardly any progress has been made. 6 ~

The mini mum support-price of rice at 7 rupees per kg. (Rs. 707 per quintal) guaranteed by
the state government during the UDF regime of 2001-06 was scuttled in the process of
implementation. ThE!. support price
.
is intended to rescue the peasants from being swindled
by the private mill owners and middlemen during the. harvest season. Ironically, however.
some licensed rice mills - one each within a panchayat- were entrusted by the Kerala
State Civil Supplies Corporation to procure the grains and pay this price to the peasants.
They, in turn, deferred payments, which forced the peasants to sell the grains for around 4

K.P. Kannan, 2000, p. 33.

226
or 5 rupees in the open market, defeating the very purpose of the support price. On the
other hand, rice was sold by traders in the open market at around IS rupees per kg. It is
argued that if the producers could get just half the market price, paddy cultivation could
have been sustained. Another issue that plagues the paddy cultivation in the state is the
non-availability of water from the inter-state Parambikulam Aliyar Project (PAP). Under
the agreement, Tamil Nadu is supposed to release 7.25 TMC of water for Chittur taluk in
Palakkad district. But in most of the years, apparently under the influence of the water
lobbies in T.N., the state does not release the agreed amount of water. This has led to the
belief that the PAP and Mullapperiyar agreements have been prejudicial to the interests of
the state. The drop in paddy cultivation is attributed to the farmers not finding it
remunerative. However, switching over to cash crops has left them at the mercy of the
world market, gripped by 'price crisis'. The prices of cash crops like coconut, tea, coffee,
cardamom and pepper have fallen steeply during the last few years, with only rubber
prices remaining steady. According to the Department of Economics and Statistics, total
paddy cultivation in Keralam is spread over 3,10,521 hectares, mainly concentrated in
two rice bowls, namely, Palakkad district and the Kuttanad area of Alappuzha district.
The decline in paddy cultivation has also led to environmental problems since paddy
fields have been water conservation reservoirs. 65

The accentuation of dependence on external markets does not seem to bode well for
Keralam in the long run. The volatility of prices is very _much a danger since prices are
not determined within the state, (but by agencies outside the state) nor are external
markets of a dependable nature, particularly in the context of a free trade regime.

There have been a number of arguments advanced in favour of a shift over from cash crop
cultivation to food crop cultivation. 66 The cultivators would be less vulnerable to the
volati Iities of the markets controlled by monopolies and the people of the state would be
relatively free from the uncertainties of the food pricing policies of the central
government. J~ also makes for better labour absorption, reduced import bill of the state
government, and an assured market. The real subsistence wages in Keralam is higher
because of the higher consumer price index for workers, arising from the fact that
Keralam is situated at the tip of the continent and import of essential commodities
involves transportation costs. Indigenous food production could help bring down real
wages and prevent flight of industries due to higher money wages. Moreover, in
comparison to food crops, the price elasticity of supply is lower in cash crops like rubber
and coconut, due to longer gestation periods. It is said, greater emphasis on food grain

G. Probh:~karan & A. Harikumar 2006: ··Paddy, politics and the Kerala limners'', Hindu. I I
April 2006, Thiruvananthapuram edn., p. 14.

22.7
production could also achieve greater forward and backward linkages to other sectors of
the state economy. But mqst importantly, it is necessary for the very survival of people in
a crisis-ridden and unpredictable world order of today.

Re-examining the Impact of Land Reforms in Keralam

The land reform in the state is widely perceived to have been one of the most thorough
and well implemented in the country. Ronald J. Herring had also designated the reform as
a "radical reform". Thus he describes Keralam as "the only Indian state to abolish
landlord-tenant nexus in a serious way. "67 M.A. Oommen says, the thoroughness and
speed with which tenancy abolition was carried out in Kerala has no parallel elsewhere in
India and the feudal landlordism stands abolished in the state and yet land has not passed
on to a class of self-cultivating peasanty. 68 As P.S. Appu says, "Of all the States, the best
performance in the field of tenancy reform was that of Kerala." 69 According to V.C.
Koshy, this was the best possible land, reforms within the confines of the Indian

I>C
S. Umadevi 1994, pp. 6-8.
67
Ronald J. Herring 1983: Land to the Tiller: The Political Economy of Agrarian Reform in
South Asia, Oxford University Press, Delhi, pp. 12-13, 212; Richard Franke & Barbara Chasin
1989: Radical Reform as Development in an Indian State, Report 6, IFDP, San Francisco, p.
58; Robin Jeffrey 1992: Politics. Women and Well Being: How Kerala Became a Model.
Oxford University Press, Delhi, p. 176.
6S
M.A. Oommen 1994, p. 121. This is not to speak of land reform as such but a particular
measure of land reform, i.e., 'tenancy abolition'. It should not, however, be overlooked that
presently, cultivation under land-leases are being taken up on a wide scale in the state {For
evidence, see K.N. Nair & Vineetha Menon 2006: "Lease Farming in Kerala: Findings from
Micro Level Studies", Economic and Political Weekly, vol. XLI, no. 26, 30 June, pp. 2732-38;
OR K.N. Nair & Vineetha Menon 2005: "Lease Farming in Kerala: Findings from Micro
Level Studies", Working paper 378, Centre for Development Studies, Thiruvananthapuram;
and Ajith 2002: "Paattakrishi' {Leased cultivation- Malayalam), pp. 93-112 and Appendix
II: "Keralathile Paattakrisht' (Leased cultivation in Keralam - Malayalam), pp. 193-200.
Although it is not counted among the major states in India, the state of Jammu and Kashmir
(J&K) is known to have had a thorough land reforms, particularly, with respect to the
measures of abolition of intermediaries and ceiling reforms under Sheikh Abdulla, with
significant re-distr.ibution of land. Thorner { 1955) had classified three types of areas following
the abolition of intermediary interests. The areas of greatest change were Kashmir and
Andhra. {Daniel Thorner 1955: The Agrarian Prospect in India, Delhi University Press, New
Delhi, pp. 28-53; as cited on P.S. Appu 1996, p. 197). All the provincial laws except that of
Jammu and Kashmir provided for payment of compensation to intermediaries (P.S. Appu
1996, p. 183). Except in Jammu and Kashmir and West Bengal no limit was put on the area of
"personally cultivated" land that an intermediary could retain (P.S. Appu 1996, p. 184). The
law of J&K enacted in 1950 had fixed a ceiling of 22.75 acres for an individual landholder
without making any allowance for differences in the quality of the land (P .S. Appu 1996, p.
145). No compensation to the landowners was envisaged. On the implementation of the
ceiling law, about 1.8 lakh hectares of surplus land was vested in the state government (P.S.
Appu 1996, p. 144). As percentage of the total operated area, the surplus land distributed
under ceiling legislation was 17.4 per cent for J&K {P.S. Appu 1996, p. 190). According to the
37'h round of the N.S.S., the incidence of tenancy (area leased in) in J&K in 1981-82 was the
second lowest in the country with 2.3 7 per cent, as com pared to 7.18 per cent of the operated
area at the all-India level (P.S. Appu 1996, p. 119). How a separate constitution and the
special constitutional status under Article 370 of the Indian Constitution have helped J&K to
accomplish this needs exploration.
P.S. Appu 1996, p. 112; See also Ibid, p. 199.

228
Constitution and existing legal framework in the country. 70 Similarly, other scholars have
also hailed the land reforms in the state. il

Land reforms in India had followed a three-fold strategy: (I) Abo Iit ion of intermediaries,
(2) Tenancy reform, and (3) Ceiling reform.

Abolition of intermediaries: A non-starter

P.S. Appu who had served as the Land Reforms Commissioner at the Centre during the
1970s, rightly says that the reform process that began with the Abolition of intermediaries
led to large-scale eviction of tenants-at-will, under-tenants and share-croppers
everywhere. Nevertheless, the abolition of intermediaries was implemented less
inefficiently in the country as compared to the later tenancy reforms and ceiling reforms
on agricultural land. The first round of land reforms, i.e., abolition of intermediaries was
successful because they were few in number and had made themselves obnoxious by
aligning with the colonial power. So the measure of abolition was easy enough and it was
done without hurting them much. 72 As against the all-India scenario, abolition of
intermediaries that was carried out all over the country since the establishment of
provincial governments in 1946 hardly took off and had little impact in Keralam. Thorner
( 1955) had classified three types of areas following the abolition of intermediary interests.
Malabar and Thiruvithamkoor-Kochi, together covering the whole of the present state of
Keralam, were identified among areas of least change. 73

At all-India level, as of 1992, only in 4 per cent of the operated area have tenants been
made secure or ownership rights conferred. 74 Tenancy reforms, however, was by and
large successful in the state and the ceiling reforms was a relative failure.

Tile Relative Success of Tenancy Reforms

"(A]s of January 1, 1970, landlordism was in effect terminated. Tenants were no longer
liable for rent and became defacto proprietors unless challenged by ovmers." 75 When in
August 1968, K.R. Goury introduced the bill, the abolition of landlordism would prove
effective because the burden of proof regarding tenancy status was being shifted from the

70
V.C. Koshy 1976: The Politics of Land Reforms in Kerala, Ph.D. thesis, Centre for Political
Studies, School of Social Sciences, Jawaharlal Nehru University, New Delhi.
71
These include T.J. Nossiter 1988: lvfarxist State Governments in India, Printer publishers.
London; P. Radhakrishnan 1989: Peasant Struggles. Land Reforms and Social Change.
Malabar. 1836-1982, Sage publications, New Delhi.
7'
P.S. Appu 1996, pp. 192, 184, 185, 190, 206.
7J
Daniel Thorner 1955: The Agrarian Prospect in India, Delhi University Press, New Delhi, pp.
28-53; as cited in P.S. Appu 1996, p. 197.
P.S. Appu 1996, p. 187.
Herring 1983, p. 196.

229
tenant to the landlord. 76 "Because large owners leased out most of their holdings (63.8 per
cent of the land for large owners 77 ), their land was redistributed mostly through the
tenancy provisions, not through the ceiling." 78 By 1980, the land reforms had been
essentially completed. In 1980, Herring had estimated the number of tenant beneficiaries
of the land reforms to be almost 1.3 million (13 lakh), or 43.3 per cent of the agricultural
households in the state in 1971. The aggregate area transferred through the abolition of
landlordism was almost 2 million (20 lakh) acres or 36.5 per cent of the net cultivated
land in the state and 42.9 per cent of the area excluding plantations. 79 Going by other
estimates, there is some exaggeration in these figures. Thus according to the State Bureau
of Economics and Statistics in 1967, the total area under tenancy was 19.21 lakh acres
constituting 42.5 per cent of privately owned land. The tenancy reforms conferred
ownership rights (or protected) on 28.42 lakh tenants over 14.50 lakh acres by 1992, says
P.S. Appu, the Land Reforms Commissioner at the Centre during the 1970s. 80 It was no
mean achievement for the state to have transferred ownership rights on land on such a
wide scale, if the land transfers had taken place to the deserving sections.

P.S. Appu had pointed out that the enforcement of ceilings and implementation of
tenancy laws, together led to the redistribution of only 6 per cent of the operated area in
India. This is rather insignificant compared to the redistributive impact of land reforms
implemented in post- War China. Thus between 1950-52, 43 per cent of the agricultural
land changed hands in the People's Republic of China. It is incomparable to other
countries because it was done under a revolutionary situation. However, India compares
poorly with Taiwan where redistribution was to the tune of 37 per cent; South Korea
where it was 32 per cent and Japan where it was 33 per cent. 81

The 1966-67 Survey divided the tenantry into two strata: kudiyirippu tenants and "other
tenantS". "Other tenants" who were little more than half of all tenants, controlled more
than 95 per cent of the land held by tenants. 82 Herring observed that "vesting of land in
the leasee, regardless of the class and stratum of the leasee, would benefit a large number
of agriculturists of relatively hig~ position in the agrarian hierarchy. Indeed, "other
tenants" stand out as a category for having by far the highest percentage of households in

-------------------------~
7o
Herring 1983, pp. 186-7 ...
77
Government of Kerahi (GoK) 1968/76: Land Reforms Survey in Kera/a: Report.
73
Thiruvananthapuram, 1976. Expanded version of the 1966-67 Survey, tables 8. 13, 8.14.
Herring 1983, p. 212.
N
Ibid, p. 211.
SD
P.S. Appu 1996, pp. 115,266.
SI
P.S. Appu 1996, p. 191.
s~
Herring 1983, p. 181. For details of the pre-reform agrarian structure, see Varghese, T.C.
1970: Agrarian Change and Economic Consequences: Land Tenure in Kerala 1850-1960.
Allied Publishers, Bombay.

230
the wealthiest stratum, though a very high percentage belonged to the poorest." 83 Again
he says, "Though the land_lord-tenant system was equated with "feudalism" in the policy
logic, in fact distinct p_rivileged strata within the landholding class, including landlords,
leased land. "84

Kudikidappukar, mostly from the Dalit castes (Scheduled Castes), the hutment-dwellers
who lived and worked on the land of the landowners, were granted not merely security of
tenure and heritable tenures but the right to purchase the plot at 25 per cent of the market
value. Half the purchase price was to be paid by the government and the balance spread
over twelve annuaf instalments. 85 An estimated number of 2,84,203 hutment dwellers
acquired permanent rights over homestead land. 86 They gained house and homestead land
of an average of 8 cents, which provided them considerable security, in contrast to their
historical condition of slavery and serflike bondage. It also rnarks a significant advance
over the bad position of the labourers in the rest ofthe region. 87 Certainly, it had a telling
impact on enhancing the security and self-confidence of the Dalits.

Nevertheless, the hype on the land reforms in the state is unwarranted since the flipside of
it is too stark to be overlooked. On the basis of the sample survey conducted by the Indian
School of Social Sciences, Thiruvananthapuram, Herring estimated that the primary
beneficiaries were the rich peasants. As per the sample, rich peasants (defined as those
who do some agricultural work but depend primarily on wage labourers) were 13.3 per
cent of the households but received 38.7 per cent of the land redistributed via tenancy
reforms.88

Grouped by size of holdings, Middle peasant households possessing less than 5 acres
constituted 84.2 per cent of the sample but received only 36.2 per cent of the redistributed
area. Small peasants holding less than one acre of land, i.e. excluding those whose
. primary occupation was agricultural labour, received only· 0.9 per cent of the land
-
redistributed. 0n !he other hand, those who held land above 5 acres ( 15.8 per cent of the
sample) gained land to~the tune of an overwhelming 63.8 per cent of the redistributed
acreage. 89

"Those who held land on lease were beneficiaries .... It is clear from prereform data that
though most of the tenants were poor smallholders, most of the tenanted land was held by

83
Herring 1983, p. 183.
84
Ibid, p. 185.
8~
Ibid, pp. 188-9.
Sb
P.S. Appu 1996, p. 116.
87
Herring 1983, pp. 213-14.
88
Herring 1983, p. 211.
89
Ibid, pp. 211-12.

231
the upper echelons of the agrarian hierarchy." 90 At the conceptual level, the central attack
was on rentiers and thus t.he principal beneficiaries were those who leased [in] land. "The
rentiers have thus been replaced by a new tier of proprietors who, as a class, are not
unambiguously tillers or even primarily engaged in agriculture." 91 As for the political
rationale of policy orientation in this direction, Herring says, the Marxists are left in the
ideological quandary as to how the plight of the labourers - the largest agrarian class -
and poor peasantry be alleviated without fracturing the rural social base of the left
movement.92 Apparently, the compromise formulae could have been necessitated by the
imperatives of electoral politics. The rationalisation of the policy logic by Namboodiripad
that the correct tactical line in that historical situation was an attack on feudalism that all
non-feudal classes. could be rallied behind an agrarian reform. He considered the
distinction between "parasitic" feudal landlords and "entrepreneurial" capitalist landlords
critical and argued for concentrating attack on the former because "capitalism in
agriculture" is an advance in a "semi-colonial, semi-feudal country". 93

No evictions from tenanted land were reported after the 1969 legislation came into force
but a large minority of tenants eligible to become owner-cultivators "voluntarily
surrendered" their land, either as a compromise or under threats from landlords. 94 Nothing
like an 'Operation Barga' in West Bengal for recording oral tenancies was accomplished
before the land reforms. It may also be considered as a major failure of the Communist
movement. Where no formal lease deeds were available, many of the tenants could not
· secure ownership rights because the project of recording informal tenancies that had
begun in late 1960s had made little headway before the implementation of the land
reforms~ in 1970 and the land tribunals faced threats from landed interests and had to play
safe. 95 Yet specific legal protection and immunity from eviction was given to tenants
belonging to Dalit (SC) and Adivasi (ST) sections.

The slogan given by the Communist Party during the years of land struggle in Keralam
was, 'Agricultural land to the agriculturists'? This is distinct from the slogan, 'Land to the
tiller'. This may be viewed in the context of measures to favour the tenantry, particularly
I

from the backward caste, Ezhavas, who constituted the principal social base of the
Communist party in those days. Tenantry, belonging to the Ezhava caste (the presently
Backward Caste) are said to· have been the prime beneficiaries of the surplus land

QO
Ql
Ibid, p. 211.
Ibid, p. 212.
Ibid, p. 212.
QJ
Namboodiripad, E.M.S. 1952: On the Agrarian Question in India, People's Publishing House,
Bombay, pp. 27, 49, 61; as cited on Herring 1983, p. 165.
Herring 1983, p. 207. The provision for 'voluntary surrenders' had undermined tenancy
reforms even in the rest of India, according to P .S. Appu 1996, pp. 186, xxi.
Herring 1983, pp. 208.

232
distribution in Keralam. It has been rightly pointed out that land reforms in Keralam
conferred land ownership_ 'to those standing at the edge of the field' rather than to the
actual tillers. 96 The actual tillers of the land in wetland cultivation from Dalit castes
received mostly a hutment land of I 0 cents each (i.e., in rural areas) by virtue of their
status as kudikidappukaar (hutment dwellers). In addition to the cultural legacy of
casteism handed down through generations, the fact that most Dalits are landless could be
the economic reason for the persistence of deep-rooted casteist mindset and caste
prejudices in Kerala society despite the trappings of a democratic orientation.

It was following the Planning Commission's guidelines that Kerala Land Reform
(Amendment) Act (KLRA) had included 'supervision' in the definition of 'personal
cultivation', thus favouring tenants over the actual tillers, nullifying in essence the slogan
of 'land- to the tiller'. 97 'Land to the tiller' was a slogan for mobilisation of the Indian
National Congress during the anti-colonial movement. This was contrary to the original
stipulation of the Congress Agrarian Reforms Committee ( 1949), which had recognised
only the rights of those farmers engaged in 'personal cultivation'. This meant that they
needed to "put in a minimum amount of physical labour and participate in actual
agricultural operations", with exceptions granted only to widows, minors and the
disabled. 98 The insistence therein that the tiller contribute physical labour to the
production process presents a striking contrast to the modern capitalist notions since
employing wage labour is the dominant form of organising agricultural production under
capitalism, according to Herring. 99

The land reform model set forth in the Five-Year Plan documents of the Government of
India too had clearly excluded the agricultural labour. The guidelines set forth by the
Union Planning Commission were restrictive of a full-fledged implementation of the land
reforms. Nevertheless, Agriculture, and therefore, land reforms was a subject in the state
list as per the division of powers in the Constitution. It falls under entry 18 of the State
List, which read: "Land, that is to say, rights in or over land, land tenures including the
relation of landlord and tenant, and the collection of rents; transfer and alienation of
agricultural land; land improvement and agricultural loans; colonization.'" 00 The state had
the prerogative to exercise a wide range of policy options 101 as only the state legislatures
are authorised to enact Land. Reform laws. The tenuous constitutional basis for the

V.C. Koshy 1976.


M.A. Oommen 1994, p. 120.
All India Congress Committee (AICC) 1949: Report of the Congress Agrarian Reforms
Commillee, New Delhi, p. 7; as cited in Herring 1983, p. 154; M.A. Oommen 1994, p. 120.
<N
Herring 1983, pp. 154, 155.
100
P.M. Bakshi (with legal comments from - ) 2006: "Schedule 7, List 11 - State List", The
Constitution of India, Universal Law Publishing Co. Pvt. Ltd., Delhi, seventh edition, p. 368.
101
M.A. Oommen 1994, p. 120.

233
Government of India's role in land reforms is entry 20 in the Concurrent list. which
speaks of Social, and Ec<?nomic Planning. 102 Therefore, the principal responsibility for
favouring one section or the other is to be placed on the state government itself and the
political movement that articulated the demands of the subaltern classes, primarily the
Communist Parties. 103

There is hardly any doubt that it was the capitalist relations in agriculture that were
sought to be promoted under the land reforms in Keralam. The 1969 Act provided legal
rights over land to a broad range of cultivators provided they bore the risk of cultivation.
"Cultivation was defined, as in the 1959 Jaw, to include supervision of wage labour." 104
"The criteria for "cultivation" apd "risk of cultivation" are clearly those of capitalist.
agriculture ..... Curiously, contribution of land alone or labor alone would not qualify the
contributor as a cultivator, whereas- contnbution of working capital alone (wages and
farm inputs) would define the contributor as a cultivator entitled to land ownership ..o1os

Presumably, the land reforms in Keralam did benefit the landless. Thus the percentage of
landless households in 1960-61 was 30.9 whereas it came down to 15.7 in 1971-72 and
12.8 in 1982, as shown by the National Sample Survey rounds. 106

A Failetl Ceiling Reform

lfthe standard Tenancy reform could procure legal ownership only to the tenants who are
in possession of the land already under their cultivation, it was through the ceiling reform
that land could be redistributed to the tillers below the status of the tenants in the agrarian
hierarchy.

The ceiling set by the 1969 legislation in the state ranged from five standard acres (6 to
7.5 ordinary acres) for a single adult to a maximum of20 ordinary acres for a very large
family. 107 The land reforms in Keralam as per the 1969 legislation allows "a greater
concentration of wealth than seems justifiable when so many are landless". 108 Cultivable

102
P.S. App_u 1996, p. xviii.
IOJ
See K. Mukundan 1995: "Marxistukal" Thozhilaalivargathe Vanchicha Charithram (The
History of How Marxists have Betrayed the Working Class - Malayalam), Dalit Sahithya
Academy, Kozhikode.
ICJ.I
Herring 1983, p. 187.
10~
Ibid.
100
C.T. Kurien, p.54.
IU7
Herring 1983, p. 189.
lOS
Ibid, p. 280.

234
land per capita was just 0.32 acres, less than one-third the figure for India as a whole. 109
And yet it may be noted th~t the ceiling limit set was the lowest in the subcontinent. 110

The exclusion of plantations, religious institutions and trusts from the land ceiling laws
left the project of land reforms a very unfinished one. Thus the Western Ghats comprising
around 48 per cent of the land area of the state was almost wholly left out of the purview
of land reforms. As was also the case with the 1957 Bill, plantations remained exempt
even under the 1969 Act but the definition of plantation was narrowed, subjecting to
ceiling a number of crops previously exempted such as, pepper, areca, cashew, coconut
and so on. Moreover kayal (polder paddy) lands in Kuttanad [that employed wage labour
on a large scale] were also brought under ceilings. 111 In 1973, M.A. Oommen had noted
that the revenue minister in 1957 had estimated surplus land to the tune of 17,50,000
acres but in the 1966-67 Survey, it came down to merely 1,50,000 acres although the
ceiling was essentially the same. 112 This constituted merely 2.7 per cent of the net sown
area. 113 That ceiling reforms in the state was a failure is clear from the fact that out of the
45 lakh acres of agricultural land in the state, 114 Economic Review acknowledges that
ultimately only 1.41 lakh acres of land was declared surplus, out of which only 0.96 lakh
acres was actually distributed to 1.66 lakh beneficiaries. This means that 0.45 lakh acres
still lies undistributed under government ownership. It also means that the average area of
land received by the beneficiaries under ceiling reforms was only 0.58 acre. 115

The total area of agricultural land (total operational holding) in the state was 45,16.000
acres according to Survey on Land Reforms 1966-67 i.e.,- before land reforms.' 16 This had
not substantially changed in 1980-81 during the Agricultural Census which showed it as
45.12,500 acres 117 and in 1990-91, it remained 45.04 lakhs as per the Economic Review-
1995, as mentioned in the table above. It is shown as 42.77 lakh acres (17,10,709

l()Q
Government of Kerala (GoK:) 1968/76: Land Reforms Survey in Kera/a: Report, Survey
conducted in 1966-67, Thiruvananthapuram, first published 1968; expanded version published
1976, pp 3-7; as cited on Herring 1983, p. 180.
110
Herring 1983, p. 189.
Ill
Ibid, p. 189.
II:
As ciied in Herring 1983, p. 203.
113
Herring 1983, p. 213 .
••• See below for clarification in this respect.
··~ Government of Kerala (GoK) 2003: Economic Review, State Planning Board.
Thiruvananthapuram, p. 31 I.
116
Government of Kerala (GoK) 1968/76: Land Reforms Survey in Kerala: Report, Survey
conducted in 1966-67, Thiruvananthapuram.
117
Ajith 2002: Bhoomi, jathi. bandhanam - Kera/athi/e karshikaprasnam (Land, caste, bondage
- the agrarian question in Keralam - Malayalam), Kanal prasidheekarana kendram, Kochi.
September, p. 20.

235
hectares) according to Agricultural Census 1995-96. 118 The decline of over 2 lakh acres
may be owing to the probl.em of data.

It is worth recalling that in 1956, total holdings above 25 acres was 14,36,088 acres. This
got substantially·reduced to just 5,59,984 acres by 1966 and to merely around 3.22 lakhs
by 1976/77. The extent of leakage prior to land reforms, i.e., between the state formation
in 1956 and after one decade, i.e., in 1966 was a massive 8, 76, I 04 acres. The extent of
reduction in large landholdings between 1966 and 1976/77 - the period characterised by
land reforms- was merely 2,37,984 acres. 119

The only records generally available for determining surplus land were the returns filed
by landowners. 120 It is alleged th~t the Kerala Land Reform (Amendment) Act (KLRA),
1969-which was implemented from I January 1970 primarily achieved a re-distribution at
the top as through partition of landholdings under joint family and gifts of land validated
since Agrarian Relations Act 1960 up until 16 August 1988_1 21 The long time-lag between
the initial proposal for land ceilings in 1957 and its actual implementation since early
1970 made this amply possible. Landlords had seriously resorted to transfer mechanisms
like partition and transfer of tenancies particularly during the decade of 1957-1966 122 i.e.,
until the second ministry under E.M.S. Namboodiripad came to power in 1967.
Moreover, an amendment to KLRA in 1978 made the gifts of surplus land to major
children during from 1 January 1970 to 5 November 1974. The legal suits in the High
Court before the land reforms legislation has been placed under Schedule 9, i.e. beyond
the purview of the judiciary, had reduced the surplus land under the ceiling law to the
tune of 8,600 hectares. 123 There was a loophole in the KLRA for creation of bogus
tenancies by the joint declaration of landlord and the tenant, as oral tenancies were held
valid. Some owners had used phony tenants to file joint declarations to evade the ceiling
provisions. 12 ~ The callousness of the bureaucracy was also to be blamed for the non-
implementation of surplus land distribution. 125 P.S. Appu had pointed out that even at the
all-India level, ceiling reforms was undermined by the generally high levels of ceilings,
numerous exemptions and widespread transfers resulting in a reduction of the area of land
that could be declared surplus. 126 Thus in the whole country, by )992, only about 2

liS
Government of Kerala (GoK) 2001: Agricultural Census 1995-96, Preliminary Report on
Operalional Holdings· :in Kerala, Department of Economics and Statistics,
Thiruvananthapuram, p. 18.
Ajith 2002.
Herring 1983, p. 208.
121
M.A. Oommen 1994, p. 127.
1::'!2
Herring 1983, p. 178.
M.A. Oommen 1994, pp. 127-8.
Herring 1983, p. 207.
M.A. Oommen 1994, p. 128.
P.S. Appu 1996, p. 189.

236
million hectares of surplus land could be distributed to some 4.76 million beneficiaries.
This constituted only less .than 2 per cent of the operated area. 127 M.L. Oantwala, C.H.
Hanumantha Rao and V.S. Vyas argued for enforcement of the existing ceiling laws
rather than scaling down the existing ceilings. P.S. Appu rightly suggests that the question
of abrogating ceiling laws should be considered only when the rural population dependent
on agriculture falls below 20 per cent or so. This is because if ceiling limits are relaxed,
there would be a scramble for purchase of land by rich farmers and speculators. 128

Although land reforms in Keralam has been hailed as one of the best among Indian states,
the facts and figures above may serve to validate the view that the 'land reforms' may
well be designated as a 'reformation of the system of caste-based landlordism' in
continuation of the colonial transformation in agriculture 129 - often, 'the feudal jenmi
turning the capitalistjenml 1

An Agrarian Transition from Below

"Kerala represented the agrarian crisis of India in acute form when the present state was
created; in 1956-57, per capita sown area was 0.38 acres, the lowest of all states,
compared to an all-India average of 1.09 acres. 130 .•. Kerala had a much lower percentage
of peasant proprietors than the rest of India, and consequently larger percentages of
tenants and laborers and a relatively larger rentier class." 131

There were differences in the agrarian structures of the three regions that came to
constitute the state
I
of Keralam in 1956. Whereas owner-cultivators had come to constitute
the largest agrarian class in Thiruvithamkoor, in Malabar and Kochi, landless labourers
and tenants were the largest agrarian classes. 132 Nearly two-thirds of the entire cultiv~ted
area had come under the direct ownership of the princely state in Thiruvithamkoor by the
tirst half of the nineteenth century. And the tenants on these lands were conferred
complete ownership rights through a royal proclamation in 1865. This brought forth an
era of peasant proprietorship in Thiruvithamkoor. The princely state of Kochi also
followed suit towards the end of the 191h Century. 133 Both these regions were under
- '

'indirect' colonial rule. By contrast, in Malabar, which was under direct British colonial

1:!7
P .S. Appu 1996, p. 190. As percentage of the total operated area, the surplus land distributed
was 17.4 per cent for J&K, 6.36 per cent for West Bengal and 5 per cent in Assam (Ibid).
P.S. Appu 1996, pp. 208,213.
Ajith 2002, pp. 44, 63.
Government of India 1962: Agricultural Labor in India: Report of the Second Enquiry, vol. 7,
p. 9; as cited on Herring 1983, p. 160.
I.H
Herring 1983, p. 160.
l.l2
Ibid, p. 160.
1.13
K.N. Raj & Michael Tharakan 1983: "Agrarian Reform in Kerala and its Impact on the Rural
Economy-A Preliminary Assessment in Agrarian Reform in Developing Countries", Crown
Helm, London& Canberra; St. Martin Press, New York, pp. 33-34; As cited on P.S. Appu
1996, p. 114.

237
rule, as part of the Madr,as province, there was land concentration in the hands of upper
caste landlords and more. seriously, the customary rights of even the upper strata of
'Kanam' tenants were denied and they were all reduced to mere tenants-at-will, subject to
eviction at any time_l 34 By late 191h century, South Malabar had gained notoriety as "the
most rack-rented country on the face of the earth". 135 Militant struggles called 'Malabar
rebellion' were waged against this highly oppressive tenurial structure during the late l91h
and early 201h centuries. The main social base of this movement were the Mappila
Muslims so these peasant revolts are sometimes nick-named as 'Mappila revolts', with
communal overtones. 136

Herring attributes the extreme disjuncture between ownership of land and labour on the
land prior to the 1970 land reforms to the high ratio of landlessness, widespread
unemployment, concentration of peasantry on tiny , holdings, modernisation of the
economy with high rates of literacy, non-agricultural employment and commercialisation
of agriculture. 137

It is amply borne out by the history of the land reforms in the state that it could not have
been achieved without intense pressure from the popular classes. Commenting on the rash
of debates in the Legislative Assembly in early 1970, Herring remarked, "The important
aspect of this political debate is that all sides assumed that a radical land reform was
something meritorious, not a political liability. Long and intensive politicization had
translated the tenurial structure into effective redistributive political forces." 138 In the end.
there was "the universal political recognition in Kerala that the agrarian underclass must
th! answered". D 9 And yet, in the process of implementation, "(t]he government had to be
goaded, threatened, and shamed into responding .... ".. 40 Again, he says, "[L]andlordism
can be abolished in Kerala because of the historically rooted left mobilization of the
agrarian underclasses and their numerous urban allies, and because tenants and laborers
outnumber cultivators and landlords .... " 1" 1 Elsewhere he says, "Kerala represents the

Ibid.
V:~rghes<!,T.C. 1970: Agrarian Change and Economic Consequences: Land Tenure in A:erala
1850-1960, Allied Publishers, Bombay, p. 78; As cited on Herring 1983, p. 162. Log:~n.
William 2004: Malabar Manuel {Report to the Government of the Madras Presidency, AES.
tirst pub. 1887) has a detailed account of the consequences on the agrarian structure of the
colonial policy of appeasing the landlords.
These rebellions are historically well-documented. See, K.N. Panikkar 200 I: Against Lord
and State: Religion and Peasant Uprisings in Malabar, 1836-1921, Oxford University Press.
New Delhi.
137
Herring -1983, p. 185.
138
I.}Q
Herring 1983, p. 195.
Herring 1983, p. 195.
140
Herring 1983, p. 205.
141
Herring 1983, p. 268.

238
agrarian crisis in extremis, but demographic pressures throughout the subcontinent are
generating comparable sit~ation." 142

When the 1969 Act came into force from I January 1970, its implementation depended
on the very forces that had opposed the legislation and not the ones who had [mainly led
the agrarian struggles and] drafted the Bill, namely the CPI-M. The government was led
by Achutha Menon of the CPI, with the informal support of the Congress and the Kerala
Congress. 143 It is also worth recalling the context ofthe political equation: 1969 witnessed
a sudden revival of interest in the ceilings in the context of the split in the Indian National
Congress and the adoption of populist policies by the ruling group. 144 Throughout 1969,
there had been serious incidents of agrarian violence between rival agrarian forces. CPM
claimed that nearly hundred activists were killed. 145 So also the month of January 1970
witnessed major incidents of violence, some on a very large scale. 146 The coalition
government headed by Achutha Menon, had faced charges of brutal suppression of
agrarian agitations and retorted in tum that there was a growing Naxalite (agrarian
revolutionary) threat to the State. 147 Violence, however, imparted impetus to land reform
implementation measures. 148 It was partly in response to the failure to show progress in
implementing ceiling refonns and threats by the Marxists to occupy plantations, the
. '
government made a legislation to take over without compensation, sections of the huge
Kannan Devan tea estate, running into 137,424 acres, i.e., nearly the total ·land expected
from ceiling reforms. Simila_rly, a legislation was initiated for nationalising without
compensation private forests. The thieat of rural violence acted as an effective lever for
prying rapid consent from the Centre for inclusion of all the land reform legislations on
the Ninth Schedule of the Constitution. This was accomplished by the Twenty-Ninth
Amendment on May 31, 1972. 149

Together, all these facts indicate that the land reforms in Keralam should more
convincingly be characterised as a 'transition from below' towards capitalist
transformation in agriculture after .the broad classificatory scheme in T.J. Byres into
'transition from above' and 'transition from· below'. According to Byres, important
instances of the basic impul~e towards agrarian transition coming from above have been
Prussia. Japan (before 1945} and the American South; while archetypal examples of the
operation of impulses from below have been England, the American North and West, and

Herring 1983, pp. 248, 160.


Herring 1983, p. 193.
P.S. Appu 1996, p. 189.
Herring 1983, p. 193.
Ibid, p. 195.
Ibid, p. 197.
Ibid, p. 197.
Ibid, p. 204.

239
France. The concern herein has been with the processes of class formation, the
constellation of class r~lationships and the class structure that characterized each
150
transition. In the cases of transitions from below, in American North and West it was
characterised by a 'dynamic petty commodity production from below', with relative
absence oftenancy, a remarkable absence of wage-labour, with farms worked with family
labour. In the case of England, it was a 'landlord-mediated capitalism from below', with
the emergence of a class of large capitalist tenant-farmers working the land with wage-
labour. In France, it was a 'significantly delayed capitalism from below', in which a
differentiated peasantry for long failed to usher in a metamorphosis towards capitalist
agriculture in the context of a long struggle waged by the small peasantry. 151

While acknowledging that the basic impulse for the agrarian reforms came from below,
we need to refrain from na"ive idealisation of the reforms in the state. The land reforms in
Keralam was basically a tenancy reform as the redistribution of land took place mainly
under the tenancy reform. Ceiling reform failed particularly because of the dismissal of
the first Communist ministry in 1959 by the Union government. Agricultural labourers
and Dalits in particular were not envisaged to receive major concessions, especially
ownership of land even under the 1959 legislation and the culpability of the State and
even of the Communist parties in this respect cannot be overlooked.

The class/social basis of the agrarian movement led by the CPI-M is revealed in that
tenants in general (not tillers per se) and rich peasants in particular were the beneficiaries
of the land reform. After a decade in opposition, the CPI-M returned to office after the
January 1980 elections leading a coalition of Left Democratic Front, with CPI also part of
it. One could not fail to take note of a convergence in the political discourses of the
CPI(M)-Ied Left Democratic Front and the Congress-led United Democratic Front since
early 1980s. Referring to the effects of embourgeoisement on electoral politics, Herring
says. "In an important sense, the CPI(M) is a victim of its own success.'" 52 Narrowing of
the gap between the two fronts had also to do with the Congress-led UDF in turn,
indulging in populist welfare measures in order to secure votes in elections.

Decline of Food Economy and Other Baneful After-effects of Land Reforms

The considerable decline in food production may legitimately be viewed as a major


negative fall-out of the land reforms _!.,n Keralam. The interests of plantation owners was

150
Terence J. Byres 2002: "Paths of Capitalist Agrarian Transition in the Past and in the
Contemporary World", pp. 54-83, in V.K. Ramachandran and Madhura Swaminathan (ed.).
Agrarian Studies Essays on Agrarian Relations in Less Developed Countries, Proceedings of
the international conference during 3 to 6 January 2002, Tulika, Kolkata, p. 59.
151
Byres 2002, p. 64.
1~2
Herring 1983, p. 214.

240
well protected under the KLRA as there was no land ceilings on holdings on plantations
engaged in producing cas~-crops like rubber, tea, coffee and cardamom, in conformity
with the guidelines set forth by the Planning Commission of the Union government. This
led to large-scale crop conversion of land to these crops. 153 Thus land reforms achieved
an undeclared objective of forcing big landowners to shift from the cultivation of coconut
and food crops like rice and tapioca (cassava) to plantation crops, particularly cash crops
like rubber. Thus the percentage of area under cash crops has consistently increased over
time. The area under paddy cultivation dwindled to almost half from 1965-66 to 1995-
96.154 Similariy, the area. under cultivation of another food crop namely, tapioca
(cassava), also came down to less than half during the period. On the other hand, the area
under rubber more than doubled and the area under coconut increased substantially.
Coconut in 1995-96, had the major crop area (30.3 per cent), followed by paddy (16.4 per
cent), rubber coming third ( 14.5 percent), pepper coming fourth (6.1 percent), tapioca
coming fifth (4.1 per cent), etc. 155

With reference to the Table 5.2: Cropping Pattern in Keralam (1990-91 to 2003-04), cited
earlier in this chapter, as for the percentage share of the area cultivated in 2003-04,
coconut occupied the first position with 30 per cent, rubber followed in the second
position with 16 per cent, paddy in the third position with 10 per cent, pepper in the
fourth position with 7 per cent, etc. During the period after the initiation of the Structural
Adjustment Policies {SAP), i.e., 1990-91 to 2003-04, areca nut recorded the second
highest increase with 58 per cent. Despite the price crisis, pepper recorded the third
largest increase in cropped area at 28 per cent and rubber followed in the fourth position
with 16 per cent during this period ofneo-liberal reforms.

It may be recalled that in 1966, i.e. prior to land reforms, the peasant sector was heavily
dependent on paddy, coconut and tapioca; these crops together accounted for 64 per cent
of the cropped area.' 56 By contrast, the situation has reversed in 2003-04, with the major
cash crops, namely, coconut, rubber, pepper, areca nut, coffee, tea and cardamom
accounting for 60 per cent of the gross cropped area in the state.IS7 As K.P. Kannan says.
in 1965-66. paddy had the largest area under cultivation in the state with 32.1 per cent,
'
: followed by coconut' with 22.5 per cent area in the second position, tapioca with 8.6 per

M.A. Oommen 1994: "Land Reforms and Economic Change: Experience and Lessons from
Kerala", pp. 117-40, in B.A. Prakash (ed.) 1994: Kerala's Economy: Performance, Problems.
Prospects, Sage Publications, New Delhi, Thousand Oaks, London, p. 127.
1;..
K.P. Kannan 2000, p. 9; based on Statistics for Planning and Economic Review, various
issues.
·~s
K.P. Kannan 2000, p. 9; based on Statistics for Planning and Economic Review, various
issues.
·~
1$7
Herring 1983, p. 180.
S. Mohanakumar & R.K. Sharma 2006: "Analysis of Farmer Suicides in Kerala", pp. 1553-58.
Economic and Political Weekly, 22 April, vol. XLI, no. 16, p. 1553.

241
cent in the third position, rubber with 5.9 per cent in the fourth position, pepper with 4.0
per cent in the fifth position, etc. 158

Apart from the exemption on ceiling limits to plantation crops, there was another major
reason for the change in the cropping pattern in the state. Thus M.A. Oommen had rightly
observed that conferring land ownership under land reforms to all categories of tenants,
including those who do not engage in agriculture had led to a shift towards perennial
crops like coconut and rubber from seasonal crops like paddy and tapioca, since the
former does not require constant personal supervision. 159

The shift to cash crops was, apparently, beneficial to metropolitan capital both Indian and
global, as cash crop production catered to their market requirements. This, in tum, led to
increased dependency of the Kerala economy and thereby placed the fortunes of its
people at the mercy of the global capitalist market characterised by anarchy of production
and volati Iity of prices.

While appreciating the substantial transformation brought about by the land reforms in
the state. on the negative side, we also need to acknowledge that land reforms led to the
eventual decline in the area under food crops and increased dependency of agriculture on
external markets, considerable land concentration and the widespread exclusion of the
actual toilers on land from right'> over agricultural Jand. 160

Land reforms had given a fillip to the capitalist relations in agriculture. Today, however,
in spite of the predominantly capitalist relations in the agriculture sector of the state,
several varieties of rent (pattom) appropriation methods and other semi-feudal modes of
I
exploitation are becoming prevalent. It also indicates that land reforms in the state is not
something that was achieved once and for all. Quite importantly, it also betrays the social
contradiction between the non-cultivating owners and non-owning cultivators.

In the context of development widening disparities, the trend could only have got further
pronounced with the growth of the service sector and non-agricultural employment in the
rural areas, as landowners could diversify into these sectors. And the prevalence of these
is, by no means, marginal ~s studies indicate. 161 According to the 37 1h round of the

ISS
K.P. Kannan 2000: Food Security in a Regional Perspective A view from "Food Deficit"
Kerala. Working Paper no. 304, Centre for Development Studies, Thiruvananthapuram,
Keralam. India. July.
I"•J
M.A. Oommen 1994, p. 132.
lhO
For further studies on land reforms in Keralam, please refer Ajith 2002; Balakrishnan 200 I;
Mooij 1999; Herring 1983.
161
See K.N. Nair & Vineetha Menon 2005: "Lease Farming in Kerala: Findings from Micro
Level Studies", Working paper 378, Centre for Development Studies, Thiruvananthapuram
which draws on five other micro-level studies. They are in Pathanamthitta, Kottayam,
Thrissur, Etnakulam and Wayanad districts, respectively. See also Ajith 2002, Appendix II:
·Tenant cultivation in Keralam', pp. 193-200.

242
National Sample Survey (N.S.S.), the incidence of tenancy (area leased in) in 1981-82
was 7.18 per cent of the operated area at the all-India level. In Keralam, it was recorded
as the lowest among 16 major states with just 2.05 per cent. 162 However, of late, Nair and
Menon (2005) argue that micro-level evidence indicates that the incidence of tenancy is
much higher than what is revealed by N.S.S. 163 Economic Review 2005 acknowledges that
21 ,554 hectares of land is being cultivated under the lease farming programme,
'Harithashree' in 895 grama panchayats all over the state, involving 33,519
neighbourhood groups and 3,27,063 families. Through such lease farming, mainly food
crops such as paddy, tapioca, other tuber crops, vegetables, etc. are cultivated. 164 This
should be considered as something quite positive given the heavy dependence of the state
on the neighbouring states for food items. P.S. Appu had pointed out that all over India
the ~enancy reform_s f:l~v~ result_ed in "tenancies being pushed underground" and land
being left uncultivated, particularly "in states like Kerala where the rural poor are
politically conscious and well organized". 165

The prevailing trend of agricultural land being used as a speculative asset has serious
implications for agriculture in the state. Apparently, the inflated price of land does not
match up to the productivity levels in agriculture. So it becomes near impossible for the
basic producing classes in agriculture to gain ownership over land, the principal
productive asset, leading to their being in a permanent state of penury. The external
influence of the remittances-driven 'Gulf boom' since the mid-1970s and the lack of
regulation by the State in this respect may be held primarily responsible for agricultural
land turning a speculative asset.

The Unfinished Agenda ofLaf!d Reforms

The foregoing analysis speaks of the need for a renewal of the project of land reforms. It
is clearly not a model of land reforms brought forth in mid-l990s under the auspices of
the World Bank, one committed to "accumulation from above" that we intend to advocate
but one that has the "potential to break the political structures that foster
underdevelopment". 166 We would like to recommend the following as initial measures:
'Stipulating minimum productivity requirement on land' 167 or imposing a fine on the
owners of fallow land and its recovery for contribution to the welfare fund of agricultural

16:!
P.S. Appu 1996, p. 119.
103
K.N. Nair & Vineetha Menon 2005, pp. 23, 27: f.n. 7.
lb-1
Government of Kerala 2006: Economic Review 2005, State Planning Board,
Thiruvananthapuram, pp. 74-75.
16S
P.S. Appu 1996, pp. 187, 212.
166
._ See, Sam Moyo and Paris Yeros (ed.) 2005: "The Resurgence of Rural Movements under
- Neoliberalism", Reclaiming the Land, Zed Books, London & New York, David Philip, Cape
Town,-p. 52.
167
Sam Moyo and Paris Yeros (ed.) 2005, p. 53.

243
labourers and poor peasants could be the first step in this direction. This may be helpful in
bringing more fallow land_ under cultivation and/or boost the revenues of the State for
welfare needs. A similar suggestion had come up from P.S. Appu who recommended the
measure of laying down minimum standards of cultivation with regard to absentee
landowners. 168 He recommends that good agricultural land owned by landowners who are
unwilling or unable to cultivate their land should be acquired under the Land Acquisition
Act. 169 Secondly, recording clandestine tenancies on lines of the 'Operation Barga' in
West Bengal is required in order to assure the actual cultivators' rights over land and
could help in the formulation of further policies. Thirdly, the proposal that the State
assume control over uncultivated land of those whose primary occupation is not
agriculture needs to be considered seriously. There is need for an important caveat here
that middle class persons like professionals have small plots of land in the rural areas,
which they do not cultivate and yet it is a collateral against economic vulnerabilities like
disease or other economic crises. Ajith is right that such a section need to be adequately
compensated and their land be taken over for cultivation by the impoverished
agriculturists. 170

As feudal/semi-feudal modes of rent appropriation have been legally abolished, the


revival of tenancies has created a policy dilemma for the state govemment. 171 There have
been proposals for legalising the leasing-out practices without adversely affecting the
legal owners since much of the land has been remaining uncultivated out of fear oflosing
ownership to tenant-cultivators to whom the plots are leased out as the provisions for
abolition of tenancies under the KLRA, 1969 are prejudicial to the interests of the owners
in such cases. It was proposed since the left-front government during 1996-200 I tharthe
land laws be amended in such a way that 'agricultural land is available for cultivation to
peasants without jeopardising the ownership rights of the present land owners'. 172
Similarly, Nair and Menon (2005) also propose that the lessors' rights over land needs to
be protected under a new policy framework. 173 Even at all-India level, scholars like P.S.
Appu had recommended a complete reversal of the all-India ·policy on tenancy reform. 174
He says, "If the restrictions on leasing are removed and government make an irrevocable
declaration that th'e tenancy law will not be amended in future to confer ownership rights

lb8
P.S. Appu 1996, p. 214.
loQ
P.S. Appu 1996, p. 219.
170
Ajith 2002, p. 184.
171
More on this in the next sub-section, "A reflection on the mode of production".
172
It was proposed by Shri K.E. Jsmael who was the Revenue minister, under the erstwhile LDF
government during the 1996-200 I period.
K.N. Nair & Vineetha Menon 2005: "Lease Farming in Kerala: Findings from Micro Level
Studies", Working paper 378, Centre for Development Studies, Thiruvananthapuram, p. 24.
P.S. Appu 1996, p. 187.

244
on tenants, quite a few absentee landowners wi II agree to lease out their land. '" 75 He
estimates that this single ITJeasure could enable the rural poor to lease in about I 0 per cent
of the arable land in the country. In a similar vein, M.L. Dantwala, C.H. Hanumantha Rao
and V.S. Vyas advocated the removal of restrictions on leasing out of land and permitting
clandestine tenancies to come to the surface. 176

Although this measure might be useful for utilising the uncultivated land in the state and
for bringing more land under cultivation and could, in the short tenn, bring more
tenancies overground, in the long term, this might tantamount to legalising the various
fonns of pattom (rent) appropriation prevailing in the state today. Moreover, in the long
term, this may not be considered a feasible proposition if we need to overcome the
mismatch in agrarian relations that has brought tenancy to the fore, in the first place. Thus
they had said, "It [tenancy] is the consequence of the simultaneous increase in two
categories of people, [']those who have land but unable to cultivate' and 'those who have
the labour and skills, but no lands or not enough lands of their own to cultivate'." 177

A Reflection on the Mode of Production

The state had distinct specificities with early monetisation of the economy and early
initiation of commodity production as a result of the colonial transformation in
agriculture, especially through the setting up of plantations. These, in tum, led to
significant restructuration of the labour process and considerable regeneration in the
social sphere, including the ·abolition of slavery in the Thiruvithamkoor (Travancore)
princely state of southern Keralam in 1854. 178. Keralam, perhaps, was the first state to
have ha~ a production system primarily for _external markets. Remittances-driven growth
of service sector and consumption boom in the state since mid-1970s are notable facts.

Are we not, rather witnessing an accentuation of 'semi-colonial' relations, by neo-colonial


or indirect means? The latest observations by an activist on the cash-crop dominated
Wayanad district is pertinent in this context: Before 1995, there were only about 40
·'blade companies" (the popular term for usury firms in the state) in the district. Today,
there are more than 500 of them operating in the district. Their proliferation was

l7~
Ibid, p. 214.
17o
Ibid, pp. 218; 208. .
177
K.N. Nair & Vineetha Menon 2005, pp. 4, See also pp. 6-7.
178
T.H.P. Chentharasseri 1970: Kera/a Charithrathi/e Avaganikkappetta Edukal (The Neglected
Aspects of Kerala History- Malaya lam), Prabhat Book House, Thiruvananthapuram, pp. 152-
3. This is despite the colonial plunder of the economic resources of the land, resulting in
considerable ecological ruin as well. "As the forest ceased to be, with the coming of
plantations, the river ceased to be, with the building of dams." (Rammohan 1996, p. 288). See
the section, 'Historical Constitution of Dominant Class Formations in Keralam' earlier in this
chapter for an overview of the positive and negative aspects of the colonial
transformation/colonial modernity in the state.

245
necessitated by the pauperisation of the peasantry owing to the drastic fall in the prices of
cash crops like coffee and pepper as a result of the liberalisation of imports as part of the
policies of imperialist globalisation. This is the picture of Wayanad district where one
peasant commits suicide in every five days. 179 The 'blade man' does not turn into a feudal
lord but employs his earnings into illegal/criminal channels such as smuggling of ivory,
spirit (concentrated alcohol), robbing vehicles, financing and the like. 180

Ajith (2002) argues to the effect that the Mode of Production (MoP) in Keralam is 'semi-
feudal, semi-colonial'. 181 In support of his semi-feudal thesis, he says, "Semi-feudalism in
the agrarian structure is expressed through the highly skewed land relations, the
continuing relationship between Jand ownership and caste, the landlessness and land
poverty of the bottom of the agrarian hierarchy that engages in agricultural work, the rural
overlordship of landlordism and non-economic coercions, land ownership that does not
require agriculture, subsistence tenant-cultivation, severe usury-mercantile
182
exploitation."

It is quite important to note that graded caste-based inequalities persist in the state with
respect to landholding is indicated by the fact that OBC Rural Labour Households (RLH)
in the state hold only 0.06 hectare land per cultivating household during 1999-0 I as
compared to 0.07 hectare for All RLH, 0.09 hectare for Adivasi RLH and merely 0.05
hectare for Dalit RLH. 183

The aforementioned phenomena of'the feudaljenmi turning capitalistjenmt through land


reforms and the revival tenancies and rent appropriation may be cited in defense of the
claim. The revival of tenancies since the 1990s in particular has involved mostly
subsistence farming by agricultural labourers and poor peasants showing how non-
capitalist forms of 'rent' appropriation by non-cultivating owners co-exists in certain
segments of the economy along with capitalist modes of 'profit' -earning and 'wage'
payment to the labourers. Thus leasing in is also engaged in as a commercial proposition

Janardhanan, Saju 2005: "Wayanaattile blade-viruddha samaravum arddha-naaduvaazhitha


raashtriyavum" [The anti-'blade' struggle in Wayanad and semi-feudal politics- Malayalam],
pp. 26-28, Janakeeya Paatha, no. I, November 2005, p. 27.
l$1)
Ibid, p. 28.
lSI
Ajith 2002, pp. 183, 185, 22-29, 5 et passim. We do not, however, object to the broad
designation of the mode of production (MoP) in India as 'semi-feudal, semi-colonial'. This is
because we had apparently a feudal-colonial MoP during the Raj, and after the transfer of
power, it turned 'semi-feudal, semi-colonial' because feudalism was not abolished in toto and
the domination by imperialism i.e., by several advanced capitalist countries, continued
through indirect/neo-colonial means.
IS~
Ajith 2002, p. 183.
183
See, Tables A.7X, A.7Y, A.8 & A.9 in Appendices. Based on Government of India 1999-
2001: Rural Labour Enquiry Report on General Characteristics of Rural Labour Households
(55th Round of N.S.S.), Statement 3.3 ( 1-4), India Labour Bureau, Ministry of Labour,
Controller of Publications (CoP), Shim Ia.

246
by large landholders and persons whose major occupation is not agriculture. 184 These two
kinds of tenancies need to. be viewed on entirely different terms. As tenancy was equated
to feudalism in the policy logic of land reforms in the state 185 , the revival of subsistence
tenancy does put a question mark on the nature of the relations of production in
agriculture.

Panku (share) pal/om, pana (money) pattom, pa/isa (interest) pal/om are some of the
methods becoming prevalent. 186 It may be borne in mind that the revival of tenancy has
occurred despite a formal ban on it under under sections 72L, 73, 74 of KLRA, 1969 187
Whether these relations are to be designated as 'semi-feudal' is also a bone of contention.
Ajith (2002) tends to view the resurfacing of tenancies as the reflection of 'semi-feudal,
semi-colonial' relations in the agriculture sector of the state. This approximation of the
mode of production in the state to the pre-colonial Chinese one, however, is disputable
given the predominance of the plantation sector, early and highly monetised exchange
relations in the state, etc. For contrary arguments see Saju Janardhanan (2005) examining
the case of the proliferation of usury firms in backward Wayanad district. He argues that
it is a reflection of the accentuation of 'semi-colonial' relations, as related to the price
crisis of cash crop commodities, as against 'semi-feudal' ones. 188

It has already been cautioned that it is erroneous to view tenancy as a feature of pre-
capitalist mode of production. Thus during the mode of production debate itself, Aparajita
Chakraborty had pointed out that tenancy, which in India was part of the pre-capitalist
relations until recently, has been becoming compatible with emergil}g capitalist
relations. 189 Similarly, Gail Omvedt had disparaged the assumption that "immiserisation.
pauperisation, growing landlessness, etc, are themselves signs of 'semi-feudalism' or lack
of capitalist development". 190 It is not logically inconsistent to view them as part of
capitalism itself and quite appropriately, in its oligopolistic phase:

184
K.N. Nair & Vineetha Menon 2005, p.23.
18~
Ronald Herring 1983, pp. 212, 185.
ISb
For studies on leased cuitivation, see Ajith 2002: "Paattakrisht' (Leased cultivation -
Malayalam), pp. 93-112 and Appendix II: "Keralathile Paattakrishi" (Leased cultivation in
Keralam - Malayalam), pp. ·193-200; and K.N. Nair & Vineetha Menon 2005.
187
Herring 1983, p. 188 and .K.N. Nair & Vineetha Menon 2005, p. 6.
ISS
See Saju Janardhanan 2005.
189
Aparajita Chakraborty 1981: "Tenancy and Mode of Production", pp. 5-14, Economic and
Political Weekly, vol. 16, no. 13, Review of Agriculture; Cited in Alice Thorner 1982 abc:
"Semi-Feudalism or Capitalism? Contemporary Debate on Classes and Modes of Production
in India" in three parts, Economic and Political Weekly, vol. 17, Dec. 4, no. 49, pp. 1961-66;
Dec. II, no. 50, pp. 1993-99 & Dec. 18, no. 51, pp. 2061-66; p. 2062.
I•JO
Gail Omvedt 1981a: "Capitalist Agriculture and Rural Classes in India'". pp. 140-59:
Economic and Political Weekly, vol. 16, no. 52, Review of Agriculture; cited in Alice Thorner
1982, p. 2063.

247
Th<! rationale of the argument by Ajith was after Marx that the relations of production
under which the surplus-producing basic classes exist has to be considered the Mode of
Production itself. Thus Marx had said, 'The relationship between owners of the means of
production and the direct producers reveals the innermost secrets of the whole social
system ... ' 191 Focusing on agriculture, Ajith says that the colonial transformation in
agriculture and even the subsequent land reforms since 1957 had taken the Dalits and
Adivasis out of the old adiyaala system and yet they being the prime source of surplus
extraction continued to prevail and they continued to be deprived of land as well. 192
However, the phenomenon of surplus extraction from the basic producing classes exist
across different segments of the e7onomy. The basic producing classes exist not only in
the plantations and the rest ofthe agricultural sector, but in modem industries, rural non-
farm sector- in traditional industries in particular, and the booming service sector. Unlike
in other states of India, it would be rather naYve to designate the MoP in Keralam to be
·semi-feudal, semi-colonial'. There is difficulty in arguing that 'semi-feudal, semi-
colonial' is the dominant Mode of Production given the predominance of plantations
since colonial times, early monetised economy, etc. The plantation economy had already
created a mode of capitalist agriculture since the colonial times. On the basis of the Farm
Management Survey conducted one year before the 1966-67 Survey, Ronald Herring
( 1983) had observed, "Capitalist agriculture was well established in Kerala, and the policy
m<!ans of separating tenants who were victims of "feudalism" from tenants who were
small-scale operatives of capitalism were by no means clear." 193 Thus even on farms less
than one acre in size, family labour constituted an average of only 47 per cent of total
labour; the remainder was hired. The percentage of hired labour increased with the size of
holding: for farms between 2.5 and 5 acres, it was 76 per cent; on farms larger than 25
acres. 97 per cent. 194, Ajith may be held guilty of the fallacy of approximating the MoP in
Keralam to the pre-revolution Chinese reality. And yet, it may be rightly argued as we did
theoretically m Chapter II that capitalist MoP articulated with pre-capitalist social
relations so as to generate greater surpluses for capitalist accumulation. Moreover,
relations of production and Mode of Production need to be viewed as distinct
phenomena. 195 Tenancy per se was considered synonymous to feudalism of the rentiers
and sought to be abolished but the capitalist mode of production in agriculture was

Karl Marx 1977: Capital, vol. 3, Progress publishers, Moscow, p. 58; as cited in Ajith 2002. p.
33.
Ajith 2002, pp. 44, 56.
Ronald J. Herring 1983: Land to the Tiller: The Political Economy of Agrarian Reform in
South Asia, Oxford University Press, Delhi, p. 184.
Government of India 1972: Studies in the Economics of Farm Management in Kerala, 1964-
65, Directorate of Economics and Statistics, New Delhi, table 4.11; as cited on Herring 1983,
p. 184.
Vtsa Patnaik (ed.) 1990: Agrarian Relations and Accumulation: The Mode of Production
Debate in India, Sameeksha Trust, Bombay.

248
considered legitimate and encouraged in that the land under capitalist production
relations, notably the pl~ntations were left out of the purview of the land ceiling
provisions. It may, however, be borne in mind that although capitalism in agriculture is an
advance over feudal relations and is considered to be less oppressive than the latter,
exploitation through surplus expropriation takes place either way. The debate on the land
question also gives rise to 'the uncomfortable question' on the character of private
property as such, "If rents are illegitimate, are profits?',. 96 Labour being the sole producer
of value, the labourers have the legitimate right to ownership of the means of production
even under capitalist relations, plantations not exempted. Moreover, the decadent and
. ,
rentier capitalism of the oligopolie~ need not necessarily be less oppressive because it is
often seen to articulate with the oppressive pre-capitalist forms of exploitation, in turn,
boosting the surpluses of capital. 197

The Land Question and the A·grarian Classes

The question arises as to what would be the place for the land question in any agenda of
social transformation for Keralam? How relevant would be the land question as was
raised during the years of land struggles? The question becomes rather complicated since
Keralam is said to be a state where agrarian transition to capitalism has already taken
place and feudal production relations have nearly gone extinct. However, we would view
that under the new dispensation, the land question in a plantation-dominated economy,
assumes added significance in the context of the need to attain food self-sufficiency and
with a view to develop the indigenous production base against the volatilities of the
global finance capital. Control over land, the principal productive asset, by the actual
toilers could enhance the incentive for agricultural production, and could even reduce the
dependence for productive capital abroad in capital-scarce economy, as was
acknowledged in the Soviet industrialisation debate. Moreover, control over productive
assets by the broad majority of the population could generate 'effective demand' and thus
provide assured markets for the goods produced.

Although it may be granted that the rhetoric on land reforms contained in the Five Year
Plan documents of the Governm~nt of India are merely 'full of sound and fury signifying
nothing' in Shakespeare's words, in terms of actual policy measures, they did contain an
important element of truth. Thus the Seventh Plan ( 1985-90) document says:

''[L]and reforms have been recognised to constitute a vital element both in terms of the
anti-poverty strategy and for modernisation and increased productivity in agriculture.

Herring 1983, p. II.


More on this theoretically in Chapter ll and both theoretically and empirically il"l the case of
Keralam in Chapter IV.

249
Redistribution of land could provide a permanent asset base for a number of rural landless
poor for taking up land bas_ed and other supplementary activities." 198

Dreze & Sen explain the rationale for land reforms in terms of equity for the sake of
growth. Dreze & ·Sen point out that Philippines, one of the least significant growth
performers among east Asian economies, is also an example of deep failure to carry out
adequate land reforms. 199 "The Indian record is even worse than the general situation in
the Philippines; some success in land reforms has been achieved in West Bengal and
Kerala, but the overall achievements in most Indian states are quite dismal." 200

While himself not being averse to collectivist/radical alternatives to the land question,
Ronald Herring rightly says, 'land', in the slogan, 'land to the tiller' could take on a
spectrum of meanings once it is conceptualised as a "bundle of rights" from specified
share of product, hereditary security, transferability, to full-fledged ownership and not
merely as a commodity or a patch ofsoil. 201

Land fragmentation and on the other hand, land concentration in the landholding pattern
in Keralam merit attention. Let us examine the case of landholdings prior to and
subsequent to the land reforms in 1970:

Table 5.3:

The long-term trend in the number and area of landholdings in Keralam

Number ofltmdlwldings (in lakhs)


Holding 1966/67 1970171 1976177 1980/81 1985/86 1990/91 1966/67 to
I
o

Size {a~re) 1990/91


(+/-)
Below 2.5 20.28 18.80 28.67 37.28 44.73 50.16 +29.88
2.5-5 2.50 2.29 2.77 2.90 2.81 2.81 +0.31
I 5-10 1.39 1.26 1.12 1.24 1.04 0.98 -0.41
10-25 0.51 0.27 0.32 0.36 0.25 0.21 -0.30
Above 25 0.11 0.04 O.o3 0.03 0.04 0.03 -0.08
Total 24.79 23.06 32.91 41.81 48.87 54.19 +29.40
Area oflandlloldings (in lak/1 acres)
Holding 1966/67 1970171 1976/77 1980/81 1985/86 1990/91 1966/67 to
Size (acre) 1990/91
(+/-)
Below 2.5 14.4 13.47 16.97 18.75 20.20 21.98 +7.94
2.5-5 8.87 9.13 9.50 9.95 9.45 9.53 +0.66
5-10 9.58 8.47 7.58 8.28 6.70 6.35 -3.23
10-25 7.08 3.74 4.54 4.90 3.25 2.83 -4.25
AoO\·e 25 5.60 5.02 3.22 3.25 4.23 4.35 -1.25
Total 45.16 39.82 40.23 45.13 43.83 45.04 --

Government of India (Gol) 1985: 1h Five Year Plan, 1985-90, vol. II, Planning Commission,
New Delhi, pp. 60-61; as cited in M.A. Oommen 1994, pp. I 17-18.
'"" Jean Dreze & Amartya Sen 2002: India Development and Participation, Oxford University
-~ress, Oxford, first published 1996, pp. 79-80.
:oo
Dreze & Sen 2002, p. 80.
::o1
Ronald J. Herring 1983, p. 13. More on the theory of land reforms in Chapter VI.

250
Sote: There may be a problem with the data with regard to the huge decline in the total land area
during 1970/71 and 1976/77. A decline to the tune of around 5 lakh acres is rather implausible. Similar
is the case with the decline of.2 lakh acres in 1985/86. So only a rough comparison is possible from this
table.
Sources: (I) Government of Kerala 1976: Survey on Land Reforms 1966-67, Thiruvananthapuram, p.
63; (2) Government of Kerala 1985-86: Agricultural Census 1985-86, Department of Economics and
Statistics, Thiruvananthapuram, p. 5; (3) Government of Kerala 1996: Economic Review 1995, State
Planning Board, Thiruvananthapuram, p. S-30; M.M. Somasekharan 1986: Keralathile Kaarshika
Ghatana (The Agricultural Structure in Kerala- Malayalam), CRC-CPI(ML), Kerala unit, Kozhikode,
p. 60. As cited in Ajith 2002: p. 226-27.

Table 5.4: Average area of landholdings in Keralam (in acres)

Holding Size 1966/67 1966/67to


1970ni 1976n7 1980/81 1985/86 1990/91
1990/91 (+/-)
'
Below 2.5 acres 0.71 0.72 0.59 0.50 0.45 0.44 -0.27
2.5-5 - 3.55 3.99 3.43 3.43 3.36 3.39 -0.16
5-10 6.89 6.72 6.77 6.68 6.44 6.48 -0.41
10-25 13.88 13.85 14.19 13.61 13.00 13.48 -0.41
Above 25 50.91 125.50 107.33 108.33 105.75 145.00 +94.09
Source: Based on Table 5.3 above, "The long-term trend in the number and area of landholdings in
Keralam" (Area/number of holdings), Ajith 2002.

About 89 per cent of the landholdings in Keralam are below half a hectare, the average
size of landholding in the state being less than 0.41 hectares. 202 As per Tables 5.3 and 5.4
on landholdings above, in 1990/91, 92.6 per cent of the total landholdings in the state
come under the category of below one hectare (i.e., 2.5 acres), the average size of which
was merely 0.44 acre. However, the below one hectare category constituted only less than
half ( 48.8 per cent) of the total agricultural land in the state in 1990/91. The average I and
area of holdings below 2.5 acres declined from 0.71 acre in 1966/67 to 0.44 acre in
1990/91, marking a decline of -0.27.

The question of fragmentation of landholdings in the state has been something very much
harped upon. It has been pointed out that except in Punjab, Haryana and Uttar Pradesh
where the consolidation of holdings has been completed, all holdings, whether large,
small or marginal are subdivided and fragmented. 203 The other side of the picture of land
fragmentation in Keralam is that there is also particularly high concentration of land.
Going oy th~ Tables 5.3 and 5..4 above, in 1990/91, landholdings above 25 acres (I 0
hectares), constituted only a miniscule 0.1 per cent of the total number of landholdings in
the state and yet they constitu~~d 9.7 per cent of the total land area in the state. 204 The

:::.o::.
Report on the Agricultural Census, 1980-81 as cited in B.A. Prakash 1994, p.3 I.
P.S. Appu 1996, p. 196. It is worth recalling that these are, indeed, areas of capitalist
agriculture.
Considering the aforementioned fact that the large plantations have encroached upon huge
tracts of forestland in the state and the actual control exercised over large tracts of leased
government land, even this figure looks to be a gross under-estimation.

251
downward trend in the land area of holdings above 25 acres in 1976/77 may be explained
with reference to the forr~al partition of joint landholdings to circumvent ceiling laws.
Howe\·er, from 1980/81 onwards, i.e., following the decade of land reforms, there was
consistent increase in the land area of large holdings. There has been substantial rise in
the average land area of holdings above 25 acres from about 51 in 1966/67 to 145 in
1990/91, marking a rise of over 94 acres over this period.

As compared to other states, in terms ofland concentration, Keralam does not fare well in
comparison with most other states. Thus in 1982, the top 1 per cent of the households in
Keralam held 14.01 per cent of land, fairly close to the all-India average of 14.35 per
cent. Keralam comes third with only A.P. (16.78 per cent) and T.N. {14.7 per cent) having
higher figures than Keralam. 205 As for the top 5 per cent of the landowning households in
Keralam, they hold 37.45 per cent of the land, ranking Keralam as the fifth (A.P. T.N.,
M.S. and Punjab & Haryana take the first four positions in that order). As for the top 10
per cent of the households, Keralam once again ranks third with only A.P. and T.N. ahead
of it. 205 The exemption of ceiling limit for plantations could be an important reason for
such land concentration. There could be big disparities in the distribution of agrarian
income as well, corresponding to such land concentration, as suggested by C.T. Kurien
himself. 207 As for the sections that OYlTl the large holdings, Indian big capital, a section of
the regional dominant classes and religious institutions hold significant chunks of land in
the state. particularly in plantations. The foreign owners made an exit from the scene with
the transfer of power.

Landlessness and Land Concentration in Contemporary Keralam

Rural Labour Enquiry (RLE) based on the National Sample Survey (NSS) rounds
conducted by the National Sample Survey Organisation (NSSO) is considered to be a
reliable source of understanding the agrarian scenario in the country. By late 1970s land
reforms in Keralam was somew.hat accomplished according to scholars in this field. An
examination of the landholding pattern in 1977-78 reveals the post-land reforms scenario.
The contemporary scenario is revealed by the figures for 1999-01.

In 1999-0 I, the number of Land poor (0.0 I to 0.2 ha) is the highest among Rural Labour
Households (RLH) in Keralam among 15 major states at 44.8 per cent vis-a-vis 17.6 per
cent at all-India level. By contrast, as for Landless RLH in 1999-0 I, Keralam is the fourth
lowest among IS major states at 46.1 per cent as against the all-India average of 58.9 per

C.T. Kurien 1995: "Kerala's Development Experience: Random Comments about the Past and
Some Considerations for the Future", pp. 50-69, Social Scientist, Jan.-March, p.54.
C.T. Kurien 1995, p. 54.
~07
C.T. Kurien 1995, pp. 54, 61.

252
cent. This is understandable because land reforms had effectively distributed homestead
land to hutment dwellers. I~ 1999-01, the landless and the land poor, together (designated
by us as 'All I:and poor') constitute 90.9 per cent of RLH in Keralam vis-a-vis 76.5 per
cent at all-India level. 208

In 1977-78, the number of Land poor (0.01 to 0.2 ha) RLH in Keralam was already the
highest among 15 major states at 74.7 per cent vis-a-vis only 33.2 per cent at all-India
level. 209 The category of Landless RLH is unavailable in 1977-78. So the above figure
should be comparable to the 90.9 per cent in the state during 1999-01, comprising of both
Landless and Land poor. This reveals a rise in the number of 'All land poor' in the state
during 1977-78 to 1999-01 from. 74.7 per cent to 90.9 per cent, indicating that land
poverty in the state continued to remain at the already high level but also rose further and
the all-Ind-ia-average of land poverty marked a phenomenal rise from 33.2 per cent to 76.5
per cent. 210

According to National Family Health Survey (NFHS) estimates in 1992-93, with respect
to the rural households not owning any agricultural land, the 63 per cent for Keralam is
disproportionately higher vis-a-vis the all-India average of 36 per cent. The figure for
Keralam in 1992-93 is even higher than that of the 41 per cent for Bihar and 45 per cent
for A.P., the states where serious land struggles are being waged. The widespread
development of capitalist relations in agriculture may be the reason for that, even similar
to the case in Punjab where landlessness is high at 49 per cent and Haryana where it is
high at 43 per cent. 211 As Marx had noted, labourer in capitalism is 'free' in a double
sense: free from feudal bondage and free from any ownership of the means of
production. 212

Again, as per Census 1991,213 the proportion of agricultural labourers in rural population
in 1991 at 9 per cent was comparable to the all-India figure of II per cent. The disparity
between 63 per cent of the rural households not owning agricultural land and only 9 per
cent of the population being agricultural labourers may be explained by the fact of the
high growth of non-farm employment in the state. Average wage rate of casual

:oa Government of India 1999-200 I: Rural Labour Enquiry Report on General Characteristics of
Rural Labour Households (55th Round of NSS), India Labour Bureau, Ministry of Labour.
Controller of Publications (CoP), Shim Ia, Statement 3.3 (I).
See Table A.IO in Appendices based on Government of India 1977-78: Rural Labour Enquiry
Report on General Characteristics of Rural Labour Households 1977-78, Statement 3.3 ( 1).
pp. 41-2.
210
See Table A.IO; and Government of India 1999-2001: Rural Labour Enquiry Report on
General Characteristics of Rural Labour Households, Statement 3.3 (I).
~II
See Table A. I in Appendices.
::!12
Cited in Ajith 2002.
!13
Table A. I in Appendices; cited from Dreze and Sen 2002.

253
agricultural labourers in the state in 1997-9 was rupees 6.78 per day at 1960-1 prices at a
much higher level than the corresponding all-India figure of rupees 2.97 per day. And
even the growth rate of real agricultural wages over the decade of 1990-2000 was at 7.9
as compared to the low level of 2.5 at all-India level. Although the real wages have kept
increasing, studies show that the days of work available per year has come down
drastically. 214

In 1999-0 I, land concentration is the highest in Keralam among 15 major states with
merely 0.1 per cent RLH controlling all the holdings above 2 hectares. West Bengal and
Orissa also figure in the same highest range at 0.1 per cent. In 1977-78, i.e., following the
land reforms, land concentration was the highest in Kerala state among 15 major states
with merely 0.17 per cent of RLH controlling all the holdings above 2 hectares. West
Bengal and Assam followed in the second and third positions in this respect. 215 In 1999-
0 I, it marked an even higher concentration from 0.17 per cent controlling it in 1977-78. 216

Such a high level of land concentration is a matter of concern since the average size of
holding per cultivating household in the state is merely 0.07 hectare, as compared to 0.18
hectare at the all-India level in 1999-0 I. In other words, the average size of holding in
Keralam is less than 40 per cent of all-India in 1999-01. Keralam figures as the fourth
lowest among- 15 major Indian states in this respect. The average size of holding per
cultivating household in the state in 1977-78 was merely 0.16 hectare, as compared to
0,61 hectare at the all-India level. Keralam had tigured as the state holding the lowest
average landholding in 1977-78 among 15 major Indian states in this respect.~ 17 While the
average holding in·the state came down to less than half from 0.16 hectare to 0.07 hectare
during 1977-78 to 1999-0 I, the all-India average dwindled to less than one-fourth during
this period, possibly due to contrary trends in demographic transition. 218

Landgrabs

Over the decades, thousands of acres of forestland has been encroached by large owners
in Wayanad district, at Moonnar and Mathikettan in ldukki district and Nelliampathy in

For growth of real wages, see Table A. I in Appendices; and for decline in the number of
workdays, see Joan P. Mencher 1990: "The Lessons and Non-Lessons of Kerala: Agricultural
Labourers and Poverty", Economic and Political Week~v. vol. 25. no. I, 6 January.
Land concentration in Keralam, West Bengal and Assam in 1977-78 and in West Bengal and
Keralam in 1999-01 might well have been a reflection of the presence of large plantations in
these states.
Government of India 1999-200 I: Rural Labour Enquiry Report on General Characteristics of
Rtiral Labour Households, Statement 3.3 (I); and Table A.IO in Appendices for 1977-78
figures.
Table A.l 0 in Appendices for 1977-78 figures.
Government of India 1999-200 I: Rural Labour Enquiry Report on General Characteristics of
Rural Labour Households, Statement 3.3 (I).

254
Palakkad district, often, with the connivance of the forest department. It has been ironic
that even as the governm~nt is not honouring its agreement for redistribution of land
made in 2001 with the impoverished Adivasis, it continues with its legally given lease of
1.08,695 acres of land to those close to the establishment for nominal lease amounts. 219
Thus Tata-tea Limited (TIL) under Tata Finlay group alone enjoys lease over 58,583
acres of government land around Moonnar in Devikulam taluk in Idukki district, at
nominal rates that does not exceed 50 rupees per acre, per annum even today. 220 In
addition to it, Tata-tea had illegally encroached on 50,000 acres of forestland at Moonnaar
in Idukki district, as admitted by the Legislative Assurance Committee reports of 1996,
1997 and 2000. 221 Allegedly, government land under its control was also being sold out
by the company. Even to this day, 'Tata remains the biggest landholder in the state. 222

Against the backdrop of the price crisis in the tea plantations since the year 2000-0 I,
spurred by unrestricted imports with low import duty on Sri Lankan tea and a sharp fall in
the international prices of tea, Tata-tea has decided to gradually move out of the
plantations business to focus on promotion of branded teas. The company decided to sell
its 17 tea estates in the state to a new private limited company being formed by the
employees of the firm and hold only Jess than 20 per cent equity. "For TIL, we want to
manage a gradual phased exit from plantations, because ownership of a plantation is not
necessary to source the product." said Percy Siganporia, Managing Director, TIL. 223 The
tea plantations in the state could not cope with globalisation owing to poor productivity-
old plants. obsolete technology, etc. 224 Thus M.S. Swaminathan Commission on WTO
concerns in agriculture in the state had had recommended the improvement of
productivity and quality, and focus on value-added products like instant tea and tea

Janakeeya Aasuthrana Parisee/akarkkul/a Kaipusthakam, (Handbook for Trainers in People's


Plan Campaign- Malayalam) 1996: 3'd phase, Thiruvananthapuram, pp. 1-8; Ajith 2002, p.
224.
K. Ravi Raman 2004: "The Asian Development Bank loan for Kerala (India): The adverse
implications and search for alternatives", Working paper 357, Centre for Development
Studies, Thiruvananthapuram, p. 39; Ajith 2002, p. 224.
Government of Kerala (GoK) 1996, 1997: Legislative Assurance Commiltee Reports, dated
14 November 1996 and 29 July 1997 submitted to the Tenth Legislative Assembly; Prakash
2002, p. 84; Ajith 2002, p. 18. The Legislative Assurance Committee reports pointed out that
out of the 70,522 acres of hind taken over from Tata-Finlay group under the Kannan Devan
Hills (Resumption of Lands) Act in 1971. The expert committee of the government that
submitted its report in 1976.had recommended this land for distribution to the Adivasi tribes
like Muthuvan and Mala J>ulayan who were originally displaced by plantations under the
British. No land was distributed to the Adivasis under this scheme. Legislative committees
pointed out that 50,000 acres of this land was, however, re-encroached by Tata-tea and that the
encroached land and land leased out by the government were being sold out by them as plots
for construction of private tourist resorts (Prakash 2002: 81, 84).
T.G. Jacob 1998: Madhyamam, Nov.27, p. 8.
Hindu 2005: "Tata Tea to sell Munnar estates to employees", 12 February,
Thiruvananthapuram edn., p. 15.
Sreedevi Jacob2003: "A bitter brew in the high ranges", The Hindu Magazine, Sunday, 28
September, Thiruvananthapuram edn., pp. 1-2. ·

255
bags.~ 15 Given the undistinguished past record of the company, this might be interpreted
as an attempt by the beleaguered company to shift the risks of plantations business to its
employees and yet maintain its control over the value added products. Moreover, the sale
of leased government land and grabbed forestland is quite a disputable proposition.
Similarly, A.V. Thomas & company has been leased out 7,500 acres and is required to
pay only Rs.5.30 per acre per annum. 226

Local activist accounts from Wayanad district speak about extensive Iandgrabs by large
and small plantations there. The case of Harrison Malayalam Plantations (HML) in
Wayanad is instructive. Based on authentic documents, an account says that the lease
period for around 90 years, of HML in Wayan ad had expired way back in early 1970s and
yet the state government failed to take back the land running into around 15,000 acres of
land. Another 15,000 acres of land was encroached upon by the HML plantation.
Moreover, the plantation was allegedly selling off plots of land from the area under its
control. There were also several smaller estates in the district which had also engaged in
encroachment into adjoining forestland. 227 Besides, ·there were prominent individuals in
the mainstream political parties who have grabbed large tracts of forestland in the district .
. Wayanad having been and still being a hot-bed of wrangling over the Adivasi land
question, such landgrabs into forestland should have attracted much greater attention in
public debates. This, however, has not happened and the debate in this respect has centred
around how migrant settler Christian- peasants and large owners have alienated the
forestland that has traditionally been inhabited by the Adivasis. This, in turn, should cast
a reflection on the character of the debates in the public sphere and in the media and more
importantly. it should cast a reflection on the class (and communal) reality in the state.

The state government has been reluctant to implement the Supreme Court order of 23
November 2001 228 to evict the encroachments of forestland in the state that occurred after
I January 1977, involving I 0,038 hectares as identified in the "Statement Showing

Ibid.
Ravi Raman 2004, p. 39; Peoples Plan Campaign 1996, p. 1-8; Ajith 2002, p. 224. On 22
October 2003, in a conference on 'Adivasi land, politics, power· at the University of Kerala,
Thiruvananthapuram, C.K. Janu claimed that there is II lakh acres of surplus land in Keralam
and even if only 2.5 lakh acres were distributed, all Adivasi households in the state would get
five acres of land each. (It is assumed that there are roughly 50,000 landless Adivasi
households in the state.).
Saju Janardhanan (personal communication).
lA No. 703 in Writ Petition 202\95.

256
Details of Encroachment" prepared by the state government. 229 The end-result of all these
land-grabs, particularly Ofl the Western Ghats has been the fast depletion of the forest
cover in the state. Thus the rich canopy of forests in Keralam may be only less than 7 per
cent and there could be another 7 per cent of degraded forests. 230 Other recent unofficial
estimates indicate that the forest cover in the state has dwindled to less than 5 per cent of
the land area. 231

Further, the state government has done precious little to stop the ganja (cannabis sativa)
cultivatiOn in at least 20,000 acres of'forestland' within the state. 232 The ganja cultivation
goes on unimpeded in the inaccessible terrains of the 'forest-land' in the High Ranges in
ldukki district and increasingly, of late, in Palakkad district.

There have been recent reports of encroachments by powerful interests at Mathikettan in


ldukki district, Wagamon (bordering Kottayam and ldukki districts), Nelliampathy in
Palakkad district, etc. with the connivance of the forest department. 233 Similarly, Poabson
company has allegedly encroached on vast tracts of forestland at Nelliampathy in

This includes encroachments upon 2,974 hectares at Mannarkkad forest division in Palakkad
district, 1,034 hectares at Moonnar in ldukki district, 732 hectares in Wayanad south, 633
hectares in Kozhikode division, 405 hectares at Nilambur division in Malappuram district, 391
hectares at Nemmara in Palakkad district, 130 hectares at Malayattoor and 699 hectares at
Kothamangalam in Ernakulam district and 106 hectares in Kottayam division. According to
this report, the state government had identified for eviction 7,652 hectares of land encroached
upon and verification of another 4,064 hectares of land was yet to be completed. This would
total to 11,716 hectares, i.e. higher than what is mentioned in the official statement (Hindu
2003: "Government apathy makes forest officials go slow on evictions", 23 December,
Thiruvananthapuram edn., p. 5).
Sugathakumari 2005: "Vanavivaadangal" [Forest controversies- Malayalam], 16 December.
Friday, Mathrublzoomi, Thiruvananthapuram edn., edit page.
K. Rajanbabu 2003: "Kaadukaiyyettam thudarkatha - 3: Kuadinekkal thazhachu valarnna
kaiyetta vyavasaayam" (The continuing saga of forest encroachment- 3: The encroachment
industry that flourished better than the forest itself- Malayalam), Kalakaumudi weekly, 1438.
val. 27, no. 32, 23 March, p. 24.
For an account of ganja cultivation within the state, see: Desabhimani 2002: "Adhikrutharude
arivode kanjavu krushi vyaapakam" (Ganja cultivation thrives with the knowledge of the
authorities - Malayalam), 2 February, Thrissur edn.; Hindu 2005: 21 Nov; Hindu 2003: 3
November, p. 5; Vattappara 2003, pp. 30-32. The high ranges or the western ghats region is
infamous for ganja cultivation. Ganja cultivation in around 5000 acres at Kampakkallu in
Vattavada panchayat, and around another 5000 acres at Bandar near Koviloor top-station has
bee!) continuing for many years. Around 5000 acres near Manhappetty in the catchment area
of Amaraavathi dam near Chinnar wildlife sancutary, Pachakkaanam near Vandipperiyaar
with a cultivation of around 3000 acres and around 1500 acres near Sooryanelli are other
major areas of ganja cultivation (Desabhimani 2002). Since early 2000s, the ganja mali a has
expanded its sphere of operation from its traditional strongholds in ldukki district to hundreds
of acres of the inaccessible areas of Anappady in Palakkad district (Hindu 2003a: "Ganja
cultivation thriving in Attappady", 3 November, Thiruvananthapuram edition, p. 5). Trib.al
belts of Anavai, Thudukki, Galazi and Kadukumanna are the main centres of ganja cultivation
in Palakkad district. Large-scale ganja cultivation goes on in 29 places in the Attappady
forests. They have posed a threat to the protective outside forest cover of the Silent Valley
tropical evergreen forest and could lead to the drying up of Bhavani, Siruvani and Kunthi
rivers (Hindu 2005: 21 Nov.).
:.u
P.K. Prakash 2003: "Muthangayile yaatharthyam Marayoorile swapnam" (The reality at
Muthanga, the dream at Marayoor- Malayalam), Madhayamam weekly, March 7, val. 8, no.
263, pp. I 0-19, p. 16. Similarly, around 1200 acres of surplus land was encroached upon at
Vadakkemunda in Kannur district in 2003.

257
Palakkad district. ~he land-grabs at Mathikettaan and Wagaman are infamousY 4 It is
widely known that in 1995, it was those close to the state revenue minister himself who
had encroached the environmentally sensitive Mathikettan forests in ldukki district.
12.500 hectares of government land here has been appropriated by private individuals on
nominal lease amounts at Kolaahalamedu near Wagaman which is the sole spot in
Keralam with pine forests. Wagaman hill ranges dot the border areas of Kottayam and
ldukki districts. Wagaman is the richest reserve of biodiversity in the Sahya mountain
range. National Geographic traveller had included Wagaman as one among the ten tourist
spots to be definitely visited. 235 Achankovilaar and Pambayaar rivers would also cease to
be, if the encroachments continue. 236

It was ·in 1995, i.e. towards the end of the tenure of the 1991-95 Congress-led United
Democratic Front government wherein K.M. Mani was the revenue minister that
encroachments had taken place on the environmentally significant Mathikettaan
forests. 237 It was 15,000 hectares of forestland that was encroached at Mathikettaan
hills. 238 Apparently, only those armed with enormous political clout could engage in such
·primitive accumulation' in each of these cases. 239

The state government took advantage of the hue and cry at the all-India level after
Muthanga firing and built up pressure on the central government and got allotted 7,693.2

At Chinnakkanaal in ldukki district, the ru!ing pany leaders themselves encroached upon the
land distributed by the government to the Adivasis, even before the Iutter could take
possession this land (Prakash, P.K. 2004: "Muthanga vaarshikathil uyarunna chodyangal".
,\1adhyamam weekly, 27 February, p. 24}.
V. Jayakumar 2003: "Wagaman: Keralathile puthiya kuruthikkalam" (Wagaman: the new
sacriticial space in Kera.lam- Malayalam}, Kalaakaumudi, no. 1456, vol. 27, no. 50. p. 7-9.
Kalakaumudi editorial 2003, p. 6.
:.17 Prakash 2002, p. 136.
:,;s
K. Rajanbabu 2003, p. 24. Unlike at Muthanga in early 2003, where the Adivasis who set up
their huts were forcibly evicted and even fired upon, the upper caste Christians with political
clout who had mostly encroached upon the land at Mathikettaan were evicted subsequently
through gentle persuasion.
' The following are accounts of land-grabs on forestland in recent times:
Prabhakaran, G. 2003: "Title deeds: depanment suppresses circular", Hindu, 28 December,
Thiruvananthapuram edn., p. I (On the passivity of state Revenue depanment to cancel bogus
pattayams on thousands of acres of forestland).
Venugopal 2004, p. 5; Hindu 2004a; and Hindu 2004b (On encroachments on 17,922 acres of
shola grassland terrain in the Kannan Devan Hills}.
Hindu 2003d: '"Large-scale tree-felling in reserve forest"', 25 December,
Thiruvananthapuram edn., p.l; Hindu 2004: "Tribal chieftain moves coun to save forests'', 6
January, Thiruvananthapuram edn., p. 4; and Hindu 2003b: "Stop tree felling at Attappady:
AGM", Thiruvananthapurom edn., 28 December; (On felling 500 acres of teak plantation at
Anavai, Attappady, Palakkad district, the core area ofNilgiri Biosphere Reserve}.
Hindu 2003c: "No action yet on Nilambur forest encroachment: PUCL", 22 December, ,
Thiruvananthapuram edn., p. 4 (On encroachments of 1,241 acres of forestland at Kannath
Malavaram in Nilambur, fringe areas of the Silent valley National Park}.
See also: Prakash 2003a; Prakash 2003b; Prakash 2003c.
J.P. Daasan 2004: "Moonnaril vanam kaiyettam vanthothil" (Large-scale forestland
encroachment in Moonnar- Malayalam}, Samakaa/ika Ma/aya/am, vol. 7, no. 35, January 2,
16-17.

258
hectares (around 19,000 acres) of forestland in five districts - Kasaragode, Kannur,
\Vayanad, Palakkad, Malappuram- for distribution to Adivasis. It is intended to benefit
13,000 Adivasi families. In return, the state government is supposed to take up
afforestation in 13,223.2 hectares of land, as protected forests. 240 If more land is required,
the state government i~ required to remit an amount of five to nine lakh rupees per hectare
according to Supreme Court directive. 241 What is implied in the latest policy stance is the
essentialist notion that Adivasis are forest-dwellers and have to be rehabilitated within
forests. 242 Apparently, the motive could be not to incur the displeasure of the entrenched
classes and not to disturb the status quo in land relations within the state. Indeed,
ideology takes the back seat where material interests of powerful classes and hard
economic gains come to the fore. •

The unfolding scenario is that big plantations in Keralam who have leased in large tracts
of government land or have illegally encroached upon adjacent forestland are trying to
~ell offtheir landed property as small plots, as in the case ofHarrisons Malayalam (HML)
Plantations under R.P. Goenka group and Beenachi estate in Wayanad, the latter held by
the Madhya Pradesh government. The other option they are taking recourse to is to shift
ownership rights to the workers' cooperatives and retain their brands and procurement
rights of the product, as in the case ofTata-tea at present. 243 Such moves could be viewed
as a result of turning the heat of public opinion on big plantations for the undue benefits
cornered by them over the decades and also a result of the recent 'plantation crisis'
'
following the fall in the prices of plantation crops. 244

Prakash 2004, p. 23.


Madhyamam daily editorial 2004: February 21. Admittedly, this willingness to distribute
forestland to Adivasis indicates a turnaround in the government's stance from the dualistic
thinking mentioned in the section, 'Contending Discourses on the Adivasi Land Question in
Keralam' in Chapter VI.
Geethanandan, leader of AGMS is of the view that effective agricultural practices could be
adopted on forestland without disrupting the natural economic system unlike in the case of the
dominant plantation economy in the state (personal communication, 19 February 2005).
Adivasi Gothra Mahasabha (AGMS) 2005a: Pamphlet for mobilisation before the I 0 May
2005 'rally to Beenachi estate in Wayanad and Land Board Commission office,
Thiruvananthapu111m.
Thus before the 10 May 2005 rally to Beenachi estate and Land Board Commission office,
Thiruvananthapuram, the AGMS pamphlet says, 2,500 crore rupees remains as unrecovered
UIT<:urs on govt:rnment land· leased out on nominal rates to the various plantations (AGMS
2005a). 42 crore rupees was paid by the Kerala government from the tribal rehabilitation fund
to the central government for obtaining the 7500 acre Aralam farm and yet there are attempts
to transfer the land to a private company instead of taking it over and distributing to the tribals
(AGMS 2005a). The government projects like Vanalakshmi and Vanarani have only served to
cater to vested interests in course of time. As a fallout of the land reforms legislations
excluding plantations from ceiling laws, 60 per cent of the agricultural land was converted
into plantations (AGMS 2005a). Moves have been afoot to partition and sell off the Beenachi
estate in Wayanad held by the Madhya Pradesh government to various real estate interests
(AGMS 2005a). Harrisson plantations had received the plantation from East India Company
and now proposes to give it out to Pepsi for pineapple cultivation and is illegally evicting the
plantation workers (AGMS 2005a). The pamphlet claimed that Tata-tea alone holds I ,60,000
acres of land out of which 60,000 was supposed to be taken over from Tata under the

259
Of late. a Central Empowered Committee of the Supreme Court expressed concern over
the continuing unabated la!"'d grabbing by 'the rich, the powerful and the influential' in
the Cardamom Hill Reserves (CHR) of Idukki district. The committee observed that even
after the regularisation of pre-1977 encroachments on 20,363 hectares (50,297 acres) of
CHR area, the state revenue department during the post-1977 period issued title-deeds on
9,367 hectares to thousands of persons, 245 allegedly benamis of powerful encroachers.
These were issued without the mandatory clearance by the Union Ministry of
Environment and Forests. In an apparent bid to legitimise the land grabs, there were
efforts from within the revenue department of the state to show the extent of land in CHR
as merely 24.56 square miles or 15,720 acres based on a 'bona fide mistake' in the
original notification in 1897, alttlough ironically, more than three times this area has
already been legally allotted out. 246 Controversy has brewed over the hectic efforts within
the state government to extend the leases 247 on some of the forest estates running into
thousands of acres at Nelliampathy in Palakkad district 248 and in roughly 10,000 hectares
of reserved forest in the CHR in spite of the denudation and resale of leased lands by the
lease-holders being officially acknowledged facts.

Another aspect of the controversy has been that the government wanted to assign prime
government land with rich biodiversity around Mankulam in the Moonnar area of ldukki
district to the tourism lobby. Both the proposals - for extension of leases and land
assignment - had full support from within revenue department of the state government
and they wanted to ensure these well ahead of the term of the UDF government ended
before mid-2006. 1 ~ 9

In yet another instance, the Opposition Leader, V.S. Achuthanandan pointed out how the
R.P. Goenka group was. selling out as plots 5,344 acres of leased government land in
Pathanapuram taluk in Kollam district, while the state government failed to take over the
land after the expiry of the lease in March 2005. 250 V.S. Achuthanandan had also pointed

legislation passed for this purpose three decades back. And yet not only has the land been not
recovered but it is being sold out as small plots by Tata (AGMS 2005a).
Venugopal 2005: I.
Venugopal 2005b.
The lease amounts have been nominal ranging from Rs.3.50 to Rs.50 per acre, per annum and
yet the unpaid tax arrears by lease-holders ran into several crores (Ravi Raman 2004).
Following Supreme Court verdict, government has got back three estates including Rosary
estate from private hands (Sugathakumari 2005).
P. Venugopal 2005a: "Hectic efforts on to assign forestland to bigwigs", Hindu.
Thiruvananthapuram edn., October 28, p. I, p. I; M. Harish Govind 2005: "Move to extend
illegal leases on forestland?", Hindu, Thiruvananthapuram edn., November I, p. I.
Hindu 2005: "Take back lease land, says Achuthanandan", Thiruvananthapuram edn ..
November I 0, p. I.

260
out about encroachment into around 4000 acres forestland in the catchment area of
Pooyamkutty project. 251

As we would go on to argue in Chapter VI, 252 the low profile landgrabs in thousands of
acres of the remote forestland in the state should be considered much bigger scams, than
many scams that have rocked Indian in recent times. Moreover, these landgrabs have
disastrous implications for the ecological balance on the Western Ghats.

VI. CASTE-CLASS INTERFACE IN KERALAM

Barbara Harriss-White (2003) spoke of how many a caste or religious community in India
has carved out a niche for itself _in the accumulation process. Thus the Muslims have
excelled in activities considered polluting to the caste Hindus, such as, leather works,
waste and scrap recycling, butchery, etc.; the Dalits have near monopoly over
employment in urban sanitation work; belief in ahimsa (non-violence) turned Jains away
from farming to business; production and exchange in the Punjab are compartmentalised
along religious and caste lines. Analysing economic power by religion and community,
she finds Marwaris, Parsis, Punjabis and Gujaratis to be ranking dominant in that order
and finds Muslims at the bottom. 253 Niched economic activities among castes and
communities may rightly be identified as a significant feature of the Kerala economy and
society as well. 254 The historical development of these castes/communities has
contributed to their current position in the socio-economic structure.

A general idea of the extent of democratisation of Kerala society as a result of the


protective discrimination through reservations provided to the deprived castes can be had
from the recently submitted Narendran Commission Report on reservations to Backward
Classes in the public sector employment in the state. Reservations in public employment
has been initiated in the state since the Abstention movement in the erstwhile
Thiruvithamkoor-Kochi states during 1930s. The Commission Report observes, "[T]here
is clear inadequacy of the representation of backward communities taken as a whole,
though the extent of inadequacy varies from community to community."255 The Report
also admits that there a:re instances where the "excess over the reservation quota" 256

::51
V .S. Achuthanandan pointed this out in the state assembly on 15 February 2006; telecast on
India Vision Malaya lam news channel at 1.40 p.m. onwards.
252
See Section I in Chapter VI, .'Identifying the Dominant Classes within Keralam'.
::sJ
Barbara Harriss-White 2003: India Working Essays on Society and Economy, Cambridge
University,Press, Cambridge, p. 141.
Please refer Appendix 1: "The Caste Composition of Kerala Society- An Introduction" for the
links between caste and occupational structure in the state.
2SS
Government of Kerala 200 I: Justice K. K. Narendran Commission Report, pp. 5-61, prepared
by Justice K.K. Narendran, T.M. Savankutty and K.V. Rabindran Nair and submitted on 9
November, English reprint in Niyama Sameeksha monthly {Malayalam) 2004, vol. 8, nos. 32-
33, p. 48.
Government of Kernla 200l: Justice K.K. Narendran Commission Report, p. 48.

261
through channel of merit is substantial in some categories of posts, as in the case of
Ezhavas but that is not t~e general pattern. The real picture of representation emerges
from the data relating to Group I - Government Departments and the Judiciary, where
Public Service Commission has strictly been following a policy of reservation. 257 In
Group I- Government Departments, the actual position of representation for all the

Backward Classes taken together is 48.23 per cent, where the quota is 40 per cent. The
Forward Classes have got a representation of 38.73 per cent. In Group I, Ezhavas got a
representation of 20.41 per cent in all the categories together. In Category I of jobs, they
got a representation of20.69 per cent as against a quota of II per cent. As against a quota
.allocation of 14 per cent in every other Category, in Category II, they got 20.40 per cent,
in Category m, 20.44 per cent, etc. 258 Muslims are under-represented in Group I, getting a
total representation of 10.45 per cent as against their quota of 10 per cent in Category I,
and 12 per cent each in every other Category. 259

The total deficiency in the fulfilment of reservation quota for Backward Classes is 7383
posts. 260 This includes 1069 posts in Category I, 3308 posts in Category II, 1969 posts in
Category III, 979 posts in Category IV, and insubstantial number of posts in Category V
and others. 261 Thus the highest number of unfilled quota remains in Category II, followed
by Category III. The total number of posts where the shortfall is noticed includes 4370
posts for Latin Catholic/Anglo Indian, 2614 posts for Nadars, 2290 posts for Scheduled
C'~stes converted to Christianity, 256 posts for Dheevara (Hindu fisher people)
community, 460 posts for Other Backward Communities, 147 for Viswakarmas and 5 for
Ezhavas. 262 Thus the Latin Catholic/Anglo Indians, Nadars and Dalit Christians in that
order remain the worst sufferers in this respect. The shortfall cannot be attributed to the
exclusion of creamy layer in the matter of recruitment for Backward Classes, which was
insisted upon only since 16 February 2000. 263 A point that logically follows is that every
caste/community within the category of 'Backward Classes' is not in similar stages of
social development and therefore there is need to target protective discrimination to the
weaker sections among Backward Classes for the amelioration of their conditions.

In the traditional caste structure in the state, Brahmins were a miniscule minority. Below
them came, Kshatriyas (Varmas, etc.) who belonged to the royal lineage and were
likewise a miniscule category. Nairs who were ritually Sudras were recruited as warriors

Ibid, p. 43.
Ibid, Clause 6.6, p. 34.
Ibid, Clause 6.7, p. 34.
Ibid, Table I, p. 54.
Based on ibid, Table I, p. 54.
Ibid, Tables 1-8, pp. 54-57. The shortfall of the actual number of posts held by Muslims is not
mentioned herein.

262
and a section of them were conferred with higher Kaanam tenancies. The category of
Vaishyas was absent in rit.ual terms--Syrian Christians and Mappila Muslims (an ethnic
mix of Arab Muslim traders with local population) filled this role. These sections came to
be designated as religious minorities with the emergence of the 'Hindu' identity. Ezhavas
were ritually 'untouchables' or outcastes until the early 20'" century. Below them were the
agrarian slave castes of Pulayar, Parayar, Kuravar, etc. The social structure of caste, in
pre-colonial India could have been the principal medium through which redistribution of
surpluses took place. Nevertheless, it is to be noted that class divisions did prevail within
these communities. Thus it is widely accepted that the landlordism of the Nairs, who were
considered Sudras in ritual terms, had a history of no more than six centuries now. 264 P.K.
Balakrishnan had pointed out that there was scant development of productive forces in
pre-colonial Keralam.and that most Nair soldiers under the princely states h