Posted by: Vikram | December 15, 2016

Is it right to let economists judge demonetisation ?

Imagine one comes and tells some Indian economists of a radical move by the US government. The US government will remain shut for three days in the middle of the week, and only skeleton crew of police and emergency medical personnel will be required to report for duty. How would our economists respond ? As economists, they would be aghast. They would point out that since 40 out of every 100 dollars spent in the US is tied to the government, a government holiday for 3 days will pretty much mean that no private businesses operate either. And crafty workers will simply take two more days of sanctioned leave to enjoy a complete week’s break. The economic loss would run into billions of dollars, projects would get delayed and even medical procedures might have to be postponed. Column after column would be produced on how this would be a horrific move.

Of course, next week is Christmas or winter break in the US, and these holidays are traditional in the Christian world. People expect to not have to work on these days, and enjoy the holiday spirit. And knowing the reality of these holidays, not a few economists will wax eloquent about how they rejuvenate the workforce, build and reinforce family and social bonds, and so forth. Why this lack of consistency ? It is because there are questions that economics can answer easily, and those it cant answer very well at all. Look at everything in short term monetary terms, and economics becomes simple. Try bringing in politics, society and other intangibles over the long term, and economics starts looking extremely limited in its ability to predict.

Demonetisation is a terrible move in terms of short term monetary policy, it is akin to depriving a body of a very large percentage of its blood supply in one go. Any doctor would be horrified if a healthy person did such a thing to themselves. But what if this blood, in addition to nourishing our organs, was also feeding cancerous tumours and other unwanted growths. What if the choice was between cutting off the supply to these tumours now, putting the rest of the body through some pain, versus expensive, risky and potentially fatal surgery down the line ?  A smart patient and a good doctor would agree that its better to suffer the pain today rather than risk death later.

Economists cannot be good doctors because they have extremely limited tools for prediction. So the default position is to rely on the past, and stick to conservative policies. They are brilliant people to lean on when we want to understand the world we live in, but not so much when we want to change it. Narendra Modi was elected on a platform of change. One hopes that he will continue to try and change the disastrous monetary and cleanliness habits of Indians, and stop trying to change their dietary preferences.

Posted by: Vikram | May 19, 2016

Why Indian cricket needs to move beyond nationalism

Cricket fans often point out that it is unique among popular sports, in that its top players spend most of the year playing for their national teams. This is in marked contrast to football, which on a day to day basis, is dominated by club teams, and American sports which are centered around local franchises. The idea of ‘playing for one’s country’ holds deep appeal for many, brought up in a world organized politically into nation states. Commentators and sports writers frequently hold up playing in a national team as the ultimate honour for a sportsman/woman, and among countries with deep political rivalries, sports matches acquire a subtext of war.

However, labour and economic statistics point to a different reality. The US Bureau of Labor’s publishes detailed stats regarding employment in America, including the number of actual professional athletes in the US. About 12,000 people make a living playing sports in the US. This only counts actual athletes, and excludes coaches and supporting staff. Is the US, with its three ‘major’ sports leagues, an outlier among rich countries ? To do a cross-Atlantic comparison, I checked to see how many professional athletes there are in the UK. The number is 17,500, surprisingly higher than the US, which has 6 times as many people. Investigating further, I found that there are 4000 professional football players in the UK, an amazing statistic.

How does British football support so many athletes ? Is it because of the Premier League, with its global reach ? Undoubtedly the Premier League helps, but less than a thousand players are employed by it. What about the rest ? This is where some interesting numbers come in. Even the lowest division of professional football in England, ‘League 2’, supports nearly a thousand players. 5000 English people attend an average League 2 football game, ensuring that the average League 2 football player gets paid nearly 50,000 pounds, a great salary in the UK.

Thus to see how deeply a society supports a sport, we have to check whether it puts its money where its mouth is. In other words, how many people actually make a living playing a sport in that country ? For cricket in India, the number is abysmally low, even accounting for the low per capita gdp. Crowds flock to support the 20 players in the Indian cricket team in the name of nationalism, and TV sponsors pump in money because it is a supreme vehicle through which to appeal to the urban/semi-urban middle classes. But until the introduction of sports leagues like the IPL, interest in any sport, even cricket, beyond the ‘national team’ has been almost non-existent.

Cricketers in the Ranji trophy, the premier cricket tournament (and in some sense the real equivalent to the EPL in India, rather than the IPL) play in front of empty stadia, with minimal sponsor and TV interest. These players do not generate any revenue on their own, they are effectively reliant on the 20 odd ‘national team’ players for their living. Needless to say, it is an utterly demoralizing reality for professional grade athletes to know that there is no spectator interest in watching their skills, and their daily bread is earned by crumbs trickling down from someone else.

For truly becoming a cricketing nation, India should aim to support at least 10,000 cricketers by watching their skills live and on TV. Unfortunately, we only support 20, that too in the name of nationalism, not sport. We need many more cricket leagues and much better viewership for Ranji games.

Language has been a contentious issue in the subcontinent since the establishment of European colonial rule. The question of which language should be used for administration and instruction in schools has led to intense political mobilization at various points of time.

As a step towards resolving linguistic conflicts in independent India, a three language formula for primary school instruction was adopted. Schools in Hindi-promoting states were to include ‘a modern Indian language, preferably from South India’ as a third language, in addition to English and Hindi. Non Hindi states were still compelled to teach Hindi, meaning that true linguistic equality remained elusive. Fast forward 50 years and North Indians have subverted this legislation, offering a prominent example of their adherence to a homogenized national identity centred around the Delhi region.

In the name of the three language formula, Sanskrit has been adopted by most Hindi belt schools as a third language. Sanskrit has far fewer speakers than Bengali, Punjabi, Tamil, Marathi and any other non-Hindi modern language. A claim is often made that Sanskrit is easier to get good marks in. But there is far more new media (movies, songs) and actual speakers of the Bengali, Tamil, and the other modern languages to learn the other languages from. Therefore these arguments seem suspect. So, why then has Sanskrit been chosen as the third language by so many schools in North India ?

There are two parts to the answer:

  • The widely propagated myth that Hindi is India’s ‘national language’, and therefore has to be spoken in some form by the non-Hindi language speakers.
  • The belief that North India is the centre of Hinduism, and therefore is also the home of Sanskrit, an important language of Hindu liturgy.


A circular typifying third language attitudes: German, French, Sanskrit, Spanish, Japanese, Russian and Chinese are all offered as options. But there is no space for a non Hindi/Sanskrit Indic language like Bengali or Tamil.


We now elaborate on these reasons. A natural question to ask is, wont the potential economic benefits of learning Marathi, Punjabi and Bengali lead to a positive outlook towards learning those languages ? After all, the North Indian elite are very keen to have their children learn languages like German and French. But here, the myth that ‘Hindi is our national language’ comes into play. So pervasive is this myth that even many non-Hindi speakers fall for it. In the minds of most North Indians, every Indian citizen must somehow speak Hindi, or they are deviant from the ‘mainstream’. This makes non-Hindi languages inferior and not worth learning, even if the opportunity presents itself.

We move onto the second reason. Many North Indians believe that Hinduism first developed there, and then ‘spread’ to other regions through Sanskrit epics. However, these epics themselves developed over a long period of time, with no clear point of origin. The importance of these texts in Hindu traditions, and indeed their very content, differs across regions. Also, Sanskrit as a language, was not native to any part of the subcontinent. But the desire to be ‘central’ in the modern Indian state, has led to a strong tendency among North Indians to appropriate Sanskrit. Due to such false and politically expedient beliefs regarding Sanskrit and North India, people, especially the elites there, have come to equate the two.

Thus, non-Hindi Indian languages are not worth learning, and Sanskrit, with a false association to North India takes their place as the third language. Thus, it is the belief in the centrality of North India and its traditions, and the resultant aversion to linguistic equality, that are the real reasons behind the widespread adoption of Sanskrit as a third language in schools there.

Posted by: Vikram | May 1, 2016

Who pays income tax in India ?

In 2014, 5 crore Indians (50 million) paid income tax. Many media outlets simply divide this number by India’s total population to make claims like only 4% of Indians pay income tax and so on. Then this number is compared to the same statistic for industrialized countries to show how non tax-compliant India is.

But a little more probing reveals that non tax-compliance of salaried professionals is a myth, at least as far as the matter of filing taxes is concerned. To really compute a meaningful number from the data about the total number of tax filers, we have to divide it by the possible pool of tax payers, not the population of the entire country.

So who can pay tax in India ?

There are three simple steps to arrive at this number. First, to be able to pay tax, you should be able to work, i.e. be in the potential labour force. The potential labour force is defined as the proportion of the total population which is above the age of 15 and below the age of 64. This is because one doesnt usually expect children below the age of 16 to be working, and people above 64 are usually retired or depend on their children. So what is the number of people in the 15-64 band for India, the world bank says its 65% of the total population, which amounts to:

0.65 * 123.6 = 80.34.

So 80 crore (803 million).

But of course, not all of these 80 crore are working. Many are students, some stay at home as housewives and so forth. So we have to further sharpen things to the number of actual participants in the workforce from these 80 crore. Again, the World Bank’s data tells us that only 56.5% of India’s possible workforce actually engages in economic activity, which gives us,

0.565*80.34 = 45.40.

i.e. 45 crore (450 million).

So is 5/45 the number we are looking for ? Not quite, there is one more step. In India, agricultural income is not taxed. Therefore, we need to subtract agricultural workers from the actual workforce. 50% of Indian workers are either farmers or farm labourers, so the pool to be subtracted from the 45 crore number is,

0.5*45.4 = 22.70.

So we are left with 45.4 – 22.7 = 22.7 crore possible tax payers.

The actual rate of tax payers then is, 5/22.7 = 22 %. So 22% of our possible pool of tax payers actually pays tax. A large component of the non-tax compliant population might be petty shop keepers, and low skilled workers like drivers and domestic workers.

But the point of this calculation is to drive home the message that the real problem is not tax-compliance, as much as it is employment. India’s private sector is incredibly small. Most of our workforce either sits at home or is trapped in low skilled farm work.

The world economy entered a period of globalization in the early 1990s. This phenomenon was driven by rapid improvements in computer and information technology, the opening of new markets and tighter economic integration across international borders. Compared to preceding decades, labor and capital became less regulated and much more mobile. However, there is increasing consensus among economists that this period of globalization is coming to an end, and that we are entering into a period of stricter trade and labor restrictions.

India has had deep and long-lasting foreign trade relationships since ancient times. All these trading relationships were accompanied by both, the diffusion of Indian technologies abroad, and the adoption of foreign technologies in India. We highlight some prominent exchanges of this kind, across the ancient, medieval and colonial eras, and discuss their enduring impacts. We then attempt to place the current era of globalization in this historical context. Doing so will allow us to think about how we can make the globalization era have a long-lasting, positive impact on the Indian economy and society. Failure to do this will result in the globalization era passing by as merely a temporary phase in India’s economic history, with no long lasting legacy.

We start with Indo-Roman and Indo-Arab trade in metals, where technology flowed from the east to the west. Techniques for the making high quality ‘Wootz steel’ were developed in ancient South India, before the start of the Common era. This steel was traded over ancient Europe, China, the Arab world and the Middle East, and was renowned as the ‘finest steel in the world’.  The Indian techniques were then adopted and improved upon in these areas with time. A notable example in this regard is ‘Damascus steel’, which was developed in the ancient Middle East, and was known for its strength and durability till the 17th century.

A Nataraj from the Chola dyasty. 1000 CE. An important symbol of achievement in Indian art and metallurgy.

A modern day recreation of a Damascus Steel knife.











Moving forward into the Common Era, an important technology was introduced into India from the East. By 140 CE, Indians acquired techniques for silk production from the Chinese, where the use of silk originated. Over time, silk became an important fabric in India, and a wide variety of silks evolved across the country for various purposes. These ranged from mekhela chadors in Assam, Banarasi sarees in UP to the famed Kanchipuram silk. Today India, along with China is the largest producer of silk, with the two countries accounting for around 60% of global silk output. And India is even today, the world’s largest consumer of silk.

Silk Mekhela Chador from Assam

Banarasi Saree








Next, a bit further into the common era, we have examples of technological interchange from the textile industry. In textiles, technology mostly flowed out of the Indian subcontinent to the rest of the world. For nearly two thousand years, India produced and exported cotton fabrics of great quantity and variety to Central Asia, East Asia and Europe. Not surprisingly then, a number of innovations in textile manufacturing ranging from the cotton gin to the spindle to spinning wheels were made in India. In particular, the spinning wheel, invented between 500 and 1000 CE, gained acceptance in both Eastern and Western directions, as the illustrations below show.

File:Illustration of al-Hariri Maqamat spinning wheel.jpg

Early illustration of a spinning wheel, Baghdad. Around 1200 CE

File:Wang Juzheng's Spinning Wheel, Close Up 2.jpg

Spinning wheel illustration from China – Around 1300 CE










Subsequent centuries saw Central Asian Turks establish kingdoms in India. The Mughal dynasty (1550 – 1707 CE) established a major trading relationship between India and Central Asia.  And it is to these contacts that we can attribute two more technology adoptions in India. The first was carpet making. Coming from Central Asia, a region with a strong tradition in making carpets, the Mughals duly introduced carpet making to India. Like silk, carpet making spread rapidly throughout the subcontinent, with Varanasi, Jaipur, Srinagar and Amritsar emerging as the most important centres of production. Today, India is the largest exporter of rugs in the world. Indeed, rug making has become thoroughly Indianized, and India is the home of companies like Jaipur Rugs, a global leader in the hand-made rugs category.


After the collapse of Mughal authority in the 1700s, trade with Central Asia lessened. However, Rajasthani kings utilized the Central Asian contacts they had made via the Mughals, to bring in another new technology to India. Expert ceramic artisans were brought to Rajasthan and a new school of pottery was established there. Indian pottery had a long tradition, but ceramic materials and glazing techniques, had not been used much so far. The Jaipur Blue pottery tradition combined these techniques with Indian pottery, and continues to create stunning works of artistry to this day.

Blue Pottery from Jaipur – Modern day

With the establishment of British colonial rule, previous trade networks were eliminated and India entered into two centuries of exploitative trading arrangements, exporting raw material to Britain while importing manufactured goods from there. Despite the lack of institutional support, individual initiative for technology transfer was still present. Perhaps the most famous example of such a transfer is motion picture technology, which was almost single handedly popularized in India through the efforts of Dadasaheb Phalke. Although cinema had been introduced in India soon after its introduction in Europe, it was Phalke who travelled to England to learn about the new medium. Starting with Phalke’s ‘Raja Harishchandra’, Indian cinema has gone on to become a defining feature of modern India through our varied film industries.


Dadasaheb Phalke – Introduced motion pictures in India

Cinematic products from India, in Tamil, Bengali, Marathi and Hindi languages (clockwise). Themes in the set range from scifi, historical musical to Sergio Leone style Westerns.












After independence, scarred by two centuries of colonialism, India followed an economic policy that emphasized self-sufficiency over foreign trade. This allowed the growth of indigenous automobile, pharmaceutical and space industries, but also inhibited the acquisition of latest technologies, and access to foreign capital and markets. But beginning in the late 1980s, India opened its borders to foreign capital and entered into an especially deep trade and labor relationship with the USA, as it had done in previous eras with Central Asia, East Asia and Europe.

In the context of urban India, this contact with the USA has had two major impacts. The first is the inflow of foreign investment and tighter integration with the global economy, especially in cities like Bengaluru, Hyderabad and Mumbai. The second is the movement of skilled, English educated Indian labor abroad, specifically to Anglo countries like USA, UK and Australia. Indian professionals are now widespread throughout the world, as India has become a leading exporter of skilled labour to richer countries. As an example, the Indian population in the US was 815,000 in 1990, but nearly quadrupled in two decades to 2,850,000 in 2010.

At an individual level, the act of migration for skilled Indians represents a chance for professional growth, and a shot at the American/Australian/European dream. Institutionally, this migration has been supported by the widespread English language technical institutes in India, America’s H-1 visa program and the amiable diplomatic relationship between the two countries. But with the winding down of globalized labor, money and technology flows, institutional support will wane. Also, as wages in India rise, many American companies will move their offices and businesses out of India.

In such a scenario, it is imperative that we focus efforts into building complex computer products like operating systems, microprocessors and search engines in India. One might question the need for doing so, since American alternatives are ubiquitous and easily available. But had this been the attitude in previous eras, we would not have had indigenous silk and carpet industries, with India’s own deep, and diverse imprints on them today. We have to learn and introduce difficult, cutting edge skills, not just for economic benefit, but for the chance to bring our civilizational ethos to bear on these human endeavours.

The outrage over the lynchings of Mohammad Akhlaq, Zahid Bhat and Noman have been replaced by sparing over ‘Award wapsi’ and the Bihar elections. One statement made in the aftermath of Dadri remained in my mind. Not for how accurately it summed up the situation, but for showing how wrong our perceptions and reference points are when we talk about Indian politics.

In reaction to the gruesome murder of Akhlaq by a Hindutva mob in Dadri, Rajdeep Sardesai bemoaned the ‘medievalism’ of the act, joining many others who unfairly project the upheaval and lawlessness of Europe’s ‘medieval’ age onto the rest of humanity. However, incidents like Dadri are unheard of in pre-modern Indian polities, whether led by Hindu or Muslim dynasties. Indeed, Hindu-Muslim riots became common only during the colonial era. What Dadri actually showcases is the culmination of a decades long process of politicization of male upper and dominant caste Hindi-belt Hindu youth.

We are so accustomed to ‘modern’ being better and superior that we fail to reflect that a lot of our social and economic problems are the result of the process of India becoming modern and the specific nature of this modernization process. Clearly, democratic politics marked by popular mobilizations and grass roots activism is a feature of the modern Indian society. Although steps were taken in introducing democratic politics by the colonial state, the practice was institutionalized by the Constitution and made into the principal and only legitimate mode of obtaining political power. However, while India was democratic it was not yet democratized. In fact, the vast majority of Indians were not even politicized fully and invariably acted according to the political will of the elite, urbanized groups and their rural proxies.

As the years have gone by, with every election and campaign India’s communities have entered into the political arena with their grievances, points of view and interests. As they did this, some unshackled themselves from their dependence on existing elites. First, the middle peasantry, who were initially influenced by the urban middle class produced by the colonial state, realized that they no longer needed that middle class. Indeed, post land reform, they were the new middle class with much larger numbers and could influence the the bulk of the electorate who now worked on their farms. By the late 70s, they had asserted their independent power, especially in the states and to this day, the vast majority of India’s chief ministers are from castes belonging to this middle peasantry.

In time, as democracy deepened and thanks to affirmative action, even the most marginalized castes of rural India, the various Dalit groups came to the fore and demanded their share of power. Meanwhile, even as Dalits were making their voices heard, the even more oppressed adivasi groups, who had been organizing under various left wing banners, came to be sandwiched between a rapacious corporate lobby, a Maoist insurgency and the state’s repressive response. However, with the ascendance of the BJP, both the Dalit political movement and adivasi struggle have been sidelined by the chauvinistic, conservative Hindutva movement.

Far from being the inevitable product of imagined ‘ancient hatreds’, the political Hinduism today is the result of the nature and dynamics of politicization of youth in North and West India’s cities and small towns. Generations of young people in India’s urban centres have been brought into the political arena on a cocktail of the secular establishment as unfairly biased towards minorities, responsible for India’s poor economic condition and the upper-caste Hindi-affiliated Hindu male as automatically Indian and everyone as marginal or suspect. This is the default worldview of the urban/semi-urban Gujarati and cow-belt non-Dalit Hindu male. One has to reflect on how after a national movement that inspired people as great as Martin Luther King, produced icons like Gandhi, Patel and Bhagat Singh, and a remarkable Constitution, steadfast democracy, we have produced a default citizen of this kind.

Although the actual violence in the name of Hindu nationalism will be carried out by such un/underemployed ‘footsoldiers’ in India-Bharat and to a lesser extent metro India, one should not think of this as small-town/semi-urban phenomenon. On contrary, the most committed supporters of this brand of nationalism are NRIs, especially Gujaratis, Mumbai-Delhi and Hindi belt migrants to the US. The metro Indians then follow the same prescriptions. This is a generation in which families share jokes on Godse killing Gandhi on whatsapp. Far from the at least the theoretical promise of equality, liberty and justice of Indian nationalism, Hindi-Hindu nationalism threatens to choke women, minorities, non-Hindi speakers and India itself.

Posted by: Vikram | August 26, 2015

Indian states and the global economy

After independence, India embarked on a centralized, state-driven program of industrial development, with economic decision making power resting with government officials and policy makers in Delhi. However, after 1990 this pattern changed, and economic growth both accelerated and grew more diffuse in its spread. States found themselves with considerable room to develop their infrastructure, policies and drive economic development. Considerable literature exists on how different states and regions have fared economically, and the social and political implications of these changes. But today, we will be focused on how Indian states have interacted with the global economy, and participated in foreign trade.

India is still a minor player in world trade, although it has seen rapid growth in this area in the last decade and a half. In 1990, India’s share of exports in the world was only 0.5%, and this increased to 1.2% in 2009. In contrast, China’s share grew from 1.8% to 9.6% in the same time period. However, we will focus on exports from various states, since they do present a varied picture, and also reveal the relative strength and sophistication of industry and business across states.

Apart from trade in goods and services, the other major point of interface between Indians and global capital is via the export of labor and remittances. India has been a leading recipient of remittances for a number of years, with remittances reaching $ 70 billion in 2013-14. Like exports, remittances show a varied picture across states, revealing the differences in how well different states are connected with international recruiting networks.

We start with a state wise breakdown of total merchandise exports, seen in Table 1. Clearly, two states on the Indian West Coast, Maharashtra and Gujarat account for nearly 50% of exports from India. Together with the South Indian states, they produce about 75% of India’s merchandise exports. Despite more of India’s population residing in its Northern and Eastern states (65%), most of the economic dynamism is shown by states in the West and the South (35%).

In fact, over the last two decades the East’s share in exports has declined from 15% to 6.6%. We see clearly in such statistics, the roots of labour migration within India from East and North to the West and South.

By looking further at sectoral compositions of the exports, we can assess the relative strengths amongst the leading exporting states. We look at state export rankings for general manufactured wares, information technology goods, pharmaceuticals, transport equipment and petroleum products. Table 2 summarizes these rankings giving values of exports in each category from leading states in billions of dollars.


Same source as Table 1

We see that Gujarat has used its geographical location to good effect and developed a major petroleum processing and petrochemicals manufacturing industry. In addition, the state has well developed textile and pharmaceutical industries. Maharashtra features in nearly all sectors as a leading state indicating its diversified industrial portfolio. In the IT goods sector, Maharashtra is the top state with the South Indian states following it. This might be surprising given that cities like Bengaluru, Hyderabad are perceived to be the bigger IT centres in India.

We now move to exports of services, which actually account for a large share (56%) of India’s exports than merchandise. Observing Table 3, we see that this is because most of the IT earnings for the South Indian cities come through IT service, not product exports. Haryana and UP also make an appearance because of the IT companies in Gurgaon and Noida. And even here, Maharashtra ranks second with Mumbai and Pune being leading software services centres.

Next up are remittances. Table 4 lists the leading states by remittances received. As many might have guessed, Kerala leads in this category, getting more than $13 billion dollars in remittances. In fact, remittances constitute about 35% of Kerala’s GDP, indicating a high dependence on such earnings. This blog had earlier referred to Dubai and other Middle Eastern cities as the ‘metro’ of Kerala. Interestingly, remittances also constitute a significant portion of the GDPs of Goa (19%) and Punjab (13%).

Observing Punjabi cinema, one notices that a large number of Punjabi movies and songs feature a protagonist with rural Punjabi roots moving abroad to economic centres in the West. Such cinema appears to be grounded in the actual movement of Punjabi labour to markets in the West. Comparing with Haryana, however we see a clear difference, Haryana’s economic growth has been driven by establishing industry for domestic and international consumption, leveraging its proximity to Delhi. Punjab on the other hand has relied on its diasporic networks to export labour abroad.

Clearly Maharashtra, Gujarat and Kerala, all on the west coast of India are the states most tied to the global economy. Particularly in the case of Maharashtra and Gujarat, their established lead in industrialization and international contacts should help create a lasting period of economic growth.

It is perhaps no coincidence that the leading male actor of contemporary Hindi cinema makes it a point to refer to himself as the only ‘Badshah’ out there. The memory of the Mughal dynasty is strong in the core regions of that long gone empire, and that region is also a cultural stronghold of contemporary Hindi cinema. So as Bollywood has started showing signs of a decline in its patronage, it might look to lessons from the last days of that dynasty.

But first, a small detour into Mughal history and some structural reasons for its rapid decline after 1707. Two reasons stand out for the erosion of Mughal authority after Aurangzeb’s death. One was Aurangzeb’s inability to accommodate emergent elites. By the time his reign of nearly 60 years was coming to a end, he had made the rising Sikhs, who could have been a great asset to the Mughal Empire in its vulnerable North West (a fact well recognized by the British); its sworn enemies. He had militarily engaged the Marathas in a protracted conflict. The Marathas had previously been reliable soldiers of the empire; and the long Mughal-Maratha war gave them the motivation and experience for the future conflict over the subcontinent. Aurangzeb failed to realize that the emergence of new elites who would seek out more political and cultural autonomy was an inevitable consequence of the stability that the empire provided, and not necessarily a threat to its survival.

The second reason was the competitive Mughal system of succession and its undoing by the ripe old age till which the emperor ruled. Mughal succession was not by primogeniture, princes were to develop the skills and networks to compete with each other for the throne. Living to be 92, by the time Aurangzeb was ready to be replaced, there were four generations of the Mughal dynasty with claims to the throne.  A dynastic competition between three or four princes became a melee of four generations of male Mughals. A necessary consequence was the weakening of the network each contender could build and the resources available to them. Unsurprisingly, even the prince that ultimately emerged victorious had a greatly diminished authority and capacity to mobilize resources. Thus the collapse of the Mughal empire was ensured by the emergence of alternate sources of political authority, and a greatly fractured centre.

The Hindi film industry seems to show similar signs. It is unable to accommodate new talent and new sources of cultural production. The Hindi film industry and its North Indian elites still live in a world where they are the sole ‘center’ and every other form of cultural production is ‘regional’ or marginal. With increasing consciousness and available surplus for cultural production, it is inevitable that the Marathi, Bengali, Punjabi, Bhojpuri and other film industries will join the Southern industries as major culture producers. Bollywood elites have to realize that they cannot expect the Hindi film to be dominant in regions where Hindi is not the main language. Unfortunately, recent episodes indicate that they do not shy from using their financial and cultural clout to subjugate competition from local movie makers.1

The other limitation in accomodating new talent comes from the increasing sell-by date of the existing Bollywood badshahs. Various techniques are extending the ‘youth’ of the existing leaders, and the number of potential dynastic heirs from the incestuous clans of Bollywood is rising quickly. The youth of metro India is increasingly attracted to foreign cultural products and norms of cultural consumption. Thus, the generation of pretenders to the Bollywood throne have to deal with intense competition in the metro India and Bharat markets from each other, and face diminished acceptability in the metro India market.

How could Bollywood survive and thrive ? Undoubtedly it needs to localize, its leading lights have to increasingly engage with the smaller but growing markets across India. The industry also has to transition to a far more egalitarian process to recruit new talent rather than become a factory of star-kids seeking their parents positions.

1: “YRF distributors in Assam have forcibly replaced an Assamese film — titled ‘Raag’ — with their latest release, ‘Gunday’.”


Historic shares of various entities in global GDP (Data – Angus Maddison, Figure – M Tracy Hunter)

Angus Maddison told us that the various lands comprising today’s India collectively formed the largest economy in the world from AD 1 to AD 1500. They were then eclipsed temporarily by the Qing empire that contained today’s China and some neighboring areas. But the more significant eroder of India’s share in the world economy was Europe, which through industrialization was able to make its people much more productive in economic terms. Also, through colonization Europe was able to obtain the natural resources needed for its industrialization, and a captive market for its own surplus goods. In other words, Europeans were able to internally generate large surpluses and extract the surplus produced in the other regions of the world for higher levels of consumption and investment.

The European model was followed in North America, and the two together constitute today’s West, which accounts for nearly half the world’s economic output. Many centuries of living in an industrialized economy has allowed the West to develop the sophisticated legal and political instruments needed to manage such an economy. The West has also created educational institutions that ensure its labor has the right skills to service such an economy. In fact, so large is the gap in institutional development between the West and the rest, that it is able to attract large numbers of skilled workers from places like India and Africa to further accelerate its own economic growth.

In recent years, India’s economy has shown some growth and India has increased its share in global economic output. Some are predicting that India could keep growing economically and regain a share of the world economy at least commensurate with its population. For most of history, India had 20-30% of the world’s population, and a slightly larger share (25-30%) in its economy. Today it has about 18 % of the world’s population, and 6.4% of its economic output. Here are the reasons why this share wont change significantly in the coming years:

Shrinking productive resources:

The high share India had historically in the world’s economy and population was mainly due to the plentiful availability of fertile land and a large network of rivers. These allowed India to be more than self-sufficient in food, develop a large internal market, and then leverage its natural advantages and economies of scale to become a net exporter of textiles, iron-works and spices to the rest of the world. However, these resources are now shrinking. Most importantly, climate change has added a huge dimension of uncertainty to India’s future water supply and agricultural productivity. In addition, industrialization is eating into India’s most important and valuable natural resource: arable land.


Percentage of districts experiencing drought in India. Since 1991, at least 15% of districts have faced a drought every year. (From Annual Report 2012-2013: NCAP, Delhi)

Lack of skilled labor: 

Despite some success in producing very highly skilled professionals in the engineering and sciences domain, the general quality of labor in India is low. Educational standards are poor, with Indian children regularly finishing near the bottom of the charts in international tests. The reasons for these poor standards are deep rooted: poor childhood nutrition and sanitation impacting the physical and mental growth of children, and a lack of teachers being the most important ones. The number one complaint of Indian business is not India’s bureaucracy or excessive rules, it is simply the lack of people who can get the job done.

Lack of energy resources:

On an absolute level, India’s energy resources are mediocre. But on the more pertinent scale of resources per capita, they are very low. India’s oil reserves on a per capita level are among the smallest in the world, and its coal reserves, although larger are of a low quality and quite polluting. Space for solar farms is limited, plus solar insolation is concentrated in the summer months, with the monsoon clouds and winter fog playing spoilsport in other months. Hydel resources will also be constrained due to the increasingly uncertain monsoons.

Under governance:

Many middle class Indian bemoan this fact, and will perhaps point to it as the major problem in India’s economic expansion (it isnt), but India’s poor state capacity and governance is a major structural problem and not simply one of the wrong people being in charge. India has ten times less judges than it needs and its police force in woefully undermanned and underfunded.

the US federal government has a ratio of 889 employees per 1,00,000; India’s Union government has just 295. State and local government employees in the US account for another 6,314 per 100,000; in sharp contrast, Uttar Pradesh has 352; Bihar, 472; Orissa, 1,007; Chhattisgarh, 1,067; Maharashtra, 1,223; Punjab, 1,383; Gujarat, 1,694. Given the magnitude of delays that mar the judicial process, it is not surprising to find this institution is probably the worst off in terms of human assets. India has about 1.2 judges per 1,00,000 population. The US has nearly 11 judges per 1,00,000 population; Sweden: 13; China: 17; and, at the top of the scale, Belgium: 23; Germany: 25; and Slovenia: 39!

Rule of law in India exists only on paper for the most part, and lack of low enforcement and poor quality of regulation is a major contributor to the lack of investor enthusiasm for the country.

None of these structural problems will be resolved in the coming future, in fact most Indian politicians rarely talk about them. But a country does not need to be super-rich to be happy, if its widespread ethno-religious tensions are mitigated and state capacity is improved, Indians can be a happy people, with our varied and vibrant cultures, and strong family traditions.

Posted by: Vikram | October 27, 2014

Disillusionments with India’s Dalit and Left activists

         Hinduism is a deeply hierarchical, oppressive religion. – Nivedita Menon (Professor at JNU)

   The Earth, bearing upon her many different peoples, speaking many languages, following different dharmas as suit their particular regions. Pour upon us a thousand-fold streams of bountiful treasures to enrich us, like a constant cow that never faileth. – Atharva Veda

For as long as I remember being politically conscious, I have identified with what I would call India’s activist left on all social issues, and many economic ones. I was led to them through my explorations of the writings of contemporary scholars of India, many of whom belong to this activist left. In fact, this blog was originally setup to discuss and understand many of their writings. Indeed, many of India’s grass root activists identify with leftist politics and they continue various struggles against tremendous odds. Needless to say, many of them are close to these scholar-cum-activists and their partnerships form a rich network of resistance against aribtrary policies and decisions of an increasingly undemocratic society.

I had a simple way of thinking about religions and social problems. I thought all religions had ‘good’ and ‘bad’ points, and that modern reform would simply correct the bad points and override religion in those matters. This seemed to be clear when one talked about Hinduism, the ‘good’ was the tolerance and openness, the bad was the notorious caste system, with the bad being comprehensively overridden by the Indian Constitution. I thought of the other religions in a similar way. Growing up in India, Islam was another religion one was exposed to. In Islam, the good (according to me) was the clear definition of God and his message, the bad was the intolerance to other religions and ideas of God.

Since I thought I knew Hinduism pretty well, I set out to fill the gaps in my knowledge about Islam, and understand why exactly it was the way it was. My readings revealed something that startled me. There actually were actually significant arguments to be made in favor of Islam being a tolerant religion. So there was no ‘bad’ , one just had to look at things from a different perspective. Similarly, what I thought of as being ‘good’, was actually much more complex, with a large number of interpretations of what Islam means and how God is to be thought about coming from various Muslim traditions.

While this meant I understood Islam better, it indicated to me that perhaps I did not understand Hinduism all that well. What if, from a different viewpoint, the ‘good’ and ‘bad’ could be inverted from the way I thought about them ? Just like it had happened with Islam. And of course, this did turn out to be the case. There are Hindu texts that clearly try and establish the superiority of one sect, or one school of thought over all others. There were Hindu kings who were not at all tolerant. And on the other side, there are Hindu texts, stories and movements that emphasize equality of all humans before God.

What animates the Hindu right wing troll is the obsessive quest to define that irredeemable ‘wrong’ in Islam, and other religions, that in his/her mind renders Hinduism superior. This is done for various reasons, but most of all for vengeance, vengeance for a fake, rubbish narrative created by European colonialists that belongs to the dustbin of history. But sadly, the same desire for vengeance seems to manifest in the writings of many activists. The project of Constitutional equality, a national vision for the establishment of which many so called ‘savarnas’ (among other Indians) laid down their lives is turned into a hate fest. Where the goal is to show that ‘Hinduism’ is unequivocally a degrading, decadent philosophy, irredeemably flawed due to a hierarchical social order. The inconvenient facts about how Jatt Sikhs treat Dalit Sikhs, hierarchies among Muslims across India and Buddhists in Ladakh and Tibet are brushed aside as side-effects of Hindu ancestry or proximity.

     Inequality is the soul and philosophy of Hinduism. – United Dalit Students Forum (JNU)

Almost every statement of a general nature made by anyone about Indian castes may be contradicted. – D.D. Kosambi

The same academy that has deconstructed the colonial mythology of timeless Hindu-Muslim rivalry and the same activism that courageously challenges the demonisation of Islam as intolerant, accept the colonial narrative of a “deeply hierarchical, oppressive” ‘Hinduism’ almost without question. Its as if humiliating those who call themselves Hindu will make Indian society equal. No wonder then, that the right wing is ascendant today. Between an unjust humiliation and a fake pride, people will usually choose the latter.

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