Download Ashwani Seminor caste and grwoth

Caste as Economic
Organization
Does it Promote Growth
and Fair Economic Outcomes?
By
Professor Emeritus
Jawaharlal Nehru University ,Delhi
Sukhadeo Thorat
1
1 Purpose : Three Issues
• What is the Economics of Caste System
• Does caste promote growth, Efficiency and fair income
Distribution?
• What is the contemporary Empirical Evidence on
• Economic Discrimination –Market and non market
• Impact on growth, inequalities and poverty
• Neither promote growth, nor fair Distribution of Income
• Hamper economic growth and create inequities and poverty
• Rest of presentation provide reasons for this position
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2 Economic Features
Theoretical discussion is based on original Text of
Manu Smriti .
Ambedkar put 185 BC,( about 2200 years ago) for
composition of MANU SMRITI and 400 AD for
Untouchabilty ( about 1615 years ago )
• Caste as operative customary law ,continued till
early 18th century when property rights were
opened up selectively during British Period .
• Both caste and untouchability is now legally ban after
Indian Constitution in 1950.
• But caste persists as a legacy of past in many forms
and spheres ,Hence we are concern about it .It is not3
3 Economic Feature of CS
CS involve division of Hindus into five social
groups called caste, namely Brahman ,
• Five castes separated and isolated through
code of endogamy -marriage with in caste .
• Occupations (or property rights) of each caste
fixed by birth, without freedom to change.
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4 Economic features cont--• Allocation of occupation (or property rights)
among castes is, graded and unequal
To the Brahmins, assigned teaching, performing
religious sacrifices and rituals , and receiving
gift; to Kshatriya to protect the people, to
Vaishya,the trade , to shudra , animal
husbandry and agriculture and to ati –shudra
or untouchables the service to all castes
above them.
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5 Economic features of CS Cont-• Education :three castes namely Brahmin,
kashtriya , and vaishya had right to education,
but Brahmin alone can teach and use
knowledge as profession , two castes, that is
kashtiya and Vaisha had right to
education,without right to teach . The Shudra
and untouchables did not have right to
education .( This feature was application to all
women irrespective of castes) .
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6 Economic of CS cont-• Social mechanism of Excommunication, social
and economic boycott for deviation from caste
codes.
• Hindu social philosophy- moral and ethic
justify caste system ,it has divine origin.
• Property rights and Economic Relations are
consecrated by religion and made sacred,
eternal, and inviolate”. Ambedkar
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7 Consequences on Efficiency and
Growth
• Un-free Economic order -but based on
restrictions.
• Restrictions on occupation outside caste,
• Restriction on labor employment
• Restrictions on formal education.
• Restriction on Social and civil rights
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8 Consequences on Growth Cont-•
•
•
•
•
Restrictions results in to negative Impact
Akerlof,Scoveli, Lal ,Ambedkar
( a) Inefficient use of capital and labor ,
(b) Disincentive for work efficiency and
( c) Limited scope for creation of scientific
knowledge and technology .
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9 Consequences on Growth Cont-Caste creates segmented and imperfect
markets in capital and labor and bring
immobility and imperfection in markets
• Capital and labor failed to move from low
return occupations to high return occupation
• Imperfect and segmented markets bring
inefficiency , and equilibrium with less than
optimum outcomes,
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10 Consequences on Growth Cont• Induced involuntary unemployment for low
caste and voluntary unemployment for high
caste and result in under use of labor
resources .
• Efficiency of labor suffers as occupations not
based on individual choice, and preference
and training or capacities, task assigned in
advance, selected on the caste status of
parents.
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11 Consequences on Growth Cont• Efficiency affected as some occupation
impure and polluting, with low status for
persons engaged in them.
• derive no job satisfactions. In fact, constantly
provoke people engaged in them to aversion,
ill will, and desire to evade,
• Disassociates intelligence from work and with
contempt for physical labor affects incentive
to work
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12 Consequences on Growth Conti• Reduced supply of quality human resource
due to restrictions on education
• Formal education only for study of Vedas in
schools. No schools for arts and sciences,
which producers ,merchants and artisan need
• Did not enhance scientific knowledge and
technologies needed for higher productivity.
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13 Consequences on Inequalities
• Occupation or property right being unequal,
produce inequality
• in assets ownership ,
• employment and
• education
• Create graded Inequalities
14
14 Empirical Evidence on
Economic Discrimination
• Indian constitution does not recognized
distinctions of caste. Also Enacted legal
safeguard against discrimination. Two Antidiscrimination laws ,1955 and 1989 , modified
in 2015 .Affirmative Action Policies
• Dalit acquired access to prohibited economic
spheres ,Owned some assets , (agriculture
land , nonfarm enterprise ) ,salaried
employment and education.
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15 Estimate of Impact on Growth :
• Discrimination persists in some, if not all
economic spheres , continued as legacy of
past in markets and nonmarket Exchange
Faced by Dalit producers /businesses in access
to inputs and sale of outputs in markets
• Discrimination in non market institutions (
Education, Health and food) and government
programs ( related food , nutrition, health ,
public employment )
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16 Estimate of Impact Farm
Income
Farmers survey 2003 , 36 % of observed
differences in net income between SC and
higher caste farmers and 64 percent of
differences between SC and Other backward
caste are accounted by discrimination
• For same data caste inequality account for
about 3 to 17 percent of overall net farm
income inequality . Discrimination results in
income loss to Dalit farmers . (Ashish Singh)
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17 Estimate for Non farm sector
Discrimination assume forms: entry treated
with contempt and hostility, unable to rent or
buy physical space , locating shop own caste
locality ,purchases mainly by own caste
consumers, in hiring ( high caste ) labour , in
initial order for business, sale of goods at
lower price ,threat to invoke the caste identity
, difficulties in credit and not having access
to social net ( caste ) work .( 2003 , and 2015)
.
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18 Estimate for Employment cont-Discrimination account 41 percent in 2005 and
24 percent differential in wage differential
between SC and forward caste in public sector
in private sector in 2012 , at over all level .
Discrimination accounts for a large part of the
earning differences in regular salaried in urban
are , with job discrimination being more
important than wage discrimination .(
Madheswaran 2015) . Call back discriminatory
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19 Estimate for overall Income
cont-• Vani Borooah for 1994 and 2005 observed
that in 1994 , at least one-third of the average
income difference between high caste Hindu
and SC/ST households was due to the
“unequal treatment” of SC/ST attributes (
discrimination). Ten year later in 2005
,significant inter-group disparities in
achievement in income and in poverty
attribute to social exclusion
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21 Consequences on Inequality
• Assets : In 2012 ,in rural area only 22 of Sc
were self employed farmers as against 45 per
cent for higher caste and 42 percent for OBC ,
About 14 per cent SC households operate
enterprises /business compared with 19
percent for higher castes .In urban area % was
31 for SC and 41 higher caste. In 2005 SC
share’s in total enterprises in the country was
only 10 per cent,compared with 42 for higher
caste .
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22 Inequality contin--• Wage labor account 55 % for SC compared
with 22 per cent for higher caste in rural area ,
and 22 per cent for SC and 7 per cent for
higher caste in urban area , in 2012
• Higher Education Enrolment rate in
2008,average being 17 percent, but 12 % for
SC ,and 27 % for higher caste .
• In 2012 unemployment rate 7 % for SC and 5
% for higher caste .
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23 Inequality continue :Income and
Poverty
• In 2012 MPCE, all India average , Rs. 1646 ,
with Rs. 2239 for the higher castes, followed
by Rs. 1518 for the Other Backward Caste, Rs.
1297 for the Scheduled Castes , and Rs. 1123
for the Scheduled Tribes (STs).
• Poverty 12.4 % higher castes, 25% OBCs, 30 %
SC and 43 % SC , all-India average being 23%.
per cent.
• Graded Inequality in income and poverty
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24 Final Comments
• Caste Economics hamper economic growth
and create inequalities and high poverty and
low human development for dalit and similar
groups, it remains inefficient institutions .
• Therefore need policies to provide legal
safeguards against market discriminations
and affirmative action policies for providing
equal access are evitable to promote growth
and reduce poverty in private sector
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Thank You
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