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The Role of Caste in Economic Transformation

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June 24, 2022

What is the issue?

Caste, which is mostly confined to politics, could be a structural factor that impedes economic transformation in India

What is the link between economic transformation and caste?

  • Caste shapes policy outcomes and is central to economic transformation itself.
  • Through its rigid social control and networks, caste facilitates economic mobility for some and erects barriers for others by mounting disadvantages on them.
  • Caste also shapes the ownership pattern of land and capital and simultaneously regulates access to political, social, and economic capital.
  • Social inequalities have mounted barriers for economic transition.
  • Even the relative success in South India is being attributed to the ‘Vaishya vacuum’ — an absence of traditional merchant castes.

In what ways do the caste impedes economic transformation in India?

  • The caste impedes the economic transformation in India through
    • Ownership and land inequality related to productivity failure within the farm sector
    • Elite bias in higher education and historical neglect of mass education
    • Caste-based entry barriers and exclusive networks in the modern sector

What is the case with land ownership and productivity?

  • Land ownership- Land defines social status and pride and works as a source of inheritance, family lineage and speculative capital.
  • India has one of the highest land inequalities in the world today.
  • During the colonial era, the British inscribed caste in land governance categories where some castes were assigned land ownership at the expense of others.
  • They made an artificial distinction between cultivators (who belong to certain castes) and the labourers (lower caste subjects who cultivated granted/gifted lands like Panchami) thereby institutionalising caste within the land revenue bureaucracy.
  • Even the subsequent land reform that took place after India’s independence largely excluded Dalits and lower castes
  • Productivity- Though India has seen surplus food production from Green Revolution, the productivity was not uniform
  • Only some castes benefitted out of it and they tightened their social control over others in rural India.
  • Post the economic reforms of the 1990s, even those who made surplus in farm sectors could not transform their status from cultivators to capitalist entrepreneurs, except a few castes.

How neglect of education hampers economic development?

  • Neglect of education- The recent agitations by Jats in Haryana and Punjab, Marathas in Maharashtra and Patels in Gujarat, demanding caste based reservation in higher education and jobs exemplify this new trend.
  • The Indian education system has been suffering from an elite bias since colonial times.
  • Although the Indian Constitution guaranteed free and compulsory education under its directive principles, it was hardly translated into practice.
  • Hence, inequality in access to education got translated into inequality in other economic domains including wage differentials.
  • India’s turn toward service growth is arguably an outcome of this historic elite bias in education.

What is the case with other countries?

  • The Global South which succeeded in achieving inclusive growth had land reforms combined with human capital, invested in infrastructure and began industrialisation in the rural sector.
  • Chinese and other East Asian countries invested in education and their success in manufacturing is a direct outcome of the investment in human capital.
  • China taking over India in manufacturing is due to this neglect in human capital formation.



  1. https://www.thehindu.com/opinion/lead/the-role-of-caste-in-economic-transformation/article65554512.ece


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