The Implications of “Stunted Structural Transformation” for Rural India

These two books have quite a lot in common. They are both based on more than half a century of careful, detailed field research in parts of rural India. Both have been written by very distinguished authors, whose work is well-known and highly regarded. The books have in common a basic theme, which has to do with the implications of what has been described as India’s “stunted structural transformation”. But there the similarities end. Comparison of the books shows up very clearly how epistemological differences, and differences of methodology, lead to very different understandings of comparable observations. The authors of both books are concerned with the relative decline in the importance of agriculture in the lives and livelihoods of rural people in India, and the increasing significance of employment in non-farm activity. But whereas Himanshu, Lanjouw and Stern [HLS] find evidence of people acting entrepreneurially to take up new opportunities, Breman shows poor working people struggling to make ends meet by taking up whatever work they can find, often in conditions that he calls those of “neo-bondage”. HLS depict even poor village people as rather classic “economic men”, making choices. Breman shows how very severely their choices are constrained, in the context of the way in which capitalism works in the Indian context. He is concerned quite fundamentally with the power relations in the context of which people act. These relations are largely missing, however, from the approach taken by the authors of How Lives Change.

The idea that India has experienced “stunted structural transformation” was proposed by Hans Binswanger-Mkhize (2013). Pranab Bardhan (2009) writes, similarly, of India’s “tortuous transition”, and the National Commission on Enterprises in the Unorganised Sector (Government of India 2009), spoke in terms of India’s “lop-sided transformation”. All these writers are referring to the point that Jan Breman makes very clearly in his Preface: “By now [he is referring to late 20th century India] it was clear that the long-awaited transformation from a rural-agrarian to an urban-industrial economy and society would not take place” (2019, xi). The Indian economy has not gone through the same structural transformation that was experienced in the first generation of industrialising economies, when “the process of industrialisation enabled the dismissed agrarian workforce to leave the countryside and settle down with their families in the rapidly growing urban economy for regular and better jobs in industry” (Breman, p. 158, referring to observations of Max Weber’s on 19^th century Germany).

The experience of the early industrializers informed influential theorising in development economics, notably by Arthur Lewis and Simon Kuznets (according to the account given by Himanshu, Lanjouw and Stern [HLS], chapter 4.2). But though India did industrialise after independence, and the share of agriculture in GDP dropped to around 15 per cent by 2011, having accounted for almost 50 per cent in 1961, the share of primary employment in agriculture still remained at about 55 per cent (having been as high as 70 per cent in 1961: all these data from HLS, Figure 3.4). Meanwhile, the share of employment in manufacturing has remained stuck at 15–16 per cent. The structural transformation of the economy has remained “stunted”, therefore, as so much labour has remained at least partially locked in agriculture, often combined with employment in informal activities of low productivity. Or as HLS put it, as against

the two-sector model of structural change presented by Lewis and Kuznets, we find that the central story is not that of a wholesale shift from the backward to the advanced sector. Instead, the evidence [from the village of Palanpur, and from India generally] points overwhelmingly to a story of gradual diversification. (127)

HLS aim through their study of Palanpur to use the village as “a lens to understand and assess various theories of development” (2) – and the critique of the two-sector model seems, in the end, to be perhaps the most important single contribution of the Palanpur study to development economics. Breman’s comparable observation is that, “The planned transition to a welfare state with formal conditions of employment for the country’s swelling workforce made redundant in agriculture was aborted” (xi). Both books are concerned with the implications of the “stunted structural transformation” that India has experienced.

But though the two books are concerned with the same basic question, as I have said, there the similarity ends. How Lives Change is by economists, and is based on seven rounds of survey research, the first of them conducted in 1957–8 and the most recent in 2015, in the village of Palanpur in Moradabad District of western Uttar Pradesh (UP). Nicholas Stern started his own studies in Palanpur, working with Christopher Bliss, in 1974–75, and he and his various co-workers have been able to draw on earlier studies in the village conducted by the Agro-Economic Research Centre of Delhi University. This is Stern‘s third book on the Palanpur research (see the earlier works by Bliss and Stern 1982, and Lanjouw and Stern 1998) – and the village is by now the most intensively investigated in the whole country. As HLS say, Palanpur is “uniquely endowed” with data and studies, and they claim that this “uniqueness of longitudinal data over seven decades … has allowed a small village of a little over 1000 inhabitants in 2015 to become an observatory [on the rural economy of India]” (50). The Palanpur studies are focused, understandably given their authorship, on the economy of the village, and the core of How Lives Change is in “Part 2. Economy”, where the authors take up the same themes that have appeared in the earlier volumes. They are concerned with changes in the agricultural economy, with tenancy (which remains, it seems, unusually extensive in this village, by comparison with what is reported nationally and in other village studies), non-farm activity and with poverty, inequality and mobility. The book differs a little from the earlier ones in having a separate section on “Society”, which considers aspects of social development – mainly underlining the continuing failures of UP governments to deliver public services in education and health - and has a little bit to say both about gender relations and local politics. It is fair to add that the authors show a keen interest throughout the book in the relationships within and between the castes of the village. The analysis the book offers is underpinned by the methodological individualism of mainstream economics, focused on the choices and actions of individuals. HLS say, “This book is about the evolving nature of the opportunities for the people of Palanpur as India changes, and how markets and the behaviour of agents influence and are influenced by change” (2). As their title itself hints, HLS see the people of Palanpur as entrepreneurs who are changing their own lives, and one of their central concerns is with why some individuals or households perceive or react to opportunities before others (though the answers they offer to this question are not altogether clear).

Jan Breman is a sociologist who has devoted himself for more than fifty years to ethnographic and historical research in south Gujarat, in particular, and the book under review is a masterly synthesis of his many substantial studies, starting with the book Patronage and Exploitation (1974), which was based on his PhD research, carried out in the early 1960s, and continued through later works including Of Peasants, Migrants and Paupers (1985), Footloose Labour (1996), The Poverty Regime in Village India (2007) and Labour Bondage in West India (2007), as well as many articles. As the titles of these books suggest, Breman’s research has been driven throughout by a focus on labour and on poverty, and by a deep concern with the servitude and exploitation that are experienced by very many Indians. These are, as he sees it, inherent in the way in which capitalism works in India. As he says in Capitalism, Inequality and Labour, after India’s independence, “Instead of coming to enjoy the comfort of regularity, security and protection of a standard labour contract backed up by state-provided benefits of social welfarism, India’s working masses were down-graded and subjected to exploitation as well as exclusion” (xi). These words ring out at the time I am writing (in June 2020), when the response by the Government of India to the Covid-19 pandemic has both exposed the brutal conditions of life and work of millions of Indians - including those very many circular migrant workers who set off to walk home from the cities to their villages – and the way in which they seem to have been invisible to the state (Harriss 2020). Breman’s research has always been concerned with these conditions of life and labour. His approach is historical, and based on analysis of how capitalism structures the lives of working people. Where HLS see individual Jatabs (the principal Scheduled Caste group of Palanpur) as innovating and acting entrepreneurially when they choose to go to work in brick-kilns, Breman sees such “choices” in the annual trek that land-poor peasants from a tribal caste make to the brick-kilns in his area of research as involving relationships of neo-bondage (183ff). The debts that the workers have usually incurred in securing their jobs mean that they are subject to coercion, and a form of servitude – even if they do not accept these conditions passively. The differences in approach and in understanding between the two books are stark.

The story of Palanpur reflects the general trends of the Indian economy, and is similar to those told in other recent village studies (as HLS recognise, chapter 7.9). Bliss and Stern (1982) thought that the principal drivers of change in the village were population growth, developments in agricultural technology and the expansion of non-farm employment opportunities outside the village. Now, looking at trends since the late 1950s, it seems clear that the major driver of change through to the mid-1980s was agricultural intensification (associated with the green revolution, and with increase in the irrigated area). Total village income in this period increased more quickly than it has since then, and inequality declined. Off-farm employment, such as there was, was mostly in regular, formal activity. Since the 1980s, however, non-farm employment has taken over as the main driver of change. The great majority of landholdings, thanks to the partitioning that has taken place with population growth (nothing being said about other possible drivers of differentiation among landowners), are of marginal size, and most village people have had to diversify their sources of income. Pluriactivity – on which I comment further below - is now the norm. At the same time mechanisation has reduced the demand for labour in agriculture and Palanpur (unusually, I suspect, among Indian villages, even now) no longer has a class of male workers depending primarily upon agricultural labour.

Now - though 84 per cent of village households derive some income from agriculture – only 23 per cent of them depend on agriculture alone. Agriculture supplies only one-third of total village income and non-farm employment nearly a half. Such employment accounts for two-thirds of all the jobs in the village (compared with about 40 per cent in the rural workforce in India as a whole, according to data for 2011). These jobs mostly involve casual employment in the informal/unorganised sector, much of it in construction (as has been true nationally) – rather than regular work – or (in almost one-third of cases) some form of self-employment. The jobs are mostly outside the village, and are most frequently taken up by “commuting” rather than by migration. It seems clear, however, that the authors have scrambled together commuting on a daily basis and circular migration, which should surely be distinguished from each other. The authors’ failure to recognise the distinction may have significant implications for judgment of their arguments – as I will explain later in this essay. The sharp increase in non-farm employment has evidently brought a reduction in poverty, but increased inequality, and there has been less inter-generational mobility in the recent past than there was before. Access to different forms of non-farm work depends to a significant extent upon family social networks and caste affiliation, and education has, so far, not played much of a role. This is one of a number of instances of the continuing significance of caste, often as a proxy for trust, even while many “traditional” caste practices have either disappeared or become much less significant. Those with the more substantial landholdings – and especially, it seems Thakurs, the erstwhile dominant caste of Palanpur – are more likely to be able to secure well-paid regular jobs or to be self-employed in activities that require some capital. There is clear evidence of a kind of hoarding of opportunity (comparable with that observed by Jeffrey, Jeffery, and Jeffery 2008), even though increasing non-farm employment has allowed for some upward mobility for the Jatabs.

The authors place some emphasis on the importance of pluriactivity in 21^st century Palanpur, and draw attention to the ways in which the pursuit of several different occupations makes for some insurance against risk, as well perhaps as for increased incomes. It is worth reflecting, however, that there is a similarity between what is happening to people in the village, and to many others in cities in India and elsewhere in the world, who are described as being employed in the “gig economy”. Many of those who work in the gig economy also take on several different activities. But while there are those who do very well indeed financially, the circumstances of a majority of gig economy workers are characterised by high levels of insecurity. Where is the line drawn between “entrepreneurialism” – emphasised repeatedly by HLS – and people struggling to make ends meet?

There are points of comparability between these findings from Palanpur and Breman’s in south Gujarat – where he has conducted studies of three villages, in two of them from the early 1960s until 2015, as well as having done research among different groups of workers. He also reports that for most village households agriculture is no longer the mainstay of their work and income. The substantial landowners have invested in education, and have increasingly sought “service” occupations¹. For most of them farming is no longer their main occupation. They, in common with their peers in other parts of the country, including Jats and Thakurs in UP, have turned away from the village – though they have consolidated their control at local levels and reinforced their hold in the region. Their erstwhile farm servants, from the tribal Dubla community, with whom they once shared what were, in a sense, intimate social relations of patronage, but with whom they now practice mutual distancing, have also turned away from the village. In the case of the Dublas, however – they were called Halpatis, or “lords of the plough” by Gandhi (4) – “the lack of sufficient and somewhat regular alternative employment means that they depend upon labour contractors to take them away to remote destinations for many months of the year” (165). Whereas it used to make good sense for landowners to employ local labour, including farm servants tied to them in relations of patronage, latterly they have been able to rely on employing workers from outside the locality – benefiting from their greater pliability and the possibility of paying lower wages. Contrary to what is usually assumed, Breman shows, the use of migrant labour has not come about because of labour shortages locally, but rather for reasons of labour control and reducing labour costs. But among the results is that off-farm employment, mostly outside the village – and kam much more than naukri, casual wage labour rather than “service” employment (to use the distinctions emphasised by Parry – see note 1) - has become the norm in south Gujarat, exactly as in Palanpur.

Whereas HLS offer quite a benign picture, however, of landless and near-landless village people being innovative in finding new ways of making a living, Breman shows that they are subject to varying degrees of “unfreedom”. As he puts it, rather than the dichotomy of free/unfree labour, he observes “a continuum ranging from greater to lesser ability to choose when, where and for whom to work” (239). Rural workers are often subject to the conditions that he describes as those of “neo-bondage” – the prefix reflecting the fact that these are no longer master-servant relationships moderated by patronage. In the past, Breman shows, the landowners’ interest in the subordination of client labour was not only economic “but driven by ambition to gain political power and social status” (3). They were interested therefore in maintaining retinues of clients, who in return gained at least a degree of livelihood security, perhaps a place to live, and various perquisites. This was what was called the Halipratha system, of master-servant relations. But as the commercialisation and monetisation of the rural economy have taken place, the relationship has become thoroughly commodified and characterised by “naked exploitation” (5). Now, “Employers use the payment of advance wages (‘earnest money’) as a mechanism of attachment” (184) – subsequently often delaying or undercutting wage payments. This is “neo-bondage”. The relationship is stripped of any sense of a morality of mutual dependence and intimacy.

Breman’s overarching argument is that “capitalism and bondage are not mutually incompatible but coexist” (264). His argument in fact goes beyond the suggestion of their “coexistence”: capital accumulation benefits from unfree labour (as Jairus Banaji has also argued [2003], and Philip Corrigan, many years ago, in an essay entitled “Feudal relics or capitalist monuments?” [1977]). In a discussion (pps.205–15) of Daniel Thorner’s influential analysis of the “built-in depressor”, seen by Thorner as accounting for the problem of agricultural productivity in India, Breman recognises Thorner’s insight, but takes him to task for having suggested that the depressor would be overcome with the development of capitalism: “The depressor did not obstruct the arrival of capitalism; it was rather the form in which capitalism manifested in the peasant landscape of colonial India” (211). Indeed, the idea of “the depressor” is entirely consistent with conceptions of “backward” forms of capitalism, such as in the argument of the historian David Washbrook (1988). Indians who owned capital, Washbrook thought, had “never had it so good”, because in the context of colonial rule they were able to make very high profits without taking on the risks of entrepreneurship, thanks to the control that they were able exercise over labour. This is what is suggested in the idea of the “built-in depressor”.

Breman’s book includes three sections, which partly reflect the successive phases of his research, but which offer, as it were, variations on a common theme. The theme is that of the persistence of unfreedom in labour relations, in the context of the engrained inequality of Indian society and the failure of politicians and planners to deliver the redistribution, and the end to exclusion, that were promised at the foundation of the Indian republic. Part 1 of the book, entitled “Labour as Codified in the Annals of the State”, brings together the story of Breman’s research with a history of successive government reports and enquiries that have played down, ignored or denied outright that bondage existed or continues to exist. It culminates in an account of the ways in which recent governments have disparaged and disregarded the findings and recommendations of the National Commission on Enterprises in the Unorganised Sector, and then the report of the Committee on Unorganised Sector Statistics: “The problem overriding all others is that those in power do not want to be briefed on the dismal plight of the men, women and children in the lower ranks of the labour hierarchy” (59). This was shown up very clearly in the way in which the government headed by Narendra Modi disregarded the conditions of life and livelihood of millions of workers when it ordered a particularly stringent lock-down in response to the coronavirus, giving only four hours’ notice.

“Destitute in Bondage”, which is Part 2, then gives an account of the history of Halipratha and its demise, and of how the Dublas/Halpatis were consistently betrayed by the Congress movement both before and after independence, because of its commitment to serving the interests of the rural elite. Breman is scathing in his treatment of the ideas and actions of Gandhian social workers who compromised with the exploitation of the Dublas, and connived in the ideas (both canards) that the Dublas owed their misery to their “defective” way of life, and that they, rather than the landowners, were responsible for the resilience of Halipratha.

The final part of the book, “The Political Economy of Boundless Dispossession”, concerns the period since about 1970, and provides an account of the increasing importance of labour circulation in the Indian economy – anticipating what has been exposed by the events that have occurred in the context of the Covid-19 pandemic (Harriss 2020). It is now a matter of public record, following the belated publication (in 2015) of the findings of the Socio-Economic Caste Census of 2011, that half of all rural households are landless, have to survive on casual wage labour that is often not available locally, and live in circumstances of severe deprivation (174). There is, therefore, a massive amount of labour migration, from one rural area to another (agriculture in Punjab, for example, has long depended on migrant workers coming from Bihar and UP), and from villages to cities. But whereas industrialisation and urbanisation in the West – as in the case of 19^th century Germany, referred to earlier - saw workers moving on a permanent basis to the cities, a high proportion of workers in Indian cities are circular migrants, moving between village homes and the urban centres. Quite what the numbers of such migrants are is uncertain, and Breman argues that the figure of 140 million which appeared in a government publication, and that was much cited during the Covid-19 pandemic is “mere speculation” (176). But the numbers are unquestionably large, and disproportionately represented among them are members of the Scheduled Castes and Scheduled Tribes, and the poorest and lowest ranked of the Backward Castes (see also Shah et al. 2018).

Such labour circulation, Breman points out, “facilitates the informalisation of economic activity; at the same time the informal economy puts a premium on labour mobility” (179). Thus, it has come about that, in India, “A new class of nowhere people has emerged, forced to drift between what passes for ‘home’ and a place of ‘work’ (and who) in their marginality … seem to pose no threat to the vested interests of capital and its agents” (xi–xii). “Structural transformation”, as I have referred to it – the transition from an agrarian to an industrial economy - has not come about in the way that it did in the early industrialising countries, and in the way in which economic development has been theorised. There is a vast segment of the working population that is impoverished and has become “footloose”, and that is – of necessity – dependent upon the ‘deeply problematic type of urban living’ (213) characteristic of Indian cities. Part of the reason why urban living is so problematic for so many people living in the vast slums of India’s cities is that they are effectively disenfranchised (see, e.g, Routray 2014). The fact that very many migrant workers in the cities don’t have ration cards, for instance, or don’t have ration cards that they can use in their place of work, became better known during the Covid-19 crisis (Harriss 2020). Another fine analysis of these problems is found in Anirudh Krishna’s aptly titled book The Broken Ladder (2017), which is in part about the almost insurmountable difficulties that the great majority of rural people confront in making their way in the urban economy.

But, of course, HLS, though they are circumspect in what they say, find in these developments evidence of the existence of opportunities, and of innovation on the parts of people from Palanpur, when they take them up. Even though Palanpur, they say, “remains a backward village showing much slower growth than India as a whole … its people do innovate, invest and take risks to change their lives” (108). Just in case readers might misunderstand, they say later, “we do not want to suggest that Palanpur is a hotbed of ideas and innovation” (164). For this reviewer (and, perhaps, the authors of the entry on “Entrepreneurship” in The New Palgrave Dictionary of Economics [Baumol and Schilling 2008]), they do stretch the concept of entrepreneurship too far. Still, they assert that although

A number of previous studies on India claim that the increase in self-employment has been due to ‘distress-induced factors’ … the activities in Palanpur suggest a process of skill and capital accumulation by the residents that is more than simply a low-level, fall back option as a result of distress. (249)

It may be noted that the first author, Himanshu, has himself written a good-deal about distress-driven employment (2011), and also that it is clearly the case that not all self-employment among Palanpur people has the characteristics of “skill and capital accumulation”. HLS, in the brief accounts that they give of the engagement of people from the village in marble-polishing, work in the Moradabad railway yard and in brick-kilns, do recognise the role of contractors and the possible significance of advances to workers. They aver however, that:

The emphasis Breman [in an earlier publication] puts on non-farm workers as a vulnerable group maybe somewhat misplaced in the context of commuting and diversification. The people in non-farm casual work and non-farm self-employment in Palanpur are not powerful. However, the diversification away from agriculture and the new opportunities are, for them, ways to manage overall risk and not only to increase incomes. They are not solely ‘non-farm casual’ workers in isolation: they have a base in the village and alternative activities in the village or in the vicinity (286)

The problem is that is hard to tell from the very limited account that is given by HLS what the non-farm working conditions of Palanpur people are like, and whether they really are different from those described by Breman. HLS seem to place a great deal of emphasis on commuting from the village, and it does seem altogether likely that daily commuters aren’t subject to same kinds of conditions as those that Breman describes. But it also seems from the data that HLS present that a large number of non-farm casual workers from the village are actually circular migrants rather than daily commuters. Table 7.16 shows that in 2015 150 non-farm jobs (two-thirds of the total number of such jobs) were outside the village, and in 2008–9 133; and the immediately adjacent Figure 7.12 shows that 60 per cent of jobs (in 2008–9) were at sites more than 50 kilometres away (and 33 per cent of them more than 100 kilometres away). It seems unlikely that all these work sites were accessible on a daily basis, both because of time and cost, and that perhaps as many as a half of Palanpur’s non-farm workers are actually short-term circular migrants rather than daily commuters. The conditions of their work and lives may not be exactly the same as those of the large numbers of migrant workers from UP who struggled to get on trains from places as far away as Mumbai during the Covid-19 crisis, but it also seems possible – from what is known of the conditions of construction work, for instance, the form of employment that accounted for 42 per cent of all casual sector jobs in Palanpur in 2008–9 (248) - that many of them are subject to coercive conditions of employment (on labour in the construction industry see Breman p. 180–1; and Srivastava and Jha 2016, on the construction industry in Delhi – where it is possible that people from Palanpur go to work). But we simply don’t know from the account that is given.

HLS conclude their study with some remarks about the ways in which their analyses in the book contribute to development economics, and with a discussion of the implications of their findings for policy. I suggested earlier that it seems that the most important point, in regard to development economics, has to do with recognition of the limitations of classic theories in the discipline about growth and distribution, though the authors’ hope is that they will succeed in elevating recognition of entrepreneurship and initiative (pps. 465–8 and 471–2). As regards policy, it is heartening, even if not at all original, that the authors should give the emphasis that they do to the improvement of public services and to investment in education and health. They might have emphasised more than they have done that India spends lamentably little of its GDP, by comparison with similar countries, on education and health. They are surely right that “economic and social returns to stronger institutions [political, public and community] could be very large” (p.450). But what might drive the realisation of this objective? The book is entirely silent about the politics of development in India, and the policy discussion is what used to be described as “Fabian”, or in other words, it is quite technocratic, as if policies are chosen and implemented by highly intelligent people of good-will, without regard to the process of politics.

Woven through Breman’s study, by contrast, as the account given here has shown, is an argument about the ways in which politicians and policy makers have neglected and disregarded working people, deliberately, as well as because of the development policies that they have pursued (including both those of the Nehruvian era and the more recent slavish following of neo-liberal orthodoxy). He contends that the workers he is concerned with do have a proletarian identity, but they have little sense of class solidarity – and he shows why this should be so (though see also Parry [2019] on the class divisions within the manual labour force). The upshot is that, remarkably, “the interests of the largest working class in India – the huge mass of agricultural-to-rural labour – have remained by and large unrepresented in the political and economic arena” (172). The lack of priority that has been given historically to education and health is an important case in point. Breman is not at all sanguine about the prospects for change in this regard, and expresses considerable fears about the implications for the working-class poor of the way in which India has moved, under Narendra Modi’s leadership, “behind a populist posture of benign command from above” toward an authoritarian state that, in line with the ideology of Hindu nationalism, “cultivates a hierarchically framed society”. Breman continues, “In this setting the twice-born [the upper castes] rule the roost, an enemy-in-our-midst [Muslims] is identified to cement the people in ‘nationalist unity’ and the lower working classes-cum-communities are firmly kept in their place as subordinates” (50). This is a grim but realistic understanding of what is happening.

Acknowledgements

The author is very grateful to an anonymous referee, to Nate Roberts and Ashwin Subramanian, of the Centre for Modern Indian Studies of the University of Goettingen, to Jonathan Pattenden at UEA, and to Gerry Rodgers, President of the Indian Society of Labour Economists, for insightful comments on a draft of this article.

Additional information

Notes on contributors

John Harriss

John Harriss is Professor Emeritus of International Studies, Simon Fraser University, Vancouver, and an Adjunct Assistant Professor in Global Development Studies, Queen's University. He first conducted research in rural India in 1972.

Notes

1 Jonathan Parry argues in his ethnographic work on life and labour in the steel town of Bhilai (2019) that the ‘classes of labour’ in India now are defined by the distinction that is widely made between ‘service’ jobs (or naukri) and casual labour employment (kam), both within and outside the manufacturing sector - with the former including permanent jobs in formal sector manufacturing.