DEPARTMENT OF ECONOMICS

Working Paper


RELATIONS OF PRODUCTION AND MODES OF
SURPLUS EXTRACTION IN INDIA: AN
AGGREGATE STUDY

by

Amit Basole and Deepankar Basu

Working Paper 2009-12









UNIVERSITY OF MASSACHUSETTS
AMHERST
RELATIONS OF PRODUCTION AND MODES OF
SURPLUS EXTRACTION IN INDIA: AN AGGREGATE
STUDY
(September, 12, 2009)
Amit Basole
!
and Deepankar Basu
$
Abstract: This paper uses areate!le"el data, as #ell as $ase!stud!
ies, to tra$e the e"olution o% some ke& stru$tural %eatures o% the 'ndian
e$onom&, relatin both to the ari$ultural and the in%ormal industrial
se$tor( These areate trends are used to in%er) (a) the dominant re!
lations o% produ$tion under #hi$h the "ast ma*orit& o% the 'ndian #ork!
in people labour, and (b) the predominant #a&s in #hi$h the surplus
labour o% the dire$t produ$ers is appropriated b& the dominant $lasses(
This summar& a$$ount is meant to in%orm and link up #ith on!oin at!
tempts at radi$all& restru$turin 'ndian so$iet&(
Keywors: relations o% produ$tion, modes o% surplus e+tra$tion, 'ndia(
!EL C"ass#$#cat#o%: B2,, B-1(
!
Department of Economics, University of Massachusetts, Amherst.
$
Department of Economics, University of Massachusetts, Amherst.
.en make their o#n histor&, but the& do not make it as the& please/ the& do not
make it under sel%!sele$ted $ir$umstan$es, but under $ir$umstan$es e+istin
alread&, i"en and transmitted %rom the past(
The 0ihteenth Brumaire o% 1ouis Bonaparte, 2arl .ar+(
PART ONE: AGRICULTURE
INTRODUCTION
Assessin the nature and dire$tion o% e$onomi$ de"elopment in 'ndia is an
important theoreti$al and pra$ti$al task #ith pro%ound politi$al and so$ial
impli$ations( A%ter all, an& serious attempt at a radi$al restru$turin o% 'ndian
so$iet&, i% it is not to %all pre& to empt& utopianism, #ill need to base its lon!term
strate& on the histori$al trends in the e"olution o% the material $onditions o% li%e o%
the "ast ma*orit& o% the population( Attemptin to build on past debates and as part
o% on!oin attempts at radi$al trans%ormation o% 'ndian so$iet&, this paper tries to
pro"ide a summar& a$$ount o% the e"olution o% some ke& stru$tural %eatures o% the
'ndian e$onom& o"er the last %e# de$ades(
'n pro"idin this summar& a$$ount, #e $onne$t #ith and speak to issues thro#n up
b& earlier #ork on $hara$teri3in 'ndian so$iet&( The primar&, thouh impli$it,
re%eren$e point %or this paper is the 4mode o% produ$tion5 debate that o$$upied
s$holars and a$ti"ists in 'ndia durin the 1960s and 1970s(
1
This paper is an
attempt to re"isit that debate in the liht o% ne# data that has sin$e be$ome
a"ailable/ it is also an attempt to #iden the anal&ti$al and empiri$al %o$us be&ond
the ari$ultural se$tor, the sole $on$ern o% the 4mode o% produ$tion5 debate( 8hile
it is true that ari$ulture $ontinues to 4emplo&5 the "ast ma*orit& o% the #orkin
people in 'ndia, the last %e# de$ades ha"e also #itnessed the slo# and errati$
ro#th o% an industrial and ser"i$es se$tor( A lare part o% the #orkin $lass no#
$onstantl& shuttles bet#een these se$tors, as mu$h as the& ph&si$all& mo"e
bet#een reions and states( 9en$e it is important to in$lude this ro#in non!
ari$ultural se$tor in an& anal&sis o% the e"olution o% the 'ndian e$onom&(
The prin$ipal :uestions that moti"ate this stud& are) #hat t&pes o% produ$tion
relations does the "ast ma*orit& o% the #orkin population in 'ndian ari$ulture and
industr& labor in; 9o# is e$onomi$ surplus appropriated %rom the dire$t produ$ers;
The aim is to understand the material $onditions under #hi$h the #orkin
population labors and the manner in #hi$h it is e+ploited(
The anal&sis is larel& pit$hed at the areate le"el, $omplemented, #here"er
possible, #ith mi$ro!le"el studies and data( 8hile a stud& o% the stru$tural e"olution
1
Thorner (1982a, 1982b, 1982c) summed up the debate and Patnaik (1990) contains a selection of the key articles.
2
o% the 'ndian e$onom& is o% interest in itsel%, this paper uses trends in the stru$tural
e"olution o% the 'ndian e$onom& to make in%eren$es about the mode o% eneration,
appropriation and use o% the surplus produ$t in 'ndian so$iet&(
2
The %o$us on surplus
appropriation, in turn, is moti"ated b& the .ar+ist idea that the %orm o% e+tra$tion o%
unpaid surplus labour pro"ides the ke& to understandin the stru$ture and e"olution
o% an& $lass!di"ided so$iet&( This important insiht #as most $learl& arti$ulated b&
.ar+ in <olume ''' o% =apital)
4The spe$i%i$ e$onomi$ %orm in #hi$h unpaid surplus labour is pumped out o%
the dire$t produ$ers determines the relationship o% domination and ser"itude,
as this ro#s dire$tl& out o% produ$tion itsel% and rea$ts ba$k on it in turn as a
determinant( >n this is based the entire $on%iuration o% the e$onomi$
$ommunit& arisin %rom the a$tual relations o% produ$tion, and hen$e also its
spe$i%i$ politi$al %orm( 't is in ea$h $ase the dire$t relationship o% the o#ners
o% the $onditions o% produ$tion to the immediate produ$ers ! a relationship
#hose parti$ular %orm naturall& $orresponds al#a&s to a $ertain le"el o%
de"elopment o% the t&pe and manner o% labour, and hen$e to its so$ial
produ$ti"e po#er ! in #hi$h #e %ind the innermost se$ret, the hidden basis o%
the entire so$ial edi%i$e, and hen$e also the politi$al %orm o% the relationship
o% so"ereint& and dependen$e, in short the spe$i%i$ %orm o% the state in ea$h
$ase(5 (pae 926, .ar+, 199?/ emphasis added()
The emphasis on the %orm in #hi$h surplus labour is e+tra$ted %rom the dire$t
produ$ers is important and #orth d#ellin on a little( 0"er& $lass di"ided so$iet&
rests on the appropriation o% unpaid surplus labour o% the dire$t produ$ers/ the %a$t
that one roup o% people $an, due to their lo$ation in the pro$ess o% produ$tion and
their relationship to the means o% produ$tion, appropriate the surplus labour o%
another roup is #hat de%ines a $lass( The appropriation o% the surplus labour o%
dire$t produ$ers b& the rulin $lass is as mu$h true o% a %eudal orani3ation o%
produ$tion as it is o% a $apitalist mode o% produ$tion( 8hat distinuishes the t#o is
the %orm in #hi$h this surplus labour is appropriated b& the rulin $lasses, not the
%a$t o% surplus e+tra$tion per se( 't is onl& in the $apitalist mode o% produ$tion that
the surplus labour o% the dire$t produ$ers, i(e(, the #orkers, takes the %orm o%
surplus "alue and is mediated throuh the institution o% #ae!labour( 8hile this
makes the e+ploitation o% #orkers less apparent under $apitalism, it also
distinuishes the $apitalist mode o% produ$tion %rom non!$apitalist modes, #here
the appropriation o% surplus labour is mu$h more "isible, dire$t and brutal( @or
instan$e, in the %eudal orani3ation o% so$iet& in .edie"al 0urope, the surplus labour
o% the ser% #as immediatel& "isible as the #ork he did on the lordAs land/ the surplus
labour took the %orm o% the produ$t o% the ser%As labour( The "isibilit& o% e+ploitation,
understood as the appropriation o% unpaid labour time o% the dire$t produ$ers, is
lost under $apitalist relations o% produ$tion/ it is obs$ured b& the institution o% #ae!
labour(
2
For an incisive analysis of the use of the notion of surplus for economic analysis see Baran (1957).
?
This stud& attempts to identi%& the e"olution o% the modes o% appropriation o%
surplus labour in 'ndia indire$tl& b& stud&in the e"olution o% ke& stru$tures o% the
'ndian e$onom& at the areate le"el( The underl&in assumption o% the #hole
stud& is that the e"olution o% the areate e$onomi$ stru$tures, like o#nership
patterns in the ararian e$onom&, the e"olution o% labour %orms like tenan$&, #ae!
labour, bonded labour, the si3e!distribution o% %irms in the in%ormal se$tor, the
patterns o% emplo&ment and miration, the importan$e o% mer$hant and %inan$e
$apital, et$(, $an pro"ide use%ul and reliable in%ormation about the mode o% surplus
e+tra$tion( 8hile it is possible to %orm a pi$ture o% the areate e"olution o% the
'ndian e$onom& usin data a"ailable %rom sour$es like the Bational Sample Sur"e&
>rani3ation (BSS>), the Ari$ultural =ensus, the =ensus o% 'ndia C and that is
pre$isel& #hat #e do in this stud& ! #e are %ull& a#are o% the limitations o% su$h
areate a$$ounts( .an& mi$ro!le"el "ariations are lost in the areate stor& and
so, #here"er possible, the areate pi$ture is $omplemented #ith $ase studies(
The stud& is broadl& di"ided into t#o se$tions, one dealin #ith the ararian
e$onom& and the other #ith #hat has $ome to be $alled the 4in%ormal5 industrial
se$tor( This t#in %o$us is moti"ated b& se"eral $onsiderations( @irst, the ararian
e$onom& a$$ounts %or the larest se$tion o% the $ountr&As #ork%or$e and population/
this makes it a natural %o$us o% an& stud& #hi$h attempts to understand the
e"olution o% the 'ndian e$onom& and so$iet& at the areate le"el( Se$ond, #hile
the non!ararian e$onom& $onsists o% the industrial and the ser"i$es se$tor, the
ma*orit& o% the #ork%or$e in these t#o se$tors is, aain, %ound in #hat has been
$alled the 4in%ormal5 se$tor/ that is #h& this be$omes one o% the %o$i o% this stud&(
Third, to the e+tent that an understandin o% the relations o% produ$tion (and %orms
o% surplus e+tra$tion) is at issue, the 4%ormal5 industrial and ser"i$es se$tor are
probabl& be&ond the domain o% an& debate/ most serious s$holars and a$ti"ists
#ould aree that the 4%ormal5 se$tor is $hara$teri3ed b& $apitalist relations o%
produ$tion( Sin$e, #hat seems to be at issue is the 4$orre$t5 $hara$teri3ation o% the
relations o% produ$tion and %orms o% surplus e+tra$tion in the ararian e$onom& and
the non!ari$ultural 4in%ormal5 se$tor, this stud& %o$uses on pre$isel& these t#o as
an inter"ention in the broader debate about the $hara$teri3ation o% 'ndian so$iet&(
PART I: AGRICULTURE
@ramed in the ba$kdrop o% massi"e mobili3ation o% the rural poor aainst intolerable
$onditions o% e+isten$e in the late 19D0s, e+pressed politi$all& in the eruption o% the
Ba+alite mo"ement and its brutal suppression b& the 'ndian state, the 4mode o%
produ$tion5 debate brouht toether some o% the most prominent .ar+ist so$ial
s$ientists in 'ndia in their attempt to $hara$teri3e the ararian stru$ture in 'ndia(
8as it $apitalist or #as it semi!%eudal; 8hat #ere the main $lasses in rural so$iet&;
9o# should 'ndiaAs relationship #ith imperialism be %a$tored into the
,
$hara$teri3ation o% 'ndian so$iet&; 8hat kind o% re"olutionar& politi$al strate&
%ollo#ed %rom the politi$al e$onomi$ anal&sis; These #ere some o% the main
:uestions around #hi$h the debate #as orani3ed(
The time is probabl& ripe %or re"isitin this debate, %or oin ba$k and takin
another look at the issues raised and the :uestions asked( There are at least t#o
reasons %or this( @irst and %oremost, #e are probabl& on$e aain #itnessin the
mobili3ation o% the rural poor aainst the $ontinued po"ert& and miser& that has
be$ome their lot under the post!$olonial 'ndian state( The numerous peoplesA
mo"ements, ranin %rom anti!S0E (Spe$ial 0$onomi$ Eone) strules and
mo"ements aainst displa$ement and %or rihts o"er $ommon propert& resour$es to
the .aoist mo"ement, are politi$al e+pressions o% this enormous rural $hurnin(
This pro"ides a ba$kdrop #hi$h is "er& similar to that pro"ided b& the late 19D0s in
'ndia/ this ba$kdrop, this ob*e$ti"e realit& o% peoplesA strules, impels us to on$e
aain ask %undamental :uestions about the stru$ture and d&nami$s o% 'ndian
so$iet&( Se$ond, more than t#o de$ades ha"e elapsed sin$e the 4mode o%
produ$tion5 debate ended in the earl& 1970s/ these t#o and a hal% de$ades ha"e
seen se"eral $hanes in the dire$tion o% poli$& o% the 'ndian state, the most notable
bein the #holesale adoption o% the neoliberal e$onomi$ %rame#ork( Did this poli$&
$hane impine on the stru$ture o% the 'ndian e$onom&; '% so ho#; 8ith the
passae o% time, #e also ha"e a$$ess to more and possibl& better :ualit& data
about the 'ndian e$onom&/ this ne# data $an be %ruit%ull& used to empiri$all&
e"aluate man& o% the $laims thro#n up durin the 4mode o% produ$tion5 debate( 't
is %or all these reasons, and #ith moti"ations "er& similar to those o% the
parti$ipants in the pre"ious debate, that #e #ish to re"isit the mode o% produ$tion
debate, startin #ith an anal&sis o% the ari$ultural se$tor and then mo"in on to
the 4in%ormal5 industrialFser"i$es se$tor(
A& SECTORAL COMPOSITION AND A'ERAGE SI(E OF )OLDINGS
Grobabl& nothin i"es a better introdu$tion to the rim stor& o% 'ndian ari$ulture
than a simple pi$ture o% the se$toral $omposition o% the three se$tors o% the 'ndian
e$onom&, in terms o% share o% total "alue added and share o% total emplo&ment(
8hile the share o% "alue added $omin %rom ari$ulture has de$lined sharpl& %rom
around -DH in 19-0 to about 16H in 2006, the share o% the total labour %or$e
enaed in ari$ultural a$ti"ities has displa&ed a mu$h slo#er de$line, as sho#n in
Table 1( This has e%%e$ti"el& trapped the larest se$tion o% the 'ndian #ork%or$e, %or
la$k o% alternati"e emplo&ment opportunities, in an e+tremel& lo# produ$ti"it&
sphere o% produ$tion, leadin to e+tremel& lo# in$omes and $onsumption
e+penditures( The $ontinued relian$e o% a lare ma*orit& o% the population on
ari$ulture, #hi$h adds an e"er de$linin share o% the "alue added to IDG, $learl&
underlines the %ailure o% an& meanin%ul stru$tural trans%ormation o% the 'ndian
e$onom& o"er the last %i"e de$ades sin$e politi$al independen$e(
-
Tab"e *: Sectora" Co+,os#t#o% o$ GDP a% Labo-r Force
A.r#c-"t-re I%-stry Ser/#ces
s0are
o$
GDP
s0are
o$
"abo-r
$orce
s0are
o$
GDP
s0are
o$
"abo-r
$orce
s0are
o$
GDP
s0are
o$
"abo-r
$orce
2006 1D(D0 D0(00 27(,0 12(00 --(00 27(00
2000 2,(D0 -9(?0 2D(D0 17(20 ,7(70 22(,0
1970 ?7(90 D7(10 2,(-0 1?(90 ?D(D0 17(D0
Sour$e) <arious 0$onomi$ Sur"e&s o% 'ndia(
8ith the ma*orit& o% the #orkin population in 'ndia enaed in ari$ultural
a$ti"ities, and #ith land bein one o% the most important 4inputs5 in ari$ultural
produ$tion, one is naturall& led to en:uire into the e"olution o% a"erae si3e o%
landholdins and other aspe$ts related to o#nership o% land in rural 'ndia( >ne o%
the ke& %a$ts about the e"olution o% the ararian stru$ture in 'ndia o"er the last %i"e
de$ades is the steadil& de$linin si3e o% ari$ultural holdins as depi$ted in =hart 1
(see Table A1 %or details)(
?

The a"erae si3e o% o#nership holdins has de$lined monotoni$all& o"er the last
%e# de$ades, #ith a "alue that is $urrentl& e"en less than hal% the $orrespondin
"alue in the earl& 19D0s( Bot surprisinl&, the same pattern o% monotoni$ de$line is
obser"ed in terms o% both o#nership and operational holdins, #here operational
holdins $an ha"e more or less land than o#nership holdins be$ause o% leasin in
3
Tables with numbers starting with A have been collected together in the Appendix.
D
and leasin out o% land( The de$linin si3e o% ari$ultural holdins point to#ards
pro$esses leadin to %ramentation o% land, important amon them bein $ontinued
demoraphi$ pressures on a %i+ed :uantit& o% land and la$k o% emplo&ment
opportunities in the industrial se$tor( The a"erae si3e o% holdins obtainin in 'ndia
toda& also has important impli$ations %or the aenda o% redistributi"e land re%orms,
as traditionall& en"isaed #ithin the le%t politi$al tradition/ #e #ill $omment on this
in a later se$tion(
1& PATTERNS OF LAND O2NERS)IP
Jnderstandin the $lass %or$es $urrentl& #orkin in ari$ulture re:uires us to look
not onl& at the e"olution o% the a"erae si3e o% holdins but also at the areate
o#nership patterns o% land in the rural e$onom&( The stead& de$line in a"erae si3e
o% holdins has been a$$ompanied b& some strikin $hanes in the pattern o%
o#nership o% land in rural 'ndia( To better appre$iate the $hanin stru$ture o%
o#nership patterns o% land in rural 'ndia, let us de%ine the %ollo#in $ommonl& used
o#nership si3e!$lasses) all %amilies o#nin less than 1 he$tare o% land #ill be $alled
4marinal5 %armers/ all %amilies o#nin bet#een 1 and 2 he$tares #ill be $alled
4small5 %armers/ all %amilies o#nin bet#een 2 and , he$tares #ill be $alled 4semi!
medium5 %armers/ all %amilies o#nin bet#een , and 10 he$tares #ill be $alled
4medium5 %armers/ and all %amilies o#nin more than 10 he$tares #ill be $alled
4lare5 %armers( This in%ormation is summari3ed %or eas& re%eren$e in Table 2(
Table 2: Size-class Definition
Size-Class Area Owned
marginal < 1 hectares
small 1 2 hectares
semi-medium 2 4 hectares
medium 4 10 hectares
large > 10 hectares
8ith this de%inition o% the "arious si3e!$lasses, #e $an see that the proportion o%
marinal %armer households has in$reased steadil& o"er the last %our de$ades,
in$reasin %rom about DD per$ent in 19D1 to about 70 per$ent o% all rural
households in 200?( This rather lare in$rease in the share o% marinal %armer
households has been mat$hed b& a stead& de$line o% lare, medium and semi!
medium %armer households) lare and medium %armer households toether
$omprise a minus$ule ?(D per$ent o% rural households in rural 'ndia toda&/ in 19D1,
this $ateor& represented about 12 per$ent o% all rural households( Bet#een the
de$line in the share o% lare landholdin %amilies and the in$rease in the share o%
marinal %armer %amilies, the 4small5 %armer %amil& has manaed to more or less
6
maintain its share $onstant o"er the past %i"e de$ades, in$reasin marinall& %rom 9
per$ent to 11 per$ent o% all rural households bet#een 19D1 and 200?(
The pattern o% o#nership in terms o% the share o% total area o#ned more or less
mat$hes the pattern obser"ed #ith respe$t to the share o% households in the rural
areas, thouh the pa$e o% $hane is more rapid in this $ase( The share o% total area
o#ned b& marinal and small %armer %amilies has steadil& in$reased %rom 7 per$ent
o% total area in 19D1 to about 2? per$ent o% total area o#ned in 200?( Garallelin
this is the stead& de$line in the share o% total area o#ned b& lare and medium
%armer households) the share o% area o#ned b& 4lare5 households de$lined %rom
27 per$ent in 19D1 to about 12 per$ent in 200?/ the $orrespondin share o#ned b&
4medium5 households de$lined %rom ?1 per$ent in 19D1 to about 2? per$ent in
200?( =auht bet#een these t#o trends is the semi!medium %armer %amil& #hi$h
has kept its share in the total area o#ned more or less $onstant sin$e 1961 at
around 20 per$ent( The $hanin pattern o% o#nership o% land is depi$ted
raphi$all& in =hart 2 and =hart ? (see Table A2 %or details)(
9as this $hanin pattern o% land o#nership made the distribution o% this most
important asset more e:uitable; The ans#er is a resoundin no( Thouh the share
o% area o#ned b& lare landholdin %amilies has de$lined substantiall& o"er the past
%e# de$ades, dri"en most probabl& b& demoraphi$ pressures and b& some hal%!
hearted attempts at land re%orms, the resultin distribution o% land at the beinnin
o% the t#ent& %irst $entur& in 'ndia $annot be seen as more e:uitable than it #as %i"e
de$ades ao( 'n %a$t, the ske#ed nature o% the distribution o% land remains more or
less inta$t, as $an be seen %rom the %ollo#in three measures) the IiniAs $oe%%i$ient
o% o#nership distribution, the 1oren3 $ur"e %or the o#nership distribution and the
a"erae area o#ned b& si3e!$lasses( The Iini $oe%%i$ient o% o#nership $on$entration
#as 0(6? in 19D1!D2, 0(61 therea%ter till 1992 and then $haned to 0(6, in 200?
(Io"ernment o% 'ndia, 200D/ pp( 12)/ the 1oren3 $ur"e %or the o#nership distribution
has also more or less remained un$haned bet#een 19D1!D2 and 200?
(Io"ernment o% 'ndia, 200D/ pp( 1?)(
'ne:ualit& o% land o#nership $an also be understood b& stud&in the e"olution o%
the a"erae si3e o% holdin b& o#nership si3e!$lasses( Stud&in this measure
ans#ers the %ollo#in t#o :uestions) (a) ho# has the a"erae landholdin o%
di%%erent si3e!$lasses e"ol"ed o"er time, and (b) #hat is the a"erae si3e o%
landholdin o% the marinal peasant household as $ompared to, %or instan$e, the
medium or lare peasant household; As $an be seen %rom Table ?, the a"erae si3e
o% holdin %or the marinal %armers has remained remarkabl& stable o"er the last
%i"e de$ades at a "alue o% around 0(2 he$tares/ the a"erae si3e %or all the other
si3e!$lasses has de$lined, #ith the larest proportional %all re$orded b& small
%armers and the smallest b& the $ateor& o% semi!medium %armers(
7

Table 3: Area Owned per Household by Ownership Size-Class
ear !ar"inal s#all se#i-#ediu# #ediu# lar"e
1961 0.20 2.41 2.84 6.13 17.64
1971 0.24 1.45 2.81 6.00 16.53
1982 0.23 1.44 2.80 5.92 16.29
1992 0.24 1.40 2.68 5.80 15.87
2003 0.21 1.38 2.67 5.62 14.05
Sour$e) $al$ulated %rom Keport Bo( ,91, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
9
8hen #e approa$h the ine:ualit& o% land o#nership b& lookin at the si3es o%
a"erae holdins a$ross si3e!$lasses relati"e to the a"erae si3e o% the marinal
%armer householdAs o#nership area, #e %ind $on%irmation o% the stor& o% $ontinued
ine:ualit&( The relati"e si3e o% a"erae holdins a$ross the o#nership si3e $lasses,
in $omparison to marinal holdins, has de$lined but remains substantiall& lare
e"en toda&( @or instan$e, as summari3ed in Table ,, the a"erae lare holdin #as
about D6 times the si3e o% the a"erae marinal holdin in 200?/ the a"erae
medium holdin #as about 26 times the si3e o% the a"erae marinal holdin( 8hile
the %ormer has de$lined %rom about 7D in 19D1, the latter has de$lined mu$h less,
%rom about ?0 in 19D1 to 26 in 200?( Thus, the deree o% areate ine:ualit& in
o#nership has remained larel& inta$t throuh these %i"e de$ades(
Table $: !ultiple of A%era"e !ar"inal Holdin" by Ownership Size-Class
ear !ar"inal s#all se#i-#ediu# #ediu# &ar"e
1961 1 11.77 13.90 29.97 86.27
1971 1 6.08 11.78 25.18 69.33
1982 1 6.12 11.93 25.22 69.40
1992 1 5.88 11.25 24.38 66.73
2003 1 6.52 12.65 26.57 66.48
Sour$e) $al$ulated %rom Keport Bo( ,91, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
The ske#ed distribution o% land o#nership o% $ourse in itsel% does not pro"ide "er&
use%ul in%ormation about the dominant relations o% produ$tion pre"ailin in the
ararian e$onom& and modes o% surplus e+tra$tion most in use/ a predominantl&
%eudal mode o% produ$tion $an ha"e a ske#ed o#nership distribution as mu$h as a
predominantl& $apitalist mode o% produ$tion( .an& parti$ipants in the 4mode o%
produ$tion5 debate in 'ndia in the 1960s, and espe$iall& Gatnaik (1962a, 1962b,
196D, 1970, 197D), dre# attention to the %a$t that the a$reae or si3e o% ari$ultural
holdins per se $annot be used to in%er the $lass status, in the .ar+ist sense, o% the
o#ner o% the holdin or the relations sheFhe enters into #ith other $lasses in rural
so$iet&( The same si3e o% holdins $an o #ith "er& di%%erent #a&s o% orani3in
produ$tion, i(e(, $apitalist or semi!%eudal, dependin on the a"ailabilit& o% #ater,
po#er, %ertili3ers, drauht animals, other tools and implements, et$( 9en$e, the
same si3e!$lass o% o#nership or operational holdin miht ha"e members %rom "er&
di%%erent $lasses(
8hile this arument is theoreti$all& "alid, #e miht nonetheless use the a"erae
si3e!$lass o% o#nership holdins as a pro+&, de$idedl& appro+imate, %or the $lass
position o% the o#ner o% the holdin( This is a purel& empiri$al arument and %ollo#s
%rom the %ollo#in t#o obser"ed %a$ts) (a) there is a "er& stron positi"e $orrelation
bet#een the si3e o% land possessed and the o#nership o% animals, minor tools and
implements (like si$kles, $ha%%!$utters, a+es, spades and $hoppers) and tra$tors
(Statement 2, Io"ernment o% 'ndia, 200-)/ and (b) i% #e de%ine, %ollo#in Gatnaik
(196D), the rural $lasses as %ull!time labourer, poor peasant, middle peasant, ri$h
peasant, $apitalist and landlord, then the proportion o% the 4upper $lasses5 tend to
10
in$rease as #e mo"e %rom smaller to larer si3es o% o#nership holdins( The se$ond
assertion, #hi$h seems %airl& intuiti"e, is partl& re%le$ted in Gatnaik (1970)( 'n her
sample o% 2?D households, o% those o#nin bet#een 2(- and 10 a$res, the ma*orit&
#ere small peasants/ o% those o#nin bet#een 10 and 1- a$res, the ma*orit& #ere
middle peasants( 0"en thouh Gatnaik (1970) did not use a random sample and the
sample si3e #as small, #e $an probabl& still make the $laim that si3e o% holdin
pro"ides a ood appro+imation o% the $lass position o% the o#ner(
But #e do not #ant to atta$h more importan$e to a$reae than to use it as a rouh
indi$ator o% $lass status( 9en$e, #e supplement the abo"e data on areate
o#nership patterns #ith the %ollo#in "ariables) (1) eoraphi$al "ariation o% land
o#nership a$ross 'ndian states, (2) the e+tent o% tenan$&, both o"er time and a$ross
spa$e, (?) e"olution o% the pattern o% tenan$& relations, (,) the e+tent and ro#th o%
landlessness, (-) the ma*or sour$es o% in$ome o% rural households, (D) the pattern o%
$apital a$$umulation in the ari$ultural se$tor, and (6) sour$es o% $redit in the rural
e$onom&( Taken toether #ith the e"olution o% the pattern o% land o#nership, these
miht help us $onstru$t a broad pi$ture about the relations o% produ$tion and the
predominant modes o% surplus e+tra$tion in the ararian e$onom&(
Be%ore #e look at e"iden$e on these important %eatures o% the rural e$onom&, #e
#ould like to address t#o possible $riti$isms) (1) nele$t o% an& dis$ussion o% the
post!independen$e Eamindari Abolition A$ts, and (2) not re$oni3in the
importan$e o% irriation and di%%erential produ$ti"ities o% land(
The dis$ernin reader miht %ind it surprisin that #e do not dis$uss the Eamindari
Abolition A$ts #hile dis$ussin the trans%ormation o% the ari$ultural se$tor in 'ndia/
$an this be $onsidered a serious lapse o% our anal&sis; 8e think not( Eamindari
Abolition A$ts and their impa$ts ha"e been dis$ussed threadbare b& se"eral
s$holars like Daniel Thorner, 8ol% 1ade*insk&, @ Tomason!Lanu33i, @ran$ine @rankel,
and others( .ost serious s$holars ha"e pointed out that the Eamindari Abolition
A$ts, passed in se"eral pro"in$ial leislatures bet#een 19,9 and 19-,, %ell %ar short
o% trans%ormin the ararian stru$ture( These a$ts did not manae to seriousl&
appropriate the land o% the 3amindars and there%ore did not manae to $urb the
po#er o% the landed elite as a $lass in rural so$iet&( Despite the passae o% se"eral
"ariants o% these 4abolition a$ts5, 3amindari interests manaed to $le"erl& use leal
loopholes to their ad"antae, $hallenin ke& $omponents o% the A$ts and thereb&
manaed to se"erel& limit the e%%e$ti"eness o% the alread& timid leal pro"isions(
The $ase o% Bihar is onl& too #ell kno#n to bear repetition( @rankel (200-) summed
up the $onsensus "ie# :uite #ell) the State manaed to abolish the 3amindari
s&stem #ithout e+propriatin the 3amindars( Eamindari Abolition A$ts did not
trans%orm the rural $lass stru$ture in an& sini%i$ant manner/ hen$e, #e did not %eel
ne$essar& to de"ote spa$e to a dis$ussion o% these leal pro"isions and $hanes(
The se$ond possible ob*e$tion that #e #ould like to address $onsists o% t#o related
points) (a) that #e inore the issue o% produ$ti"it& di%%erentials, espe$iall& the
11
di%%erential produ$ti"it& o% land that e+ists bet#een irriated and non!irriated
areas/ and (b) that this produ$ti"it& di%%erential makes state!le"el or national!le"el
anal&sis larel& useless(
't is true that the si3e (o% the ari$ultural unit) and surplus produ$ed (lea"in aside
%or the moment the produ$tion relations under #hi$h surplus is bein produ$ed)
ha"e a $omple+ relationship $o!determined b& te$hnoloi$al and eoraphi$al
"ariables( A small plot in a dr& area #ill produ$e mu$h less surplus than a small plot
in a #ell!irriated area/ a small %ruit or$hard #ill produ$e more b& #a& o% in$ome
than a small subsisten$e plot( But to the best o% our kno#lede data on a$$ess to
#ater is not a"ailable at the national le"el to the same e+tent that data on land
o#nership distribution is/ hen$e, e"en thouh #e understand the importan$e o% the
issue o% a$$ess to #ater, #e do not present detailed data on this in the paper( 8e
hope that this issue #ill be e+plored in %uture resear$h(
8e do not think that produ$ti"it& di%%erentials bet#een irriated and non!irriated
areas make state!le"el anal&sis useless( The appropriate le"el o% anal&sis depends
on the :uestions that the anal&sis is meant to address( >ur aim in this stud& is to
understand the broad patterns o% e"olution o% the relations o% produ$tion that the
ma*orit& o% the #orkin population in 'ndia labours in/ that is #h& #e ha"e
undertaken the anal&sis at the areate, national and state le"el( 8e are a#are o%
the %a$t that this ne$essaril& %or$es us to inore se"eral important "ariations, like
the e+tent o% irriation, obser"able at lo#er le"els o% areation/ e"er& areate
le"el stud& #ould %a$e this limitation( A more disareated anal&sis is somethin
#e miht take up in the %uture to $omplement our present stud&/ but #e belie"e
that this does not detra$t %rom the use%ulness o% areate!le"el studies #hi$h $an
in%orm national!le"el politi$al strate& and a$tion(

C& INTER3STATE 'ARIATION IN LAND)OLDING PATTERNS
To make sense o% the eoraphi$al "ariation in the patterns o% land o#nership
a$ross 'ndian states, #e ha"e di"ided all the states into t#o roups( The %irst roup
$omprises o% states #hi$h ha"e a relati"el& lare share o% the total area o#ned b&
lare landholdin %amilies/ #e $all these the 4lare landholdin states5 and
summari3e in%ormation about these states in Table A?( The se$ond roup $onsists o%
states #here lare landholdin %amilies o#n a relati"el& small proportion o% the total
area/ #e $all these the 4small landholdin states5 and pro"ide data about these
states in Table A,( As e+pe$ted, the %ollo#in states belon to the %irst roup)
Andhra Gradesh, Iu*arat, 9ar&ana, 2arnataka, .adh&a Gradesh, .aharashtra,
Gun*ab, and Ka*asthan( The se$ond roup, i(e(, the small landholdin roup has the
%ollo#in members) Assam, Bihar, 9ima$hal Gradesh, Lammu and 2ashmir, 2erala,
>rissa, Tamil Badu, Jttar Gradesh, and 8est Benal(
12
8h& is this di"ision into #hat #e $all lare landholdin and small landholdin states
use%ul; Ane$dotal and other e"iden$e that #e present later on in the paper
suests that the %irst roup o% states, i(e(, the lare landholdin states, is pre$isel&
the roup that has #itnessed relati"el& robust ro#th o% $apitalist relations o%
produ$tion in ari$ulture/
,
the se$ond roup larel& $onsists o% the states #hi$h are
still en$umbered b& remnants o% pre!$apitalist modes o% orani3in produ$tion( The
%a$t that the latter roup o% states has also seen a de$line in the share o% land
o#ned b& lare landholdin %amilies seems to suest that the e$onomi$ position o%
the 4semi!%eudal5 landlords, to the e+tent the& deri"e their po#er solel& %rom land
o#nership, has de$lined relati"e to the middle and ri$h %armers and $apitalist
landlords at the national, state and reional le"el( The semi!%eudal landlords seem
to ha"e been repla$ed b& ri$h and middle peasants as the rulin blo$ in the ararian
stru$ture o% $ontemporar& 'ndia( This, as #e point out later, #as not so mu$h the
result o% politi$al $on%li$t bet#een a risin $apitalist %armin $lass and the %eudal
oliar$h&/ rather, the latter ha"e, aided b& a pliant State, raduall& trans%ormed
themsel"es into $apitalist %armers, amon other thins( 8e return to this important
point later in the $on$ludin se$tion(
D& LANDLESSNESS
Sin$e land is one o% the most important 4means o% produ$tion5 in the ararian
e$onom&, an& anal&sis o% the pattern o% land o#nership in the rural e$onom& must
pa& $lose attention to the roup o% landless households( Sin$e this roup o%
households is totall& di"or$ed %rom o#nership o% land, the& miht be e+pe$ted to
i"e us an a$$urate measure o% #hat #e miht $all a rural proletariat $lass, the
$lass o% rural population #ho are e%%e$ti"el& propert&less(
A$$ordin to Bational Sample Sur"e& >rani3ation (BSS>) data summari3ed in
Table A-, the e+tent o% landlessness has sta&ed more or less $onstant o"er the last
%i"e de$ades) in 19D0!D1, 11(6H o% rural households #ere landless/ the
$orrespondin %iure in the 2002!0? sur"e& $ame out to 10H( The inter!state
"ariation in landlessness sho#s that 9ima$hal Gradesh, .aharashtra and 2arnataka
ha"e the larest share o% landless households in rural areas( >n the lo#er side,
Lammu M 2ashmir, 2erala, Gun*ab, Ka*asthan, Jttar Gradesh and 8est Benal ha"e
small shares o% landless households in the rural e$onom&(
4
The %a$t that states like Gun*ab and 9ar&ana ha"e underone robust $apitalist ro#th has
been #idel& noted and $ommented on( 0"iden$e that points in this dire$tion are) relati"e
$onsolidation o% ari$ultural holdins, in$reased me$hani3ation o% the produ$tion pro$ess,
predominan$e o% peasant!proprietors as opposed to parasiti$ landlords, radi$al $hane in
the pattern o% tenan$& (on #hi$h more belo#), a$$umulation o% $apital in the ari$ultural
se$tor, et$( @or e"iden$e on the ro#th o% $apitalist relations in Gun*ab ari$ulture see,
Sidhu, (200-) and the re%eren$es therein(
1?
The BSS> de%inition o% landless households is, #e %eel, misleadin and i"es a
tremendous underestimate o% landlessness in rural 'ndia( This is be$ause the BSS>
de%ines landless households as onl& those households #hi$h o#n less than 0(02
he$tares( Thouh the BSS> has $onsistentl& used this de%inition to de%ine landless
households, this i"es an in$orre$t pi$ture o% 4e%%e$ti"e landlessness5( This be$omes
$lear on$e #e *u+tapose land o#nership data #ith data on patterns o% land use(
Data put out b& the BSS> %or 2002!0? sho# that households o#nin less than 0(,
he$tares use more than 90H o% their land as homestead (Io"ernment o% 'ndia,
200Da, pp( 2-)( Thus, i% landlessness is understood as pertainin to land that $an be
used %or $ulti"ation and that $an enerate some in$ome %or the %amil&, then all
households o#nin less than 0(, he$tares should be $onsidered landless( 9en$e, a
more realisti$ de%inition o% landlessness must $onsider all households o#nin less
than 0(, he$tares as 4e%%e$ti"el& landless5(
Jsin this de%inition o% landlessness, #e see that the e+tent o% e%%e$ti"e
landlessness is both more pronoun$ed and that it has sini%i$antl& in$reased o"er
the de$ades, as sho#n in Table A- and depi$ted in =hart D( The proportion o%
e%%e$ti"el& landless households, a$$ordin to this de%inition, in$reased %rom ,,(21H
in 19D0!D1 to D0(1-H in 2002!0? %or the $ountr& as a #hole, an appre$iable
in$rease b& all a$$ounts( Sin$e land is the primar& input to ari$ultural produ$tion,
this also unders$ores the hihl& ske#ed distribution o% landholdin patterns in 'ndia
e"en toda&) D0 per$ent o% the poorest rural households o#n onl& D per$ent o% the
land used %or $ulti"ation! The %a$t that the ma*orit& o% rural households are
e%%e$ti"el& landless is also $orroborated b& lookin at the estimate o% households
that o#n no land apart %rom homestead (Table ,K, Io"ernment o% 'ndia, 200Da) as
summari3ed in Table -(
1,
Tab"e 4: Pro,ort#o% o$ R-ra" )o-se0o"s w#t0 %o "a% ot0er t0a%
)o+estea
Andhra Gradesh -?(1 Lharkhand 2,(6 >rissa ?7(-
Aruna$hal Gradesh 2?(- 2arnataka ,0(, Gun*ab -D(7
Assam ,0(? 2erala D7(? Ka*asthan 19(D
Bihar ,?(6
.adh&a
Gradesh ?,(0 Sikkim ,,(,
=hhattisarh 2D(2 .aharashtra ,,(7 Tamil Badu D,(-
Iu*arat ,,(0 .anipur ?0(? Tripura -9(-
9ar&ana ,9(- .ehala&a 29(0
Jttar
Gradesh 2D(?
9ima$hal 22(6 .i3oram 1,(1 Jttaran$hal 26(6
Lammu and 2ashmir 11(0 Baaland 1-(-
8est Ben!
al ,D(-
Sour$e) Keport Bo( ,91, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
Alon e+pe$ted lines, in$reasin landlessness is re%le$ted in the in$reasin
proportion o% ari$ultural #orkers "is!N!"is $ulti"ators in rural 'ndia( Apart %rom a
%e# outlier states like Aruna$hal Gradesh, Assam, 9ima$hal Gradesh, LM2, and
Ka*asthan, most other 'ndian states in 2001 had substantial numbers o% ari$ultural
#orkers $ompared to $ulti"ators (details in Table AD)( Some ma*or states like
Andhra Gradesh, Bihar, 2erala, >rissa, Tamil Badu and 8est Benal had more
ari$ultural #orkers than $ulti"ators( The e"olution o% the relati"e strenth o%
$ulti"ators and ari$ultural #orkers in re$ent de$ades is also interestin( @or the
$ountr& as a #hole, #hile the number o% $ulti"ators remained more or less $onstant
at 12- million bet#een 1991 and 2001, the number o% ari$ultural #orkers
in$reased %rom about 7D million to 10D million durin this same time period (.ishra,
2006)/ in$reasin landlessness $reated the rounds %or the s#ellin o% the ranks o%
the rural proletariat(

E& TENANCY
Iro#in landlessness miht not lead to the $onsolidation o% $apitalist relations o%
produ$tion and ro#th o% the rural proletariat and semi!proletariat i% there is
#idespread pre"alen$e o% tenant $ulti"ation( There are a%ter all, t#o di%%erent #a&s
in #hi$h the surplus labour o% dire$t produ$ers $an be appropriated b& the rulin
$lasses in a rural $onte+t, dire$tl& as #ae!labour and indire$tl& as land rent, #ith
the latter re%errin to the rent paid as part o% a tenan$& $ontra$t( The %irst method
o% appropriatin surplus is asso$iated #ith $apitalist relations o% produ$tion, #hile
the se$ond is asso$iated #ith semi!%eudal methods o% surplus e+tra$tion(
Tenant $ulti"ation, #ith share$roppin as the %orm o% the tenan$& $ontra$t,
espe$iall& allo#s e+tra$tion o% the surplus produ$t in the %orm o% land rent(
1-
There%ore, share$roppin tenant $ulti"ation has been histori$all& identi%ied as one o%
the most important semi!%eudal %orms o% surplus e+tra$tion in rural 'ndia( 't is %or
this reason that the e+tent o% its pre"alen$e toda& $an be used as an important
indi$ator o% the $ontinued strenth o% %eudal and semi!%eudal modes o% surplus
e+tra$tion, and indire$tl& at the relati"e strenth o% the landed entr& in rural
so$iet&( 9en$e, it is important to $omplement the stud& o% land o#nership and
landlessness patterns #ith a $lose stud& o% the e"olution o% tenan$&, both the
e+tent o% its pre"alen$e and the e"olution o% its %orm, o"er time( 8hat does the
e"iden$e on tenan$& sho#;
Areate le"el data suests that tenant $ulti"ation as a %orm o% orani3in
ari$ultural produ$tion has #itnessed a stead& and steep de$line in rural 'ndia o"er
the last %our de$ades( A$$ordin to BSS> data, the per$entae o% households
leasin in land has de$lined %rom 2-H in 1961!62 to 12H in 200?/ the per$entae o%
area leased in to total area o#ned has de$lined %rom 12H in 1961!62 to 6H in 200?/
and the per$entae o% area leased out to total area o#ned has also de$reased %rom
DH in 1961!62 to ?H in 200? (Io"ernment o% 'ndia, 200Da)( The same de$linin
pattern is obser"ed e"en #ith data on tenan$& %rom the "arious Ari$ultural
=ensuses in 'ndia(
The sharp de$line in the e+tent o% tenan$& is also obser"ed %or operational holdins(
8hereas the per$entae o% operational holdins #ith partl& or #holl& o#ned land
has pra$ti$all& remained un$haned at around 9-H, the per$entae o% operational
holdins #ith partl& or #holl& leased!in land has %allen drasti$all& %rom around 2,H
in 19D0!D1 to 10H in 2002!0?( 'n terms o% the total area operated, the per$entae
share o% area leased in has de$lined %rom 10(6H in 19D0!D1 to D(-H in 2002!0?( At
the areate le"el, the radual shi%t %rom tenant $ulti"ation to sel%!$ulti"ation
seems to be a persistent and unmistakable trend in the 'ndian ararian e$onom&(
't is true that areate %iures about the de$line o% the e+tent o% tenan$& miht not
be "er& help%ul in dra#in $on$lusions about the 4tenan$& problem5( @or it is
$on$ei"able that the de$line in tenan$& is larel& restri$ted to larer holdins, i(e(,
those belonin to middle and ri$h peasants, #hile there is a simultaneous in$rease
in the in$iden$e o% tenan$& %or smaller holdins, i(e(, those belonin to poor
peasants and landless labourers (Gatnaik, 196D)( Sin$e, in an& meanin%ul sense,
the 4tenan$& problem5 re%ers to the indire$t e+tra$tion o% surplus labour o% the
landless and near!landless households, #e need to supplement the areate
pi$ture about the e"olution o% tenan$& #ith a more disareated stor&, #here the
disareation runs alon si3e!$lasses(
8hat is the e"iden$e on the e"olution o% tenan$& b& si3e!$lasses; As sho#n in
=hart , (details in Table A6) , other than %or lare operational holdins, i(e(,
operational holdins o% 10 he$tares or more, the share o% tenant holdins ha"e
de$lined sharpl& in all the other $ateories( 'n %a$t, the share o% tenant $ulti"ation
1D
has marinall& in$reased %or lare operational holdins o"er the last %i"e de$ades
(thouh there is a de$line o"er the last de$ade e"en %or this $ateor&)(

As sho#n in Table D, the share o% area leased in b& si3e!$lass o% operational
holdins displa& the same pattern a$ross the si3e!$lass $ateories/ the share o% area
leased in has de$lined a$ross the board, #ith the de$line sharpest %or the medium
holdins( @or lare operational holdins, the share o% leased in land de$lined b& the
least proportional amount( '%, as mentioned earlier, the tenan$& problem larel&
re%ers to semi!%eudal modes o% e+ploitation o% the landless and near!landless
throuh tenant $ulti"ation, then this problem seems to ha"e be$ome less se"ere
o"er the last %i"e de$ades( 8hat about the eoraphi$al "ariation in the e+tent o%
tenan$&;
Tab"e 5: S0are o$ Area Lease I% by O,erat#o%a" S#6e3
C"ass
Perce%ta.e o$ area "ease #%
*7583
5*
*7983
9*
*7:*3
:;
*77*3
7;
;88;3
8<
.arinal 1D(D 17(9 9(6 7(6 7(D
Small 1, 1,(D 7(- 7(- D(7
Semi!medium 11(6 11(6 6(? 6(, D(?
.edium 9(D 7(6 D(D D(9 ,(2
1are 7(? -(9 -(? 11(, D(1
All si3es 10(6 10(D 6(2 7(? D(-
Sour$e) Keport Bo( ,92, BSS -9
th
Kound, Lanuar&!De$ember, 200?(

16
The inter!State "ariation in the e+tent o% tenan$& in 200? sho#s an interestin
pattern too, as summari3ed in Table A7( The states #hi$h report the hihest share
o% leased!in area are Gun*ab and 9ar&ana, the t#o states #hi$h ha"e the most
4de"eloped5 ari$ultural produ$tion( Apart %rom >rissa, Gun*ab and 9ar&ana, all the
other ma*or states had leased!in area #hi$h #as less than 10H o% the total operated
area( Thus, states #hi$h are usuall& $onsidered to be the bastions o% semi!%eudal
and pre!$apitalist produ$tion relations are not the ones #hi$h ha"e the hihest
pre"alen$e o% tenan$&, #ith the e+$eption o% >rissa/ it seems, there%ore, that the
de"elopment o% $apitalism in 'ndian ari$ulture has pe$uliarl& used tenan$& and
other %orms o% pre!$apitalist relations o% produ$tion as means o% redu$in the $osts
o% produ$tion and $ontrollin labour(
To et a $omplete pi$ture o% the e+tent and e%%e$t o% tenan$&, #e need to in$lude
data on the terms o% tenan$& too, i(e(, ho# the tenan$& $ontra$t #as spe$i%ied( The
BSS> landholdin sur"e&s $lassi%& $ontra$ts relatin to leased!in land into the
%ollo#in $ateories) (a) %i+ed mone& lease, (b) %i+ed produ$e lease, ($) share o%
produ$e lease, (d) ser"i$e $ontra$t lease, (e) share o% produ$e alon #ith other
terms, (%) leased %rom relati"es( The BSS> data sho#s that the predominant %orm o%
tenan$& has been share$roppin, i(e(, the share o% produ$e lease( This has not
$haned mu$h o"er time) the share o% leased!in area oin %or share$roppin has
sta&ed relati"el& stable around ,0H, as $an be seen %rom =hart - (see Table A9 %or
details)(
The inter!state "ariation in the terms o% lease, (see in Table A10), also pro"ides
use%ul in%ormation( 9ar&ana and Gun*ab, the states #ith the larest share o% leased!
in land, had %i+ed mone& lease $ontra$ts as the predominant %orm o% tenan$&(
Assam, Bihar, >rissa and Jttar Gradesh #ere the %our ma*or states #hi$h had
share$roppin as the predominant %orm o% tenan$& $ontra$t( This di%%eren$e is
17
important be$ause the %orm o% tenan$& is radi$all& di%%erent in the t#o roups o%
states(
'n states like Gun*ab and 9ar&ana, tenant $ulti"ators are no loner the landless and
poor peasants/ it is rather the middle and ri$h peasants #ho lease!in land to
in$rease the si3e o% their ari$ultural operations and reap some e$onomies o% s$ale
on their $apital in"estments (Sidhu, 200-)( Thus, the %i+ed mone& rent %orm o%
tenan$& is not an indi$ator o% pre!$apitalist relations o% produ$tion, but are rather
"er& mu$h part o% the $apitalist de"elopment in 'ndian ari$ulture/ the land rent
that is earned b& the lessor, in this $ase, $an be $onsidered $apitalist rent( 'n states
like Bihar and >rissa, on the other hand, tenan$& is still predominantl& o% the old
%orm, #here the larest roup o% lesse is landless and near!landless peasants( 'n
su$h a s$enario, share$roppin operates as a semi!%eudal mode o% surplus
e+tra$tion, #here land rent $an be $onsidered pre!$apitalist rent(
-

The areate e"iden$e on tenan$&, thus, seems to suest a sharpl& de$linin role
o% tenan$& at the national le"el( 8hat is interestin is that its $ontinued pre"alen$e
is obser"ed mainl& in $onte+ts o% $apitalist ari$ultural produ$tion, #here
share$roppin is less important than mone& rents, and not in the states #ith semi!
%eudal modes o% surplus e+tra$tion/ amon the three states #ith the larest
reported share o% tenant $ulti"ation, the top t#o are Gun*ab and 9ar&ana, pre$isel&
the states #here $apitalist %armin has de"eloped the most( 'n the more pre!
$apitalist settins, tenan$& is relati"el& less pre"alent toda& and has steadil&
de$lined o"er the de$ades but, alon e+pe$ted lines, share$roppin $ontinues to be
the predominant %orm o% the tenan$& $ontra$t(
A $a"eat is in order( 't is #ell kno#n that reliable data on the real e+tent and terms
o% tenan$& is di%%i$ult to $ome b&( Due to the possibilit& o% leal a$tion se$urin the
rihts o% tenants, there is al#a&s an in$enti"e %or landlords to understate the e+tent
o% tenan$& the& a$tuall& parti$ipate in( >%ten times, this is done b& repla$in
re$orded tenants #ith unre$orded tenants/ i% the e+tent o% unre$orded tenant
relationships are lare, then o%%i$ial data on the e+tent o% tenan$& #ould
underestimate their true pre"alen$e( 't is di%%i$ult to rule out the possibilit& that the
BSS> data on tenan$& su%%ers %rom su$h problems( 8hat miht mitiate the
problem is the %a$t that #e ha"e looked at data on tenan$& o"er se"eral de$ades
and not onl& at a point in time/ hen$e, i% the pre"alen$e o% unre$orded tenan$ies
ha"e remained more or less stable o"er time, #e miht et a relati"el& $orre$t
pi$ture o% the trend(
-
@or a distin$tion bet#een $apitalist and pre!$apitalist rent see Gatnaik (196D)(
19
F& RETURNS FROM CULTI'ATION AND SOURCES OF INCOME
8hile in%ormation on patterns o% land o#nership, landlessness and tenan$& pro"ide
"er& use%ul $lues about the ararian stru$ture o% 'ndia, this needs to be
$omplemented #ith data on the sour$es o% rural in$ome to et a more $omplete
pi$ture o% $lass relations( 9o# does the "ast ma*orit& earn their in$omes; Do the&
#ork mainl& %or #aes or do the& deri"e the lionAs share o% their in$ome %rom sel% or
tenant $ulti"ation; Do the& deri"e a substantial portion o% their in$ome %rom pett&
produ$tion; These are important :uestions to $onsider be$ause the& pro"ide $lues
about the ne$essar& relations into #hi$h the ma*orit& o% the rural population enter
durin the pro$ess o% produ$tion and in$ome eneration( A predominan$e o% #ae
in$ome #ould suest the radual spread o% the institution o% #ae!labour and
there%ore o% $apitalist relations/ $ontinued dependen$e on in$ome %rom $ulti"ation
(sel% or tenant) #ould suest an opposite stor&(
Se"eral $a"eats are in order be%ore #e pro$eed( @irst, a straiht%or#ard link
bet#een #ae!labor and $apitalism on the one hand, and non!#ae in$ome and
non!$apitalism on the other hand has its pit%alls( As #e see in the se$tion on
industr&, "arious t&pes o% sel%!emplo&ment in$ome $an result %rom mer$hant and
%inan$e $apitalist relations (mainl& "ariations on the puttin!out s&stem)/ hen$e
non!#ae in$ome $an o%ten mask the underl&in $apitalist relations( Similarl&, #ae
in$ome $an o%ten mask the %a$t o% bondae, e+tra!e$onomi$ $oer$ion and other
%orms o% 4un%ree5 labour restri$tin the domain o% operation o% $apitalist relations/
but, as has been pointed out, %or instan$e b& Gatnaik (196D), man& o% these
4un%ree5 relations are $reated b& $apitalism and are not reli$s o% a pre!$apitalist
past and so $annot be taken as a marker o% semi!%eudalism( Se$ond, o%ten the same
indi"idual parti$ipates in se"eral t&pes o% e$onomi$ a$ti"ities, as #e mention belo#,
and thus the areate le"el distin$tions that #e make bet#een #ae and non!
#ae in$ome miht need serious modi%i$ations #hen lookin at more mi$ro!le"el
phenomena( Thus, #ith these $a"eats in mind, #e #ill pro$eed to stud& the sour$es
o% rural in$ome be$ause #e %eel the areate le"el distin$tion bet#een #ae and
non!#ae in$ome still has important $lues to o%%er about the dominant relations o%
produ$tion in 'ndia(
To start an anal&sis o% the sour$es o% rural in$ome #e need to re"isit the issue,
pointed out earlier, o% the $ontinued %ramentation o% land( =ontinuin
%ramentation leads to a de$linin a"erae si3e o% o#nership and operational
holdins, and this in$reasinl& brins the :uestion o% "iabilit& o% small!holdin
$ulti"ation to the %ore( >% $ourse the small si3e o% the a"erae holdin is not the
onl& %a$tor that needs to be re$koned #ith #hen lookin at the issue o% "iabilit& o%
small!s$ale $ulti"ation( 0+isten$e o% the round!rent barrier (Gatnaik, 197D), la$k o%
%ormal $redit, mo"ement in the terms o% trade "is!N!"is industr& and ser"i$es,
d#indlin rural publi$ in"estment and rapidl& erodin irriation %a$ilities ki$k in too,
and makes te$hnoloi$al $hane almost impossible to initiate and sustain at the
%arm le"el/ the e+ploitation %a$ed b& %armers in the input and output markets,
20
$ombined #ith these other %a$tors, %or$e in$omes %rom small holdins to be
e+tremel& lo#( @or instan$e, in 2002!0?, the a"erae return %rom $ulti"ation per
he$tare, i(e(, "alue o% output less "alue o% paid out e+penses (e+$ludin "alue o%
%amil& labour or rent o% o#ned land), #as Ks( D6-D %or 2hari% and Ks( 9290 %or the
Kabi season (.ishra, 2006)( The lo# return %rom $ulti"ation, as summari3ed in Table
6, implies that most rural %amilies need to aument their in$omes throuh #ae
labour (in both the rural %arm and non!%arm se$tors) and pett& $ommodit&
produ$tion (o% both ari$ultural and non!ari$ultural $ommodities)( The dependen$e
on #ae in$ome and in$ome %rom pett& produ$tion #ould seem to be espe$iall&
pronoun$ed %or the small %armers, marinal %armers and near landless households,
#hi$h toether $omprise about 7-H o% the rural population( Alon e+pe$ted lines,
this is e+a$tl& #hat #e %ind #hen #e look at the sour$es o% in$ome o% rural
households %rom BSS> data(
Tables 7 and 9 summari3e in%ormation about the sour$es o% rural in$ome b& the
si3e!$lass o% o#nership holdins( Se"eral interestin %a$ts emere %rom this data(
@irst, most o% the rural households ha"e ab&small& lo# in$omes/ the in$omes do not
$o"er e"en the basi$ e+penditures ne$essar& %or sur"i"al( 't is onl& the rural %amilies
#ith more than , he$tares o% land #hose total in$ome e+$eeds their e+penditures
(Io"ernment o% 'ndia, 200-/ .ishra, 2006)( To put this in perspe$ti"e, let us re$all
that in 200?, 9DH o% rural households o#ned less than , he$tares/ thus, in 200?,
9DH o% rural households had lo#er total in$omes C #hi$h in$ludes in$ome %rom
$ulti"ation, #ae labour, and pett& produ$tion C than e"en #hat their e+tremel& lo#
e+penditures re:uired( 't is, there%ore, not surprisin that rural 'ndia should ha"e
seen an e+plosion o% debt o"er the last de$ade, leadin in man& $ases to se"ere
distress and e"en sui$ides( Se$ond, %or a lare ma*orit& o% rural households, the
primar& sour$e o% in$ome is #ae in$ome, as $an be seen %rom =hart 6( @or all
%amilies #ith less than 0(, he$tares, i(e(, the e%%e$ti"el& landless households as
de%ined abo"e, #ae in$ome pro"ided more than hal% o% their total monthl& in$ome/
in 200?, let us re$all that D0H o% rural households beloned to this $ateor&( @or
$ompletel& landless households, o% $ourse, this proportion #ould be mu$h hiher(
Third, in$ome %rom pett& $ommodit& produ$tion a$$ounts %or a substantial portion C
$lose to 20 per$ent C o% the total in$ome o% rural households/ this is espe$iall& true
%or near landless and marinal %armer households, #ho toether $omprised about
70H o% rural households in 200?(
Thus areate le"el data seems to suest that #ae in$ome has be$ome a "er&
important sour$e o% in$ome %or the ma*orit& o% the rural population( This implies that
surplus e+tra$tion throuh the institution o% #ae!labour has be$ome one o% the
most important %orms o% e+tra$tin the surplus produ$t o% dire$t produ$ers( Sin$e
in$ome %rom pett& $ommodit& produ$tion is an important sour$e o% in$ome %or the
landless labourers and marinal %armers, this suests that e+ploitation b&
mer$hant $apital throuh une:ual e+$hane is also an important %orm o% surplus
e+tra$tion(
21
Tab"e 9: Ret-r%s $ro+ C-"t#/at#o%= ;88<
H o%
house!
holds
returns
%rom
khari% (Ks
per &ear)
returns
%rom
rabi (Ks
per
&ear)
returns
%rom
%arm ani!
mals (Ks
per
month)
returns
%rom
non!%arm
business
(Ks per
month)
A"er!
ae
@amil&
Si3e
Bear land!
less 9(9 ?D6 ,D2 12- ??9 -
.arinal --(D ?2,? 2DD6 77 22? -(2
Small 17(1 7097 -922 100 171 -(6
Semi!
.edium 10(D 1?770 10-9D D9 177 D(2
.edium ,(7 227,1 209,0 6- ,22 D(9
1are 0(9 ??,9, ?,D00 122 -06 6(-
All D200 -0-9 7- 2?D -(-
Sour$e) .ishra, 2006(
To preempt an& misunderstandin, the notion o% une:ual e+$hane and its
relationship to surplus e+tra$tion needs some elaboration( As lon as $ommodities
e+$hane in proportion to their "alues, i(e(, as lon as pri$es re%le$t the underl&in
labour "alues $onealed in $ommodities, artisanal produ$ers $annot be e+ploited, in
the .ar+ist sense o% the term, be$ause the& are not separated %rom the means o%
produ$tion( But the %ormation o% market pri$es is mediated throuh monopol& and
other %orms o% barainin po#er/ hen$e, market pri$es %or indi"idual and roups o%
$ommodities $an, in the presen$e o% monopol&, de"iate %rom the their labour
"alues( '% one part& to the e+$hane $an s&stemati$all& ensure this de"iation, this is
tantamount to s&stemati$ une:ual e+$hane, i(e(, e+$hane #hi$h s&stemati$all&
de"iates %rom the labour "alues $onealed in $ommodities( 'n su$h a situation, one
part& to the e+$hane appropriates part o% the "alue that is produ$ed b& the other
part&, and thereb& appropriates a part o% the surplus labour time o% the other part&
#ithout i"in an&thin in return( The markets #here the $ommodities arisin %rom
pett& produ$tion b& landless and marinal %armers are sold are t&pi$all& $ontrolled
b& mer$hants/ these mer$hants manae to s&stemati$all& ensure de"iation o%
pri$es (the& pa& to the artisan!produ$ers) %rom underl&in labour "alues due to their
monopol& position in these markets( This is the sense in #hi$h mer$hant $apital
manaes to appropriate a part o% the "alue produ$ed b& pett& produ$ers throuh
une:ual e+$hane(
G& CREDIT
'n%ormal $redit, o%ten linked #ith produ$t and labour markets, has histori$all&
pla&ed a "er& important role in the perpetuation o% semi!ser"ile $onditions o% li%e
and e$onomi$ stanation in rural 'ndia( Sin$e usurious $apital, #hi$h operates
22
throuh the me$hanism o% in%ormal $redit, is ne"er dire$tl& in"ol"ed in the pro$ess
o% produ$tion in the sense in #hi$h industrial $apital is, the pro%its o% the
mone&lender $an onl& be understood as a $laim on the surplus produ$t produ$ed
else#here( Jsurious $apital, there%ore, ets a share o% the total surplus produ$tion
throuh the pro$ess o% redistribution o% the surplus #ithout ha"in parti$ipated in its
eneration( That is the sense in #hi$h usurious $apital is understood to be
ne$essaril& parasiti$(
Tab"e :: So-rces o$ A/era.e Mo%t0"y I%co+e >Rs?
wa.e
#%3
co+e
#%co+e
$ro+
c-"t#/a3
t#o%
#%3
co+e
$ro+
a%#3
+a"s
#%co+e
$ro+
%o%$ar+
b-s#%ess
tota"
#%3
co+e
tota"
e@3
,e%ses
O
0(01 106- 11 D, 2?0 1?70 2296
0(01!
0(, 96? 29D 9, 260 1D?? 2?90
0(,1!1 620 67, 112 19? 1709 2D62
1(01!2 D?- 1-67 102 167 2,9? ?1,7
2(01!, D?6 2D7- -6 210 ?-79 ?D7-
,(01!
10 ,7D ,D6D 12 -06 -D71 ,D2D
P10(0
0 --6 7?21 11? D6D 9DD6 D,17
Sour$e) Table D, Keport Bo( ,96, BSS -9
th
Kound(
Tab"e 7: Perce%ta.e o$ A/era.e Mo%t0"y
I%co+e >A?
wa.e
#%3
co+e
#%co+e
$ro+ c-"3
t#/at#o%
#%3
co+e
$ro+
a%#3
+a"s
#%co+e
$ro+
%o%3
$ar+
b-s#3
%ess
O 0(01 66(90 0(70 ,(D, 1D(D6
0(01!
0(, -9(-7 17(1? -(6D 1D(-?
0(,1!1 ?9(70 ,?(?, D(19 10(D6
1(01!2 2-(,6 D?(?0 ,(09 6(1,
2(01!, 16(6- 6,(71 1(-9 -(7-
,(01!
10 7(-- 72(?1 0(21 7(92
P10(0
0 -(6D 7D(07 1(16 D(99
Sour$e) Table D, Keport Bo( ,96, BSS -9
th
Kound(
2?

Durin the 4mode o% produ$tion5 debate, usurious $apital and debt bondae pla&ed
a ke& role in de%inin 4semi!%eudalism5, #hi$h #as understood as a semi!ser"ile
state o% e+isten$e %or the #orkin population in the ararian e$onom&( 1o#
produ$tion b& tenant $ulti"ators ne$essitated $onsumption loans/ o%ten these loans
#ere made b& the same landlord #ho had hired out land to the tenant( The terms o%
these loans #ere so onerous that the& $ould ne"er be possibl& paid ba$k b& the
tenant/ as interest kept pilin up on top o% the oriinal loan amount, the tenants
#ere e"entuall& %or$ed to 4pa& ba$k5 in labour ser"i$es rendered to the landlord(
Thus, this me$hanism o% perpetual debt bondae drasti$all& redu$ed the %reedom o%
labour to parti$ipate in the institution o% #ae!labour and $reated the semi!ser"ile
$onditions identi%ied as 4semi!%eudalism5 (Grasad, 196,)( Bote that in su$h a
situation, a lare part o% the surplus produ$t o% the dire$t produ$ers #as
appropriated as %eudal 4labour ser"i$es5(
0:uall& important, in%ormal $redit #as o%ten the me$hanism throuh #hi$h di%%erent
markets, like the labour market and the produ$t markets, #ere linked toether( This
interlinked s&stem o% markets then %a$ilitates e+tra$tion o% surplus throuh une:ual
e+$hane, in the sense #e ha"e used this term abo"e( 'nterest rates in these
4in%ormal5 $redit markets are o%ten as hih as ?0H per month and the main
borro#ers are the landless labourers, the marinal and small peasant households
#hose total in$ome is perenniall& belo# their $onsumption e+penditures( 0+isten$e
o% usurious $apital also a$ts as a depressant on the rural e$onom&) "er& hih rates
o% return promised b& mone&!lendin a$ti"ities $reate enormous disin$enti"es %or
produ$ti"e in"estment, thereb& perpetuatin $onditions o% e$onomi$ stanation and
so$ial ba$k#ardness( @urthermore, produ$tion relations are themsel"es important in
shapin these une:ual e+$hane relations( 't is pre$isel& the si3e o% land holdins
and absen$e o% su%%i$ient $ollateral due to maldistribution o% assets, that %or$es
peasants to o to in%ormal $redit sour$es and as a result to sel%!e+ploit themsel"es(
2,
9en$e, %or all these reasons, it is important to stud& the e"olution o% in%ormal $redit
in the rural e$onom& o% 'ndia( 8hat does the e"iden$e sa&;
8hile the share o% total rural $redit pro"ided b& mone&lenders de$lined
substantiall& bet#een 19D1 and 1971, the trend o% rapid de$line #as halted in the
earl& 1970s( Sin$e then the mone&lender has made a spe$ta$ular $omeba$k in rural
'ndia, as $an be seen in =hart 7 (details in Table A11)( The ne# mone&lenders,
thouh, are :uite di%%erent, in terms o% so$ial $omposition, %rom the older
mone&lenders( 8hile the earlier brand o% mone&lenders had $lose links #ith landed
propert&, the ne# $rop does not seem to ha"e that $onne$tion( >"er the last t#o
de$ades, "arious roups o% the rural population, like traders, s$hool tea$hers,
o"ernment ser"ants, la#&ers, ri$h %armers, and other members o% the pett&
boureois $lass, ha"e entered this lu$rati"e business, %a$ilitated b& the radual but
stead& retreat o% %ormal $redit institutions(

The inter!state "ariation o% the pre"alen$e o% in%ormal $redit, as depi$ted in =hart 9,
has interestin %eatures( @irst, most o% the larer states ha"e a larer share o% the
total rural $redit $omin %rom %ormal than %rom in%ormal sour$es/ other than Gun*ab,
Ka*asthan, Assam, Bihar and Andhra Gradesh, all the other states had a hiher
proportion o% total $redit attributable to %ormal than to in%ormal sour$es in 200?(
Sin$e the larest $omponent o% in%ormal $redit $omes %rom mone&lenders, most
states seem to ha"e had relati"el& lo#er pre"alen$e o% mone&lenders( Se$ond,
some o% the states #ith relati"el& #ell de"eloped $apitalist ari$ulture like Gun*ab,
Andhra Gradesh and Tamil Badu also ha"e a "er& hih pre"alen$e o% in%ormal $redit(
'n Gun*ab, %or instan$e, one o% the main pla&ers in the in%ormal $redit market is the
trader!middleman kno#n as the arhati&a, #ho o%ten pro"ides $redit, sells inputs and
also pro$ures the output %rom the %armer( This t&pi$al pattern o% interlinked markets
allo#s the surplus produ$t to be easil& e+tra$ted %rom the dire$t produ$er throuh
une:ual e+$hane #hereb& input pri$es are in%lated and output pri$es depressed(
2-
'nterestinl&, 8est Benal, #hi$h has had some limited deree o% land re%orms in
the past, also sho#s a hih per$entae o% non!institutional %orms o% rural $redit(

)& CAPITAL FORMATION IN AGRICULTURE
An important :uestion relatin to the de"elopment o% $apitalist relations o%
produ$tion in 'ndian ari$ulture is #hether there has been an& sini%i$ant trend
to#ards rein"estment o% surplus and $apital a$$umulation in the ararian e$onom&(
This is an important :uestion be$ause the de"elopment o% $apitalist relations
$annot $on$ei"abl& pre$lude $apital %ormation on a more or less e+tensi"e s$ale(
1a$k o% $apital %ormation in ari$ulture #ould indi$ate the $ontinued presen$e o%
produ$tion relations #hi$h a$t to#ards hinderin the de"elopment o% produ$ti"e
%or$es( 9en$e, it is important to take a look at the e"iden$e on the trends o% $apital
a$$umulation in the ararian e$onom&( 8hat does the areate le"el data suest
in this reard;
Areate le"el data on ross $apital %ormation in 'ndian ari$ulture sho#s
interestin temporal patterns, as displa&ed in =hart 10 (details in Table A12)( To
bein #ith, note that ross %i+ed $apital %ormation in ari$ulture, %orestr& and
%isheries (I=@A) is $omposed o% t#o parts) ross %i+ed $apital %ormation in
ari$ulture (I@=@A) and $hanes in sto$ks (='S)( As $an be seen %rom =hart 10, the
2D
ross "alue o% $apital sto$ks has more than tripled in real terms (199?!9, pri$es)
o"er the last %our de$ades, mo"in %rom D? billion rupees in 19D1 to 190 billion
rupees in 1999/ this ro#th, moreo"er, has been larel& dri"en b& the ro#th in
%i+ed $apital %ormation(
@or the period as a #hole, i(e(, %rom 19D1 to 1999, ross $apital %ormation in
ari$ulture re# at about ?H per annum, a sini%i$ant rate o% ro#th b& de"elopin
$ountr& standards( De$omposed b& de$ades, the ro#th in ross $apital %ormation
displa&s sini%i$ant di%%eren$es( 8hile the ro#th rate o% I=@A #as -(0-H per
annum in the de$ade o% the 19D0s, it a$$elerated sini%i$antl& to 7(6H per annum
durin the 1960s/ therea%ter, the ro#th rate slo#ed do#n sini%i$antl&( Durin the
1970s, $apital %ormation reistered a neati"e ro#th rate o% !0(??H per annum
and pi$ked up aain in the 1990s to a ro#th rate o% 2(79H per annum durin the
1990s( 8hat is interestin is that the slo#do#n in $apital %ormation is larel&
a$$ounted %or b& the de$eleration o% publi$ se$tor $apital e+penditures in
ari$ulture/ pri"ate se$tor in"estments, thouh ro#in at a slo#er rate than in the
19D0s and 1960s, ne"er be$ame neati"e e"en as publi$ se$tor in"estment ro#th
dipped belo# 3ero/ moreo"er, it has pi$ked up steam durin the 1990s despite poor
per%orman$e o% the publi$ se$tor (Table 1(2, Iulati and Bathla, 2002)(
9o# does this ro#th in $apital a$$umulation in the ari$ultural se$tor $ompare
#ith the rest o% the 'ndian e$onom&; To ans#er this :uestion, #e look at the ross
$apital %ormation in ari$ulture relati"e to the areate ross domesti$ $apital
%ormation (ID=@) in the 'ndian e$onom&/ this in%ormation is depi$ted in =hart 11
(details in Table A1?)( As $an be seen %rom =hart 11, ari$ultureAs share in the ross
domesti$ $apital %ormation #as stable at around 1-H till the earl& 1970s/ in %a$t it
e"en displa&ed a sliht positi"e trend %rom the mid!19D0s to the earl& 1970s(
Therea%ter, $apital %ormation in ari$ulture has de$lined drasti$all& as a share o% the
26
total $apital %ormation in the e$onom&, %rom about 17 H in 1970 to a little more
than DH in 1999(
Areate le"el data on $apital %ormation in 'ndian ari$ulture, there%ore, seem to
suest that there #as sini%i$ant $apital a$$umulation durin the 1960s and
1970s( Durin this period, $apital %ormation in ari$ulture kept pa$e #ith $apital
%ormation in the rest o% the 'ndian e$onom&( @rom the de$ade o% the 1970s, dri"en
larel& b& $hanes in $entral o"ernment poli$&, ari$ulture has %a$ed a state o%
relati"e nele$t) $apital %ormation in ari$ulture has not onl& sini%i$antl& slo#ed
do#n but has also %allen relati"e to the rest o% the e$onom&( This $an be a$$ounted
%or b& the drasti$ %all in publi$ in"estment in ari$ulture(
I& AGGREGATE TRENDS AND SUMMARY
>ur anal&sis o% areate le"el data has re"ealed the %ollo#in sini%i$ant trends in
the ararian e$onom& o% 'ndia)
1( The share o% IDG $ontributed b& ari$ulture has steadil& de$lined o"er the
last %i"e de$ades/ this de$line has not been mat$hed b& a de$line in the share
o% the #ork%or$e enaed in ari$ulture( The result o% these t#o trends has
been a de$linin share o% per $apita "alue added %rom the ari$ultural se$tor(
27
This has essentiall& $onsined a lare se$tion o% the 'ndian #orkin
population to "er& lo# produ$ti"it& (and lo# in$ome) #ork(
2( The a"erae si3e o% ari$ultural holdins, both o#nership and operational,
has seen a stead& de$line o"er the last %i"e de$ades, #ith the a"erae
o#nership holdin in 2002!0? bein 0(6? he$tares(
?( The o#nership o% land remains as ske#ed as it #as %i"e de$ades ao/ se"eral
measures $apture this ske#ed pattern o% o#nership in the ararian e$onom&(
@or instan$e, the Iini $oe%%i$ient o% landholdin o#nership $on$entration has
remained pra$ti$all& un$haned bet#een 19D0!D1 and 2002!0?/ in %a$t it has
marinall& in$reased bet#een 1991!92 and 2002!0?(
,( 8hile the areate distribution o% land o#nership remains as ske#ed as
be%ore, interestin and important patterns are "isible #ithin this un$hanin
areate pi$ture( The share o% land o#ned b& lare (10 ha or more) and
medium (, ha to 10 ha) landholdin %amilies has steadil& de$lined o"er the
last %e# de$ades %rom around D0H to ?,H/ the share o#ned b& small (1 ha to
2 ha) and marinal (less than 1 ha) landholdin %amilies has in$reased %rom
around 21H to ,?H, #hile the share o% semi!medium (2 ha to , ha) %amilies
has remained un$haned at around 20H(
-( Garallel to this de$line in the share o% land held b& lare landholdin %amilies
is their de$line as a share o% rural households/ on the other hand, there is a
lare in$rease in the share o% small and marinal landholdin %amilies amon
rural households( 'n 2002!0?, 70H o% rural households #ere marinal
landholdin %amilies/ the $orrespondin %iure #as DDH in 19D0!D1( Both
these trends seem to indi$ate the de$linin e$onomi$, so$ial and politi$al
po#er deri"ed %rom the o#nership o% land in 'ndia(
D( The eoraphi$al (inter!state) "ariation o% landholdin o#nership pattern
allo#s us to di"ide the 'ndian states into t#o roups) lare landholdin states,
and small landholdin states( 'n the 4lare5 landholdin states, a substantial
share o% total area is still o#ned b& relati"el& lare landholdin %amilies/ in
the 4small5 landholdin states, the share o% land held b& lare or medium
landholdin %amilies is "er& small( The %ormer roup $onsists o%) Andhra
Gradesh, Iu*arat, 9ar&ana, 2arnataka, .adh&a Gradesh, .aharashtra, Gun*ab,
Ka*asthan/ the se$ond roup $onsists o%) Assam, Bihar, 9ima$hal Gradesh,
LM2, 2erala, >rissa, Tamil Badu, Jttar Gradesh, 8est Benal(
6( Ioin hand!in!hand #ith the de$line in the share o% land o#ned b& lare
lando#nin %amilies, is the stead& de$line o% tenant $ulti"ation and its
radual repla$ement b& sel% $ulti"ation in 'ndian ari$ulture( The share o%
operational holdins usin tenant $ulti"ation de$lined %rom about 2,H in
19D0!D1 to about 10H in 2002!0?( There are lare eoraphi$al "ariations in
the e+tent o% tenan$&, #ith the larest share o% leased!in land as a share o%
29
total operated area o$$urrin in Gun*ab and 9ar&ana, t#o prominent
e+amples o% #hat #e ha"e $alled lare landholdin states/ >rissa has hih
pre"alen$e o% tenan$& and is an e+ample o% #hat #e ha"e $alled small
landholdin states( The proportion o% area o#ned and the proportion o% area
operated b& the di%%erent si3e!$lasses are almost e:ual/ hen$e, there is no
e"iden$e o% re"erse tenan$& on an& substantial s$ale at the areate le"el,
thouh this miht hide re"erse tenan$& at state or reional le"els(
7( 'n most pla$es #here tenan$& e+ists, the larest %orm o% the tenan$& $ontra$t
is still share$roppin( 'n 2002!0?, share $roppin a$$ounted %or about ,0H o%
the land under tenan$& in 'ndia/ this has more or less sta&ed $onstant o"er
the de$ades( An important e+$eption is Gun*ab and 9ar&ana, the t#o states
#hi$h ha"e the larest share o% leased!in land, #here the predominant %orm
o% the tenan$& $ontra$t is %or %i+ed monetar& pa&ment(
9( 0%%e$ti"e landlessness is lare and has steadil& in$reased o"er the past %e#
de$ades( The share o% e%%e$ti"el& landless households in total rural
households has in$reased %rom about ,,H in 19D0!D1 to D0H in 2002!0?(
10(Small holdin ari$ultural produ$tion has in$reasinl& be$ome e$onomi$all&
un"iable o"er the &ears( 'n 200?, the a"erae in$ome %rom $ulti"ation #as
insu%%i$ient to $o"er e"en the "er& lo# le"el o% $onsumption e+penditures o%
the ma*orit& o% rural households( This is one o% the primar& $auses behind the
re$ent in$rease in rural indebtedness( This in$reasin di%%i$ult& o% sustainin
in$omes throuh $ulti"ation #as probabl& #hat led $lose to ,0H o% %armers in
200- to suest, durin the $ourse o% a BSS> Sur"e&, that i"en a $han$e,
the& #ould opt out o% ari$ulture( =hanes in the ararian stru$ture o% 'ndia
seem to ha"e alread& brouht the :uestion o% $olle$ti"i3ation on the histori$al
aenda( 8e return to this point in the $on$lusion(
11( Disareatin total in$omes o% rural households enaed in ari$ulture
a$$ordin to t&pes o% in$ome sho# that #ae in$ome has be$ome the main
sour$e o% in$ome %or a lare ma*orit& o% the population( @or about D0H o% the
rural households in 200?, the ma*or share o% in$ome $ame %rom #ae #ork,
supplemented b& in$ome $omin %rom pett& $ommodit& produ$tion, both in
the ari$ultural and non!ari$ultural se$tor( Another 20H o% rural households
dre# e:ual shares o% their total in$ome %rom #ae #ork and $ulti"ation, both
at about ,0H(
12(Gre"alen$e o% in%ormal sour$es o% $redit throuh mone&lenders had seen a
sharp de$line o"er the 19D0s and 1960s, but the de$line seems to ha"e been
halted sin$e the earl& 1970s( The mone&lender has made a $omeba$k in rural
'ndia, %a$ilitated b& a stead& retreat o% the institutions o% %ormal $redit(
1?(There #as sini%i$ant $apital a$$umulation in the ari$ultural se$tor durin
the 1960s and 1970s/ this has drasti$all& %allen durin the 1970s and has
?0
pi$ked up a little durin the 1990s( The %all in the ro#th rate o% $apital
%ormation has been larel& dri"en b& the %all in publi$ se$tor in"estments in
the ararian e$onom&(
Guttin all these trends toether, one is led to the %ollo#in tentati"e $on$lusions
(more in the nature o% a #orkin h&pothesis)) o"er the past %e# de$ades, the
relations o% produ$tion in the 'ndian ararian e$onom& ha"e be$ome in$reasinl&
4$apitalist5/ this $on$lusion emeres %rom the %a$t that the predominant mode o%
surplus e+tra$tion seems to be #orkin throuh the institution o% #ae!labour, the
de%inin %eature o% $apitalism( Arti$ulated to the lobal $apitalist!imperialist s&stem,
the de"elopment o% $apitalism in the peripher& has o% $ourse not led to the ro#th
o% in$ome and li"in standards o% the "ast ma*orit& o% the population( >n the
$ontrar&, the ararian e$onom& has $ontinued to stanate and the ma*orit& o% the
rural population has been $onsined to a li%e o% po"ert& and miser&(
Areate le"el data suests that the t#o main %orms throuh #hi$h the surplus
produ$t o% dire$t produ$ers is e+tra$ted are (a) surplus "alue throuh the institution
o% #ae!labour (#hi$h rests on e:ual e+$hane), and (b) surplus "alue throuh
une:ual e+$hane (#hi$h mainl& a%%e$ts pett& produ$ers) #here input pri$es are
in%lated and output pri$es de%lated %or the dire$t produ$ers due to the presen$e o%
monopol&, monopson& and interlinkin o% markets/ semi!%eudal %orms o% surplus
produ$t e+tra$tion, throuh the institution o% tenant $ulti"ation and share $roppin,
has de$lined o"er time( .er$hant and usurious $apital $ontinues to maintain a
substantial presen$e in the li%e o% the rural popula$e, both o% #hi$h manae to
appropriate a part o% the surplus "alue $reated throuh #ae!labour, apart %rom
dire$tl& e+tra$tin surplus "alue %rom pett& produ$ers throuh une:ual e+$hane(
The pro$ess o% $lass di%%erentiation has been $onsiderabl& slo#ed do#n and
$ompli$ated due to the stead& in$orporation o% the 'ndian e$onom& into the lobal
$apitalist s&stem, #hi$h has supported and e"en en$ouraed the ro#th o% a lare
4in%ormal5 produ$tion se$tor( This in%ormal produ$tion se$tor $an be best
understood as bein in"ol"ed in pett& $ommodit& produ$tion, both o% ari$ultural
and nonari$ultural $ommodities( Gett& $ommodit& produ$tion re%ers to the
orani3ation o% produ$tion #here the produ$er o#ns the means o% produ$tion and
primaril& uses %amil& and other %orms o% non!#ae labour in the produ$tion pro$ess(
Gett& $ommodit& produ$tion is e+ploited mainl& b& mer$hant and usurious $apital
#here the main %orm o% surplus e+tra$tion is throuh the me$hanism o% une:ual
e+$hane and not throuh the institution o% #ae!labour/ une:ual e+$hane is o%ten
%a$ilitated and maintained throuh interlinked produ$t, labour and $redit markets(
The $oe+isten$e o% both #ae!labour and pett& $ommodit& produ$tion, #hereb&
landless labourers, marinal %armers and small %armers parti$ipate in both, in one
as %ree labour and in the other as o#ner!produ$er, has impeded the de"elopment o%
proletarian $lass $ons$iousness and $ompli$ated the task o% re"olutionar& politi$s(
This is a point #e return to in the $on$ludin se$tion but be%ore that #e turn to a
detailed stud& o% pett& $ommodit& produ$tion in the non!ari$ultural se$tor(
?1
PART II: INDUSTRY
5
A& INTRODUCTION
A%ter three de$ades o% planned industriali3ation and another three de$ades o%
in$reasinl& market!based de"elopment, #hat t&pes o% produ$tion relations are
%ound in 'ndian manu%a$turin; 8hat are the main modes o% surplus e+tra$tion; 's
'ndian industr& $apitalist; '% so #hat is the nature o% this $apitalism; 's it dominated
b& industrial, %inan$e or mer$hant $apital; To address these :uestions, #e present
ma$roe$onomi$ data %rom %i"e rounds o% the Bational Sample Sur"e&s (BSS) o% the
unorani3ed manu%a$turin se$tor %rom 197, to the present, supplemented #ith
mi$ro $ase studies(
Traditional a$$ounts o% 'ndian industr& tended to %o$us on lare!s$ale or 4modern5
industr&, sin$e it #as assumed that this se$tor #ould ro# rapidl& to a$$ommodate
all industrial emplo&ment( The #orkin $lass #as also imained similarl& as
$onsistin o% urban #orkers in lare industr&( The #orkers and small produ$ers in
the 4traditional5 or small!s$ale industr&, thouh numeri$all& stron, o$$upied an
ambiuous position in .ar+ist theor& %or t#o reasons) one, the re"olutionar& sub*e$t
#as the modern lare!s$ale industrial #orkin $lass, and t#o, the re"olutionar&
e+perien$es o% Kussia and =hina sho#ed that peasants and other small produ$ers
$ould, dependin on the spe$i%i$ histori$al $onditions, be rea$tionar& %or$es, allies
o% the modern industrial #orkin $lass, or a re"olutionar& %or$e in their o#n riht(
The present stud& is moti"ated b& a desire to understand the material $onditions
$on%rontin the "ast ma*orit& o% the industrial #orkin $lass, #hi$h labors in the
4in%ormal se$tor(5 1are!s$ale industr& has not e+panded as e+pe$ted in 'ndia( The
share o% lare industr& (%a$tories o% P100 #orkers) in manu%a$turin emplo&ment
re# %rom around -H in 1900 to ?0H in 1970 and therea%ter has de$lined to around
2- H (Ko& 2000)( 8hile lo# emplo&ment elasti$it& in lare!s$ale industr& has been
blamed on imported $apital!intensi"e te$hnoloies, the other less emphasi3ed part
o% the stor& is e+tensi"e use o% in%ormal ($asual and sub!$ontra$ted) emplo&ment b&
%ormal %irms parti$ularl& %or labor!intensi"e #ork, parti$ularl& in the post!1991
period( This on$e aain points to the ne$essit& o% a$:uirin a ood rasp o% the
empiri$al realities o% 'ndiaAs in%ormal manu%a$turin #ork%or$e(
To a %irst appro+imation, relations o% produ$tion in lare %ormal se$tor %irms ma& be
termed 4industrial $apitalist(5 8e do not dis$uss these %urther( This stud& limits
itsel% to the in%ormal se$tor( A$$ordin to the latest Bational Sample Sur"e&
>rani3ation (BSS>) sur"e& $o"erin the period 200-!200D, ?D(,, million o% 'ndiaAs
,- million industrial #orkers (i(e( about 6-H) #ere emplo&ed in the in%ormal
manu%a$turin se$tor (Io"ernment o% 'ndia, 2007a)( The in%ormal e$onom&
a$$ounts %or ,0H o% industrial IDG( 9ere relations o% produ$tion and modes o%
D
'n this stud& #e use the term 4'ndustr&5 to re%er onl& to the manu%a$turin se$tor and e+!
$lude minin and $onstru$tion %rom our anal&sis(
?2
surplus e+tra$tion are more $omple+ than those pre"ailin in %ormal industr&(
9o#e"er it is imperati"e to de"elop a theoreti$al understandin o% these relations
so that the $on$ept o% the 4#orkin $lass5 does not $ontinue to inore the "ast
ma*orit& o% the #orkin population in 'ndia(
A$ross all three se$tors, as #ith most de"elopin $ountries, in 'ndia a lare portion
o% the emplo&ment (b& some estimates up to 90H) is $lassi%ied as 4unorani3ed5
(Io"t( o% 'ndia terminolo&) or 4in%ormal5 (a$ademi$ and eneral poli$& usae)( An
in%ormal %irm is not reistered #ith the o"ernment and t&pi$all& does not pa& an&
ta+es, nor is re:uired to abide b& labor and other la#s( 'n%ormal emplo&ment means
that #ork is not reular, se$ure, or o"erned b& %ormalF#ritten $ontra$ts, and
usuall& no bene%its (health, retirement, other so$ial se$urit&) are paid( Althouh the
e+a$t si3e o% the in%ormal e$onom& in de"elopin $ountries is hard to estimate,
there is little disareement that the "ast ma*orit& o% emplo&ment is still outside the
%ormal se$tor( 0"en lea"in aside ari$ulture, the in%ormal se$tor a$$ounts %or ,7
per$ent o% non!ari$ultural emplo&ment in Borth A%ri$a, -1 per $ent in 1atin
Ameri$a, D- per $ent in Asia, and 62 per $ent in Sub!Saharan A%ri$a(
6

This purel& statisti$al or administrati"e aspe$t o% in%ormalit& should be distinuished
%rom more substanti"e issues o% %irm si3e and produ$tion and e+$hane relations,
althouh naturall& the t#o intera$t in a $omple+ #a& (%or e(( $osts o% $on%ormin to
o"ernment reulations are o%ten $ited as a reason %or remainin small or
undertakin 4hori3ontal5 as opposed to 4"erti$al5 e+pansion)( Dis$ussions o% the
in%ormal se$tor o%ten $on%late multiple $losel& related &et distin$t 4a+es o%
di%%erentiation(5 These are sho#n in @iure 1( 'n this s$hemati$, the %ormal!in%ormal
distin$tion itsel% is restri$ted onl& to the :uestion o% State reulation o% e$onomi$
a$ti"it& (4reistered5 "ersus 4unreistered5)( @or e+ample, %or statisti$al purposes
the 'ndian manu%a$turin se$tor is di"ided into t#o parts) those %irms that are
reistered under the @a$tories A$t o% 19,7 (4orani3ed manu%a$turin se$tor5,
herea%ter %ormal se$tor) and those that are unreistered be$ause the number o%
emplo&ees is less than 20 (in o%%i$ial I>' parlan$e, the 4unorani3ed manu%a$turin
se$tor5 and herea%ter the in%ormal se$tor)( The Annual Sur"e& o% 'ndustries (AS')
$olle$ts data on %ormal %irms( The Bational Sample Sur"e& >rani3ation (BSS>)
in$ludes in its sur"e&s o% in%ormal manu%a$turin all %irms #hi$h are not $o"ered
under the Annual Sur"e& o% 'ndustries (AS') and #hi$h are not publi$ se$tor %irms(
This is the uni"erse o% in%ormal manu%a$turin as %ar as o%%i$ial data is $on$erned(
Se"eral sur"e&s ha"e been $arried out in 'ndia sin$e the 19-0s at periodi$ inter"als
b& the BSS> to estimate the si3e and $ontributions to IDG, o% the small!s$ale and
the in%ormal manu%a$turin se$tor (both urban and rural)(
>ther than the %ormal!in%ormal a+is mu$h attention has been %o$used on the lare!
s$aleFsmall!s$ale (%irm si3e) a+is, and in%ormal manu%a$turin is o%ten e:uated #ith
small!s$ale produ$tion( This $an be taken to be true as a %irst appro+imation #ith
7
See Jhabvala, Sudarshan and Unni (2003) for a discussion of statistical problems.
??
the stron $a"eat that not all #orkers emplo&ed in the %ormal se$tor are 4%ormal
#orkers5 sin$e $asual labor emplo&ed "ia $ontra$tors and sub!$ontra$tors %orms a
substantial part o% %ormal se$tor %irms( The AS' $olle$ts some data on the $asual and
$ontinent #ork%or$e in the %ormal se$tor( 8e do not present this data here( The
point o% the s$hemati$ is to dra# attention to the more substanti"e aspe$ts o% the
%ormal!in%ormal di"ide that relate to %orms o% e+ploitation (real "ersus %ormal
subsumption o% labor to $apital), relations o% produ$tion (o#nership o% means o%
produ$tion "ersus #ae labor) and the t&pe o% $ir$uit o% $apital (need "ersus
a$$umulation)(
The share o% small!s$ale and in%ormal industr& in emplo&ment has been hih sin$e
$olonial times and BSS data sin$e 197, sho#s that in%ormal manu%a$turin has held
on to its emplo&ment share, perhaps e"en e+panded it, in re$ent times( A$$ordin
to the most re$ent BSS round (200-!200D), 7-H o% %irms in in%ormal manu%a$turin
#ere o#n!a$$ount enterprises (emplo&in no #ae!#orkers), #hile 10H #ere %irms
emplo&in less than D #orkers, and - H emplo&ed more than D but less than 20
#orkers (Io"ernment o% 'ndia, 2007a)( The o"er#helmin number o% o#n!a$$ount
%irms in in%ormal manu%a$turin is sometimes $elebrated as a t&pe o%
4entrepreneurial $apitalism(5 9o#e"er this is misleadin and elides the %a$t that
surplus e+tra$tion "ia une:ual e+$hane pla&s a sini%i$ant role in this se$tor(
7
Ii"en that in%ormal %irms displa& not onl& 4independent $ommodit& produ$tion5 and
$apitalist relations, but also a lare "ariet& o% 4puttin!out5 modes as #ell, #e
present a t&polo& to $hara$teri3e produ$tion and e+$hane relations in the
in%ormal se$tor( The a+es o% the t&polo& are 4$ontrol o"er $apital5 (%i+ed and
#orkin, sel% or other), 4$ontrol o"er labor5 (pro$ess and produ$t, sel% or other) and
4$ontrol o"er market5 (produ$t and %a$tor, sel% or other)(
@or a lon time the relations o% produ$tion and the manner in #hi$h surplus is
e+tra$ted %rom the ma*orit& o% the #orkin $lass has been nele$ted or
underemphasi3ed, at times simpl& bein labeled 4pre!$apitalist,5 or 4non!$apitalist,5
a term #hi$h does not tell us mu$h about the a$tuall& e+istin relations( The
in%ormal #orkin $lass is also not easil& re$oni3ed as #orkin $lass %rom a .ar+ian
perspe$ti"e, as it ma& not be doubl& %ree (either not %ree o% the means o%
produ$tion, or not %reel& mobile, or both)( BSS data o"er the past three de$ades as
#ell as indi"idual $ase!studies sho# that the parti$ular t&pe o% $apitalism %ound in
'ndian in%ormal manu%a$turin is $hara$teri3ed b& a lare number o% "er& small
%irms lo$ked in une:ual e+$hane relationships #ith mer$hant and %inan$e $apital(
Broadl& speakin %ormal rather than real subsumption o% labor to $apital, and
e+tra$tion o% absolute rather than relati"e surplus "alue $hara$teri3es man& %irms(
Surplus e+tra$tion "ia the 4$on"entional5 #ae!labor route is $ompounded b&
une:ual e+$hane, unpaid domesti$ labor, labor bondae, $ontinent or $asual
labor, and ender and $aste hierar$hies(
8
For details refer to the previous section on agriculture.
?,
F#.-re *: T0e a@es o$ #$$ere%t#at#o% >M%OP B +ea%s o$ ,ro-ct#o%= Re
"#%e #%#cates t0e c0aracter#st#cs -s-a""y assoc#ate w#t0 t0e $or+a" sector=
t0e .ree% "#%e= t0e #%$or+a" sector?
1& MARX ON CINFORMAL INDUSTRYD
@or the past %i%t& or si+t& &ears the :uestion o% the transition to $apitalism has
doed the de"elopment literature, althouh not al#a&s re$oni3ed as su$h( The
problem o% repla$ement o% 4traditional5 pre!$apitalist (%eudal and pett& $ommodit&)
produ$tion relations b& 4modern5 $apitalist relations #as o% $ourse the e+pli$it
problem o% $lassi$al de"elopment e$onomi$s( The same problem later resur%a$ed in
the $onte+t o% the 4%ormal!in%ormal5 di"ide and in this %orm it $ontinues to this da&(
Somethin akin to a sustained and sophisti$ated debate o"er the nature o%
produ$tion relations or the mode o% produ$tion in ari$ulture did not o$$ur %or 'ndian
industr&, althouh man& o% the same issues pre"ail there as #ell( @urther, man& o%
the issues that moti"ated earl& .ar+ist $ontro"ersies o"er the role o% the peasantr&
in the so$ialist re"olution are rele"ant to the anal&sis o% small!s$ale industrial
produ$tion as #ell(
The :uestion 4is 'ndian ari$ulture $apitalist;5 immediatel& raised the :uestion
4#hat is $apitalism;5 The %ollo#in prin$iple $riteria emered %rom that debate)
$lass di%%erentiation and proletariani3ation o% labor, enerali3ed or e+pandin
$ommodit& produ$tion, and surplus a$$umulation and rein"estment( Then the
:uestion be$omes to #hat e+tent does doubl&!%ree labor, $ommodit& produ$tion
(produ$tion %or e+$hane rather than use) and a$$umulation $hara$teri3e a $ertain
se$tor o% the e$onom&, %or our purposes 'ndustr&( >ne $an sa%el& sa& that lare!
Registered
nregistered
!ccumulati"n #"gic
$eed
#"gic
%&""d '"(s)
%*ad '"(s)
#"cal mar+et
$ati"nal,-nternati"nal
.ar+et
/mall-scale
#arge-scale
0"rmal /u(sum1ti"n
"2 #a("r
Real /u(sum1ti"n
"2 #a("r
34n .n35
6age la("r
?-
s$ale, %ormal industr& displa&s all these $hara$teristi$s( 9o#e"er, in the in%ormal
manu%a$turin se$tor the stor& is more $omple+ and these $riteria appl& in "ar&in
derees( Ienerali3ed $ommodit& produ$tion, rather than produ$tion %or use
dominates, ho#e"er sel%!emplo&ment e+ists alonside #ae!labor to a sini%i$ant
deree and data on %irm si3es sho#s that rein"estment o% surplus into e+panded
reprodu$tion ma& not o$$ur( Kather the amount o% surplus a"ailable %or
rein"estment ma& be reatl& redu$ed partl& due to lo# produ$ti"it& and partl& due
to siphonin o%% o% the surplus b& mer$hant and %inan$e $apitalists(
.ar+ had mu$h more to sa& about the transition %rom small!s$ale and $ottae
industr& to $apitalist %a$tor& produ$tion as $ompared to the transition %rom peasant
to $apitalist %armin( 'n =hapters 1, and 1- o% =apital <ol( 1, he dis$usses at lenth
the de"elopment o% modern industr& in 0nland and parts o% Ierman&( The sheer
di"ersit& o% produ$tion relations, in$ludin independent $ommodit& produ$tion,
puttin!out and #ae!labor, des$ribed b& .ar+, $alls to mind $ontemporar&
$onditions in 'ndian in%ormal industr&( 'n these paes .ar+ appears to be $on$erned
about t#o thins( >ne, under #hat $onditions do modern lare!s$ale %a$tories
emere %rom e+istin de$entrali3ed #orkshops and domesti$ produ$tion( And t#o,
ho# is small!s$ale and domesti$ industr& trans%ormed #hen it be$omes arti$ulated
#ithin a dominant industrial $apitalist mode o% produ$tion( Both these :uestions are
pertinent %or us toda&(
.ar+ notes reardin the emeren$e o% lare industr&)
To $arr& on trade as a manu%a$ture, #ith $on$entration o% #orkers, is
pro%itable onl& under e+$eptional $onditions, be$ause $ompetition is at its
reatest bet#een those #orkers #ho desire to #ork at homeQand be$ause
the $apitalist, b& s$atterin the #ork around, sa"es an& outla& on #orkshops
et$( Be"ertheless, the position o% this spe$iali3ed #orker, #ho, althouh he
#orks at home, does so %or a $apitalist, is "er& di%%erent %rom that o% the
independent $ra%tsmen, #ho #orks %or his o#n $ustomers( (.ar+ 1992, pp(
,D2!,D?)
9ere t#o issues o% $ontemporar& rele"an$e are raised( @irstl&, outsour$in to
smaller #orkshops $an, under some $ir$umstan$e, be more $on"enient, %rom the
$apitalistAs point o% "ie#, than $entrali3in produ$tion in a %a$tor&, somethin #e
obser"e repeatedl& in the 'ndian e+perien$e, parti$ularl& in the neoliberal period(
>ne $ontemporar& a$$ount o% artisanal industr& in 'ndia puts it thus)
The pro$urement o% means o% labour and the task o% trainin %or :ualit& pro!
du$tion are no loner $on$erns o% the $apitalist( Lust as these are a bother o%
the labourer, so also is the maintenan$e o% the ma$hiner& and stead& suppl&
o% ele$tri$it& and #ater( 'n this manner, almost the entire $ost o% manain
sustained produ$tion has been trans%erred to produ$er( (Sahasrabudhe&
2001, p( ?)
?D
Se$ondl&, the home!based artisan #ho #orks %or mer$hant $apital, thouh he
appears super%i$iall& similar to the independent $ra%tsman o% &ore, is also "er&
di%%erent %rom him( 'n %a$t, .ar+ asserts)
This modern 4domesti$ industr&5 has nothin e+$ept the name in $ommon
#ith old!%ashioned industr&, the e+isten$e o% #hi$h presupposes independent
urban handi$ra%ts, independent peasant %armin and abo"e all, a d#ellin!
house %or the #orker and his %amil&( That kind o% 'ndustr& has no# been
$on"erted into an e+ternal department o% the %a$tor&QBesides the %a$tor&
#orker, the #orkers enaed in manu%a$ture, and the handi$ra%tsmen, #hom
it $on$entrates in lare masses at one spot, and dire$tl& $ommands, $apital
also sets another arm& in motion, b& means o% in"isible threads) the
out#orkers in the domesti$ industries, #ho li"e in the lare to#ns as #ell as
bein s$attered o"er the $ountr&side( An e+ample) the shirt %a$tor& o% .essrs
Tillie at 1ondonderr&, #hi$h emplo&s 1000 #orkers in the %a$tor& itsel%, and
9000 out#orkers spread o"er the $ountr& distri$ts( (.ar+ 1992, pp( -90!-91,
emphasis added)
=apital thus orani3es produ$tion in a %amiliar dual mode) lare %a$tories are
arti$ulated #ith smaller #orkshops dependent upon the %a$tor&( 0+ploitation takes
di%%erent %orms under these t#o $ir$umstan$es(
'n the so!$alled domesti$ industriesQe+ploitation is still more shameless than
in modern manu%a$ture, be$ause the #orkersA po#er o% resistan$e de$lines
#ith their dispersal/ be$ause a #hole series o% plunderin parasites insinuate
themsel"es bet#een the a$tual emplo&er and the #orker he emplo&s( (ibid,
p( -91, emphasis added)
Both the %a$tors alluded to in the :uote abo"e remain rele"ant in 'ndian in%ormal
industr& toda&( The dispersal o% the #orkin $lass or, in some instan$es, the %ailure
o% the #orkin $lass to areate in the %irst pla$e, results in the breakin o% laborAs
resistan$e to e+ploitation b& $apital( And the risin importan$e o% middlemen
$reates $hannels %or surplus e+tra$tion "ia une:ual e+$hane(
Thus, in readin .ar+ on the e"olution o% modern industr& one is o%ten stru$k b& the
resonan$e #ith 'ndian manu%a$turin toda&( The #idespread pre"alen$e o% puttin!
out relations, the preponderan$e o% mer$hant $apital and o% %ormal subsumption o%
labor seems to suest a t&pe o% $apitalism that pre$edes in histori$al time, the
4%ull!%leded5 industrial $apitalism o% 8estern 0urope and Borth Ameri$a( Does this
mean that the 'ndian e$onom& is on the same transition path as the ad"an$ed
industrial e$onomies; An a#areness o% the histori$al $onte+t $autions aainst an&
su$h straiht%or#ard interpretation( The issue o% the transition to industrial
$apitalism and the disappearan$e o% the in%ormal se$tor is a "er& $ontro"ersial one
in the literature and #e do not enter into this debate here( Thouh it is #orth
pointin out that in some #a&s this debate o"er $ontemporar& e$onomi$ realit&
?6
mirrors the debate in 'ndian e$onomi$ histor& o"er the %ate o% 4traditional industr&5
under $olonialism(
'n that debate, the 4deindustriali3ationFnationalist5 s$hool maintained that
traditional industr& #as de$imated due to $ompetition %rom $heap manu%a$tured
oods and deliberate $olonial trade and industrial poli$&(
9
A more re$ent
4re"isionist5 s$hool $ountered that $ontinuit& rather than rupture marks the
artisanal lands$ape in $olonial and post!$olonial 'ndia (Ko&, 199,)( Simmons (197,)
o%%ers a ood o"er"ie# o% this debate alon #ith ke& sour$es( The $hallene lies in
re$onstru$tin a pi$ture that sho#s elements o% $ontinuit& as #ell as $hane, #hile
maintainin a %o$us on the material $onditions that keeps the #orkin $lass
e+ploited and trapped in lo# produ$ti"it&Flo#!#ae #ork( This is pre$isel& #hat
.ar+ hints at #hen he $alls our attention to the di%%eren$es and the similarities o%
domesti$ and $ottae industr& subordinated to $apital $ompared to pre!$apitalist
artisanal produ$tion(
At the "er& least it $an be said that rather than bein annihilated, se"eral t&pes o%
traditional industries sur"i"ed #ith $hanes into the 20
th
$entur&, and e"en re# in
si3e in some $ases(
4'n some $ases, the ro#th o% ma*or $ra%t to#ns o% $olonial 'ndia has been
trul& staerin in the last -0 &ears( Surat at the turn o% the $entur& probabl&
emplo&ed about -!D,000 #ea"ers in silk and la$e( Toda&, the dire$t
des$endant o% #ea"in, the po#erloom, pro"ides emplo&ment to about hal% a
million( .oradabad brass#are enaed 6!7,000 %ull!time #orkers in 192,( 'n
the 1990s, an estimate pla$es the to#nRs metal #orkers at 1-0,000( Bot more
than a %e# thousands #ere %ound in the $arpets in .ir3apur!Bhadohi area in
the inter#ar period( ?00,000 is the appro+imate %iure in the 1990s( These
$ases $apture a steadil& in$reasin share o% the in%ormal se$tor in industrial
#ae!labour(5 (Ko& 1999)
.ar+ has sometimes been read in teleoloi$al %ashion as assertin that the
parti$ular transition %rom pett& $ommodit& produ$tion to small #orkshops and
domesti$ industr& arti$ulated #ith $apitalism (puttin!out) to lare!s$ale %a$tories
#ill be repeated #here"er $apitalism de"elops( 9o#e"er, it is also #orth notin that
the period o"er #hi$h this transition o$$urs is around ?00 &ears (%rom the 16
th
$entur& to the 19
th
$enturies)( >ne important %a$tor that .ar+ did not in$orporate in
his anal&sis is imperialism/ later .ar+ists dre# attention to imperialism and the
une"en de"elopment that $hara$teri3es the #orld $apitalist s&stem( 't has been
arued that the in$orporation o% the 'ndian e$onom& into the lobal $apitalist
s&stem $reates $onditions %or the perpetuation o% the in%ormal se$tor and other lo#!
9
The earl& nationalist #riters in$luded K(=(Dutt and Ka*ani Galme Dutt( A more re$ent #riter
holdin this "ie# is Ba$hi (196D)( An o%t!$ited ma$ro statisti$ in this reard is Gaul Bairo$hAs
estimates o% the 4le"els o% industriali3ation5 a$$ordin to #hi$h 'ndia a$$ounted %or 2-H o%
#orld manu%a$turin output in 16-0, 7(DH in 17D0 and 1(6H in 1900( (:uoted in Simmons
197,, Table 1)
?7
produ$ti"it& a$ti"ities( To this must be added another $a"eat( .odern lare!sale
industr& has in eneral displa&ed reat $apital intensit& and a $orrespondin %ailure
to pro"ide emplo&ment to a lare %ra$tion o% so$iet& (e"en in =hina, the ne#
manu%a$turin po#erhouse, the se$ondar& se$tor $urrentl& emplo&s onl& 2?H o%
the labor %or$e)( The persisten$e o% small!s$ale produ$tion as 4emplo&er o% last
report5 raises important :uestions %or the t&pe o% industriali3ation that should dri"e
the de"elopment pro$ess( 8e de%er %urther $omments on this issue until the
$on$ludin se$tion(
C& T)E FORMAL AND T)E INFORMAL IN INDIAN INDUSTRY
8ith the ba$kround laid out abo"e, let us pro$eed to some statisti$s on the 'ndian
e+perien$e o% the past %e# de$ades( Se$toral shares in emplo&ment and output %or
'ndia o"er the past $entur& are sho#n in @iure 2a and @iure 2b( These data,
$ombined %rom "arious sour$es, are to be interpreted $autiousl& (not least be$ause
4'ndia5 re%ers to a di%%erent eoraphi$al reion pre and post!'ndependen$e)(
9o#e"er the salient %eature is relati"el& un$ontro"ersial) a de$line in ari$ultural
emplo&ment and an in$rease in ser"i$es %ollo#ed b& industr&( The de$line in
ari$ultureAs share o% emplo&ment has been mu$h slo#er than de$line in share o%
output, #ith $onse:uen$es as noted in the pre"ious se$tion( Dependin upon the
e+a$t de%inition, the manu%a$turin se$torAs $urrent share in IDG is some#here
bet#een 20!2-H( Total emplo&ment in this se$tor is about ,- million (about 17 H o%
the labor %or$e)( The share o% industrial se$tor in emplo&ment has in$reased, albeit
slo#l&, sin$e the 1970s (1, to 17H)
?9
Tables 1 and 2 sho# the relati"e proportions o% the %ormal and in%ormal e$onomies
in emplo&ment (as o% 2000) and output (as o% 200?) %or the three se$tors( @ormal
%irms a$$ounted %or around D0H o% output and in%ormal %irms %or ,0H( A$$ordin the
latest BSS> sur"e& ($o"erin the period 200-!200D) ?D(,, million #orkers #ere
emplo&ed in the in%ormal manu%a$turin se$tor( Thus around 6- H o% the
manu%a$turin #ork%or$e is emplo&ed in the in%ormal se$tor(
Tab"e *: Perce%ta.e s0are o$ $or+a" /ers-s #%$or+a" co%tr#b-t#o% to GDP
#% t0e t0ree sectors= ;88;3;88<
Se$tor @ormal (H o%
IDG)
'n%ormal (H o%
IDG)
Total
Ari$ulture, %orestr& and
%ishin
,(1 9-(9 100(0
.inin, manu%a$turin,
ele$tri$it& and $onstru$tion
D0(- ?9(- 100(0
Ser"i$es -?(1 ,D(9 100(0
Total ,?(? -D(6 100(0
Sour$e) Sharma and =hitkara (200D) .easurin =ontribution o% 'n%ormal
Se$torF'n%ormal 0mplo&ment to IDG, 0+pert Iroup on 'n%ormal Se$tor Statisti$s
(Delhi Iroup)

,0
Tab"e ;: Perce%ta.e s0are o$ $or+a" /ers-s #%$or+a" e+,"oy+e%t #%
t0e t0ree sectors= *7773;888
Se$tor @ormal (H o%
emplo&ment)
'n%ormal (H o%
emplo&ment)
Total
Ari$ulture, %orestr& and
%ishin
0(7D 99(1, 100(0
.inin, manu%a$turin,
ele$tri$it& and $onstru$tion
2,(,6 6-(-? 100(0
Ser"i$es 2,(D0 6-(,0 100(0
Sour$e) Saha, 2ar and Bhaskaran (200,) .easurin 'n%ormal 0$onom& throuh
'n$ome and 0+penditure Sur"e&s, 0+pert Iroup on 'n%ormal Se$tor Statisti$s (Delhi
Iroup)
As miht be e+pe$ted %rom its lare si3e, the s$ope o% in%ormal a$ti"it& is similarl&
e+tensi"e( 'n 'ndia small!s$ale, in%ormal industr& produ$es %ood produ$ts,
be"eraes, $otton, #ool, and silk te+tiles, #ood and paper produ$ts, leather and
$hemi$al produ$ts, metal produ$ts, ele$tri$al and transport e:uipment and repair
ser"i$es o% "arious kinds in$ludin repair o% $apital e:uipment( BSS> data indi$ate
that the %ood, te+tile and arment industries are the larest emplo&ers in the
in%ormal manu%a$turin se$tor( @iure ? sho#s the industries that a$$ount %or about
90H o% in%ormal emplo&ment(
>ne main $ause o% an+iet& reardin the de"elopment o% industr& in 'ndia has been
that the %ormal se$tor has displa&ed lo# emplo&ment elasti$ities( @iure , sho#s
that %ormal se$tor emplo&ment (industr& and ser"i$es) has been stanant sin$e the
1970s( 'n parti$ular the post!re%orm period has seen ro#in in%ormali3ation( The
share o% lare industr& (usuall& de%ined as $omposed o% %irms emplo&in more than
100 #orkers) in manu%a$turin emplo&ment re# %rom around -H in 1900 to ?0H
in 1970 and therea%ter has de$lined to around 2- H (@iure -)(
=ontrari#ise, as mentioned earlier, the share o% small!s$ale and in%ormal industr& in
emplo&ment has been hih sin$e $olonial times and BSS> data sin$e 197,
(dis$ussed in more detail in the ne+t se$tion) sho#s that in%ormal manu%a$turin
has held on to its emplo&ment share, perhaps e"en e+panded it, in re$ent times(
10
10
At the statisti$al le"el a "ital $a"eat to BSS data is the underestimation o% the in%ormal
se$torAs $ontribution to emplo&ment and in$ome( A$$ordin to one stud& o% the Iu*arat
$erami$ manu%a$tures industr& (Das 200?) onl& about ?H o% the total number o% units
sur"e&ed #ere re%le$ted in the o%%i$ial statisti$s and similarl& the o%%i$ial data on
emplo&ment #as less than 2H o% the stud&As estimate( 8e take this issue up in a later
se$tion(
,1
F#.-re E: E+,"oy+e%t #% t0e $or+a" sector >*7:83;88<? #% +#""#o%s >So-rce:
C&P& C0a%raseF0ar a% !ayat# G0os0
**
?
'#ploy#ent in the or"anised sector
0
10
20
30
40
50
60
70
80
1
9
8
1
1
9
8
4
1
9
8
5
1
9
8
6
1
9
8
7
1
9
8
8
1
9
8
9
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
5u(lic /ect"r 5ri7ate /ect"r 8"tal
The persisten$e o% small!s$ale and $ottae industr&, both due to its a$tin as a
reser"e %or surplus labor and in part due to a$ti"e o"ernment poli$& o% support, on
the one hand, and support %or lare!s$ale modern industr& on the other hand ha"e
resulted in a %irm si3e distribution displa&in #hat .a3umdar and Sarkar (2007)
re%er to as the 4missin middle(5 This re%ers to the lo# proportion o% %irms
emplo&in more than -0 but less than 1000 or more #orkers (@iure D)( 'n part the
e+planation ma& be %ound in in$enti"es to redu$e small %irm si3e to less than -0
o%%i$ial #orkers in order to a"oid $omplian$e #ith labor and other la#s( Be&ond a
11
http)FF###(authorstream($omFpresentationF.udki!19?,9!La&ati!Ihosh!Ke$ent!emplo&!
ment!trends!'ndia!=hina!un%ortunate!$on"eren$e!Asian!$entur&!similar!e$o!as!0ntertain!
ment!ppt!po#erpointF
,2
$ertain si3e, #here non!reistration is not an option, e$onomies o% s$ale ma& result
in lare %irm si3es(
'n passin #e note that the reasons #h& small %irms are unable or un#illin to ro#
are $omple+ and are the sub*e$t o% se"eral o%%i$ial and a$ademi$ studies( @iure 6
displa&s some o% the ke& results %rom a sur"e& o% 1212 small %irms (.orris et al
2001)( These are responses to the :uestion 40n$ir$le the three most important
%a$tors that ha"e restri$ted &our ro#th and de"elopment and rank them in order o%
importan$e5( The s$ores ha"e been ad*usted %or the rank, and %e#er than three
responses(
D& PRODUCTION RELATIONS: A FIRST LOOK
Kather than %o$usin on %irm si3e (lare "ersus small), leal $riteria (reistered
"ersus unreistered) or emplo&ment reimes (reular, semi!reular, $asual), in this
stud& our aim is to in"estiate the produ$tion relations and modes o% surplus
e+tra$tion %ound in in%ormal manu%a$turin %irms( 9arris (1972) $omments re%errin
to $ateories based on %irm si3e or s$ale (su$h as number o% emplo&ees, si3e o%
assets et$()(
4@or anal&ti$al purposes these $ateories are :uite $learl& o% "er& limited
"alue be$ause the& mostl& rest upon numeri$all& de%ined $lasses and ma&
subsume :uite di%%erent %orms o% the produ$tion pro$ess and o% relations o%
produ$tion(5 (p( 9,-)
The D2
nd
round o% the Bational Sample Sur"e& $arried out in 200-!0D $ontains the
most re$ent national!le"el data on the in%ormal manu%a$turin se$tor in 'ndia( Data
is also a"ailable %rom pre"ious rounds $ondu$ted in 2000!2001, 199,!199-, 1979!
1990 and 197,!197- i"in a broad o"er"ie# o% the e"olution o% in%ormal industr&
o"er the past 2- &ears(
,?
F#.-re 5) Distribution o% emplo&ment (in H) in manu%a$turin %irms b& emplo&ment
si3e roups( (AS' data) (Sour$e) .a3umdar and Sarkar 2007)
,,
The %irst thin to note is that the number o% in%ormal manu%a$turin %irms as #ell as
the number o% #orkers has remained more or less $onstant o"er the past 2- &ears
(@iure 7)(
9o# do in%ormal manu%a$turin entreprises and #orkers "ar& a$ross the states;
@iures 9 and 10 sho# the state!#ise distribution o% in%ormal enterprise as #ell as
in%ormal #orkers( T#o states, 8est Benal and Jttar Gradesh a$$ount %or ?0
per$ent o% all in%ormal manu%a$turin enterprises as #ell as in%ormal #orkers in the
$ountr&( >nl& the top ten states are sho#n in the %iure (see BSS D2
nd
round Keport
-2,, Statement ?b and Keport -2-, Statement -A %or entire list)(
Dependin on #hether and ho# man& #ae!#orkers are emplo&ed in the %irm, #e
$an $ateori3e in%ormal %irms based on BSS> data as %ollo#s (the labels are ours))
1( Gett&!proprietorships) These are $alled 4>#n A$$ount .anu%a$turin 0nterprises5
(>A.0s) in the BSS> data( The ke& de%inin %eature is that no #ae!#orkers are
emplo&ed( Jse o% %amil& labor is $ommon and man& %irms are situated on household
premises(
2( .arinal $apitalist) These are $alled 4Bon Dire$tor& .anu%a$turin
0stablishments5 (BD.0s) in the BSS> data( The& ha"e at least one #ae!#orker
but no more than - #ae and %amil& #orkers taken toether(
?( Small =apitalist) These are $alled 4Dire$tor& .anu%a$turin 0stablishments5
(D.0s) in the BSS> data( These emplo& more than - but less than 20 #orkers (at
#hi$h point the& should be in$luded in the Annual Sur"e& o% 'ndustries)(
,-
(i"ure ): *ercenta"e share of infor#al #anufacturin"
enterprises
0
2
4
6
8
10
12
14
16
18
6
e
s
t

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9
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State
+
(i"ure ,-: *ercenta"e share of infor#al #anufacturin" wor.ers
0
2
4
6
8
10
12
14
16
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+
Gett&!proprietorships are b& %ar the most $ommon t&pe o% produ$tion relation in
both rural and urban areas, in terms o% both number o% %irms and number o%
#orkers( 9o#e"er, relati"el& more marinal and small $apitalist %irms are %ound in
urban areas as $ompared to rural areas( The rural and urban per$entae shares %or
200-!200D are sho#n in @iure 11a and @iure 11b and the all!'ndia shares o% %irms
and #orkers are sho#n %or the past 2- &ears in @iure 12a and @iure 12b(
,D

BSS> data also re"eal that unpaid %amil& members and other non!hired helpers
make up a "er& lare part o% the in%ormal industrial #orkin $lass( 8hile -2H o%
in%ormal #orkers are 4#orkin o#ners,5 and 2,H are 4hired #orkers,5 the
remainin, %ull& 2,H are $ateori3ed as 4other #orkers,5 i(e( unpaid domesti$
#orkers( The ma*orit& o% hired #orkers (7-H) are male #hile the ma*orit& o% 4other
#orkers5 (-9H) are %emale (Io"ernment o% 'ndia, 2007)(
,6

E& ASSETS
'n order to et a more detailed pi$ture o% these %irms #e ne+t present some data on
t&pes o% assets o#ned and "alue added in manu%a$turin a$ti"it&( 'n addition #e
present some data on #ae and pro%its shares in the areate in this se$tor(
@iure 1? sho#s that the #orkshop premise or home %orms the sinle larest asset
%or in%ormal %irms, a$$ountin %or D0!70H o% assets(
,7
The per$entae ro#th in market "alue o% %i+ed assets o#ned b& the three t&pes o%
in%ormal enterprises o"er the period %rom 199,!9- to 200-!0D (ad*usted %or in%lation
usin the #holesale pri$e inde+), is sho#n in the table belo#(
Tab"e <: Growt0 rate o$ $#@e assets >*77E374 to ;884385?
55 < gr"4th 23.32
.= < gr"4th 34.82
/= < gr"4th 51.03
BSS> data also suest that rented assets %orm an important part o% the operation
o% the in%ormal manu%a$turin e$onom&( 'n 200-!200D, a$ross all three t&pes o%
in%ormal %irms, ?0H o% total assets #ere hired( 8hile hired assets %ormed a reater
part o% total assets %or marinal and small $apitalist %irms, e"en %or pett&!
proprietorships, nearl& 2-H o% total assets #ere hired( Taken toether #ith the data
presented later in the paper on use o% $redit, #e note that so!$alled 4pett&
$ommodit& produ$ers5 are in %a$t separated to a sini%i$ant deree %rom the means
o% produ$tion and that the $ir$uit o% $apital %or in%ormal %irms starts #ith mone& or
$redit( 'n $ertain t&pes o% puttin!out arranements #hat appears to be pett&
$ommodit& produ$tion is in %a$t disuised #ae!labor( 8e de%er a more detailed
dis$ussion o% this to Se$tion ' and the $on$ludin se$tion(
F& GROSS 'ALUE ADDED
To $al$ulate the ross "alue added in manu%a$turin t#o :uantities are %irst
de%ined)
,9
1( >peratin 0+penses) 4The total "alues o% ra# materials, ele$tri$it&, %uel,
lubri$ants and au+iliar& materials $onsumed/ $ost o% maintenan$e, ser"i$es
pur$hased and other e+penses in$urred durin the re%eren$e period(5 (Io"ernment
o% 'ndia 2007$, p( 1,)
2( Ke$eipts) 4The sale "alue o% produ$ts and b&!produ$ts manu%a$tured b& the
enterprise toether #ith the "alue o% ser"i$es rendered to other $on$ernsQ5 (ibid)
Then, Iross <alue Added (I<A) S Total Ke$eipts C Total >peratin 0+penses
8hile, as e+pe$ted, "alue added has in$reased %ar more rapidl& in %ormal
manu%a$turin as $ompared to the in%ormal se$tor (@iure 1,), it is interestin to
note that I<A has been in$reasin rapidl& in the past de$ade a$ross the in%ormal
se$tor( @iure 1- sho#s this b& remo"in the trendline %or the %ormal se$tor(
=oupled #ith the %a$t that total in%ormal industrial emplo&ment has not ro#n
similarl& o"er the same period, #e $an in%er than labor produ$ti"it& has been
in$reasin in this se$tor(
Table , i"es summar& areate statisti$s %or #ae and pro%it shares as #ell as
a"erae #aes and pro%its per #orker( An important $a"eat o% theoreti$al as #ell as
pra$ti$al importan$e must be mentioned here #hen $onsiderin the "alue!added
%iures( .i$ro $ase studies re"eal that in situations #here lon suppl& $hains e+ist
linkin the produ$er #ith the %inal $onsumer, the sale pri$e o% the produ$er (the
in%ormal %irm) is onl& a small part o% the retail pri$e paid b& the %inal $onsumer(
-0
TA1LE E: Gross 'a"-e Ae a% 2a.es S0are $or
I%$or+a" F#r+s
PP MC SC
Areate I<A (Billions
Ks) 270(D1 211(20 ?7,(0-
8ae Share (Billions Ks() ! 12,(61 20D(7-
Gro%it Share (Billions Ks() ! 7D(-1 166(,1
Bo( o% #orkers (millions) 2?(D9 -(67 D(97
I<A per %irm (Ks)
1920?(
00
119?02(
00
--7-1?(
00
I<A per #orker (Ks)
117,D(
00
?D-,?(0
0
--0-2(0
0
number o% #orkersF%irm 1(D2 ?(2D 10(1-
Annual
emolumentF#orker (Ks) !
21-6D(0
0
29D?-(0
0
Gro%itFper #orker (Ks) !
1,9D6(0
0
2-,16(0
0
Sour$e) Keport -2D, and Keport -2-, Statements 10 and
12
This problem is parti$ularl& a$$entuated #hen the "alue $hain is lobal( As
=hakrabarti and <arman (2009) note in their stud& o% the 2anpur leather $luster,
4almost 70 per $ent o% the %inal pri$e o% the shoe oes to the lon $hain o%
middlemen #ho operate onl& in the post!produ$tion stae( >r in other #ords,
(i"ure ,/: 0ross 1alue Added by type of fir# in the infor#al
sector
0
50
100
150
200
250
300
350
400
450
1984 1989 1994 2000 2005
r
u
p
e
e
s

b
i
l
l
i
o
n
s
55
.=
/=
-1
%our!%i%ths o% the T"alue additionA o% shoes in the lobal "alue $hain a$tuall&
adds no "alue to the produ$t(5
9eint3 (200?, 200D) has de"eloped a model in the 4une:ual e+$hane tradition5 o%
0mmanuel, Grebis$h and Siner, that attempts to $apture the une:ual distributional
$onse:uen$es o% a lobal produ$tion s&stem #here 4lare retailers or brand!name
$orporations set up a de$entrali3ed s&stem o% produ$tion and distribution(5 9ere
A$tual produ$tion is sub$ontra$ted out to small produ$ers #ho %a$e
e+tremel& $ompetiti"e $onditions (=arr, =hen, and Tate 2000, Bona$i$h and
Appelbaum 2000, Iere%%i 199,)( Ketailers and brand!name multinationals
en*o& some deree o% market po#er #hi$h the& $an use to keep pri$es lo#
%or the oods the& pur$hase or to earn rents throuh the de"elopment o%
monopolisti$ brand identities( (9eint3 200?)
9e %urther arues that
b& $ombinin the spe$i%i$ insihts o% lobal $ommodit& $hain anal&sis #ith
the theoreti$al inno"ations o% the une:ual e+$hane traditions, a model o%
these relationships $an be de"eloped that e+plores the distributi"e
$onse:uen$es o% the e+pansion o% lobali3ed manu%a$turin tied to a%%luent
$onsumer markets throuh the institutional linkaes o% lobal $ommodit&
$hains(
8e note in passin that this issue is still rele"ant e"en #hen $ommodit& $hains are
onl& reional or national in s$ope(
G& CREDIT
A$$ordin to BSS> data in 200-!0D outstandin loans #ere 21(DH o% total %i+ed
assets o#ned, at the all 'ndia le"el( 8hile nearl& -0H o% the $redit in rural and
urban areas $ame %rom o"ernment aen$ies, publi$ se$tor and $ooperati"e banks,
or other institutional sour$es (su$h as the 2hadi and <illae 'ndustries =ommission),
pri"ate mone&!lenders alon #ith other in%ormal sour$es su$h as %riends and
relati"es a$$ounted %or 1-H o% outstandin loans at the all!'ndia le"el( 0+pe$tedl&,
%ormal sour$es o% $redit #ere more important %or small $apitalists as $ompared to
marinal $apitalists and pett&!proprietors( Gett&!proprietors are the #orst hit b&
mone&!lenders( The per$entae o% loans %rom mone&!lenders to rural pett&!
proprietors has a$tuall& in$reased substantiall& in the period %rom 199,!9- to 200-!
0D, #hile it has de$reased %or e"er& other $ateor& as seen in the %iure( The %iure
o% 2-H $an be $ompared to the proportion o% loans oin to %armers %rom mone&!
lenders reported in the se$tion on ari$ulture(
-2
F#.-re *5: Perce%ta.e o$ "oa%s to #%$or+a" +a%-$act-r#%. e%ter,r#ses
co+#%. $ro+ +o%ey3"e%ers >b"-e: *77E374= +a.e%ta: ;884385?
0
5
10
15
20
25
30
55-rural .=-rural /=-rural 55-ur(an .=-ur(an /=-ur(an
+

o
f

l
o
a
n
s

c
o
#
i
n
"

f
r
o
#

#
o
n
e
y
-
l
e
n
d
e
r
s
The usurious nature o% mone&!lender $redit is apparent #hen #e note that the
4annual interest pa&able as a per$entae o% loan amount outstandin5 is on
a"erae ten per$entae points hiher (at 2DH) than %ormal sour$es o% $redit
(around 1-H)(
)& S)ORTCOMINGS OF NSS DATA
Das (200?) has $arried out a mi$ro!le"el $ase stud& o% the $erami$ #are
manu%a$turin sub!se$tor in Iu*arat spe$i%i$all& to un$o"er the short$omins o%
national le"el BSS data, #hi$h result in part %rom problems #ith in$ludinFe+$ludin
spe$i%i$ sub!se$tors belo# the t#o!diit le"el Bational 'ndustr& =lassi%i$ation (B'=)(
The ke& points that emere %rom this stud& are)
1( At a reater le"el o% disareation o% industrial $lassi%i$ation it is seen that BSS
data has impro"ed "astl& o"er time to in$lude more and more pre"iousl& missed
t&pes o% industries( @or e+ample earl& BSS data (1967!69) estimated no in%ormal
enterprises in manu%a$turin or pro$essin o% $otton te+tiles, and in drus,
$osmeti$s and #ashin and $leanin preparations, both o% #hi$h $onsist o% se"eral
in%ormal units in Iu*arat (and most likel& else#here as #ell)(
2( The Bational Sample Sur"e&s are likel& to underestimate, in some $ases se"erel&,
the number o% in%ormal enterprises and as a result the si3e o% in%ormal emplo&ment(
@or e+ample, the $erami$ #are sub!se$tor had one sur"e&ed unit and an estimated
eiht units in the in%ormal se$tor a$$ordin to 199,!9- BSS data( Das (200?) %ound
-?
at least 1D, and possibl& as man& as 229 in%ormal units( The $orrespondin
emplo&ment estimates #ere 2, #orkers %or $erami$ #are industr& in Iu*arat
a$$ordin to BSS (199,!9-) data and an&#here bet#een 1,292!1,702 #orkers as
per the Das (200?) stud&( Thus onl& about ?H o% the total number o% units sur"e&ed
#ere re%le$ted in the o%%i$ial statisti$s and similarl& the o%%i$ial data on emplo&ment
#as less than 2H o% the stud&As estimate(
?( Annual emoluments %or all non >A.0As a$$ordin to BSS 200-!200D is Ks(
2D,D72( Das (200?) re"eals #aes around Ks( 17,000 (assumin reular &ear!lon
emplo&ment)( The pie$e rate s&stem #as #idel& pre"alent thouh it does not
%eature prominentl& in the o%%i$ial statisti$s(
,( >nl& around 27H o% in%ormal enterprises had no hired #orkers (the ma$ro BSS
data reports a mu$h larer per$entae)( Around 77H o% in%ormal units #ere sinle
proprietor units and nearl& -0H o% emplo&ees in in%ormal units #ere %amil&
members (unpaid labor)(
I& A FRAME2ORK FOR DISCUSSING PRODUCTION RELATION IN T)E
INFORMAL SECTOR
8hile the BSS> data ser"es #ell as a %irst pass on the t&pes o% produ$tion relations
in the in%ormal se$tor, the true $omple+it& is re"ealed onl& "ia mi$ro $ase studies(
Jsin e+amples %rom di%%erent in%ormal industries in$ludin Ara %oot#ear, 1u$kno#
=hikan, Iu*arat =erami$s, and JG and TB 9andlooms, and a 1991 sur"e& o% 1-00
artisan households in"ol"ed in 1- di%%erent e+port!oriented handi$ra%t industries, #e
o%%er a s$hemati$ look at these produ$tion relations and the prin$ipal #a&s in #hi$h
surplus e+tra$tion is %a$ilitated(
The "ariet& o% produ$tion relations obser"ed empiri$all& $an be $aptured in a simple
matri+ (see Table -) #here the t#o a+es are $ontrol o"er labor pro$ess and produ$t,
and $ontrol o"er $apital( A simple di$hotom& $an be made bet#een sel%!
dire$tionFo#nership and other!dire$tionFo#nership(
The in%ormal manu%a$turin se$tor displa&s a reat "ariet& o% produ$tion relations in
#hi$h the produ$er retains or losses $ontrol o"er the means o% produ$tion and the
labor pro$ess to "ar&in derees( The 4$lassi$al artisan5 mode $onsists o% sa& a
#ea"er, a metal!#orker, a leather!#orker #ho o#ns his o#n means o% produ$tion,
#orks in his o#n house or #orkshop and produ$es %or the market( She or he also
retains $ontrol o"er a sel%!dire$ted labor pro$ess( 9o#e"er, as $apitalism
undermines the $onditions o% e+isten$e o% independent $ommodit& produ$tion, sel%!
o#nership o% $apital does not ne$essaril& mean sel%!dire$tion in the labor pro$ess(
Ke$all .ar+As $omment abo"e, #ith respe$t to the domesti$ #orker that the
-,
Qthe position o% this spe$iali3ed #orker, #ho, althouh he #orks at home,
does so %or a $apitalist, is "er& di%%erent %rom that o% the independent
$ra%tsmen, #ho #orks %or his o#n $ustomers( (.ar+, 1992, p( ,D2!,D?)
=apitalist relations ma& thus sho# up %irst not in the separation o% the produ$er
%rom the means o% produ$tion but rather in a slo# loss o% $ontrol o"er the pro$ess
and produ$t o% labor( >r $on"ersel&, o#nership o% the means o% produ$tion does not
automati$all& entail o#nership o% the produ$t o% labor or $ontrol o"er the pro$ess o%
labor(
The 4puttin!out5 mode o% produ$tion is histori$all& a result o% the subordination o%
artisanal produ$tion to mer$hant $apital( T&pi$all& a mer$hant or his representati"e
supplies orders (and in some instan$es ra# materials or #orkin $apital) to the
produ$er and $olle$ts the %inished produ$t at an areed upon pri$e or pie$e!#ae(
>ne a$$ount o% the $ontemporar& small!s$ale industr& des$ribes the situation thus)
Jnder the ne# s&stem $apitalists e+er$ise tiht $ontrol in the market o% ra#
material and %inished produ$ts( Grodu$tion is orani3ed throuh a suppl& o%
ra# material to sites o% produ$tion spread out in houses and huts( A batter&
o% middlemen and $ontra$tors operates at se"eral le"els( 'n man& $ases
these le"els are so numerous that the produ$er kno#s nothin about the
master( 8ae and :ualit& $ontrols are e+er$ised b& middlemen( This
arranement has spread :ui$kl& in te+tile, hosier&, read&made $lothes,
ele$tri$al de"i$es, small ma$hines and leather #orks( >% late, iron#ork, $la&!
#ork, $arpentr& and stone #ork has also been brouht #ithin the ambit o%
this s&stem( 8e are #itnessin a trans%ormation o% "illaes, mohallas and
to#ns into lare %a$tories, a trans%ormation, #hi$h has no pre$edent(
(Sahasrabudhe&, 2001)
Toda& puttin!out oes b& the name o% sub!$ontra$tin and is a #idel& dis$ussed
phenomenon in mainstream international e$onomi$s as lobal $ommodit& $hains
be$ome in$reasinl& elaborated( The puttin!out "ariations %ound in 'ndian in%ormal
industr& are des$ribed in Table -(
12
G>!' or Guttin!out "ariation '! The produ$er #orks on hisFher o#n premises #ith
o#n e:uipment and o#n #orkin $apital, in a sel%!dire$ted labor!pro$ess but hands
o"er produ$t to one or %e# middlemen( 9eFshe ma& also be dependent upon the
same mer$hant %or a$$ess to #orkin $apital or $redit( This t&pe o% arranements is
%ound amon other pla$es in the Ara %oot#ear industr&(
G>!'' or Guttin!out "ariation ''! The produ$er #orks on o#n premises #ith o#n
e:uipment but #ith borro#ed #orkin $apital, in a sel%!dire$ted labor!pro$ess and
hands o"er produ$t to mer$hant $apitalist or his representati"e( This is also a
$ommonl& %ound t&pe o% relation in the handloom and po#erloom se$tors(
12
8e thank .ohan Kao %or the %rame#ork behind the t&polo& depi$ted in Tables - and D(
--
Tab"e 4: A ty,o"o.y o$ ,ro-ct#o% re"at#o%s #% t0e I%#a% #%$or+a"
+a%-$act-r#%. sector
1abor
=apital
Sel% produ$t and
pro$ess
Sel% pro$ess,
other produ$t
>ther produ$t
and pro$ess
Sel% %i+ed and
#orkin
=lassi$al artisanF
independent
produ$er
G>!' Kare
Sel% %i+ed,
other #orkin
Kare G>!'' G>!'<
>ther %i+ed and
#orkin
Kare G>!''' =lassi$al
industrial
$apitalist
G>!''' or Guttin!out "ariation '''! The produ$er #orks on otherAs premises or #ith
rented e:uipment and #orkin $apital but in a sel%!dire$ted labor!pro$ess and
hands produ$t o"er to mer$hant $apitalist( 8ea"ers in rural areas (sometimes
$alled 4dependent #ea"ers5) o%ten labor under su$h relations(
G>! '< or Guttin!out "ariation '<! Grodu$er #orks in o#n premises #ith o#n
e:uipment but borro#ed #orkin $apital but produ$es onl& a small part o% a
marketable produ$t a$$ordin to a $apital!imposed di"ision o% labor( @or e+ample in
the 1u$kno# $hikan industr&, the #omen #ho per%orm embroider& do so in their
o#n homes #ith their o#n e:uipment #ith ra# material bein pro"ided b& a
mer$hant $apitalistAs aent( The produ$ers (embroiders) do not ha"e a produ$t o%
their o#n to sell(
9o#e"er the matri+ abo"e is missin a $ru$ial aspe$t o% the in%ormal manu%a$turin
se$tor #hi$h is important %or understandin e+ploitation in the se$tor( This element
is $ontrol o"er the produ$t and %a$tor markets, i(e( a$$ess to $redit and ra#
materials and a$$ess to markets %or %inished oods, #hi$h is a %un$tion o% market
po#er and the stru$ture o% markets in eneral( This a+is is parti$ularl& use%ul in
re"ealin e+ploitation "ia une:ual e+$hane #hi$h is potentiall& hidden in the
t&polo& abo"e( A sel%!emplo&ed artisan #ith $ontrol o"er the pro$ess and produ$t
o% labor ma& ne"ertheless lose independen$e "ia the loss o% $ontrol o"er a market(
This situation is depi$ted in Table D(
-D
Tab"e 5: Petty3,ro,r#etors0#,s a% +arFet access
1abor
.arket
Sel% produ$t and
pro$ess
Sel% a$$ess 'ndependent
produ$er
>ther a$$ess Dependent
produ$er
Dependent produ$er ! Grodu$er #orks on o#n premises #ith o#n e:uipment and
o#n #orkin $apital, not on order %rom an& mer$hant, &et must e"entuall& sell to
one or a %e# mer$hant $apitalist usuall& in an une:ual e+$hane relationship( This
hihlihts the %a$t that apparentl& sel%!emplo&ed #orkers $an be at the mer$& o%
"arious mer$hants and middlemen #ho make themsel"es "ital to the sur"i"al o% the
produ$ers either b& e+tendin trade $redit or b& retainin $ontrol o"er the market(
'n the ne+t se$tion #e o%%er an e+ample o% this phenomenon %rom the Ara %oot#ear
industr&(
Kelatin our t&polo& to Ko&As (199?) t&polo&, #e $an sa& that the 4$lassi$al
artisan5 $orresponds to Ko&As 4independent #ea"ers5 (sale o% produ$t not tied to
one bu&er, no monopson&) and the puttin!out "ariations $orrespond to the t#o
t&pes o% 4dependent #ea"ers,5 those emplo&ed on pie$e $ontra$ts (4seller o% $loth5,
G>! ' and '') "ersus those on #ae!emplo&ment (4seller o% labor5, G>! '''), the
$apitalist in the %irst instan$es bein a mer$hant or mone&!lender and the se$ond
$ase bein a larer produ$er!$um!mer$hant( An e+ample o% G>! ''' has been
reported in .au, JG, #here lare produ$ers lease out looms to #ea"ers( 48orkers
#ork in their o#n house but on someone elseAs looms(5 (Ko&, 199?, p( 206)
These $ateories are also %luid and $hanin( @or e+ample in the Bha"ani handloom
industr& in Tamil Badu des$ribed b& de Be"e (200-) man& $apitalist o#ners o%
#orkshops #ho pre"iousl& emplo&ed #ea"ers on pie$e!#aes bean to sell or lease
their looms to master!#ea"ers to #hom the& pro"ided &arn( The problems o%
manain the looms and dis$iplinin labor #ere thus trans%erred %rom the mer$hant
$apitalist to the master!artisan( @urther, the master!#ea"ers are not o#ners o% the
produ$t sin$e the& ha"e been sub!$ontra$ted b& mer$hants to #hom the& must
return the %inished produ$t(
-6
1astl&, it should be noted that the %luidit& o% produ$tion relations is also mani%ested
at the le"el o% the indi"idual #orker #ho ma& #ork on pie$e!#aes toda&, be a
small $ontra$tor o% laborers tomorro# and #ork on a %a$tor& shop!%loor on the third
da&(
!& MODES OF SURPLUS EXTRACTION
As elaborated in the introdu$tion, a 4mode o% surplus e+tra$tion5 re%ers to the
spe$i%i$ #a& in #hi$h unpaid labor is e+tra$ted %rom the produ$ers and appropriated
b& the dominant $lasses( 'n ad"an$ed $apitalist e$onomies su$h as the Jnited
States, the emplo&er!emplo&ee relationship (the #ae!laborF$apital relation) %orms
the sinle most important mode o% surplus e+tra$tion althouh in the neoliberal
period une:ual e+$hane bet#een larer and smaller $apitalists "ia sub!$ontra$tin
has assumed rene#ed importan$e( 'n $ontrast, de"elopin e$onomies su$h as 'ndia
are $hara$teri3ed b& a mu$h reater "ariet& o% modes( Broadl& speakin #e ma&
distinuish bet#een three prin$ipal modes) #ae!labor, unpaid #ork, and une:ual
e+$hane( 'n the %irst $ase surplus is pumped out o% dire$t produ$ers b& ensurin
that #orkers produ$e reater "alue than is returned to them in the %orm o% #aes(
'n the se$ond $ase, one "ital to both peasant produ$tion and artisanal produ$tion,
the labor o% #omen and $hildren is e+tra$ted in return %or dire$t subsisten$e( 'n the
third $ase, the surplus produ$ed in small!s$ale produ$tion, e"en i% it be %irst
appropriated b& the dire$t produ$er, is e"entuall& trans%erred %rom the produ$er to
the mer$hant $apitalist or %rom a small produ$er to a lare produ$er (in the $ase o%
sub!$ontra$tin)(
Belo# #e $onsider some spe$i%i$ institutional #a&s in #hi$h surplus e+tra$tion is
a$hie"ed in the in%ormal e$onom&(
'( Gie$e #aes
The BSS> does not ather data on #hether #aes paid in the in%ormal se$tor are
pie$e!#aes or time!#aes but #e kno# %rom se"eral $ase!studies that pie$e!
#aes are still #idel& pre"alent in small!s$ale manu%a$turin( 'n the Iu*arat
$erami$ stud& $ited earlier (Das 200?) 77H o% in%ormal units and ,6(-H o% %ormal
units %ollo#ed the pie$e!rate s&stem( 'n a 1991 sur"e& o% ?D- handi$ra%t artisan
units, 9DH paid pie$e!#aes (<i*a&aopalan 199?)( .ar+ (1992) notes the salient
%eatures o% pie$e!#aes)
The :ualit& o% the labor is here $ontrolled b& the #ork itsel%, #hi$h must be o%
a"erae per%e$tion i% the pie$e!pri$e is to be paid in %ull( Gie$e!#aes
be$ome, %rom this point o% "ie#, the most %ruit%ul sour$e o% redu$tions o%
#aes and $apitalisti$ $heatinQThe& %urnish to the $apitalist an e+a$t
measure %or the intensit& o% labor (p( D9,)(
@urther,
-7
Ii"en pie$e!#ae, it is naturall& the personal interest o% the laborer to strain
his labor!po#er as intensel& as possible/ this enables the $apitalist to raise
more easil& the normal deree o% intensit& o% labor( 't is moreo"er no# the
personal interest o% the laborer to lenthen the #orkin!da&, sin$e #ith it his
dail& or #eekl& #aes rise (p( D9-)(
Thus pie$e #aes a$hie"e an in$reased rate o% e+ploitation "ia in$reasin intensit&
o% labor and a lenthened #orkin da& #hile at the same time the& ob"iate the
need %or $ontrol b& the $apitalist o"er the labor pro$ess(
Sin$e the :ualit& and intensit& o% the #ork are here $ontrolled b& the %orm o%
#ae itsel%, superintenden$e o% labor be$omes in reat part super%luous( (p(
D9-)
9en$e .ar+As $on$lusion 4that pie$e!#ae is the %orm o% #aes most in harmon&
#ith the $apitalist mode o% produ$tion(5 (pp( D96!97)
The t#o t&pes o% puttin!out relations des$ribed b& .ar+, #hi$h i"e rise to a
4hierar$hi$all& orani3ed s&stem o% e+ploitation and oppression,5 are still appli$able
to in%ormal manu%a$turin in 'ndia)
>n the one hand, pie$e!#aes %a$ilitate the interposition o% parasites
bet#een the $apitalist and the #ae!laborer, the 4sub!lettin o% labor(5 The
ain o% these middlemen $omes entirel& %rom the di%%eren$e bet#een the
labor!pri$e #hi$h the $apitalist pa&s, and the part o% that pri$e #hi$h the&
a$tuall& allo# to rea$h the laborer( (p( D9-)
8e #ill shortl& see e+amples o% su$h e+ploitation "ia une:ual e+$hane( And,
>n the other hand, pie$e!#ae allo#s the $apitalist to make a $ontra$t %or so
mu$h per pie$e #ith the head laborer!in manu%a$tures #ith the $hie% o% some
roup, in mines #ith the e+tra$tor o% the $oal, in the %a$tor& #ith the a$tual
ma$hine!#orker U at a pri$e %or #hi$h the head laborer himsel% undertakes
the enlistin and pa&ment o% his assistant #ork people( The e+ploitation o%
the laborer b& $apital is here e%%e$ted throuh the e+ploitation o% the laborer
b& the laborer (p( D9-, emphasis added)
Both the s&stems noted abo"e are %ound in the Ara %oot#ear industr&( @or
e+ample, master artisans take responsibilit& %or an order, e+e$ute part o% the #ork
themsel"es and re$ruit additional artisans as needed to %ul%ill the order, and
mer$hants dire$tl& put!out orders to artisans #ho #ork on their o#n!a$$ount, #ith
unpaid %amil& labor to the deli"er the produ$t (2norrina 1999)( 'n eneral
4e+ploitation o% the laborer b& the laborer5 e+a$tl& $hara$teri3es produ$tion
relations in the in%ormal e$onom&(
-9
''( Jne:ual e+$hane
The issue o% une:ual e+$hane and the Ve+ploitationV o% pett&!produ$ers and small
$apitalists b& mer$hant $apital is ubi:uitous in the literature on artisans (see Gortes
and 8alton 1971, Ko& 199?, 2norrina 1999, 8ilkinson!8eber 1999,)( Wet %e#
:uantitati"e studies e+ist on the areate amount o% surplus that is siphoned o%% in
this %ashion( As&mmetri$ market po#er needed %or une:ual e+$hane e+ists
be$ause t&pi$all& man& artisans must $ompete %or the business o% one or a %e#
traders( An earl& 1990s sur"e& o% around 1-00 sel%!emplo&ed handi$ra%t produ$ers
%ound that around -0H o% the artisans obtained their ra# materials %rom traders
(#ho pla$ed the order) and around 90H handed o"er the %inished produ$t to
middlemenFtraders (<i*a&aopalan 199?)( 2norrina (1999) pro"ides institutional
detail in his stud& o% the Ara shoe industr&)
Be$ause plent& o% anon&mous artisans must barain #ith a limited number o%
identi%iable traders and be$ause the small :uantities allo# %or eas&, :ui$k,
and a$$urate inspe$tion, the marins %or artisans are pushed do#nQ
.oreo"er #ith all their #orkin $apital tied up in one produ$tion $&$le,
artisans in a dire$t sales $hannel $annot postpone sellin( (p( ?1,)
Traders, on the other hand, $an #ait %or artisan pro%it marins to de$line( @urther,
traders also double as %inan$iers e+tendin $redit in the %orm o% leather ra#
material( Sin$e these artisans are o#ners o% their home!based produ$tion units and
#orkin $apital this is a t&pi$al e+ample o% hidden dependen$& o% sel%!emplo&ed
artisans(
As mentioned earlier, dependin on ho# pre"alent su$h situations are, the& $ast
doubt on areate "alue!added numbers( Sin$e "alue!added is $al$ulated simpl&
b& subtra$tin ra# material $osts %rom total re$eipts une:ual e+$hane, b&
in$reasin input pri$es and de$reasin output pri$es and thereb& s:uee3in
marins, #ill result in lo# "alue!added estimates(
Apart %rom monopsonisti$ or monopolisti$ situations, e+tensi"e middlemen
net#orks also ser"e to redu$e the pri$e paid to the artisan per pie$e( 'n .e+i$oAs
arment industr&, domesti$ #omen #orkers #ork on pie$e #aes usin their o#n
se#in ma$hines(
A blouse #hi$h retails %or 120 pesos $osts the mer$hant D0 pesos, plus the
$ost o% the material #hi$h he has i"en read&!$ut to the broker( The broker
pa&s the seamstress 1-!20 pesos and keeps the rest %or himsel%( (1omnit3,
:uoted in Gortes and 8alton, 1971, p( 99)
To a$$omplish the produ$tion taret the seamstress ma& re:uire the help o% her
$hildren, mother, neihbors et$( This #ork is unpaid( 9ere #e #itness a $ommon
#a& o% in$reasin absolute surplus "alue, b& enain not onl& the artisan but
D0
hisFher entire %amil& %or one personAs #ae( @urther, #orkers assume the $osts o%
errors in produ$tion(
'n the 1u$kno# =hikan industr& middlemen (bee$h#aale), also $alled aents,
per%orm the #ork o% brinin $loth and other ra# materials to the embroider at her
home and then $arr&in o%% the %inished produ$t( So$ial norms around ender make
produ$ers a$$essible onl& to men #ho are the #omenAs relati"es and neihbors(
Aents lo$ate, re$ruit, and $ontrol labor that is other#ise ina$$essible to the
holder o% $apital( The aent is o%ten a relati"e, or at least a neihbor o% the
#omen he emplo&s, %amil& members usuall& ha"in pre%eren$e in the
allo$ation o% #ork( @or the rest, #hile aents do not $ontrol embroiderers b&
dire$tl& o"erseein their #ork, the& do impose a rudimentar& dis$ipline upon
them b& ad*ustin the %lo# o% #ork a$$ordin to the relati"e produ$ti"it& o%
ea$h #oman, and ad*ustin #aes as a means o% penali3in de%i$ient #orkers
and re#ardin ood ones( 'n this #a&, aents e%%e$ti"el& release the
maha*ans %rom the need to inter"ene dire$tl& in the labor pro$ess (8ilkinson!
8eber 1996, p( -9)(
Aents are paid b& the tradersFmer$hants per pie$e and in turn pa& the produ$er(
'n 1u$kno# in 1990, pri$es started at around ten rupees %or a small $hildRs
kurta (shirt), risin to D0 rupees %or a manRs kurta, simpl& embroidered(R
8omenRs sal#ar!kami3 (tuni$!pants ensembles) raned in pri$e %rom ,0 to
more than 100 rupees( @inel& embroidered items, as #ell as lare pie$es like
saris and table$loths, $ost se"eral hundred rupees( Gie$e #aes %or
embroider& on these items #ere as lo# as a sinle rupee %or kurta
embroider& in the "illae, %i"e to %i%teen rupees %or sal#ar!kami3 embroider&
in to#n, and up to 100 rupees %or top!ti$ket items( 'n "er& rare
$ir$umstan$es, a hihl& skilled embroiderer miht $olle$t more than 100
rupees %or a spe$iall& $ommissioned pie$e obtained dire$tl& %rom the trader(
At the other e+treme, most #omen et their #ork throuh aents, #ho take a
substantial $ut %rom the pie$e #ae, so that the #omen et no more than a
%ra$tion o% a rupee %or embroiderin the most $ommonl& sold item, a kurta(
As miht be e+pe$ted, %e# embroiderers $an a%%ord to bu& the produ$ts the&
make( (ibid, p( -2)
8hile male aents admit to takin at least -0 per$ent and sometimes more o% the
pie$e #ae %or themsel"es, %emale aents take less( (p( D0)
8hile one $ould make the $ase that i"en the te$hni$al $onditions o% produ$tion,
the middlemen per%orm an essential %un$tion brinin toether the $omponents o%
the %inal $ommodit&, it should be noted that their $ompensation $an be %ar in e+$ess
o% the labor the& e+pend( .iddlemen #aes ma& thus be seen as $ut o% the surplus
rather than #aes per se, bein proportional not to the labor e+pended but the
s$ale o% operation( This is analoous to Adam SmithAs obser"ation that pro%it o%
D1
enterprise should not be "ie#ed as #aes %or super"ision sin$e pro%its are
proportional not to labor e+pended b& the $apitalist but rather to the sto$k o% $apital
emplo&ed(
A last point to note is that e+$hane relations mani%ested in these terms o% trade
a$t in $on$ert #ith produ$tion relations( Grodu$tion relations (in$ludin but not
limited to asset o#nership patterns) determine market po#er( .arket po#er and
resultin terms o% trade determine $urrent in$ome( 'n$ome determines %uture assets
and produ$tion relations( 't is important to emphasi3e this dual nature be$ause
aruments that limit themsel"es to deterioratin terms o% trade or non!$ompetiti"e
market stru$tures o%ten do not :uestion #h& the $onditions o% e+$hane are #hat
the& are( 8h& are rates o% return on $apital rea$hin ?0 or ,0H demanded %rom
small produ$ers; Gerhaps be$ause produ$tion is %ramented and "olumes o% loans
are small, or pur$hase "olumes are small, and transa$tions $osts are lare(
Kelations o% produ$tion thus underlie relations o% e+$hane( 't is not onl& be$ause
intermediaries manipulate and monopoli3e that #e et une:ual e+$hane, but
rather produ$tion relations $an $reate the $onditions %or une:ual e+$hane, #hi$h
are e+ploited b& intermediaries( This is not ne#s( 'n %a$t su$h an arument %orms
the $lassi$al rationale %or the %ormation o% produ$er and peasant $ooperati"es(
'''( 1abor Bondae
Das (200?) in Iu*arat =erami$s and De Be"e (200-) in Tamil Badu handlooms and
po#erlooms des$ribe the pra$ti$e o% 4$onsumption ad"an$es5 #hi$h are used to
hold #orkers in bondae( These ad"an$es ($alled 4baki5 in TB) $an amount to as
mu$h as one &earAs #orth o% #aes %or the #orker and binds him to the emplo&er
until the loan is paid o%%, #hi$h ma& ne"er happen(
=onsumption ad"an$es #ere "ie#ed in the modes o% produ$tion debate as a t&pe o%
%eudal or semi!%eudal arranement #hi$h makes labor un%ree( 9o#e"er the situation
here is more $omple+( 't is true that these ad"an$es o%ten %un$tion as a de"i$e to
retain skilled labor that redu$es $osts o% repla$ement and trainin( 9o#e"er the
resultin 4riidit&5 in the si3e o% the labor %or$e is also $ited b& emplo&ers as a
problem durin lean times or in dealin #ith 4problem5 #orkers( @urther, #orkers
retain mobilit& b& trans%errin loans to ne# emplo&ers(
'<( Iender and =aste
0+ploitation o% unpaid domesti$ labor espe$iall& o% #omen and $hildren is ubi:uitous
in household enterprises( 'n addition to unpaid market #ork (to be distinuished
%rom non!market #ork per%ormed b& #omen), #omenAs paid #ork is o%ten de"alued
D2
as #ell( The 1u$kno# =hikan industr& pro"ides an ar$het&pal e+ample o% surplus
e+tra$tion a$hie"ed "ia de"aluin o% #omenAs paid #ork(
8omenRs embroider&, made in the home, is looked upon #ith %ar less respe$t
than the produ$ts o% men, made in their #orkshops( =hikan embroider& is
thus not rearded seriousl& as an o$$upation in spite o% the %a$t that man&
%amilies depend upon the in$ome the& deri"e %rom it( 'n %a$t, it is $ustomaril&
re%erred to b& maha*ans as V%ree!timeV #ork to %ill in the hours bet#een
$ookin, $leanin, and $arin %or $hildren( As an e+tension o% #omenRs unpaid
household tasks, $hikan is barel& real #ork at all( 'ndeed, some maha*ans
reard themsel"es as doin #omen a %a"or b& pa&in them to do leisure
a$ti"ities( As one put it, VThe& *ust sit around and the& et #ork, and the& et
mone&( All in their spare time! 'Rm the one #ith all the heada$hes(V
(8ilkinson!8eber, 1996, p( D2)
Another a"enue %or the de"aluin o% produ$ti"e #ork is "ia $aste( AraAs %oot#ear
industr& o%%ers a t&pi$al e+ample o% a $aste!based di"ision bet#een artisans #ho
produ$e a $ommodit& and tradersFmer$hants #ho sell it( Grodu$ers are $hamars (an
untou$hable $aste) #hile mer$hants are upper!$aste 9indus %rom Gun*ab( 'n eneral
the 4produ$er $astes5 (artisans and peasants) are o%ten shudras (>B=s) or dalits
(S=s) #hile the traders and other non!produ$ti"e #orkers belon to the %or#ard
$astes( 9o#e"er, e"en in instan$es #here emplo&ers and #orkers belon to the
same $aste, this ma& strenthen rather than undermine the reime o% e+ploitation(
@or e+ample 0nelsho"en (1999) alludes to the Surat diamond $uttin industr&
#here both emplo&ers and emplo&ees are Saurashtra Gatels( 8hile the $aste
monopol& helps #orkers retain some *ob se$urit&, it also make it di%%i$ult %or them to
$hallene e+ploitation sin$e $ommunit& bonds are supposed to trump $lass
$ontradi$tions( As a result there has been no strike in this industr&(
Thus Iender and =aste hierar$hies $an ser"e to enhan$e surplus e+tra$tion
o$$urrin "ia #ae!labor or une:ual e+$hane( This hihlihts the importan$e o%
understandin ho# e+ploitation is produ$ed at the interse$tion o% se"eral
hierar$hies( The intention is not to redu$e Iender or =aste oppression to $lass
e+ploitation, but rather to elu$idate ho# ea$h o% these ma& rein%or$e (and at times
undermine) the other(
K& SUMMARY AND AGGREGATE TRENDS
'n the se$ond part o% this stud& #e ha"e attempted to take a broad look at the
orani3ation o% in%ormal industr& in 'ndia( 'n parti$ular #e ha"e %o$used on the
e"olution o% %irm si3e, the t&pes o% produ$tion relations and the modes o% surplus
e+tra$tion pre"ailin in in%ormal industr&( The %ollo#in points should be
emphasi3ed)
D?
1( The industrial se$tor as a #hole (%ormal and in%ormal) has not e+panded reatl&
in terms o% emplo&ment in the past three de$ades and toda& stands at around 17H
($ompared to =hinaAs 2,H) o% total emplo&ment in the 'ndian e$onom&(
2( The in%ormal se$tor still a$$ounts %or around 6-H o% industrial emplo&ment in
'ndia( The emplo&ment share o% the %ormal se$tor in eneral and lare!s$ale
industr& in parti$ular has been stanant %or the past three de$ades(
?( The number o% in%ormal %irms and #orkers has been more o% less stationar& sin$e
the 1970s and the relati"e shares o% pett&!proprietorships, marinal and small
$apitalist %irms is also larel& unaltered(
,( Jttar Gradesh and 8est Benal a$$ount %or ?0H o% in%ormal manu%a$turin
enterprises as #ell as in%ormal #orkers(
-( @ood produ$ts, te+tiles and arments are the top three in%ormal emplo&ers
a$$ountin %or nearl& -0H o% emplo&ment(
D( .ost in%ormal %irms do not o#n substantial amounts o% $apital e:uipment( The
land or buildin on #hi$h the %irm is situated a$$ounts %or D0!70H o% asset "alue %or
in%ormal %irms( 'n 200-!200D, a$ross all three t&pes o% in%ormal %irms, ?0H o% total
assets #ere hired( 8hile hired assets %ormed a reater part o% total assets %or
marinal and small $apitalist %irms, e"en %or pett&!proprietorships, nearl& 2-H o%
total assets #ere hired(
6( 0"en thouh I<A %or the %ormal se$tor %ar outstrips I<A in the in%ormal se$tor,
"alue added in in%ormal industr& has in$reased sini%i$antl& in the last de$ade(
Sin$e the number o% #orkers has remained more or less the same, this suests
that labor produ$ti"it& has been risin in this se$tor(
7( I<A $al$ulations do not usuall& take into a$$ount the e%%e$t o% une:ual e+$hane
and lobal "alue $hains( 9ih input pri$es and lo# output pri$es (un%a"orable terms
o% trade) %a$ed b& small produ$ers a$$entuate the problem o% lo# "alue added in
manu%a$turin(
9( =redit is important %or all in%ormal produ$ers but pett&!proprietors are the #orst
hit b& mone&!lenders( The per$entae o% loans %rom mone&!lenders to rural pett&!
proprietors has a$tuall& in$reased substantiall& in the period %rom 199,!9- to 200-!
0D, #hile it has de$reased %or e"er& other $ateor& durin the same period(
10( The relations o% produ$tion in in%ormal industr& are neither purel& independent
produ$er ($hara$teri3ed b& produ$erAs $ontrol o"er the labor pro$ess and o#nership
o% $apital) nor onl& industrial $apitalist ($hara$teri3ed b& a proletarian #ork%or$e
and a real subsumption o% labor to $apital)( Kather a spe$trum o% puttin!out
relations based on %ormal subsumption o% labor and a relian$e on e+tra$tion o%
absolute rather than relati"e surplus "alue is obser"ed(
D,
11( 'n addition to puttin!out arranements, nominall& sel%!emplo&ed or
independent produ$ers are o%ten lo$ked into a relation o% dependen$& "is!N!"is
mer$hant and %inan$e $apital( This situation is $losel& analoous to the position o%
the peasant in the $ountr&side #ith respe$t to intermediaries(
12( Gie$e!#aes, une:ual e+$hane, bonded labor, $ontinent and $asual labor, and
ender and $aste oppression all $onspire to in$rease the produ$erAs e+ploitation
larel& "ia e+tra$tion o% absolute surplus "alue(
1?( 't is #idel& re$oni3ed that in the %a$e o% the %ailure o% modern industr& to
e+pand satis%a$toril&, in%ormal industr& has a$ted as the 4emplo&er o% last resort5
%or surplus labor in the ari$ultural se$tor( 9o#e"er BSS data also sho#s that
emplo&ment in in%ormal manu%a$turin has been more o% less $onstant sin$e the
1970s( Thus it $an be in%erred that in%ormal retail as #ell as in%ormal labor in
$onstru$tion ha"e larel& absorbed the in$rease in the labor %or$e(
1,( Kelations o% dependen$& and la$k o% resour$es as #ell as in$enti"es %or te$hni$al
$hane keep in%ormal #orkers trapped in lo# produ$ti"it&, lo# #ae #ork( Surplus
labor, lo# #aes and intense (sel%) e+ploitation in turn $reate disin$enti"es %or
te$hni$al $hane(
1-( @rom the point o% "ie# o% the lare or %ormal!se$tor $apitalist (#hether mer$hant
or industrial) sub!$ontra$tin arranements retain ad"antaes o% e$onomies o%
s$ale in pur$hase o% means o% produ$tion #hile $ir$um"entin the $osts asso$iated
#ith a %ormal labor %or$e( Bumber o% #orkers prote$ted b& leislation is kept to a
ne$essar& minimum #hile mu$h labor!intensi"e (skilled and unskilled) #ork is
$ontra$ted out to in%ormal units( Throuh emplo&ment o% unpaid %amil& labor and
labor paid belo# o%%i$ial minimum #ae, in%ormal %irms are able to sur"i"e and
%ormal %irms are able to e+tra$t larer amounts o% surplus "alue( The disinteration
o% the te+tile mills and their $on"ersion into po#erloom s#eat!shops is an e+ample
o% this pro$ess(
1D( 1abor bondae, ender and $aste hierar$hies, unpaid domesti$ #ork and
$ontinent and $asual labour $an all be understood as attempts to in$rease
absolute surplus "alue( This rein%or$es the %a$t that in all these $ases, there is
%ormal rather than real subsumption o% labor b& $apital( The in$enti"e to alter the
methods o% produ$tion or adopt ne# te$hni:ues o% produ$tion $omes, in these
$ir$umstan$es, %rom the dire$t produ$er, #ho ho#e"er, la$ks the resour$es to
undertake this task( =apitalists in the %ormal se$tor do not ha"e the in$enti"e to
undertake te$hni$al $hane be$ause under %ormal subsumption o% labor there is no
dri"e to in$rease relati"e surplus "alue( 0%%orts to in$rease produ$ti"it& and redu$e
#ork burdens are thus doubl& undermined as produ$ers, #ho ha"e the in$enti"e do
not $ontrol their o#n surplus #hile $apitalists, i"en a lare labor %or$e read& to
#ork %or e+tremel& lo# #aes, ha"e resour$es but do not %a$e in$enti"es %or
te$hni$al $hane( Baturall&, #e do not mean to impl& that the abo"e!stated reason
D-
is the onl& %a$tor in $ontinued lo# labor produ$ti"ities obser"ed in in%ormal
manu%a$turin, but it is ne"ertheless an important part o% the stor&(
PART III: CONCLUSION
B& #a& o% $on$lusion, #e #ould like to raise some politi$al and philosophi$al issues
and :uestions %or %urther dis$ussion #ithout in an& #a& $laimin to ha"e arri"ed at
an& $on$lusi"e ans#ers( Thouh both the authors larel& aree as to the areate
trends presented abo"e, #e deri"e di%%erent politi$al and so$ial impli$ations %rom
these trends( This deri"es partl& %rom di%%erent politi$al and philosophi$al
perspe$ti"es that both o% us see oursel"es $losest to( Kather than paper o"er our
di%%eren$es, #e there%ore, present our alternati"e "ie#points, #hi$h miht e"en be
$ontradi$tor&, %or %urther debate and dis$ussion(
The %irst issue that #e #ish to put %or#ard %or dis$ussion relates to the d&nami$s o%
$lass di%%erentiation( As #e ha"e seen, both in ari$ulture and in industr&, the
persisten$e o% pett& produ$tion is a $hara$teristi$ %eature o% 'ndian $apitalism/ #hat
does this impl&; 't implies that almost all members o% the #orkin $lass o$$up&, at
di%%erent points in time, multiple positions in the stru$ture o% produ$tion, i(e(, #ithin
a short time span, ea$h member o% the #orkin population parti$ipates in multiple
produ$tion relations and her $ons$iousness is shaped b& these multiple, and o%ten
drasti$all&, di%%erent ob*e$ti"e positions in the produ$tion pro$ess ( 0"en a $asual
lan$e at rural 'ndia demonstrates this multipli$it&( At one time a #orker is an
ari$ultural labourer, e+ploited throuh the institution o% #ae!labour/ at another
time, o%ten #ithin #eeks or months, she is a tenant $ulti"ator, hirin in land %rom
the lo$al landlord and %a$in e+ploitation throuh semi!%eudal methods/ at another
point she is a pett& produ$er, operatin as a o#ner!operator o% a small business and
usin %amil& labour %or produ$tion purposes(
This multipli$it& o% ob*e$ti"e positions in the produ$tion pro$ess has "er& important
impli$ations %or the pro$ess o% $lass di%%erentiation and de"elopment o%
re"olutionar& $lass $ons$iousness) $lass di%%erentiation that #as obser"ed in 0urope
(and in parti$ular in 0nland), durin its $apitalist trans%ormation, di%%erentiation o%
so$iet& bet#een a relati"el& homoeneous proletariat (#ho onl& sell their labour!
po#er) and a $apitalist $lass (#ho onl& appropriate surplus "alue throuh the
institution o% #ae!labour), is not #hat #e obser"e toda& in 'ndia (and other
similarl& pla$ed e+!$olonies)( Thus, the $apitalism that is de"elopin in 'ndia is
drasti$all& di%%erent %rom the one that de"eloped in 0urope bet#een the latter hal%
o% 1D
th
and 17
th
$enturies( 'n the 'ndian $ase, the persisten$e o% pett& produ$tion in
ari$ulture, industr& as #ell as ser"i$es has been interpreted as arrested $lass
di%%erentiation( 9o#e"er a $loser look at the e"ol"in relations o% produ$tion re"eals
that $lass di%%erentiation is pro$eedin, albeit in a #a& di%%erent %rom the 0uropean
$ase( @or e+ample the di%%erentiation that is takin pla$e in rural 'ndia is more
DD
bet#een a heteroeneous rural entr& and a heteroeneous rural poor, than
bet#een $apitalist and #orker( 'n industr& too, the apparent preponderan$e o% pett&
produ$tion hides the e+tent o% #ae!labor, %or e+ample b& makin a pie$e!rate
#ae #orker appear as an o#n!a$$ount produ$er( Both in ari$ulture and in
industr& the a$tual e+tent o% alienated labor is hidden b& a semblan$e o% pri"ate
propert&(
'% the $lass di%%erentiation at the lo#er end o% the so$ial and e$onomi$ hierar$h& is
masked b& parti$ipation o% members o% the #orkin population in multiple relations
o% produ$tion, the rural entr& at the other end o% the spe$trum is also a $omple+
entit&( 9o# did this rural entr& $ome into bein; 1and re%orms, o% a de$idedl& timid
"ariet&, 4sli$ed o%% a bit o% the old land!o#nin $lasses, those that o#ned enormous
estates, and in$orporated a small upper se$tion o% the tenants in the land!o#nin
roup, thus $reatin a broader strata o% lando#nersQ5 (Desai, 197D) :uoted in
Balaopal, 197D)( .embers o% the rural entr& ha"e, o"er the &ears, lost some o%
the monopol& o"er land, as #e ha"e seen, but %a$in this de$line, ha"e ni$el&
4di"ersi%ied5 their port%olios into other areas o% rural e$onomi$ li%e, thereb&
maintainin their hold o"er rural so$iet& (.et$al%, 19D6)( @a$ilitated b& a pliable
state, members o% this $lass raduall& ot in"ol"ed in trade and usur&, in
o"ernment $ontra$ts %or in%rastru$ture #orks, in buildin and maintainin hotels,
$inema theatres, petrol pumps, et$( The& $ontinue to rel& hea"il& on their
relationship to the State to %a$ilitate the reprodu$tion o% their $apital/ and #ithout
e+$eption, the& are the lo$al notables o% mainstream politi$al parties, o%ten
maintainin their o#n militias to politi$all& intimidate the lo$al population(
't is di%%i$ult to di%%erentiate, #ithin the rural entr&, bet#een %eudal interests and
$apitalist interests, as mu$h as it is di%%i$ult to di%%erentiate bet#een di%%erent
"arieties o% $apital) industrial, mer$hant, usurious( Analoousl&, %rom the point o%
"ie# o% the #orkin $lass, it is di%%i$ult to identi%& #here surplus e+tra$tion "ia
une:ual e+$hane stops and that "ia #ae!labor beins( As %eudal methods o%
surplus e+tra$tion, like tenan$&, de$lined and as their hold on the monopol& o% land
d#indled, members o% the rural entr& painlessl& morphed into $apitalist %armers
and lo$al mer$hants( Some started industrial a$ti"ities #ith the support o% the State,
#hile others plouhed their $apital into mone&!lendin( 't is #orth notin that ne"er
in independent 'ndia ha"e the $lass o% $apitalist %armers taken up arms aainst the
so!$alled %eudal interests in land/ the $ontradi$tion, to the e+tent it e"er e+isted
bet#een these %ra$tions o% the rural rulin $lasses, ha"e been resol"ed in the most
ami$able manner(
The se$ond issue #orth $onsiderin is the $ontinued $entralit& o% the ararian
:uestion to an& pro*e$t %or re"olutioni3in 'ndian so$iet&( This %ollo#s simpl& %rom
the %a$t that the ma*orit& o% the #orkin people in 'ndia are related, dire$tl& or
indire$tl&, #ith the ari$ultural se$tor/ this is a dire$t result o% the %ailure o% the
stru$tural trans%ormation o% the 'ndian e$onom&( An& attempt, there%ore, at radi$al
re$onstru$tion o% 'ndian so$iet& #ill ha"e to deal #ith the ararian :uestion
D6
e%%e$ti"el&( Dealin #ith the ararian :uestion #ill mean, amon other thins,
rapidl& in$reasin the produ$ti"it& o% ari$ultural a$ti"it&, the surest #a& to in$rease
the in$ome o% the "ast masses o% the #orkin people in"ol"ed in ari$ulture and
thereb& $reate a home market %or domesti$ industr&(
The .ar+ist tradition has seen redistributi"e land re%orms as essential to the pro*e$t
o% dealin #ith the ararian :uestion( The reasons ha"e primaril& been politi$al,
thouh some e$onomi$ aruments ha"e also been de"eloped(
1?
Goliti$all&, land
re%orms ha"e been seen as a #a& to de$isi"el& break the po#er o% the parasiti$
$lass o% %eudal and semi!%eudal landlords/ e$onomi$all&, it has been understood as
$reatin $onditions %or the de"elopment o% the produ$ti"e %or$es in rural so$iet&,
in$reasin the produ$ti"it& o% labour, $reatin a surplus %or supportin
industriali3ation and pro"idin a market %or domesti$ industr&(
Jsin 1eninAs distin$tion bet#een the Grussian and the Ameri$an paths %or
boureois de"elopment in the rural e$onom& lends $reden$e to the $all %or
redistributi"e land re%orms( Dis$ussin the 4t#o %orms5 o% boureois de"elopment
out o% the %eudal and semi!%eudal order $hara$teri3ed b& ser%dom in late 19
th
$entur& Kussia, he sa&s)
The sur"i"als o% ser%dom ma& %all a#a& either as a result o% the
trans%ormation o% landlord e$onom& or as a result o% the abolition o% the
landlord lati%undia, i( e(, either b& re%orm or b& re"olution( Boureois
de"elopment ma& pro$eed b& ha"in bi landlord e$onomies at the head,
#hi$h #ill raduall& be$ome more and more boureois and raduall&
substitute boureois %or %eudal methods o% e+ploitation( 't ma& also pro$eed
b& ha"in small peasant e$onomies at the head, #hi$h in a re"olutionar&
#a&, #ill remo"e the 4e+$res$en$e5 o% the %eudal lati%undia %rom the so$ial
oranism and then %reel& de"elop #ithout them alon the path o% $apitalist
e$onom&(
Those t#o paths o% ob*e$ti"el& possible boureois de"elopment #e #ould $all
the Grussian path and the Ameri$an path, respe$ti"el&( 'n the %irst $ase %eudal
landlord e$onom& slo#l& e"ol"es into boureois, Lunker landlord e$onom&,
#hi$h $ondemns the peasants to de$ades o% most harro#in e+propriation
and bondae, #hile at the same time a small minorit& o% Irossbauern (4bi
peasants5) arises( 'n the se$ond $ase there is no landlord e$onom&, or else it
is broken up b& re"olution, #hi$h $on%is$ates and splits up the %eudal estates(
'n that $ase the peasant predominates, be$omes the sole aent o%
ari$ulture, and e"ol"es into a $apitalist %armer( 'n the %irst $ase the main
$ontent o% the e"olution is trans%ormation o% %eudal bondae into ser"itude
1?
Gatnaik (1962) summaril& re*e$ts an& e$onomi$ rationale %or land re%orms and instead
stresses the politi$al loi$/ but Gatnaik (196D) and Gatnaik (197D) de"elop an e+pli$itl& e$o!
nomi$ loi$ %or land re%orms in terms o% o"er$omin the round rent barrier to $apitalist de!
"elopment(
D7
and $apitalist e+ploitation on the land o% the %eudal landlordsULunkers( 'n the
se$ond $ase the main ba$kround is trans%ormation o% the patriar$hal
peasant into a boureois %armer( (1enin, 1906)(
The three main $ommunist streams in 'ndia, the =ommunist Gart& o% 'ndia (.ar+ist),
the =ommunist Gart& o% 'ndia (.ar+ist!1eninist) 1iberation and the =ommunist Gart&
o% 'ndia (.aoist) more or less a$$ept this distin$tion, the %irst t#o e+pli$itl& and the
last one impli$itl&(
1,
9en$e, %or all the three streams the main task (or a+is) o% the
$urrent stae o% the Geoples (or Be#) Demo$rati$ Ke"olution is the ararian
re"olution, #ith redistributi"e land re%orms bein one o% its main tasks(
8hile it is true that 'ndia, be$ause it did not #itness an& serious e%%orts at land
re%orms on a national s$ale, de"eloped alon the landlord path out o% semi!
%eudalism, there are some important di%%eren$es that need to be $onsidered( >ne
pole o% landlord $apitalism, "i3(, landlessness has been ro#in o"er the &ears/ the
other pole o% landlord $apitalism, "i3(, the $ontinued dominan$e o% a %e# 4bi
peasants5 seems to be at "arian$e #ith the e"iden$e( Areate le"el data about
'ndia that #e ha"e seen in the $ourse o% this stud& seems to thro# up an
unmistakable trend o% the de$linin po#er o% landlords (%eudal or other#ise), not b&
an& re"olutionar& means but *ust b& the sheer pressure o% demoraphi$
de"elopments and e$onomi$ stanation( The total land o#ned b& the lare
landholdin %amilies, the 4bi peasants5 that 1enin re%ers to, ha"e hal"ed o"er the
last %i"e de$ades and toda& the& o#n onl& about 12 per$ent o% the total land( >n the
other hand, the land o#ned b& medium!to!small landholdin %amilies has in$reased
to o"er D- per$ent( Does this, alon #ith other e"iden$e on the de$line o% tenan$&
and the in$rease o% #ae!labour, not indi$ate that the rural e$onom& in 'ndia is
ine+orabl& bein pushed in the dire$tion o% peasant $apitalism; 9o# #ould this
important trend o% the in$reasin dominan$e o% peasant $apitalism, and a radual
#hittlin do#n o% landlord $apitalism, $hane the $ourse o% the ararian re"olution;
'% landlords, as a $lass, are d#indlin in e$onomi$ and so$ial po#er, is a proramme
aimed at breakin their politi$al po#er still rele"ant; 's the $ontradi$tion bet#een
%eudalism and the broad masses o% the people still the prin$ipal $ontradi$tion in
'ndia toda&;
Another issue that #ill need to be addressed in the $onte+t o% the sloan %or
redistributi"e land re%orms is to see #hether the resultin %arms #ill be "iable in an&
meanin%ul e$onomi$ sense( 1et us re$all that the a"erae si3e o% o#nership holdin
in 'ndia in 200? #as 0(71 he$tares/ so, the most e:uitable redistribution #ill result
14
=G'(.) and =G'(.1) 1iberation e+pli$itl& re$oni3e the $urrent rural s$enario in 'ndia as be!
in $hara$teri3ed b& landlord $apitalism/ this #as most $learl& %ormulated b& Gatnaik (196D,
197D) and %inds its pla$e in the =G'(.) proramme a$$ordinl&/ it also appears e+pli$itl& in
the ararian proramme o% =G'(.1) 1iberation, thouh there is no mention o% Gatnaik (196D,
197D)( The =G' (.aoist), on the other hand, larel& dis$ounts the de"elopment o% $apitalist
relations in rural 'ndian( =hara$teri3ation o% 'ndian so$iet& $an be %ound in the prorammes
o% the =G'(.), =G'(.1) 1iberation and =G'(.aoist)/ links %or the prorammes are pro"ided in
the re%eren$es(
D9
in the a"erae holdin o% this si3e( '% instead land is onl& taken %rom those o#nin
more than 10 a$res and all o% it distributed amon those $urrentl& o#nin less than
1 a$re, then the a"erae si3e o% holdin %or those re$ei"in redistributed land #ill
rouhl& be$ome 1(2- a$res(
'% #e *u+tapose this #ith the $ost o% $ulti"ation data, #e $an easil& see that
ari$ultural units o% appro+imatel& su$h si3es #ill not be e$onomi$all& "iable in the
sense o% bein able to enerate an& substantial surplus produ$t a%ter sustainin a
de$ent le"el o% $onsumption o% the produ$ers( 't is e+tremel& doubt%ul #hether
these small %arms $an enerate an& e$onomi$ surplus e"en a%ter the onerous
relations o% une:ual e+$hane ha"e been remo"ed %rom the pi$ture( =an the&,
there%ore, help in the industriali3ation e%%ort b& eneratin surplus or #ill the&
instead re:uire a net resour$e %lo# in their dire$tion #ith subsidi3ed $redit, po#er,
inputs, te$hnolo&, et$( to $ontinuousl& keep them "iable; This :uestion is
e+tremel& important as $an be seen %rom the $on$rete e+perien$es o% the Kussian
and =hinese re"olutions(
The ro#th o% $apitalist relations in the 'ndian $ountr&side, the $ontinued
%ramentation o% the land, the de$line in tenan$&, the un"iabilit& o% small!s$ale
produ$tion and other related %a$tors seem to suest that $olle$ti"e %orms o%
ari$ultural produ$tion are raduall& bein pushed on to the histori$al aenda o%
the re"olutionar& mo"ements in 'ndia( =olle$ti"e, $ooperati"e and so$ialist %orms o%
lare!s$ale ari$ulture probabl& need to be seriousl& $onsidered as an option
emerin out o% the "er& e"olution o% the material $onditions o% the "ast masses o%
the #orkin people( The aenda o% redistributi"e land re%orms $reatin boureois
propert& in rural areas and %a$ilitatin $apitalist de"elopment needs to be seriousl&
rethouht, not be$ause o% some ideoloi$al reasons but be$ause the de"elopment
o% the ararian stru$ture seems to demand su$h a re!e"aluation(
't is not that redistributi"e land re%orm is, either e$onomi$all& or politi$all&, not
use%ul/ it is e+tremel& use%ul at this stae o% 'ndian de"elopment and thus %inds
pride o% pla$e in the proramme o% all the $ommunist streams( 1and re%orms #ill
$ertainl& help in in$reasin the $onsumption le"els o% the "ast masses o% the
peasantr& %rom their $urrent ab&small& lo# le"els/ it #ill demo$rati3e the o#nership
stru$ture in rural so$iet&/ it #ill help $reate an internal market %or the a$$umulation
o% $apital/ it #ill help break the stranlehold o% the rural entr& o"er rural so$ial and
politi$al li%e( All these reasons undoubtedl& make redistributi"e land re%orms an
indispensable part o% an& strate& %or the radi$al restru$turin o% 'ndian so$iet&(
8ithout in an& #a& underminin the loi$ o% land re%orms in the present 'ndian
$onte+t #e #ould also like to strike a $autionar& note, %ollo#in Gaul Baran (19-6),
aainst treatin land re%orms as a pana$ea %or all e$onomi$ problems o% an
underde"eloped so$iet& su$h as 'ndia( The ararian stru$ture o% rural 'ndia, #ith its
e+tremel& lo# land!man ratio, suests that the limits o% the positi"e aspe$ts o%
redistributi"e land re%orms #ill be rea$hed prett& :ui$kl&/ it #ill need to be
60
positi"el& trans$ended #ithin a "er& short time( 9en$e, the transition %rom a %o$us
on redistributi"e land re%orms and support %or peasant $apitalism to an emphasis on
$olle$ti"e o#nership and produ$tion #ill need to be re$koned #ith %rom the "er&
beinnin/ both the ararian stru$ture and histori$al lessons suest su$h an
emphasis(
The third lare issue raised b& our stud& $on$erns the mode o% industriali3ation o%
the 'ndian e$onom&( 't is relati"el& un$ontro"ersial that a shi%t o% the ari$ultural
population into the se$ondar& and tertiar& se$tors #ill be re:uired in order to raise
real in$omes o% the "ast ma*orit&( 9o# this trans%ormation is to be a$hie"ed is the
:uestion( The stru$tural trans%ormation re:uired to relie"e abo"e!mentioned
pressures on ari$ulture $annot be le%t to the anar$h& o% the lobal $apitalist
market( The 4market!%riendl&5 post!1991 period has been #itness to a t&pe o%
ro#th that has resulted in risin ine:ualit& and in$reasin number o% lo#!#ae,
$ontinent and in%ormal *obs( 9o#e"er the $ontradi$tions and problems o% the pre!
Ke%orm, 4plannin period5 also need to be taken seriousl&( There is an urent need
to break out o% $ertain simple binaries and e:uations #hi$h ha"e been imposed
upon us( The %irst binar& is that bet#een State!manaed $apitalism and market!
oriented $apitalism( 'ndiaAs e+perien$e sho#s that the "ast ma*orit& o% the #orkin
population has su%%ered reatl& in both reimes( 'n our strule aainst a
parti$ularl& predator& t&pe o% neoliberal $apitalism (#hose da&s ma& in an& $ase be
numbered i"en the lobal $risis), #e must not %ind oursel"es un#ittinl& aruin
%or a return to the bureau$rati$ and $orrupt State( Kather the spe$ta$ular %ailure o%
the neoliberal model $an be an opportunit& to demand reater de$entrali3ation and
more autonomous de"elopment( The "arious peopleAs mo"ements ha"e been
arti$ulatin pre$isel& su$h a model o% de"elopment(
The se$ond simple e:uation is bet#een rural areas and ari$ulture on the one hand,
and $ities and industr& on the other hand( The so$ial and e$oloi$al $ontradi$tions
o% the lare!s$ale, $apital intensi"e model o% industriali3ation must be taken
seriousl&( Bo#here has this model produ$ed hih le"els o% emplo&ment in an
e$oloi$all& sustainable %ashion #hile i"in produ$ers a sa& in the runnin o% the
#orkpla$e( 't is be$omin in$reasinl& $lear that the e$onomi$ "iabilit& o% su$h
industriali3ation is obtained onl& b& $ost e+ternali3ation( The 'ndian e+perien$e
points to the ne$essit& %or de"elopin dispersed, lo# $apital!intensit&, sustainable
models o% industr& that ne"ertheless raise real in$omes o% the ma*orit& (see Dat&e
1996 %or one su$h model)( This is not a utopian pipe!dream but rather a histori$al
ne$essit& i% 4de"elopment5 is not to remain an un%ul%illed promise %or the ma*orit& o%
'ndians(
Bone o% the abo"e $an be taken onl& as a demand %or better or more enlihtened
de"elopment poli$&( Kather it arti$ulates #hat has alread& been emerin %rom
so$ial and politi$al mo"ements and in turn seeks to round the politi$al demands in
an empiri$al and theoreti$al $onte+t( There is a need to e+tend re"olutionar&
peopleAs mo"ements rooted in peasant ari$ulture and national resour$e strules
61
into the rural, semi!urban and urban industrial milieu( The urent :uestion here is
ho# $an the dispersed industrial #orkin $lass be e%%e$ti"el& politi$all& orani3ed at
a national le"el; This #orkin $lass does not al#a&s resemble the 4$lassi$al5
doubl&!%ree, urban industrial proletariat( Wet, our attempt here has sho#n that it
remains e+ploited nonetheless and $an and should %orm an important $omponent o%
le%t re"olutionar& politi$s( 's an artisan!peasant allian$e a possibilit& %or the near
%uture;
There is a di%%eren$e o% opinion bet#een the t#o o% us on the :uestion o% the model
o% industriali3ation that miht %ruit%ull& a$$ompan& e%%orts at a radi$al restru$turin
o% 'ndian so$iet&( >ne o% us (AB) belie"es, as has been stated in the abo"e
pararaphs, that a dispersed, lo# $apital!intensit&, sustainable model o%
industriali3ation is the #a& %or#ard( 8hile #e aree that the s$ale and eoraphi$
dispersal o% industriali3ation per se does not lead to its bein more demo$rati$ or
e$oloi$all& sustainable, DB pla$es more importan$e on the institutional settin
#ithin #hi$h the industriali3ation e%%ort is embedded( A small!s$ale industriali3ation
e%%ort in the $onte+t o% lo$al le"el ine:ualities o% $lass, $aste and ender $an
rein%or$e those ine:ualities and nulli%& all attempts at demo$rati$ $ontrol o% the
produ$tion pro$ess/ on the other hand, a lare!s$ale, hih $apital intensit& and
$entrali3ed industriali3ation e%%ort #ithin a so$ialist $onte+t miht be amenable to
demo$rati$ $ontrol i% the institutions o% #orkersA $ontrol are in pla$e( DB belie"es
that the e+perien$e o% the Kussian and =hinese re"olutions sho#s that pett&
produ$tion o% the artisanal "ariet& $annot sol"e either the e$onomi$ problems o% the
"ast masses o% an underde"eloped $ountr& like 'ndia or the politi$al problems o% a
so$iet& embarkin on the so$ialist path( Sustainabilit&, %or DB seems to ha"e more
to do #ith proper $ost!bene%it anal&sis rather than the s$ale o% produ$tion as su$h(
'n a so$ialist $onte+t, #here the surplus produ$t o% so$iet& is demo$rati$all&
$ontrolled, the pa$e and dire$tion o% te$hni$al $hane #ill be determined in a
rational and s$ienti%i$ manner and not le%t to the anar$h& o% $apitalist produ$tion
and the imperati"es o% pro%it ma+imi3ation( 'n su$h a settin, internali3in the
en"ironmental $osts o% produ$tion #ould %lo# naturall& %rom the imperati"es o% all
round so$ial de"elopment(
't has been our e%%ort in the present stud& to arri"e a ma$ro understandin o% 'ndian
ari$ulture and 'ndustr& %rom the .ar+ist perspe$ti"e( As our di%%erin positions
ad"an$ed abo"e indi$ate, #e do not intend to arue %or an& one riht solution to the
problems identi%ied in the stud&( Kather #e hope that the data and the
a$$ompan&in re%le$tions and spe$ulations #ill ser"e to %uel %urther dis$ussions and
debate out o% #hi$h "isions %or a %uture 'ndian so$iet& ma& emere(
(8e #ould like to thanks Debarshi Das, Iail >m"edt, .ohan Kao, Sukla Sen, Abha&
Shukla and Kahul <arman %or help%ul $omments on an earlier "ersion o% the paper()
62
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199?!99(
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6D
APPENDIX
Table A,: A%era"e Size of Ownership Holdin" in 2ndia
,)3,-32 ,)4,-42 ,)52 ,))2 2--3
>stimated !rea 34ned ?milli"n ha@ 128.73 119.64 119.74 117.35 107.23
!7erage area "4ned ?ha@
-ncluding landless 1.78 1.53 1.28 1.01 0.73
>Acluding landless 2.01 1.69 1.44 1.14 0.81
!rea 31erated ?mill"n ha@ 133.48 125.68 118.57 125.1 107.65
!7erage area "1erated ?ha@ 2.63 2.2 1.67 1.34 1.06
Sour$e) Keport Bo( ,91, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
Table A2: &and Ownership Structure in 6ural 2ndia by Ownership Size-Class
#ar"inal s#all se#i-#ediu# #ediu# lar"e
1961 < "2 h"useh"lds 66.06 9.16 12.86 9.07 2.85
< "2 area "4ned 7.59 12.39 20.54 31.23 28.25
1971 < "2 h"useh"lds 62.62 15.49 11.94 7.83 2.12
< "2 area "4ned 9.76 14.68 21.92 30.73 22.91
1982 < "2 h"useh"lds 66.64 14.70 10.78 6.45 1.42
< "2 area "4ned 12.22 16.49 23.58 29.83 18.07
1992 < "2 h"useh"lds 71.88 13.42 9.28 4.54 0.88
< "2 area "4ned 16.93 18.59 24.58 26.07 13.83
2003 < "2 h"useh"lds 79.60 10.80 6.00 3.00 0.60
< "2 area "4ned 23.05 20.38 21.98 23.08 11.55
Sour$e) Keport Bo( ,91, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
66
Tab"e A<: Lar.e La%0o"#%. States: S0are o$ Area Ow%e by Ow%er3
s0#, S#6e3C"ass
+ar3
.#%a" s+a""
se+#3
+e#-+
+e#-
+
Lar.
e
AND)RA
PRADES) ;88< 21(76 19(9- 21(1D 22(91 1,(0-
*77; 21(?0 22(,, 2,(1- 2,(0D 7(0D
*7:; 11(2D 1-(29 20(60 29(7? 22(92
*79*39; 9(92 1?(1D 21(19 ?0(1- 2-(-7
GU!RAT ;88< 1?(D0 1D(0- 17(9D ?9(12 12(27
*77; 9(-- 1-(,, 2,(67 ?1(99 17(2,
*7:; D(DD 10(67 22(D? ?9(,- 20(,9
*79*39; ,(-? 9(9, 1D(6? ?D(1- ?2(D-
)ARYANA ;88< 1?(1- 1-(7? 2,(D2 ?,(1, 12(2D
*77; 6(9D 1?(,? ??(-, ?6(16 6(91
*7:; -(0, 1?(,, 21(-7 ,,(90 1-(0-
*79*39; ,(D? 6(,? 17(9- ,D(9? 22(0D
KARNATAKA ;88< 1D(D- 19(,- 2?(17 29(-2 11(20
*77; 11(0- 17(?- 26(72 2D(D2 1D(1D
*7:; D(21 1?(-D 2-(,0 ?1(,- 2?(?7
*79*39; -(6, 11(71 2,(7, ?-(19 22(,2
MAD)YA
PRADES) ;88< 11(D1 19(06 2-(70 ?1(2- 12(29
*77; 6(D1 1-(,9 2,(96 ?-(?7 1D(-6
*7:; ,(99 11(07 2,(?0 ?6(9? 21(62
*79*39; ?(?, 9(1D 21(?D ?6(70 27(?,
MA)ARAS)TRA ;88< 12(?7 16(-6 ?0(77 26(?- 11(67
*77; 6(02 12(D1 2-(-, ??(,? 21(,1
*7:; ,(D- 10(90 20(72 ?D(2? 26(,0
*79*39; ?(,7 7(-9 17(?, ?-(,- ?,(1,
PUN!A1 ;88< 9(1D 1-(D? 2-(?0 ?,(-0 1-(?1
*77; 6(17 12(?- ?0(21 ?7(0, 12(22
*7:; -(-9 10(6D 22(76 ,2(2? 17(-D
*79*39; ,(,6 7(76 2-(0D ?6(9D 2?(D,
RA!AST)AN ;88< 9(2D 11(19 17(D1 27(,0 ?2(-2
*77; -(,2 10(0, 17(90 ?1(-- ?,(10
*7:; ?(D? 6(29 16(29 ?-(19 ?D(-9
*79*39; 2(0? D(67 1?(1- ?2(79 ,-(1-
Sour$e) Keport Bo( ,91, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
67
Tab"e AE: S+a"" La%0o"#%. States: S0are o$ Area Ow%e by Ow%ers0#,
S#6e3C"ass
+ar3
.#%a" s+a""
se+#3
+e#-+ +e#-+ "ar.e
ASSAM ;88< ,,(,2 ?,(76 1D(?D ,(?2 0(00
*77; ?7(0- 29(06 2?(0D 7(-? 1(29
*7:; 2,(-? ?,(71 26(D6 11(-0 1(,7
*79*39; 22(1- ?0(22 ?0(69 1-(20 1(D,
1I)AR ;88< ,2(06 2-(29 17(-? 9(-D ,(D?
*77; 27(-7 2?(7, 2,(,- 17(D7 ,(,,
*7:; 2?(9D 22(91 26(02 20(22 -(90
*79*39; 17(20 2?(,? 27(06 2?(D? D(D6
)IMAC)AL PRADES) ;88< ,?(70 27(02 19(66 D(,- 2(0?
*77; ?,(99 20(?- 21(-6 17(-0 ,(D0
*7:; 20(9, 2?(09 2D(0, 26(72 2(11
*79*39; 21(22 2?(,? 2-(92 2?(12 D(?1
!GK ;88< ?D(2D 2-(,9 19(-, 11(12 6(-7
*77; 2-(-2 ??(,0 2-(7, 1-(2? 0(00
*7:; 27(1? ?0(29 27(60 12(-D 0(?2
*79*39; 26(,1 ?9(?? 2-(20 7(0D 0(00
KERALA ;88< D0(62 21(1? 10(67 6(1D 0(00
*77; -,(-1 2,(19 1,(?2 D(?? 0(DD
*7:; ,-(6, 2?(-1 19(11 10(0D 1(-9
*79*39; ,0(77 2,(?2 19(9- 11(79 2(9D
ORISSA ;88< ,1(-2 26(0D 19(62 9(97 1(67
*77; 2D(?6 26(1D 2-(99 17(07 2(,0
*7:; 19(77 29(6? 2-(0, 19(-0 -(7,
*79*39; 20(,- 2D(9- 2-(77 20(62 D(00
TAMIL NADU ;88< ??(21 2?(10 22(09 20(-6 1(2?
*77; ??(27 2D(2, 2,(1- 12(1- ,(17
*7:; 2?(-6 26(2, 2?(-? 20(9, ,(61
*79*39; 20(2? 21(7, 2-(21 22(96 9(6-
UTTAR PRADES) ;88< ?,(79 26(?7 20(6, 1,(D- 2(?,
*77; 26(,2 2,(77 2-(72 17(1, ?(6?
*7:; 20(?D 2,(07 27(11 22(2- -(17
*79*39; 16(,9 2,(D- 26(9, 2?(7- D(06
2EST 1ENGAL ;88< -7(2? 2-(61 11(77 ,(02 0(00
*77; ,1(29 27(11 22(97 6(D2 0(00
*7:; ?0(?? 27(66 26(2? 12(12 1(-,
*79*39; 26(27 2-(D9 26(62 17(D1 0(60
Sour$e) Keport Bo( ,91, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
69
Table A/: 'ffecti%e &andlessness in 6ural 2ndia: Cu#ulati%e Distribution of &and Owner-
ship *atterns o%er Ti#e
,)3,-32 ,)4,-42 ,)52 ,))2 2--3
Area
Owned
+ of
hhlds
+ of
area
+ of
hhlds
+ of
area
+ of
hhlds
+ of
area
+ of
hhlds
+ of
area
+ of
hhlds
+ of
area
0 ha 11.68 0 9.64 0 11.33 0 11.25 0 10.04 0.01
< 0.21 ha 37.9 0.54 37.42 0.69 39.93 0.9 42.4 1.31 50.6 2.08
< 0.41 ha 44.21 1.59 44.87 2.07 48.21 2.75 51.36 3.8 60.15 5.83
Sour$e) Keport Bo( ,91, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
Tab"e A5: C-"t#/ators a% A.r#c-"t-ra" 2orFers #% R-3
ra" I%#a= ;88*
C-"t#/a3
tors
A. 2orF3
ers
A.wrFrHC
-"t#/
Andhra Gradesh 66-6??6 1??7,D61 1(6?
Aruna$hal Gradesh 26-,0? 16D?, 0(0D
Assam ?6126D9 12-?,-1 0(?,
Bihar 706-10, 1?1,-D?9 1(D?
Ioa ,-77- ?106D 0(D7
Iu*arat -D96,?, ,97?209 0(76
9ar&ana 29-721- 122,,0? 0(,1
9ima$hal Gradesh 19,D790 92-97 0(0-
Lammu M 2ashmir 1--9D?? 226?2- 0(1-
Lharkhand ?7-7677 2710D61 0(6?
2arnataka DD7,-21 -9019?, 0(77
2erala D9?97D 1-06071 2(16
.adh&a Gradesh 106??-1D 61?D?91 0(DD
.aharashtra 11-D929? 10?1,620 0(79
>rissa ,196912 ,92192- 1(16
Gun*ab 1997D,0 1?9,0?- 0(60
Ka*asthan 12921?6, 2,?D-DD 0(19
Sikkim 1?1201 1D9-2 0(1?
Tamil Badu ,66?027 6-??6DD 1(-7
Tripura ?10761 262612 0(77
Jttar Gradesh 216-,699 129?1?16 0(-9
Jttaran$hal 1--D202 2,,-20 0(1D
8est Benal --7-7,7 62,0-16 1(?0
Tota"
**:97:5
E7 778;<**< 8&:<
Sour$e) =ensus o% 'ndia, 2001(
70
Tab"e A9: S0are o$ Te%a%t )o"#%.s by O,erat#o%a"
S#6e3C"ass
Perce%ta.e o$ te%a%t 0o"#%.s
*7583
5*
*7983
9*
*7:*3
:;
*77*3
7;
;88;3
8<
.arinal 2,(1 26 1,(, 9(? 9(7
Small 2-(1 26(7 16(9 1,(9 10(6
Semi!medium 2?(D 2,(7 1-(9 12(2 10(?
.edium 20(- 20 1,(- 1?(1 6(7
1are 9(- 1-(9 11(- 1D(6 1?(7
All si3es 2?(- 2-(6 1-(2 11 9(9
Sour$e) Keport Bo( ,92, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
Tab"e A:: Te%a%cy #% t0e MaIor I%#a% States
s0are o$ te%a%t 0o"3
#%.s s0are o$ area "ease #%
*7:*3
:;
*77*3
7;
;88;3
8<
*7:*3
:;
*77*3
7;
;88;3
8<
ABD9KA GKAD0S9 1?(7 1,(1 12(9 D(2 9(D 9(0
ASSA. 12(9 10(1 7(9 D(, 7(9 -(?
B'9AK 19(6 -(D 12(6 10(? ?(9 7(9
IJLAKAT ,(7 ?(6 -(? 2(0 ?(? -(1
9AKWABA 2-(9 16(1 10(6 17(2 ??(6 1,(,
2AKBATA2A 10(6 7(0 ,(D D(0 6(, ?(D
20KA1A D(6 -(2 -(1 2(D 2(9 ,(0
.AD9WA GKAD0S9 7(0 9(0 6(? ?(D D(? ?(D
.A9AKAS9TKA 10(D D(9 D(D -(2 -(- ,(6
>K'SSA 17(2 1D(9 19(, 9(9 9(- 1?(0
GJBLAB 21(? 1-(9 1?(1 1D(1 17(7 1D(7
KALAST9AB 6(1 D(- 2(9 ,(? -(2 2(7
TA.'1 BADJ 2,(6 1-(? 9(, 10(9 10(9 D(0
JTTAK GKAD0S9 20(- 1-(- 11(6 10(2 10(- 9(-
80ST B0BIA1 2?(1 1,(, 1,(1 12(? 10(, 9(?
Sour$e) Keport Bo( ,92, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
71
Tab"e A7: S0are o$ Lease3#% Area by Ter+s o$ Lease
ter+s o$ "ease
*7583
5*
*7983
9*
*7:*3
:; *77*37; ;88;38<
#%c"
%&r&
e@c"
%&r&
#%c"
%&r&
e@c"
%&r&
%i+ed mone& 2-(D 1-(, 10(9 19 22(6 29(- 29(7
%i+ed produ$e 12(9 11(D D(? 1,(- 16(, 20(? 20(D
share o% produ$e ?7(2 ,6(9 ,1(9 ?,(, ,1(1 ,0(? ,0(7
>ther 2?(? 2-(1 ,0(9 ?2(1 17(7 9(9 7(7
Sour$e) Keport Bo( ,92, BSS -9
th
Kound, Lanuar&!De$ember, 200?/ n(r(Snot
reported(
Tab"e A*8: S0are o$ Area by Ter+s o$ Lease= MaIor I%#a%
States: ;88;38<
$#@e
+o%ey
$#@e
,ro3
-ce
s0are
o$ ,ro3
-ce
$ro+
re"a3
t#/es ot0er
ABD9KA
GKAD0S9 ?1(D ?6(9 2,(0 2(1 ,(,
ASSA. 1-(7 ?(D --(0 0(0 2-(D
B'9AK 12(0 16(- D6(0 0(- ?(0
IJLAKAT 10(6 ,D(? ?6(9 ?(- 1(D
9AKWABA 61(2 9(7 1-(7 0(1 ?(1
2AKBATA2A ?2(, ,1(1 2,(7 0(0 1(6
20KA1A ?9(9 6(- 12(0 ??(0 6(7
.AD9WA
GKAD0S9 17(? ?2(- ?9(0 1(D 7(D
.A9AKAS9TKA 2D(2 9(0 ?6(- 1-(6 11(D
>K'SSA 11(1 6(7 6?(0 ?(- ,(D
GJBLAB 69(2 1(- 1-(? ?(1 0(9
KALAST9AB ?-(0 16(6 ?9(? 1(1 D(9
TA.'1 BADJ ?2(0 ?0(0 22(9 6(? 6(7
JTTAK GKAD0S9 2?(7 12(9 -2(9 -(0 -(,
80ST B0BIA1 2?(6 27(- ?,(9 ,(1 7(7
'BD'A 29(- 20(? ,0(? ,(0 -(9
Sour$e) Keport Bo( ,92, BSS -9
th
Kound, Lanuar&!De$ember, 200?(
72
Tab"e A**: S0are o$ Debt $ro+ 'ar#o-s So-rces $or C-"t#/ator
)o-se0o"s >A?
*74* *75* *79* *7:* *77* ;88;
So-rces o$ Cre#t
'nstitutional 6(? 17(6 ?1(6 D?(2 DD(? D1(1
=ooperati"e So$ieties ?(? 2(D 22 29(7 ?0 ?0(2
=ommer$ial Banks 0(9 0(D 2(, 27(7 ?-(2 2D(?
Bon!'nstitutional 92(6 71(? DD(? ?D(7 ?0(D ?7(9
.one&lenders D9(6 ,9(2 ?D(1 1D(1 16(- 2D(7
Jnspe$i%ied ! ! ! ! ?(1 !
Sour$e) Io"ernment o% 'ndia, 2006(
Tab"e A*;: Gross Ca,#ta" For+at#o% #% A.r#c-"t-re at *77<37E
Pr#ces
GFCFA CIS GCFA GFCFA CIS GCFA
*75* -9(02 ?(66 D2(69 *7:* 1?6(21 -(12 1,2(??
*75; -,(D7 0(2? -,(91 *7:; 1?,(06 D(62 1,0(69
*75< -7(?? 2(00 D0(?? *7:< 1?6(DD 6(D? 1,-(29
*75E D2(62 2(66 D-(,9 *7:E 1?9(2D 6(99 1,6(2-
*754 D7(1, 1(1, D9(27 *7:4 1?7(,D
11(0
2 1,9(,7
*755 61(66 2(26 6,(0, *7:5 1?0(D1
10(6
1 1,1(?2
*759 62(69 1(D, 6,(,? *7:9 126(79 9(19 1?6(07
*75: 69(-- 0(,9 70(0, *7:: 1??(6- 9(19 1,2(9,
*757 67(7? D(7? 7-(DD *7:7 1,?(?- ,(26 1,6(D2
*798 7?(17 -(7? 79(01 *778 126(27 D(9D 1?,(2,
*79* 69(70 D(7- 7D(D- *77* 1-7(0- D(11 1D,(1D
*79; 7?(62 6(97 91(60 *77; 1,-(,D ,(19 1,9(D-
*79< 90(D? 12(,D 10?(09 *77< 1-D(10 -(?1 1D1(,1
*79E 77(1- 1-(-, 10?(D9 *77E 1,6(,9 -(00 1-2(,9
*794 7D(09 1?(-- 99(D, *774 1D0(12 7(?1 1D7(,?
*795 9?(,7 22(96 11D(,- *775 160(1, 7(60 167(7,
*799 11?(-D ?0(99 1,,(-- *779 16,(62
12(9
1 176(D?
*79: 11-(7- 16(21 1??(0D *77: 16,(99
11(7
1 17D(70
*797 129(96 -1(99 171(9D *777 169(69
10(?
? 190(12
*7:8 1?D(09 ,2(1, 167(2?
Sour$e) Iulati and Bathla, 2002(
7?
Tab"e A*<: GDCF= GDP a% S0ares #% *77<37E ,r#ces
Years
GDCF
>Rs b#"3
"#o%?
GDP >Rs
b#""#o%?
GFCAHG
DCF
GDPAH
GDP
GDCFHG
DP
19D0!D1 ,?-(,9 2221(D1 1,(,2 ,0(-? 19(D
19D1!D2 ,09(9D 2?0-(62 1?(?9 ?9(D1 16(67
19D2!D? ,D-(0- 2?6-(2 12(96 ?6(D1 19(-7
19D?!D, ,79(12 2-19(69 1?(?9 ?7(-2 19(,1
19D,!D- -,0(D1 2606(26 12(72 ,0(?D 19(96
19D-!DD D1D(69 2D?7(D, 12 ?7(1, 2?(?7
19DD!D6 D,1(01 2D?,(,1 11(D1 ?9(21 2,(??
19D6!D7 D00(D7 27?9(6D 1?(?2 ,1(92 21(1-
19D7!D9 -77(0- 29?7(16 1,(-7 ,0(69 20(01
19D9!60 DDD(2D ?1?0(?9 1?(?D ,0(-1 21(27
1960!61 D79(61 ?292(26 12(-D ?9(09 20(9-
1961!62 609(67 ??,7(,2 12(92 ?6(27 21(2
1962!6? D96(1, ??29(12 1,(69 ?6(19 20(9,
196?!6, 71D(D, ?,?,(6? 12(6 ,0(? 2?(67
196,!6- 62,(-7 ?,6-(-? 1?(6- ?6(?9 20(7-
196-!6D 6-9(,- ?69,(0, 1-(?? ?,(,7 20(02
196D!66 7-?(0D ?7-7(D9 1D(9, ?2(D9 22(11
1966!67 9DD ,1?6(71 1?(66 ?,(17 2?(?-
1967!69 1112(- ,?6-(0, 1D(?D ?2(,1 2-(,?
1969!70 971(-9 ,1,-(61 17(1D ?0(-D 2?(D7
1970!71 971(91 ,,2?(19 1,(- ?D(02 22(2
1971!72 991(97 ,616(09 1,(19 ?-(-D 21(0?
1972!7? 991(99 ,770(79 1,(D- ?,(1? 20(?2
197?!7, 102-(1, -21D(76 1,(?D ?,(97 19(D-
197,!7- 1112(2D -,-?(,9 1?(,, ??(9D 20(,
197-!7D 1216(-6 -6DD(-, 11(D1 ?2(?- 21(11
197D!76 1219(67 D0?1(?9 11(2, ?0(6? 20(22
1976!77 1?97(91 D2D-(-9 10(22 29(19 22(??
1977!79 1-7,(-, D79-(,1 9(?2 ?0(D? 22(97
1979!90 1D99(D- 6?2-(67 6(9 29(2- 2?(2
1990!91 19-D(- 66??(,9 7(?9 27(7- 2-(?
1991!92 161-(-? 671-(6- 7(62 27(1 21(9-
1992!9? 176,(66 717-(,, 7(D1 27(?9 22(9
199?!9, 197,(12 7-92(2 6(D9 27(1D 2?(09
199,!9- 2,21(1? 9222(79 D(9D 26(-- 2D(2-
199-!9D 2D92(19 9927(66 D(D, 2-(?6 26(12
199D!96 2D?7(7? 10D19(02 6(11 2D 2,(7-
7,
1996!97 297-(D7 1110?(7, D(2- 2,(?9 2D(79
1997!99 296-(17 117-?(99 D(?9 2,(,7 2-(1
Sour$e) Iulati and Bathla, 2002(
7-