[Book Review] ‘States & Minorities’: A Critique of Ambedkar’s Economic Ideas

M. Aseem //

Dr B R Ambedkar submitted States and Minorities, previously published in 1945 as a standalone book, to the Sub-Committee on Fundamental Rights of the Constituent Assembly of India in 1947. The Sub-Committee, of which B R Ambedkar was a member, was tasked by the Assembly to draw up a list of Fundamental Rights for the Constitution of India. Ambedkar wrote States and Minorities on request and behalf of the Scheduled Caste Federation – an organisation that he himself had founded in the early 1940s. 

While the brief to B R Ambedkar by the Federation was to put forth safeguards for the Scheduled Castes, he went beyond this. States and Minorities looked like a mini-constitution complete with a Preamble and also contained draft articles on ‘Fundamental rights of Citizens’ and ‘Admission of States into the Union’. The Preamble said that the to be constituted United States of India will ‘remove social, political and economic inequality by providing better opportunities to the submerged classes’ and ‘make it possible for every subject to enjoy freedom from want’. The document contained a comprehensive constitutional architecture for the protection and empowerment of Scheduled Castes.  The most striking section of the document was ‘Remedies against Invasion of Fundamental Rights’ which many consider to be the ‘the strongest articulation of social and economic rights’. It is also said that Ambedkar advocated for ‘State Socialism’ and ‘Economic Democracy’. We will here only examine Ambedkar’s economic ideas, leaving rest for some other occasion. These ideas are contained mainly in Article II, Section II, Clause 4 and the provision for Higher Education in Part II, Clause 1. We quote both verbatim in full here while analysing them.

Clause 4 Protection against Economic Exploitation

The United States of India shall declare as a part of the law of its constitution —

(1) That industries which are key industries or which may be declared to be key industries shall be owned and run by the State;

(2) That industries which are not key industries but which are basic industries shall be owned by the State and shall be run by the State or by Corporations established by the State;

(3) That Insurance shall be a monopoly of the State and that the State shall compel every adult citizen to take out a life insurance policy commensurate with his wages as may be prescribed by the Legislature;

(4) That agriculture shall be State Industry;”

On examination of the above provisions we find that the first 3 sub-clauses, though not included in the actual constitution were implemented in toto by the Nehru led Congress government of the Indian capitalist class, of which Ambedkar was also a member for few years, in the very first decade after the constitution was adopted, as Ambedkar wanted per sub-clause 10 quoted later. 3 tier structure of industry was implemented gradually in which key industries like telecommunications, railways, post, space, ports, airports, etc were directly owned and operated by governments.  Then came the important basic or primary industries which were owned by Central or State government owned public sector corporations. These included Mining, Metals, Steel, Heavy Industrial and Agricultural Machinery, Aircrafts and Airlines, Roadways, Shipping, Waterways, Basic Drugs, Vaccines, etc. Besides Insurance, both Life and General, as stipulated by Ambedkar, major banks like Imperial Bank, banks of princely states and some others were also put directly in ownership of the government. Some more banks were later nationalised in 2 tranches in 1969 and 1980. Hence, as far as ownership and operational control is concerned the government policy in Independent India in initial decades was exactly as Ambedkar wanted except few notable exceptions, e.g., TISCO/TELCO (now known as Tata Steel & Tata Motors), which continued to be owned by Tatas. However, government did not force every employee to mandatorily take an insurance policy, but it has encouraged them to do so through tax concession based incentives. Ambedkar also wanted Agriculture to be made a State Industry per clause 4 but this did not become government policy. However, before we examine Ambedkar’s ideas on Agriculture along with sub-clause 9, let us first see sub-clauses 5 to 8 on the question of procedure of Transfer of ownership to state.

“(5) That State shall acquire the subsisting rights in such industries, insurance and agricultural land held by private individuals, whether us owners, tenants or mortgagees and pay them compensation in the form of debenture equal to the value of his or her right in the land. Provided that in reckoning the value of land, plant or security no account shall be taken of any rise therein due to emergency, of any potential or unearned value or any value for compulsory acquisition;

(6) The State shall determine how and when the debenture holder shall be entitled to claim cash payment; 

(7) The debenture shall be transferable and inheritable property but neither the debenture holder nor the transferee from the original holder nor his heir shall be entitled to claim the return of the land or interest in any industrial concern acquired by the State or be entitled to deal with it in any way;

(8) The debenture-holder shall be entitled to interest on his debenture at such rate as may be defined by law, to be paid by the State in cash or in kind as the State may deem fit;”

We find that what Ambedkar prescribes here is not exactly what ‘nationalisation’ is understood to be in general economic parlance. Nationalisation as used in India mostly implies the transfer of property to state without paying any value compensation to the erstwhile private owner, individual or corporate. That is how it was done in insurance and bank nationalisation. However, Ambedkar prescribes that government should value the said properties and issue debentures or bonds of that value in the name of erstwhile owners which will be inheritable by their heirs or transferable (saleable) to others. When these bonds will be paid for in cash will be decided by the government. Till then interest on the amount will be paid to holders on the rate decided by government. Hence, this is not nationalisation per se but compulsory purchase of property by the government and the private owners were not deprived of their private property. Rather it Would help monetise their existing properties and furnish them financial capital which they could very well invest in secondary or consumer goods industries which were to be in private capitalist ownership per the scheme devised by Ambedkar.    

 “(9) Agricultural industry shall be organised on the following basis:

  (i) The State shall divide the land acquired into farms of standard size and let out the farms for cultivation to residents of the village as tenants (made up of group of families) to cultivate on the following conditions:

  (a) The farm shall be cultivated as a collective farm

  (b) The farm shall be cultivated in accordance with rules and directions issued by Government; 

  (c) The tenants shall share among themselves in the manner prescribed the produce of the farm left after the payment of charges properly leviable on the farm;

  (ii) The land shall be let out to villagers without distinction of caste or creed and in such manner that there will be no landlord, no tenant and no landless labourer;

  (iii) It shall be the obligation of the State to finance the cultivation of the collective farms by the supply of water, draught animals, implements, manure, seeds, etc.;

  (iv) The State shall be entitled to—

  (a) To levy the following charges on the produce of the farm: (i) a portion for land revenue; (ii) a portion to pay the debenture-holders; and (iii) a portion to pay for the use of capital goods supplied; and

  (b) To prescribe penalties against tenants who break the conditions of tenancy or wilfully neglect to make the best use of the means of cultivation offered by the State or otherwise act prejudicially to the scheme of collective farming;”

Ambedkar’s scheme, if implemented, would have destroyed the small scale and fragmented Indian agriculture and consolidated it into larger collective farming by group of farmers on sizable plots of land leased to them to by state after these were compulsorily purchased from earlier landowners. This had the potential of increasing productivity as well as transforming social relations and stratification in Indian villages dominated till then by caste based ownership and division of labour. However, this cannot be seen as completely egalitarian as the existing landowners were only deprived of operational control and not ownership rights. They would continue to receive an extra share of income based on the amount of land they owned earlier. Only after this share was paid to them and revenue and repayment of capital expenditure to government, the remaining surplus was proposed to be distributed among the cultivators as directed by government. Hence, earlier landowners would have continued to receive higher share of income as their private property right.

  “(10) The scheme shall be brought into operation as early as possible but in no case shall the period extend beyond the tenth year from the date of the Constitution coming into operation.”

 “Part II Provisions for Higher Education

That the United States of India shall undertake the following special responsibilities for the betterment of the Scheduled Castes:

(1) Governments — Union and State — shall be required to assume financial responsibility for the Scheduled Castes and shall be required to make adequate provisions in their budgets. Such Provisions shall form the first charge on the Education Budget of the Union and State Government.

(2) The responsibility for finding money for secondary and college education of the Scheduled Castes in India shall be upon the State Governments and the different States shall make a provision in their annual budgets for the said purpose in proportion to the population of the Scheduled Castes to the total budget of the States

(3) The responsibility for finding money for foreign education of the Scheduled Castes shall be the responsibility of the Union Government and the Union Government shall make a provision of rupees 10 lakhs per year in its annual budget in that behalf.

(4) These special grants shall be without prejudice to the right of the Scheduled Castes to share in the expenditure incurred by the State Government for the advancement of primary education for the people of the State.”

Regarding provisions for higher education, it is to be remarked that this document nowhere requires state to provide universal compulsory education to all, a democratic demand of Indian people during national struggle right from the time of Jotiba Phule. This only provides for a specific budget for higher education of Scheduled Caste Students, in India and abroad, which would be mandatorily spent for this purpose and share of expenditure on primary education as proposed in government budgets. Hence, it should be understood that it would not provide for compulsory universal education as state responsibility, only a specific amount of budget with assured share for Scheduled Castes which cannot mean equal education for all without discrimination.

Is It Socialism?

If we see strictly and only in simple economic terms socialism means abolishing private property in means of production, bringing social ownership, production organised not for profit of private owners but for meeting social needs, requirement for all to work per ability and distribution of product per the work performedafter providing for universal social services like child, elder, infirm and lactating mothers care, health, education, housing, etc. On the above criteria, we can immediately see that what Ambedkar prescribes is not Socialism of any variety. Then what it is and why it was proposed?

Ambedkar’s primary intention was to remove all types of social, political and economic discrimination against Scheduled Castes. He saw hereditary division of labour and labourers perpetuated in small scale production as a fundamental basis of this discrimination. Hence, he favoured socialisation of production on large scale under state directive and control. However, it is clear, that he did not at all want to abolish private property rights of erstwhile owners. Then what was the reason for proposing state control of part of the economy? For that we need to refer to some history.

In 1937 Subhash Chandra Bose became Congress President. By that time negotiations for transfer of power to Indians under a new constitution were already on since the two Round Table Conferences in London in 1930 and 1931, Dr Ambedkar being a participant in both. In this background Bose formed a National Planning Committee under chairmanship of Nehru to formulate an economic policy to be adopted by a future national government. Many representations were made to this committee and a debate ensued on future economic policies.

One remarkable document in this debate was from a group of leading industrialists and technocrats – JRD Tata, GD Birla, Kasturbhai Lalbhai, Seth Purushottam Das Thakurdas, Lala Sriram, AD Shroff and John Mathai – popularly known as Bombay Plan or Tata-Birla Plan. It proposed a 15 year economic plan for India. The purpose of the Bombay Plan, as the signatories discussed among themselves, is recorded in the minutes of the Plan’s secretariat meetings. The government (they meant the future government of free India) might take populist economic measures in a hurry after the war. Such measures were all the more likely if the government faced organised political demands for redistribution of income and wealth. These measures would harm the prospects of India’s economic development in the long run. However, this possibility could be avoided by proceeding in an orderly and more caring path of development before such a contingency arose. The plan was proposed to initiate the process and make both the government and the public aware of the long run issues of development and income distribution.

The plan’s strategy and methods foreshadowed the official Five Year Plans of independent India launched just a few years later. A key principle of the Bombay Plan was that the economy could not grow without government intervention and regulation. Accordingly, government was called upon to mobilise capital and invest in primary heavy or capital intensive industries and private sector, with its limited capital resources, was to focus on secondary or consumer goods industries. This would enable the private capitalists to accumulate capital over a period of time as government owned enterprises would be able to work on lower rate of profit allowing private sector to earn relatively higher rate of profit. This is also, in essence, the industrial plan proposed by Dr Ambedkar in this document and also followed by the Nehru Government in independent India. Hence, we can say that it was the plan favoured by Indian capitalist class as such.

However, the agriculture part of the plan proposed by Dr Ambedkar did not find favour with the ruling class owing to several reasons. One, resources for industrialisation were to be mobilised by transfer of resources from agriculture to industry, thereby ruling out quick modernisation of agriculture. Second, modernisation of agriculture would immediately have shown that huge number of work force engaged in agriculture was surplus, for which Indian capitalist class was in no position to provide employment. Third, Indian capitalist class, having grown in the period of worldwide crisis ridden capitalism, was a weak, diseased and compromising one with no will and vitality for deep transformation of society and its democratisation by militant fight against caste, religion, patriarchy and other obscurantist ideas. It compromised with all sorts of reactionary forces as it was afraid of a working class revolution if wide ranging social transformation was attempted. It, therefore, went ahead with state push for industrialisation but did not accept the proposal of quick and forced modernisation of agriculture.

We can conclude that Dr Ambedkar’s plan proposed in ‘States and Minorities’ was not a socialist plan. He wanted a modern, large scale production based economy on the basis of private property ownership, i.e., capitalism, which he believed was a more peaceful way of creating a discrimination free democratic society, instead of the ‘violence’, as he feared, in the dictatorship of proletariat in bringing about Scientific Socialism of Marxist ideology.

[Originally published in The Truth: Platform for Radical Voices of The Working Class (Issue 8 / December 2020)]

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