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Ambedkar the economist

Dilip Halder |

The conspicuous absence of Dr Bhimrao Ramji Ambedkar&’s economic thought in celebrated works of eminent Indian economic historians begs a question. Ambedkar&’s identity as an economist might have escaped their notice because of his fame as the chairman of the Drafting Committee of the Constitution and as a leader of the backward and downtrodden sections of Indian society. This may be true in case of ordinary citizens of India, but surely not an acceptable alibi from any serious researcher in the area of Indian economic thought.

However, of late Amartya Sen has recognised Ambedkar as the father of his economics (May 2007). This recognition might hopefully inspire economic historians to have fresh look at Ambedkar&’s works with unbiased minds. However, the present discussion is devoted to pointing out in brief the different dimensions of Ambedkar&’s identity as an economist.

Ambedkar&’s life time (14 April 1891-6 December 1956) starts from the last decade of the 19th century and extends up to a little after the mid-20th century. He was born in an untouchable ‘Mahar’ family in Mhaw in Madhya Pradesh and had a childhood of struggle for being untouchable and poor. The opportunity of having higher education in USA and England in Economics and various other subjects in social sciences and law equipped him intellectually to study contemporary socio-economic problems that emanated from a hierarchical social structure under an exploitative foreign rule. His probing analysis of the social order and the nature of exploitation perpetrated by the traditional social system was not only revealing but helped suggest pragmatic remedial measures which, due to lack of implementation, could not produce desired results, neither in his time nor thereafter

His analytical faculty and pragmatic approach could be understood for the first time in his 42-page research paper entitled Administration and Finance of the East India Company submitted in Columbia University as the dissertation for MA (Economics) degree in 1915. This dissertation offers a historical account of the administration and finances of the East India Company and brings out economic and legal implications which ran counter to the interest of Indians.

An important finding of this study made him score above RC Dutta&’s analytical faculty. It is regarding the heavy tribute that India had to pay regularly to Britain by way of “home charges” which was entirely the creation of war and was illegitimate. The act of 1858, which goes by the name “Act for better government of India”, states that: “the revenues of India shall not, without the previous consent of both Houses of Parliament, be applicable to defray the expenses of any military operations carried on beyond the external frontiers of such possessions by her Majesty&’s forces charged upon such revenues”.

This provision of the act was used by many scholars in India including RC Dutta to justify this heavy tribute by India as salutary financial provision. The basic drawback of this justification, according to Ambedkar, lies on two crucial points (i) the revenues of India ‘have been spent outside India for non-indian purpose, even after the Act’ and (ii) ‘the fatal error lay in this, – the excepting clause in the above section which sanctions the expenditure of Indian revenue outside of India omits the vital word “previous”. To have any salutary impact previous consent of the Parliament is a necessary requirement. The previous consent was not taken. This escaped the notice of everybody including Indian scholars. This finding of Ambedkar&’s work not only established his identity as a brilliant analytical economic historian but as a bold, patriotic Indian as well.

The other work on economics was entitled Provincial Finance in British India, which was his Ph.D. thesis in Columbia University USA in 1917, and was published in book form in 1925. It was considered to be a basic contribution to the theory of public finance. To be more specific it dealt with Centre-state financial relationship in British India covering the period 1833 to 1921. This probing analysis was highly acclaimed all over the world.

Professor Dr Edwin Robert Anderson Seligman, the then Professor of Political Economy, Columbia University, New York, an authority on the subject, editor in chief of Encyclopedia of Social Sciences and one of the founder members of American Economic Association, commented that, “the value of Mr Ambedkar&’s contribution to this discussion lies in the objective recitation of the facts and the impartial analysis of the interesting development that has taken place in his native country. The lessons are applicable to the other countries as well; nowhere, to my knowledge, has such a detailed study of underlying principles been made”.

The inquiry into the causes of financial malady of British India and the suggestion of sharing the financial responsibility by the Centre and provinces were really commendable. Apart from the international recognition of Ambedkar&’s thesis at that time his ideas even today go a long way in determining the federal structure that has been adopted by different nations including India. It may be mentioned here that the Finance Commission, which is appointed for five years as per the Constitutional provision, is the result of Ambedkar&’s thesis. This, in a sense, is considered a permanent solution to the complicated issue that was associated with the Centre-state relationship. This is no doubt a significant contribution to the theory of public finance and more specifically to the theory of federal finance.

A significant contribution is his celebrated book entitled The Problem of the Rupee: Its origin and Its Solution, published in 1923. Before its publication London School of Economics had awarded him D.Sc. degree in economics in 1921. The second edition of the book was published in 1947. This book shows that he was an authority in economic policy and currency problems. He analysed very meticulously the problem of Indian currency from 1800 to 1920 and suggested a currency system for India. In so doing he sharply differed with the idea of John Maynard Keynes.

Ambedkar advocated the gold-standard and Keynes prescribed goldexchange-standard in his treatise entitled ‘Indian Currency and Finance’ published in the year 1909. Ambedkar argued in favour of gold-standard because in this system the supply of currency cannot be so easily made and as such it better insures stability of prices and so that poorer sections would get relief. Though Ambedkar&’s suggestion was not taken up by the Imperial Government, his intention of protecting the interests of the poor is clear.

Ambedkar submitted interesting evidence to the Royal Commission on Indian Currency and Finance when he appeared before it on 5 December 1925. This contribution might have gone a long way to establishment of the Reserve Bank of India

Though Ambedkar could not bring out the second edition, his idea of economics actually permeated through his programmes of action in the field of politics. His identity as an economist did not get diluted because of the diverse activities he was engaged with during the rest of his life. Ambedkar knew that India was predominantly an agricultural economy, that 80 per cent of the population lived in villages, agriculture was their main occupation and they were not economically well off. He believed that rural poverty should be eradicated. Towards this end, he organised mass movements and had reasonable success.

The abolition of “Khoti” system (1949) ‘Mahar Vatan’, (1959) and introduction of The Bombay Money Lenders’ Bill (1938) stand out as distinct success stories of his movement. In some parts of Konkan region of Maharashtra, ‘Khots’ (like Zaminders) had rights to land, which were cultivated by farmers from whom the Khots would collect revenue, a part of which was shared with the government. This was called the Khoti system and it subjected the vast majority of rural farmers to oppression and exploitation.

Ambedkar initiated a movement against this system on 14 April 1929 in an Agricultural Conference in Chiplun of Ratnagiri District. In 1936, he founded independent labour party and its manifesto gave high priority to the abolition of the ‘Khoti’ system. On 17 September 1937, a historic bill for abolition of the Khoti system was introduced by Ambedkar in Bombay Legislative Council. After a long struggle the Khoti system was abolished in 1949.

The ‘Mahar Vatan’ system was an outcome of The Bombay Hereditary Offices Act (1874), which was used to exploit rural poor of the ‘Mahar’ caste. Mahars used to hold very low-level government jobs, mostly odd jobs of all government departments round the clock. In fact, these Mahars and their families were at the beck and call of government officers for 24 hours without any defined task. The range of their jobs included removal of carcasses to running with the tonga of officers throughout their journey. In return Mahars were given a piece of land called ‘Vatan’ to be cultivated by them, and a part of the produce was passed on to the government as ‘Baluta’. Sometimes, a paltry sum of money used to be given by way of wage. This remuneration was not regular and officers would increase or decrease the sum – and the size of the land – arbitrarily. This inhuman exploitation was perpetrated by giving them an ego-boosting description like ‘Vatandars’ (which means landlords) and in turn they were saddled with heavy duties.

 As Labour Member of Viceroy&’s Executive Council from 1942 to 1946, Ambedkar introduced a number of welfare measures for the working class of India. Notable among them are establishment of employment exchanges, machinery for fixation of minimum remuneration, tripartite dispute settlement mechanism, fixation of working hours, working conditions, maternity leave, leave with pay etc. which, even today offers a safety net to labourers. These labour welfare measures take care of not only the productivity of labour, but insurance of the claim of legitimate share of labour in the total production or income of the industry. In a sense, it takes care of growth and development as well. Higher productivity of labour means the growth of income and legitimate share of the labour means more equitable distribution of income and less inequality of distribution, which in turns means development. Ambedkar, a man educated in USA and UK, was not an armchair economist. He was an economist in thought and action with a rare vision.

The writer is a former professor and head of department of economics, Jadavpur University