Source: TW
Why Does the ‘Provincial Propertied Class’ Remain Provincial? Reading the Agrarian Question of Capital Through Caste
Introduction
Indian agriculture has been experiencing adverse terms of trade since the economic reforms of the early 1990s (Dev & Rao, 2015). Compounded by vulnerabilities in the domain of production such as water access and depletion of soil quality, farmers have been cultivating in distress. Since the early 2010s, the country has also witnessed a series of agitations from castes with major stakes in agriculture such as the Jats in Haryana and Punjab, Marathas in Maharashtra and the Patels in Gujarat (Jaffrelot & Kalaiyarasan, 2019, 2020). They demand, among other things, backward caste status to be able to benefit from affirmative action policies that can facilitate access to employment and education opportunities, and thus their entry into the urban formal economy. While scholars point to the relative affluence of segments within these castes to argue against such claims (Deshpande, 2016), they do acknowledge the inability of members of such castes to access the urban labour market on favourable terms, particularly in a globalising environment. While this relates to the question of labour transition from the rural to the urban, there is little discussion on how caste intersects with diversification of capital from the rural to the Indian urban. This is particularly interesting given the extensive debate on the mode of transition in the 1980s when commercialisation of agriculture led to accumulation of considerable surpluses within agriculture (Omvedt, 1992; Thorner, 1982). While the debate on terms of trade dwelt upon the political economy of surplus transfers between agriculture and non-agricultural sectors, the extent to which capitalist farmers could diversify into capital accumulation in the urban is less studied. Scholars like Rutten (1999) and Upadhya (1988) point to the possibility of such diversification in certain regions. However, the fact that it has happened only in specific regions has not been accounted for adequately.
Understanding such patterns in diversification is important given that it is well established in scholarship on Indian businesses that non-farm capital accumulation tends to be dominated by specific caste or community groups (Bagchi, 2012; Damodaran, 2008). If there are caste barriers to enter circuits of accumulation in the urban or the non-farm, how do they matter to capitalists from within agriculture when they seek to diversify? In other words, how does caste as an institution shape the pathways of diversification of agrarian capital? If caste relations are embedded within regional political economies, can the latter shape the nature of diversification?
In this article, we address these questions by exploring the differential trajectories of capital accumulation in the urban by two agrarian caste groups, the Kongu Vellala Gounders (KVGs) in western Tamil Nadu and the Jats in Haryana. The two castes are concentrated in regions that have witnessed considerable commercialisation of agriculture and hence generated significant agrarian surpluses. The KVGs managed to diversify through productive investments in the urban that have transformed the region into one of the most dynamic industrial hubs in the country. Jat farmers on the other hand, despite managing to generate considerable surpluses within agriculture, have failed to make this transition. We explain this difference by highlighting three factors. To begin with, the dominance of specific caste groups in non-agrarian accumulation, particularly through control over production and distribution for pan-Indian markets, erects barriers for transition of agrarian capital into the urban. This has been further compounded by the increasingly adverse conditions under which capitalist farmers produce in rural India, on the one hand, and new barriers to entry posed by globalising market conditions. Additionally, sub-national political trajectories and accompanying state interventions have enabled relatively better transition pathways for the KVGs. A cultural economy of valorisation of land-based livelihoods by the Jats and the dominance of non-agrarian accumulation by caste elites in the region have, among other factors, contributed to their inability to diversify. We therefore argue that a caste-based reading is critical to understand the agrarian question of capital in India.
Apart from secondary data and literature, the article draws upon primary fieldwork conducted at two sites in Tamil Nadu and Haryana. While the fieldwork done in Tamil Nadu is largely based on detailed semi-structured interviews with knitted garment producers in the Tiruppur region undertaken by the second author at three different points in time since the mid-1990s,1 information on diversification strategies in Haryana was drawn from a set of detailed interviews undertaken by the first author in 2019 and 2020 among Jat farmers and entrepreneurs in Panipat district. Though the fieldwork done in Haryana was less intensive, we have backed this data with material from secondary sources and recent literature on diversification among Jat farmers. Our focus on diversification of agrarian capital into the urban emphasises the ability to move into productive circuits that are pan-Indian or global, and not confined to that of the region. This was done because: (a) it is a domain that has historically been dominated by Indian big business which, as we establish later, is dominated by caste elites or high status communities—since the article focusses on caste barriers, examining this domain becomes important; (b) this focus also allows us to examine the extent to which new market conditions and policy reforms have undermined or enhanced such barriers; and (c) it provides a frame that enables comparison between two agrarian castes negotiating similar barriers to diversification.
Contextualising Agrarian Transitions in India
Standard narratives in development economics assign three functional roles for agriculture in a developing economy: as a source of economic surplus for investment in industry, as a source for surplus labour that can feed into non-agrarian accumulation and finally, as a sector that produces food for all (Johnston & Mellor, 1961). These resonate with Marxist interpretations of the agrarian question in transitioning economies. Classical debates on agrarian transitions privileged the question of capital more than labour (Bernstein, 1996). As capitalist relations penetrate agriculture, it releases labour from the countryside through a process of differentiation and dispossession. This labour, constituting an army of potential wage labourers, needs to be absorbed into the capitalist non-agricultural sector. Consequently, this process requires an expanding non-agricultural modern sector, which in turn needs additional capital to fund this growth. The agrarian question of capital therefore requires a surplus to be generated within agriculture, which is then siphoned out of the sector and into an ‘industrial accumulation fund’. Thus, developmental states have to not only ensure that surplus gets generated, but also design appropriate institutional interventions to channel this surplus into appropriate sectors.
Only a few economies in the Global South, however, approximate the historical trajectories of agrarian transition in the advanced capitalist countries. Comparing South-East Asia and Latin America, Cristobal Kay (2002) argues that state capacity, character of agrarian reform and interactions between agriculture and industry in development strategies are crucial to explain differences in the nature of transition. While a few Asian economies like Japan, South Korea and Taiwan managed to secure such a transition, the agrarian structure and poor links between agriculture and industry prevented such transitions in Latin America. While the mechanisms of transfer of surplus varied across countries in South-East Asia, Kay points out how the landowning classes could effect a strategy of investing their surplus from agriculture into industry, commerce and finance (Kay, 2002, p. 1089). While not all surpluses were transferred through diversification by capitalist farmers themselves, the latter did manage to diversify their agrarian surpluses into urban-industrial circuits of accumulation.
The transition in India too did not follow the trajectory witnessed in advanced capitalist economies (Lerche, 2013; Mohanty, 2016). While the share of income from agriculture has fallen over the last three decades, a substantial share of the Indian workforce continues to depend on agriculture. However, even for farming households, wage income, remittances and state-led social policy programmes have increasingly become the main source of income over time (see Figure 1).2
Figure 1. Sources of Income for Agricultural Households in India (%)
Source: Calculated from NSSO (2002–2003), NSSO (2012–2013), NAFIS (2015–2016).
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In 2016, only 35 per cent of farm household income came from cultivation, while the remaining was derived from non-farm sources. Given the poor average rural household incomes (Dev, 2018), many agricultural households have diversified their sources of livelihood and income under distress. This is particularly visible in the case of marginal and small farmers, for whom wage income has become a significant source—about 45 per cent of their total household income (NABARD, 2018). Also, the proportion of income earned from non-farm sources was found to be inversely related to the size of the farm one owns. For example, a marginal holder earns only 7 per cent of their income through cultivation, while it is 22 per cent for smallholders (Dev, 2018). Apart from a tiny section at the top end of distribution, a majority of farmers do not produce any surplus. While this suggests pressure on small and marginal farmers (with landholding size of 1–2.5 hectares and below 1 hectare, respectively) that pushes them into the urban or rural non-farm, the behaviour of those at the top end of distribution and the nature of their surplus diversification is less clear. Importantly, there have been shifts in the conditions of accumulation in the post-Green Revolution period.
The introduction of Green Revolution technologies in the mid-1960s, in response to the food crisis in India, coincided with the expansion of commercialisation of agriculture and generation of significant agrarian surpluses in parts of India where such technologies diffused better. This process was accompanied by the growth of a class of capitalist farmers from a set of intermediate landed castes in the rural. Through political mobilisation and policy interventions, particularly through favourable price mechanisms, they managed to generate surpluses and a net transfer of resources from the non-farm sector to the farm sector in the 1970s and 1980s (Mitra 1977; Varshney, 1995). This process, however, ran out of momentum by the 1990s. To begin with, these castes could no longer organise their politics based on the peasant (kisan) identity. They were also increasingly differentiated with sections of them moving out of agriculture.3 Second, policy reforms of the early 1990s shifted emphasis on transfer of accumulation to the urban from the rural, through incentives for private investments in urban infrastructure and other non-agricultural sectors. Though liberalisation measures were argued to help farmers realise better prices, for most years, terms of trade have been against agriculture (Dev & Rao, 2015). Declining public investments and agro-ecological degradation further contributed to the crisis that infamously manifested in the phenomenon of farmers’ suicides, particularly in regions with high levels of commercial agriculture such as Maharashtra and Punjab (Reddy & Mishra, 2009).
We would like to draw attention to two aspects that are relevant for this article. First, even under such conditions, it is possible that a fraction of landed households from agrarian castes may generate surpluses. Second, even when significant surpluses were being generated within agriculture until the early 1990s, the routes for diversification into the urban were likely to have been varied. The association of non-agrarian non-provincial accumulation with a distinct set of caste groups poses questions on the processes and politics of diversification of agrarian capital. Even if macro-economic factors are conducive to generate surpluses and diversify into circuits of accumulation in the urban, caste as an institution may shape the movement of capital from rural to urban.
Caste–Business Nexus and Implications for Agrarian-Provincial Capital
In an analytical overview of intersections between caste and economic activity in India, Munshi (2019) maps the mechanisms through which caste shapes markets for credit, labour and commodities. Drawing upon the works of D.R. Gadgil, he points out that the Indian business class is largely confined to families from a few specific elite communities. Several other economic historians too have pointed out that the origins and expansion of Indian businesses have been historically distinct (Bagchi, 2012; Hazari, 1967). An important aspect of this distinctiveness has been the prevalence of the business house, a fallout of the managing agency system that emerged in colonial India. A business house, headed by a single family but with interests in diverse sectors of the economy, emerged as a key institution in capital accumulation in both colonial and post-colonial India (Hazari, 1967). By virtue of their control over diverse sectors and by accounting for a substantial share of the assets created, capital accumulation by such business houses has been accompanied by a tendency to concentrate and centralise economic power.4
There were three routes through which processes of monopolisation unfolded. First, business houses used their economic power to reinforce their position through lobbying state institutions. Second, by virtue of their first mover advantage, they could also control access to capital generated in the formal banking system. Third, during the phase of planned import-substitution-led development (until the early 1990s), they managed to acquire licences to produce goods cutting across sectors. By acquiring licences and not producing the amount for which they acquired licences, they could pre-empt competition and derive extra-normal profits (Government of India, 1969). Leveraging their economic power at the national level, business houses could also therefore maintain market power in specific industries through restrictive practices. This power also restricted new entrants into accumulation in the urban-industrial domain. Rajakumar and Henley (2007) point out that though there were changes in composition and concentration of assets, more than 50 per cent of business houses that were among the top 20 in the 1950s continued to be among the top 20 even in 2001. While policy reforms such as privatisation and the emergence of new sectors such as software and telecommunications led to the entrance of new groups, the social background of business houses has been remarkably stable.
Unlike most colonies, India saw the emergence of a native business elite drawn almost entirely from caste and community groups with a mercantile background (Bagchi, 2012; Damodaran, 2008; Roy, 2018). Such social groups had trading and banking networks that transcended regions and often extended into territories of other modern day nation-states, particularly into West Asia, North Africa and South-East Asia. Roy (2018) explains their success in their ability to draw on caste and kinship networks to overcome institutional gaps such as lack of adequate information, underdeveloped formal credit markets and formal contract enforcement mechanisms. The depth and spatial spread of such networks and intra-community norms were critical to this phenomenon. Even among the top 20 business houses identified by Rajakumar and Henley for 2001, all except one, belonged to such caste groups. A recent news item also pointed out that 15 of the top 20 business groups are family owned and upper caste.5
However, there are some differences. There are a few other caste groups (not traditionally mercantile) that have entered the list of top big business groups, but they are predominantly upper caste as well. The lower entry barrier associated with the IT sector because of lower investment requirements is believed to have democratised the entrepreneurial space in India. Further, with the opening up of capital markets, traditional kinship or familial networks may have become less important to access capital. Lardinois (2017), based on a study of over 100 top firms in the software sector, argues otherwise and suggests that entry into this sector too is restricted. He contends that while traditional business communities do not exactly dominate the sector, entrepreneurship and managerial control is predominantly confined to upper castes. It appears that upper castes draw other credentials such as human capital and socially embedded pan-Indian and global networks to access capital and markets. This is particularly significant as the study indicates that most of the Indian firms analysed had access to global funding and were also catering to global markets. In this new macro-environment, Roy’s (2018, p. 8) observation that entrepreneurs who are able to form broader but weaker ties are likely to adapt better to changing market conditions compared to those who are more embedded in strong and closed networks becomes more pertinent.6 His argument about the ‘strength of weak ties’ rather than that of strong familial ties may help us understand the possibility of forging such cosmopolitan networks.
In recent discussions on agrarian transitions, Bernstein (1996) points out that the importance of the capital question during the pre-globalisation phase has since diminished. With the global integration of capital markets, it is no longer necessary for the state to channel agrarian surpluses to fund urban accumulation. Global capital markets can be tapped into for fuelling growth and structural transformation. As Lerche (2013, p. 386) contends:
Industrial development in the South today depends more on relations between Southern states and capital on the one hand, and international finance and global product markets (including commodity chains) on the other, than it does on the interlinkages between national agriculture and national industry. Hence, accumulation within agriculture has been bypassed as an issue of importance for national/industrial capital in the South.
In the context of India too, since the initiation of pro-market reforms, there has been a greater reliance on capital markets for resource mobilisation, which in turn are sustained by substantial flows of global capital (D’Costa & Chakraborty, 2017). There is some evidence for this process at the micro-level too. Harriss-White (2016), based on a diachronic perspective on the silk weaving and paddy market town of Arni in Tamil Nadu, suggests that over time, accumulation in the urban has becomes less linked to the processes of accumulation in its agrarian hinterlands.
Though the capital question of agrarian transition may be less important from the perspective of a national economy, it is important to ask what it means for actors involved in capitalist agriculture in India? This is particularly significant because access to capital and markets for non-agricultural goods and services continue to be tied to specific caste and community groups. It was earlier assumed that the transition of capital from the agricultural sector to the urban-industrial would imply an ‘expanded reproduction’ of the rural capitalist class as well. In the 1980s, the Green Revolution was accompanied by the emergence of an agrarian capitalist class, and the rise of what Balagopal (1987) termed the ‘provincial propertied class’. He argued that the Green Revolution led to the accumulation of surplus capital by a class of farmers who can be broadly labelled as rich and middle peasantry. Based on his observations in rural Andhra Pradesh, he contended that this class does not reinvest the surplus only within agriculture. Rather, they diversified avenues of accumulation in the urban traversing trade, cinema, education, real estate and politics. A typical family of the ‘provincial propertied class’, in Balagopal’s words,
has landholding in its native village, cultivated by hired labour, bataidars, tenants or farm-servants and supervised by the father or one son; business of various descriptions in towns—trade, finance, hotels, cinemas and contracts—managed by other sons; and perhaps a young and bright child, who is a doctor or engineer or maybe even a professor in one of the small-town universities. (Balagopal, 1987, p. 1545)
Upadhya (1988), based on fieldwork in the same region, also points out how agrarian capitalists have managed to invest and diversify their surpluses into urban sectors including some in small-scale industries. Two aspects regarding the modes of transfer of agrarian surplus identified by Balagopal are important for our purpose. One, surplus gets invested in education and therefore translates into enhanced human capabilities that can in turn generate higher and sustained returns. Second, other investments in the urban tend to be in localised sources of rent generation rather than in circuits of accumulation that transcend the region. It is for this reason that he labels this capital ‘provincial’. We need to therefore ask why agrarian surpluses are not being transferred into circuits of accumulation that transcend regional borders. In other words, why does capital continue to remain provincial? It is in this regard that our discussion on the dominance of business houses controlled by caste elites at the pan-Indian scale becomes important. Damodaran (2008) alludes to the spatial relations forged by different kinds of capital. While the former mercantile communities managed to traverse pan-Indian and often transnational spaces, the capital of lower castes tended to be more localised and seldom crossed regional boundaries (with very few exceptions). Even when older roles for traditional networks declined in a globalising environment, business communities and caste elites re-embedded their networks, enabling them to sustain their dominance. Baru (2004) too draws attention to these two circuits when he refers to the two-tiered nature of Indian capitalism—‘investments from above’ and ‘from below’. While Baru points to the importance of the latter for regional development, he does not engage with the limits posed on this tier by the overarching tier of capital from ‘above’.
While Balagopal’s observations hold true for agrarian capital accumulation in the immediate post-Green Revolution period, there have been two important shifts since then. To begin with, as we observed earlier, there has been a persistent agrarian crisis in the country (Reddy & Mishra, 2009). Second, the share of income being generated from agriculture has steadily fallen and now accounts for only 17 per cent of the national income (Vijayabaskar, 2017). As a result, relative incomes of those dependent on agriculture are likely to have dropped lower compared to incomes of those in the non-agricultural sector. In a context of declining relative incomes from agriculture and the persistence of barriers to entry into the domain of modern capital accumulation, how does agrarian capital or those seeking to generate surpluses within agriculture engage with the urban? While surplus can be transferred through other mechanisms to a new capitalist class, the South-East Asian experience suggests that an important pathway that ensures more inclusive modernisation is through diversification by agrarian capitalists themselves into the urban. If non-agrarian accumulation is segmented by caste, what are the implications for inclusive modernisation? We argue, based on case studies in two prominent Green Revolution regions in India, that the prospects of entry of agrarian capital into trans-regional circuits of accumulation are limited. However, factors related to regional political economy do open up possibilities even as they constrain in other instances. In the case of Tiruppur, Tamil Nadu, transition of agrarian capital into circuits of accumulation through manufacturing that is increasingly globalised has been possible. In Haryana, on the other hand, Jat farmers failed to effect such a transition even when they managed to generate surpluses within agriculture.
The Two Cases
As stated above, Haryana and western Tamil Nadu were early adopters of Green Revolution technologies and have been noted for their agrarian dynamism. Over time, agriculture’s share in income fell in both states but more rapidly in Tamil Nadu. The share of agriculture in state income came down to 17 per cent in 2017–2018 in Haryana (Government of Haryana, 2018), but it is less than 8 per cent in Tamil Nadu (Government of Tamil Nadu, 2017).
While cultivating households in Tamil Nadu considerably diversified beyond agriculture over time, such households in Haryana continued to derive substantial income from agriculture. This change has also resulted in shifting of the workforce out of agriculture in both states. Among those who remained in cultivation in Haryana, as per the NSSO situational survey (2012–2013) illustrated in Figure 2, about 55 per cent continued to derive their income from farming. The corresponding figure for Tamil Nadu is just 28 per cent. For Jats, who have historically been associated with land and agriculture, this shift has profound significance. As per the IHDS-II (India Human Development Survey), the percentage of households that depend on cultivation among the Jats was 67 per cent as against the state average of 24 per cent in 2011–2012 (Kalaiyarasan & Jaffrelot, 2019).
Figure 2. Sources of Income to Agricultural Households in Tamil Nadu and Haryana (%)
Source: Calculated from NSSO (2012–2013).
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Here, we focus on diversification of Jats and KVGs in two highly industrialised districts in Tamil Nadu and Haryana, Tiruppur and Panipat, respectively. Figures 3 and 4 show where these two districts stand in terms of share of manufacturing units compared to other districts.
Figure 3. Share of Manufacturing Units by Districts in Tamil Nadu (%)
Source: Calculated from Economic Census 2013–2014.
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Figure 4. Share of Manufacturing Units by Districts in Haryana (%)
Source: Calculated from Economic Census 2013–2014.
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Kongu Vellala Gounder Diversification in Tiruppur
Tiruppur town and its hinterlands in western Tamil Nadu have emerged in the national and global industrial map as a major producer and exporter of cotton knitwear goods. Though the history of knitwear production in the region goes back to the colonial period, its dynamism since the late 1980s is of particular note (Chari, 2004; Vijayabaskar, 2001). Spurred by macro-economic reforms such as currency devaluation and other trade liberalisation measures, the region grew to become one of the vital nodes in the garment value chain situated in the Global South, producing garments for leading retailers and brands in the North. Literature attributes this success to multiple factors that include the entrepreneurial dynamism of the KVGs, the numerically dominant caste in the sector (Damodaran, 2008; Swaminathan & Jeyaranjan, 1997); national and global logics of accumulation in the sector (Cawthorne, 1993; Krishnaswami, 1989; Vijayabaskar, 2001); and forms of labour control in the regional agrarian economy (Chari, 2004).
For the purpose of this article, we focus solely on diversification of landed KVGs, the numerically largest agrarian caste in the region, into the modern urban economy through their entry into knitwear production. To contextualise the process of their diversification, we briefly segue into the historical geography of the region. By virtue of its black soils, commercialisation of agriculture in the region began with the cultivation of cotton in response to incentives under the colonial economy as early as the second half of the nineteenth century (Baker, 1984; Berna, 1960; Mahadevan, 1992; Harriss-White, 1996). Expansion of commercial cultivation made Tiruppur the biggest cotton market in the Madras Presidency and the third biggest in British India. This led to the setting up of gins and presses in the town, as well as spinning mills. Knitwear production too had begun in the region by the late 1920s and expanded during World War II.
Though trade in cotton was dominated by merchant communities from the northern and western Indian regions, a few belonging to landowning castes also managed to enter trading (Mahadevan & Vijayabaskar, 2014). Damodaran (2008) notes that a third of the cotton brought into the market since the first decade of the twentieth century was done by the farmers themselves allowing them to gain a higher share of the sale price. Some of the better endowed and successful among them went on to become commission agents, sourcing cotton from other farmers as well. Subsequently, they also set up gins, presses and spinning mills. This ability, as Damodaran points out, can be attributed partly to the absence of a trading elite that could create entry barriers for accumulation in the urban for agrarian capital. Damodaran also maps a similar transition made by Kamma Naidu entrepreneurs into the production of agricultural and textile machinery with deep linkages between commercialisation of agriculture and the processing of cotton in the larger Coimbatore region. Rukmani (1993), in her historical analysis of urbanisation in Tamil Nadu, attributes the distinct nature of urbanisation in the region to such linkages between commercialisation of agriculture production of specific crops and the urban through the processing and trading of commercial crops.
The knitwear industry owes its origin in Tiruppur to the entry of capital from weaving communities with mercantile interests as well as from merchant communities from Malabar. This was a phase when production was centralised with units undertaking all operations in-house. Following the fragmentation of the production process into separate operations that could be divided spatially as well as in terms of ownership, investment requirements for setting up a unit decreased considerably.7 The fragmentation facilitated the entry of sections of KVG farmers who could not gain a foothold in the industry earlier when investment requirements were larger. There were two routes through which the transition of agrarian capital into urban accumulation took place. Farmers with larger landholdings and with better access to water followed the classic route of investing their agrarian surplus in industrial production. Other farmers who were less likely to generate a surplus made the transition either by selling parts of their land or through a process of slow diversification by networking with kin to set up units. This process, though prevalent even in the 1960s and 1970s, accelerated considerably in the late 1980s and 1990s when exports began to expand, accompanied by higher margins.8 Apart from income from agriculture, Gounder entrepreneurs also cite family income as an important source of initial capital which is again likely to be dependent on returns from agriculture (Chari, 2004).
A key dimension of this transition to the urban is the transformation of KVG entrepreneurs’ capabilities over time through investments in education. A route that became particularly significant since the mid-1980s is the entry of professionals into the sector. Those who had worked in the formal economy after investing considerably in higher education moved into entrepreneurship, drawn by the expansion of exports and better returns. Since then, there has been an influx of white-collared employees from the formal sector, both public and private, teaming up with locals with good knowledge of the industry to start export-oriented units.9 With their capabilities more attuned to the process of accessing global markets and loans from formal lending institutions, many of them succeeded. While this phenomenon was not confined to farming households in the region, there were many from such households who transitioned through investments in human capital. This route, as we shall see later, is particularly important for second-generation entrepreneurs from the region.
Till 2005, the quantum of exports was shaped by a quota system (Joshi, 2002). As countries in the Global North sought to protect their own industries against competition from low-wage regions in the Global South, they imposed restrictions on imports from these countries. Quotas were allotted on the basis of past export performance and these were often held by traders from traditional mercantile communities as they had better resources to access global markets. With the removal of the quota system since the early 2000s, new opportunities opened up even as there was competition from other global players. There were a few KVG entrepreneurs with tertiary educational qualifications who could negotiate global travel and discussions with buying agents even under the quota regime, but they were not many. The post-quota phase, however, saw the entry of second generation entrepreneurs taking over the exports segment and seeking to diversify under such more competitive conditions.
It is here that investments in education by these households and the region become important. Unlike agrarian households in most parts of the country, landed middle castes in Tamil Nadu have invested in education substantially. The state, in fact, has the largest share of population in tertiary education, and this is true for lower castes as well. As per the All India Survey on Higher Education (AISHE) 2017–2018, the gross enrolment ratio for those with more than 12 years of schooling and those in the age group of 18–23 years was almost 50 per cent in Tamil Nadu, while the all-India average was only 26 per cent (Kalaiyarasan & Vijayabaskar 2021). Not only is it fairly evenly distributed across gender and caste, there is also a bias towards technical education. As per the NSSO survey (2014–2015), 32 per cent of graduates enrolled in higher education in Tamil Nadu are in technical or professional courses as compared to 15 per cent for all of India. Such investments in education are tied to the conceptualisation of social justice by the Dravidian movement that has shaped politics in the state. Viewing power as essentially emanating from caste elites’ hold over modern education, the economy and public sphere, the movement sought to undermine caste hierarchies by appealing to lower castes to enter the modern economic domain through education as the rural was seen as a space mired in rigid caste-based divisions of labour. Considering the route to the urban-modern as a critical pathway to securing social justice, the mobilisation and capture of state power subsequently by the movement saw the realisation of affirmative action policies as well as the creation of decentralised educational infrastructure to enable access for lower castes. Table 1 illustrates this.
Table 1. Caste and Education Levels in Tiruppur and Coimbatore Districts (2017–2018)
Scheduled Caste Other Backward Class All
Illiterate 40.6 14.8 19.6
Up to middle school 41.3 43.9 43.5
Higher secondary 12.1 22.5 20.5
Graduates 6.1 18.8 16.4
All 100.0 100.0 100
Source: Calculated from NSSO-PLFS 2017–2018.
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The KVG are classified as a backward caste and, as Table 1 indicates, the share of Other Backward Class (OBC) graduates is quite high in relative terms. Such state-level political ethos and the developmental response have therefore critically shaped the agrarian–urban transition in the Tiruppur region. New entrepreneurs from non-agricultural households as well as highly educated second-generation entrepreneurs from agrarian backgrounds have sought to secure Tiruppur’s location in the global knitwear map with reasonable success. Not only have these new entrepreneurs succeeded in tapping into new markets, they have also diversified in terms of product profile as well as introduced innovations like Enterprise Resource Planning (ERP) and industrial engineering solutions to improve productivity. Some of them have also sought to invest in other locations such as Ethiopia, Bangladesh and Sri Lanka to take advantage of lower resource costs. Many have also begun to backward integrate setting up spinning mills, while a few are trying to bypass intermediaries to directly sell to retailers. As Damodaran (2008) points out, exporters have also constituted a fairly powerful association capable of negotiating with regional and national governments. In fact, the former President of the Tiruppur Exporters Association, A. Sakthivel, also served as the head of the Federation of Indian Export Organisations (FIEO) for a few years.
While historical factors reduced the dominance of mercantile interests observed elsewhere, the agrarian transition to the urban in western Tamil Nadu was also facilitated by a regional political ethos, both of which were found to be lacking in the case of Jat farmers in Haryana.
Jat Diversification in Panipat
Though spread over several states, Jats are numerically concentrated in Punjab, Haryana, Rajasthan and western Uttar Pradesh. Despite variations in their socio-economic condition across states, they are considered to be among the more prosperous agricultural castes of North India (Singh, 2011). Jaffrelot (2002) attributes their prosperity to two factors. Tenancy reforms, although incomplete, enabled many Jat tenants to become landowners and eliminated intermediaries between the state and cultivators. Moreover, the consolidation of holdings by pooling fragments of land into plots viable for cultivation in Haryana was also speedily achieved (Gill, 1989)10 resulting in tenancy declining significantly and the share of self-cultivation by owners increasing to more than two-thirds by 1957. The second factor was the Green Revolution. The Jats, who had access to land and the capacity to invest, gained more from the Green Revolution because of the regional bias inherent in those technologies (Jaffrelot, 2002).
Despite having gained through both land reforms and the Green Revolution, they could not, however, translate those gains into sustained accumulation and diversification into non-farm sectors. For one, they lacked skills and the education needed to diversify.
Green Revolution technologies were capital intensive and also enabled multiple cropping cycles within a year. The Punjab–Haryana region was one of the few in the country that saw the cultivation of three cycles of crops in a year. This in turn spawned the demand for and expansion of credit, input and agro-output markets that was met by entry of Khatris and Banias who had first-mover advantage in trade. Such intense cultivation that relied on household labour in good measure accompanied by the absence of a need to acquire formal education led to the neglect of building capabilities that could have helped the Jats diversify. Further, their attitude towards diversification was also shaped by a community ethos that privileged agrarian livelihoods. The rural life of a peasant was romanticised and celebrated. Jat leaders such as Charan Singh, former Prime Minister of India, deliberately nurtured and celebrated agrarian ethos and rural lives.11 Singh argued, ‘The peasant is an incorrigible individualist; for his avocation, season in and season out, can be carried on with a pair of bullocks in the solitude of Nature without the necessity of having to give orders to, or take orders from anybody’ (Singh, 1959, p. 104). Jat farmers imbibed a norm that they were the masters of their own lives. This ethos led Jats to believe that the village ‘was always a stronger moral unit than a factory. The sense of the community was a vital thing among the peasantry, providing a natural foundation for collaboration or co-operative action’ (Singh, 1959, p. 270). They built their organisation, the Bharatiya Kisan Union (BKU), based on such norms. As a result, they lacked incentives to diversify or invest in education as the KVGs did. Consequently, they became victims of the ethos of valorising their caste and land-based livelihoods.
In addition to this internal barrier to the domain of urban accumulation, they also had to confront an external entry barrier imposed by dominant business communities in the region. As Damodaran (2008, p. 275) observes:
In the North…. The Banias, Marwaris, and Khatris have been ubiquitous in commodity and money markets; this has made the entry point for affluent capitalist farmers not terribly inviting even in areas such as agro-processing. The capital that grew with the Green Revolution may be eager for self-expansion through conversion into industrial capital; but the outlets are few and precarious.
Banias and Khatris—Punjabi communities who traditionally controlled money and commodity markets in rural Haryana—moved to cities in the 1990s and began to enter modern urban sectors in the state. Given their historical connections to trading and money lending, Banias were more dominant, but the Khatris too managed to find niche segments in the urban economy.
This has in turn led to resentment among the upwardly mobile Jats who aspire for, but fail to gain a foothold in the urban. This resentment is expressed in terms of seeing Punjabis as ‘refugees’ and ‘outsiders’ while they consider themselves to be sons of the soil. After Partition, Punjabis settled in the lands left by Muslims who migrated to Pakistan. They were an occupationally diversified community, with some Punjabis cultivating the land allocated to them, and a majority of them engaged in petty businesses or running small grocery shops in villages. Being early migrants to cities, they managed to access opportunities opened up by the economic reforms of the 1990s. Jats, on the other hand, considered entering urban business to be an affront to their social status. In the 1990s, when the rich Jats finally shifted to cities, they faced considerable entry barriers.
Panipat is the most industrialised district in Haryana state, discounting Gurgaon (now known as Gurugram) and Faridabad where industrialisation was spurred by the expansion of accumulation in New Delhi. Panipat is the largest hub in terms of manufacturing clusters, after Gurgaon and Faridabad, as per the Economic Census 2013–2014. It is a textile hub, known for its home furnishings and is also one of the leading centres for exports of such furnishings from India. Of a total of 879 enterprises in the state, 445 are located in Panipat. It produces 75 per cent of the total blankets made in the country12. The history of this textile cluster goes back to First World War when it was encouraged to supply goods under the British Raj (Roy, 2003) and received an impetus post-partition that saw a settlement of weavers in the region. A wool-producing area historically, woollen manufacturers expanded and diversified under colonialism. Demand expanded during the First World War, even though the wool economy was also heavily dependent on foreign trade in colonial India. Post-Independence India witnessed the entry of cotton into the cluster as well in response to the expansion of export opportunities in the 1970s. The hand-knotted carpet business that initially catered to the domestic market began to expand in response to global demand since the late 1970s. Jodhka (2010) notes that most suppliers in Panipat are from the locally dominant business communities such as the Banias and Punjabis. Interviews with key informants in the cluster suggested that the two communities control about 80 per cent of units in the cluster. Punjabis were the first to exploit the opportunities opened up by the cluster. According to informants, caste networks have enabled them to access markets, and gave them an advantage in terms of pricing and access to credit for inputs. Their early entry also meant that they have established a degree of trust that increases the prospects of repeated contracts with global buyers.
As a Jat businessman who manufactures spare parts used in the textile industry observed, it is difficult to get a foothold in bedsheets and blanket markets. The former is controlled by Punjabis and the latter is by Banias. Even if a Jat invests in this sector, they are unlikely to get market access, observed another Jat entrepreneur who is again a supplier of spare parts. Apart from market access, delayed payment for their supplies is an issue that they cannot afford given their relatively poorer investment capacity. Similarly, Jats also report or perceive discrimination in sourcing inputs as they are of the opinion that they will be denied input credit by Punjabi input suppliers. Moreover, since they lack exposure to business and knowledge of export markets or the education to negotiate global markets, they do not see themselves competing with Punjabis or Banias unlike the KVGs. Jats have, however, managed to get a small foothold in the spare parts segment of the textile industry as it involves more labour intensive and physical work, with a few of them going on to become producers of machines needed for textile industries. However, unlike in Tiruppur where the KVGs have managed to enter on a large scale and also diversify into related segments, the Jat presence is almost negligible in the Panipat cluster.
This inability to diversify has led to Jats largely retaining their surplus in the form of gold.13 They have also invested within agriculture, particularly in tractors, electric and diesel pumps for groundwater extraction as groundwater has become the main source of irrigation in the region. Over time, however, while this led an increase in costs of cultivation, it has not been compensated by adequate increase in market prices. To sum up, if they could not diversify the surplus generated in the 1980s into the expanded circuits of accumulation in the urban, they could not generate much surplus since the 1990s. The relative position of the farm sector has worsened and widened rural–urban disparities. The consumption expenditure growth in urban areas, for instance, has been more than five times higher than the consumption growth in rural areas in Haryana. As per NSSO-CES, the urban to rural expenditure ratio increased from 130 per cent in 1993–1994 to 170 per cent in 2011–2012.
The only non-agricultural sector that Jats have achieved reasonable success in is transport services, which they entered either through investments in transport equipment or by working as drivers and then gradually becoming owners.14 The fact that the transport sector does not require literacy and high-end skills or sophistication in management has also contributed to this diversification. Another route through which Jats have diversified is through the rise in land prices. Though a section of landed Jats started moving to cities even in the early 1990s, as documented by Jodhka (1996), gains made through the increase in land prices became particularly important in the 2000s when the real estate boom around the National Capital Region (NCR) region translated into speculative accumulation among sections of Jats who own land close to that region. Otherwise, as Damodaran (2008) points out, agrarian surplus was largely invested in lavish social ceremonies or in small, localised rentier businesses like petrol pump dealerships, marriage halls and shopping complexes. The overlaps with Balagopal’s observations (discussed above) on the nature of investments made by capitalist farmers of coastal Andhra Pradesh during the 1980s are obvious.
This narrative of failed transition into the non-provincial urban accumulation by the Jats mirrors observations by Sinha (2021) of Jat diversification in Punjab as well. Mapping the diversification strategies of 59 capitalist Jat farmers with large landholdings (those with 4 hectares and above) since the 1960s, Sinha once again points out that most diversification had been into petty businesses or into agro-processing or trade. They confront limits to scale up or sustain primarily because of the absence of wider networks. In other words, Jat capital in the urban continues to be provincial. Sinha also observes their relative success in the transport sector as well as diversification through entry into the military services or through international migration. Given the absence of investments in education, they also have not been able to enter high-end segments in the urban labour market opened up by economic reforms such as in software services or managerial cadres in other fast growing sectors. Therefore, for Jats, the most common source of income, even in 2011, was cultivation. Among the Forward Castes (which includes Jats), 67 per cent of households were dependent on cultivation and just 11 per cent were salaried (Jaffrelot & Kalaiyarasan, 2019). In fact, the share of salaried households among the Jats was the lowest among all caste groups in the state. The Scheduled Castes (SCs) and OBCs, in fact, have a higher proportion of salaried households—about 21 per cent and 19 per cent, respectively compared to the Jats.15 Educational investments and affirmative action policies have contributed to better participation in modern formal jobs by the lower castes. As a result, in the absence of adequate human endowments unlike the KVGs, the Jats seldom enter into high-end segments of the urban labour market.
Caste and the Agrarian Question
Based on a comparative study of two dynamic agrarian regions, we have tried to make a case for the relevance of the caste question to understand rural–urban transitions in India. Unlike the processes of transition in South-East Asia, caste-based divisions of labour play a critical and mediating role in the transfer of agrarian surpluses into circuits of accumulation in the urban. Given the continued dominance of upper-caste groups and traditional business communities in the sphere of urban accumulation that transcends the provincial or the regional, landed caste groups face barriers in effecting a transition from ‘investment from below’ into a sphere that is dominated by big businesses. However, based on the diversification trajectory of the KVG landed households in western Tamil Nadu, we suggest that sub-national politics can generate pathways for such transition. The KVG farmers, benefitted from the absence of a dominant mercantile caste, and managed to accumulate to an extent through participation in trade and subsequently managed to enter the knitwear production sector. To be sure, given that knitwear production was confined to the small scale sector, it was not exactly a domain that attracted the dominant business communities. However, in many other clusters of small-scale production, studies do point to the control exercised by traders (Vijayabaskar, 2001). Even knitwear production in Kolkata, for example, was controlled by traders by virtue of their access to markets. In the Tiruppur region, KVG entrepreneurs, over a period of time, replaced the merchant and weaver communities that dominated the sector initially. Importantly, members from KVG households, by virtue of sub-national affirmative action policies and a political ethos that privileged entry into modern education and economy, managed to transition from being poorly literate entrepreneurs to ones capable of negotiating conditions in the highly competitive global apparel market. However, such pathways of diversification are not evident in most parts of India where mercantile and caste elite families tend to monopolise the non-provincial circuits of accumulation in non-agricultural sectors.
To that extent, the failed transition narrative of Jat capitalist farmers is more representative of rural to urban capital transitions in India. The Jat story is probably unique to the extent that the Haryana region happens to be among the most commercialised and productive agrarian regions in India, and hence, most likely to have diversified out of agriculture as anticipated by classical transition narratives. On the contrary, Jat farming households are confronted with a twin crisis. Declining returns from agriculture and a failure to exert hegemonic control over lower-caste agricultural labourers in the rural have generated anxieties around their perceived social status. Recent reports suggest that Jats’ concerns are also tied to sections of SCs entering jobs and small businesses (Ghildiyal, 2015). Simultaneously, a failure to enter modern employment or to expand accumulation in the urban, except in real estate (in specific locales) and transport, has marginalised them in the urban. Through this article, we have therefore also sought to render visible the control of upper castes over the dominant circuits of accumulation in the urban. The relationship between circuits of provincial and non-provincial capital however requires further analysis. To conclude, Upadhya (1988), based on a survey of entrepreneurs in urban Andhra Pradesh in the 1980s who had diversified from agriculture, ends her two-part paper wondering whether farmers-turned-businessmen will transform into a class of industrial capitalists, as anticipated in the traditional understanding of agrarian transition. It would appear that economic shifts in post reforms India has made that possibility more remote.