editorials

Updated: Jul 28, 2019 08:52 IST

The 2019 election results have confirmed the rise of the Bharatiya Janata Party (BJP) as the new political hegemon in India. By increasing its majority between 2014 and 2019, the BJP has proved that its 2014 victory was not an aberration. There is another politically important conclusion, even if numerically less significant, to be drawn from the 2014 and 2019 results: it is the near decimation of the Left parties, namely the Communist Party of India (Marxist) and the Communist Party of India.

The CPI (M) and CPI had reached an all-time high of 53 Lok Sabha seats in the 2004 elections. This came down to 20 in 2009, 10 in 2014 and a mere five in the 2019 elections. Out of the five seats won by the CPI (M) and CPI, four are from the state of Tamil Nadu and probably would not have gone to these parties had they not allied with the Dravida Munnetra Kazhagam (DMK) in the state.

There is a regional, and politically more sympathetic approach to this. The Left is all but over in West Bengal, and even though it has won just one Lok Sabha seat in Kerala, it still has a significant vote share in the southern state. The former can be attributed to local factors, while the latter can be termed as a temporary setback. West Bengal and Kerala have always been a big part of the Left’s parliamentary strength in India.

But is there another side to this? It is often argued, especially by Left-leaning intellectuals and politicians, that economic policy in India has undergone a pro-market and anti-poor shift after economic reforms were unleashed in 1991. If true, this should have actually increased the electoral traction for Left politics in the country. The observed trend, as has been discussed above, has been in the reverse direction. What explains this divergence between the Left’s academic prognosis and political performance?

To be fair to the Left, it is entirely possible that it failed to exploit the growing anti-poor bias in post-reform India due to organisational handicaps outside its traditional strongholds. It is also possible that other parties have employed pro-poor rhetoric to encash the political discontent among the poor in the country. After all, both the Congress, and over the past six years, even the BJP, have increasingly focused on social development and welfare schemes. Finally, it could also be that other identities such as caste and religion have prevented a class-based political consolidation in Indian politics.

There can, of course, be an entirely different view, which is that there is no such thing as class consciousness in Indian politics and the poor see no conflict vis-à-vis the rich in this country, and therefore the two often vote in unison. Statistics from National Election Studies (NES), the only source of long-term and transparent post-poll studies in India conducted by CSDS-Lokniti actually suggest that this is largely true in India. Put otherwise, the rich and the poor largely vote for the same party and leaders. HT has looked at class-wise support for the BJP and the Congress, India’s two major parties, from 1999 Lok Sabha election onwards. In all instances except one (the voting of the upper class in the 2004 elections), the lead/deficit for these two parties is consistent across class lines. This means that if the rich voted more for the Congress than the BJP, so did the poor, and vice-versa (See Chart 1).

To be sure, not all of this inter-class concurrence in voting can be attributed to lack of class conflict. The Congress, until 2009, always had a greater vote share than the BJP, thanks to its larger national footprint. So it is possible that it ended up with a bigger support across classes compared to what the BJP had. However, the 2019 figures strengthen the argument that the rich and poor are increasingly voting similarly.

In these latest parliamentary elections, the BJP leads over the Congress across all categories, but its leads are the greatest among the richest and poorest voters, something which goes against the assumption that the rich and the poor have different political preferences.

How does one explain this? A substantive answer to this question requires a detailed examination of evolution of class equations in the Indian economy in the post-reform period. However, a look at some descriptive statistics can throw some light on the issue.

The most basic indicator of balance of class forces in a capitalist economy is the change in the share of income accruing to labour and capital. The KLEM (Capital with a K, Labour, Energy, Material) database released by the Reserve Bank of India (RBI) provides a way to track this. KLEM gives sector-wise value added figures and share of labour and capital in total value added in each sector. It looks at how much capital mattered (or contributed) to value addition and how much labour did.

These statistics can be used to calculate the total share of labour and capital in value added for the entire economy and also the ratio between them. A ratio of 1 means both add the same value; less than 1, that labour adds more value than capital; and greater than 1, that capital adds more value than labour.

This ratio was hovering between 0.8 and 0.9 between 1980-81 and 2000-01, started rising thereafter and peaked at 1.2 in 2007-08 (the year when global financial crisis struck). This meant that capital added much more value than labour. It declined sharply after that and has been stable at one between 2009-10 and 2015-16, the latest year for which KLEM data is available. It is unlikely that the ratio would have changed drastically in the subsequent period (see Chart 2).

There are another set of statistics which suggest that class equations have not changed significantly in the Indian economy in the post-reform period. World Bank gives data on quintile-wise (top 20% to bottom 20%) income shares for India from 1983 to 2011.

While there has been a shift towards the richest segment in the post-reform period, it is, contrary to popular perception, not really drastic. What is also remarkable is that the gain of the top 20% has come at the cost of the entire bottom 80% of the population, rather than squeezing just the bottom quintile. Essentially, the rich may have gotten richer but this hasn’t come at the cost of the poorest but at the cost of everyone else (see Chart 3).

Do these statistics mean that class equations have by and large remained intact in post-reform India? Another set of comparisons using the KLEM database suggest that the answer could be complicated and perhaps at odds with the conventional class perspective.

The KLEM database gives sector-wise value added, total employment and labour income share for the economy. This can be used to calculate a wage curve which shows the average earnings associated with a share of the workforce in the economy. An example can make this clear. Let us assume that an economy has two sectors – sector A and sector B – and they employ 20 and 80 out of the total 100 workers. If the value added in sector A and B is ~100 and ~1,000 and the share of labour income in both sectors is 0.5, then the average earnings for workers in sectors A and B would be ~2.5 and ~6.5 respectively. As is to be expected, a real economy is far more complex than the simple example given here.

A comparison of average earnings for different segments of India’s workforce shows a significant increase in income inequality in the post-reform period. A scatter plot of average earnings and associated share of workers shows that top 10% of India’s workers show a significant spike in average earnings in 2015-16 compared to 1990-91 levels than the bottom 90% (see Chart 4).

This, when read with the almost equal distribution of value added between labour and capital during this period, offers an extremely important insight about class-relations in today’s India. Instead of there being a capitalist aristocracy where capital incomes perpetuate income inequality, India has witnessed the rise of a labour aristocracy. The top 10% of the Indian workers earn significantly more than the rest compared to what was the case three decades ago. This could be a result of the dominance of service sector, where mangers walk away with most benefits rather than big-ticket manufacturing, where the capitalist gets most of the income, in India’s growth trajectory.

The emergence of a labour (and not capital) aristocracy has serious repercussions for somebody who is trying to exploit and deepen a rich-poor divide in a society’s politics. It is far easier to mobilise a factory worker against a factory owner, but extremely difficult to politically motivate a casually employed worker against an investment banker or a top-notch IT professional. This is because the conflict of interest between the factory worker and the owner is pretty obvious. However, it is not so straightforward in the latter case. In fact, the poorly employed and poorly paid worker might see his predicament as the result of an individual failure of not being able to get proper education and a well paying job, which could have secured him a place in the labour aristocracy, rather than a collective problem. After all, there are many proverbial rags to riches stories among India’s successful professionals, both in the private and public sector.

POST SCRIPT

The reality however is drastically different. Raj Chetty, a professor of economics at Harvard University, has shown in his research that upward mobility has dropped significantly in the United States compared to what it used to be earlier.

While children born in the 1940s had a 90% chance of earning more than their parents, those born in the 1980s only had a 50% chance to do so.

It is not very difficult to imagine that upward mobility has been coming under squeeze in India as well. Cost of education has been increasing. Rising school enrolments are making it more and more difficult to get into the handful of elite but subsidised government run higher educational institutions, as the number of competitors increase.

Skyrocketing cut-offs in Delhi University colleges and mushrooming of highly expensive coaching centres for professional entrance examinations etc. are an example of this trend.

With a growing demand for higher education, rightly seen as a ticket to India’s growing labour aristocracy, sub-standard private and even public sector institutions are growing. There are many more AIIMS, IITs and IIMs in India today than there were a decade ago, but the new ones, difficult as they are to get into, are hardly a match for the old established brands in the job market.

For a country, which has been basking in the glory of increasing literacy and rising school enrolments until very recently, these are early warnings of the looming catastrophe in the job market. It will not be an exaggeration to say that India’s future class wars would be fought at the gates of the best higher educational institutions rather than factories or farms.

The question is whether the political class, especially the Left, would precipitate and deepen these fault lines or just keep paying lip-service to the clichéd and politically useless rhetoric that claims India’s ruling class took a pro-rich turn after the neoliberal reforms of 1991.