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India’s Dominant Proprietary Classes Report (Assessment)

In India, there exist three dominant proprietary classes, namely: the industrial capitalists, the rich farmers and the professionals from both the civilian and military groups plus the white-collar workers. The discussion below relates to specific characteristics of the above groups, as evidenced by India’s economy.

The Industrial Capitalist Class

This class is controlled by the top business families, which existed during the independence period. Their interest is hinged on their business empires survival.

Therefore, they overwhelmingly supported government policies: import substitution, quantitative restrictions on trade, protection of the domestic markets and the running of the public sector to provide intermediate products, capital goods, and infrastructural services to private industries at low prices (Bardhan 40). Secondly, they were interested in maintaining the monopoly powers. For example, in 1976, only 20 business houses controlled the majority of productive assets within the private sector.

To support import substitution industrialization, the Indian government created many lending institutions in support of local entrepreneurs through loans. However, these loans had never been given to poor Indians or prospective entrepreneurs, but later they formed a larger percentage of industrial finance for the capitalist class. Most of these capitalists would have obtained start-ups from their plowed back profits like in most developed countries, but this was nonexistent (Bardhan 43).

Second, most the government policies supported the providing of industrial and import licenses to curb industrial and commercial interests. However, as a result of connections, this policy turned out to be in favor of industrial capitalists. In fact, the wealthy industrialists with connections received the lion’s portion during bureaucratic license allocation, thus sheltering their oligopolistic profits (Bardhan 45).

Moreover, in controlling the monopoly power of these capitalists, the Indian government introduced license regulation. However, most of the large industrial houses freely violated these regulations, thus creating unlicensed capacities. For example, in 1970, Mr. Nanda – chairman of Escort ltd, refused to follow licensing regulations. He also refused to pay these license fines if penalized or allow himself to be arrested for such violations (Bardhan 46).

Forth, the Indian government initiated a policy of changing loans from public finance institutions into equities in private companies. This policy was, however, immediately watered down or taken away completely to allow for capitalists control of their business empires. Nevertheless, in cases where substantial equities were held, family control of business houses continued to prevail over management structures (Bardhan 45).

Fifth, the Indian government introduced a policy of having control and authority in the public finance institutions. Capitalists easily tricked the authorities to take over their non-profitable units with huge outstanding loan balances. As such, the government acted as a loss absorber of last resort for these private businesses.

Finally, there was a government policy of limiting foreign company’s shareholding, thus promoting local investors. This policy excluded foreign participation in the equity capital, thus allowing only the capitalists to control major business ventures despite signing agreements and foreign cooperation (Bardhan 43).

Rich Farmers

Rich farmers are those cultivating landholdings in excess of 4 hectares, thus constituting over 60 percent of all cultivated areas and producing over 53 percent of the total crop yields. In some instances, these farmers hired labor power to exploit the working class within the agricultural sector (Bardhan 47).

However, land reforms after independence increased the on-going process of land transfer from the upper caste landlords to middle caste enterprising farmers. These middle caste property owners converted into large farmers with the help of cheap and easily available hired laborers and sharecroppers. This was necessitated by the disorganization of poor peasants and agricultural laborers.

In several instances, these agricultural laborers were mobilized in large-scale rural movements by rich farmers to support them in agitations for lower taxes, higher farm prices, and input subsidies. During these movements, family farmers also benefited from reduced power and irrigation unit rates, high produce prices, subsidized credits, and inputs.

However, to spread the risk associated with agricultural production, members of the capitalist family diversified into money lending, transportation, trading, and other businesses (Bardhan 45).

The interests of rich and family farmers revolved around campaigning for the higher farm prices. Although, this created conflict between class members, peasants, and wage laborers who were net food buyers, the member did not care much. High agricultural prices negatively affected wage levels, which lagged behind escalating food prices, thus pressurizing households. In most instances, the need for high prices resulted in conflicts between commission agents, specialized grain traders, and landlords.

Moreover, these farmers are interested in frustrating government land ceiling legislation, thus causing tenurial rights violations. In most cases, landlords employed their economic and social dominance in discouraging government accomplishment of redistributive land reforms. In performing these acts, both the rich and family farmers colluded, although they used different political approaches (Bardhan 47).

The Indian government policy of supporting agricultural developments have in most cases, assured farmers of substantial price support at the expense of poor urban population since the 1960s. In addition, government policies have continued to support these farmers through the provision of subsidized agricultural inputs, especially electric power, fertilizer, water system, diesel, tractors, and institutional credit schemes.

In addition, agricultural income and wealth are tax-exempt or zero-rated. In fact, it is reported that there has been limited taxation of agricultural income and wealth if any. This might be attributed to the power of these rich farmers who have organized hired laborers to fight for their rights (Bardhan 48).

The Professionals (Civilians And Military) And White-Collar Workers

During the colonial time in India, there was a massive increase in the number of professionals linked to its judicial, educational, and administrative developments rather than industrial or technological. However, in most cases, there were many conflicts of interests amongst the professionals, public sector servants, and private capital owners.

This was true because most civil servants were hired from traditional literacy groups with a minimal organic connection to industry or trade. However, in traditional groups with low literacy levels and high dropout levels, professionals usually take pleasure in the scarcity of value for their education (Bardhan 50).

The interests of professionals were to direct educational investments in their favor. In this way, they were able to preserve their scarcity rents. In addition, their interests were to acquire and control licensing powers at different levels of bureaucracies. In doing so, most of these professionals were able to increase their ability to grow rental incomes rapidly. However, education offers for underprivileged groups a quick route to upward mobility and to secure jobs in the different bureaucracies and the professions (Bardhan 51).

Comparing China And India Social Indicators (1990 And 2011)

GDP per capita PPP 1990 1,193 1,121
2011 3,203 7,418
Life expectancy at birth (years) 1990 58 69
2011 65 73
Infant mortality rate (per 1000 live births) 1990 81 39
2011 47 13
Under-five mortality rate (per 100 live births) 1990 114 49
2011 61 15
Maternal mortality rate (per 1000 live births) 1990 600 120
2010 200 37
Total fertility rate (children per woman) 1990 3.9 2.3
2011 2.6 1.6
Access to improved sanitation (percentage) 1990 18 24
2010 34 64
Infant immunization (DPT) (percentage) 1990 59 95
2011 72 99
Infant immunization (measles) (percentage) 1990 47 95
2011 74 99
Mean years of schooling, age 25+ 1990 3.0 4.9
2011 4.4 7.5
Female literacy rate, age 15-24 (percentage) 1991 49 91
2010 74 99
The proportion of underweight children (percentage) 1990 59.5 13
2006-10 43 4.0

During the pre-reform era, massive challenges were experienced in China. The country paid heavy prices, extensively learned, and set out rules and regulations as preconditions for its market-oriented economic reforms (Dreze and Sen 47). In fact, China growth policies benefited from the foundation developed during the 1980-90’s periods. Although India has recorded rapid economic growth in the last two decades, it has failed to reduce the suffering within the country.

In addition, even making rapid changes in access to universal education amongst the younger generation would take a long time to have an effect. So it is important to conclude that improvements in social indicators can directly be attributed to reforms in the past decades (Dreze and Sen 40).

India’s Progress On Social Indicators: (1990 And 2011)

GDP per capita PPP 1990 1,193
2011 3,203
Life expectancy at birth (years) 1990 58
2011 65
Infant mortality rate (per 1000 live births) 1990 81
2011 47
Under-five mortality rate (per 100 live births) 1990 114
2011 61
Maternal mortality rate (per 1000 live births) 1990 600
2010 200
Total fertility rate (children per woman) 1990 3.9
2011 2.6
Access to improved sanitation (percentage) 1990 18
2010 34
Infant immunization (DPT) (percentage) 1990 59
2011 72
Infant immunization (measles) (percentage) 1990 47
2011 74
Mean years of schooling, age 25+ 1990 3.0
2011 4.4
Female literacy rate, age 15-24 (%) 1991 49
2010 74
The proportion of underweight children (percentage) 1990 59.5
2006-10 43

India’s Ranking Amongst The Six South Asia Countries

GDP per capita 4 3
Life expectancy 4 5
Infant mortality rate 2 5
Under-five mortality rate 2 5
Maternal mortality ratio 3 4
Total fertility rate 2 4
Access to improved sanitation 4-5** 5
Child immunization (DPT) 4 6
Child immunization (Measles) 6 6
Mean years of schooling, age 25+ 2-3** 4
Female literacy rate, aged 15-24 2-3 4
The proportion of underweight children 4-5** 6

*1 represent top country ranking; 6 is the bottom country ranking; ** represent ambiguity in ranking due to the non-availability of data in some countries under consideration (Dreze and Sen 54).

Of all the South Asian countries (Bangladesh, Sri Lanka, Pakistan, Bhutan, and Nepal), India’s performance improved especially in gross domestic product per capita from 4th to 3rd position. Nevertheless, comparing India to other South Asia countries, the country had better performance than many countries in 1990 (Dreze and Sen 40). In general, it is important to note that India’s performance declined compared to other South Asian countries under review in most of the social indicators.

Works cited

Bardhan, Pranab. The Political Economy of Development in India, Oxford and New York: Basil Blackwell, 1984. Print.

Dreze, Jean, and A. Sen. An Uncertainty Story: India and its Contradictions, USA: Princeton University Press, 2013. Print.

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