Bhimrao Ambedkar: revered reformer, forgotten economist

A statue of Dr. B.R. Ambedkar   | Photo Credit: K. Murali Kumar

Dr. Bhimrao Ambedkar is celebrated for his immense vision and contributions to the legal and social framework of our Republic, but many forget that he was, by training, one of the foremost Indian economists of his time.

Armed with a double PhD from Columbia University in New York, and the London School of Economics, he first set his mind to the emancipation of smallholder farmers, who were trapped in cycles of debt, with access to inputs restricted to those of privileged castes. As a result, marginal farmers were destined to stay marginalised. Babasaheb was in favour of pooling of land among small farmers with cooperative management of land. However, he was more concerned with the factors of production and productivity.

His solution was for the state to attempt to control farm input prices. The idea was central to the planned agricultural growth of the first 50 years of free India. However, the problem today for marginal farmers is not much different than it was in 1918, with input costs still prohibitively high for smaller farmers. The M.S. Swaminathan National Commission on Farmers identified the same truths that Ambedkar had, and suggested a solution of setting an MSP at least 50% higher than the cost of production, as opposed to market-linked mechanisms. The Delhi government earlier this year became one of the few States to implement the panel’s recommendations.

His next goal was to break open the obscure financial relationship between the Centre and States (imperial versus provincial governments). He concluded that a system where fiscal powers were shared between the two entities would be the most stable, an idea which is enshrined in the Constitution. His key finding was that leaving all fiscal powers with either entity had led to more corruption and weaker linkages between revenue and development of a province. This finding is relevant even today, as the Centre with a new tax regime tries to influence the polity of States and territories like Delhi.

Babasaheb revealed that London was constantly out to loot the various provincial governments of the British Raj, centralising funds and changing monetary policy to suit its ends. In a similar fashion, it is shocking to see this behaviour repeated after more than 150 years, this time by Delhi instead of London. The Centre in Delhi today is using political favouritism to exclude States which do not toe its line. The CAG report for the year ending March 31, 2018, reveals that the Central government has reduced its grants to GNCT of Delhi by 23% since 2015.

Babasaheb was also instrumental in introducing major labour reforms, making the case for state intervention in labour relations in his writings as “what is called liberty from the control of the state is another name for the dictatorship of the private employer”.

Women’s rights

More significantly, the idea of women as a potent force for economic change owes its legal existence in India solely to Ambedkar. He was instrumental in drafting specific laws to protect the rights of women in mines and factories, as well as recognising maternity in the law. Maternity rights in modern India owe their existence to Babasaheb.

He was also the driving force behind Employees’ State Insurance and the collection of industrial and labour statistics to track the progress of labour. In keeping with this spirit, the Delhi government earlier used statistics to determine a real wage for labour and implement the most progressive minimum wage in the country.

Ambedkar used his status as the Viceroy’s Cabinet Minister on Water and Power to provide a vision for the nation’s oath to modernity, predicated on free access to utilities without discrimination. Under his leadership, the Central Water Commission and the Central Electricity Authority were convened, and until this day ensure that large-scale water and power management projects account for the needs of all Indians. Inspired by this vision of universal access to water and electricity, and standing on the shoulders of the large utility infrastructure initiatives that were Ambedkar’s brainchild, the Delhi government ensured the provision of ‘lifeline’ minimums of power and water were made available for free to all citizens at all times.

Perhaps his most enduring economic research is focussed on the debates around colonial India’s monetary policy, a subject on which he authored two books. In 1934, the Hilton Young Commission was set up to debate this topic. Every member of this Royal Commission on Indian Currency and Finance held a copy of Ambedkar’s book, The Problem of the Rupee, as Ambedkar argued his case for fiscal stability. As a result, the committee drafted the Reserve Bank of India Act of 1934 with the express purpose of protecting markets from currency fluctuations through state control. This is a far cry from today, where we are in an environment of constant attack upon the servants and resources of the RBI and other institutions, weakening the base of economic stability.

The result has been a shrinking of economic activity, employment, industrial output and GDP, coupled with a currency destabilisation in global markets. Babasaheb’s vision that strong monetary policy and robust institutions were required to ensure economic growth in India still rings true.

On his death anniversary, let us commit to learning more about this truly great Indian, who was full of ideas much ahead of his time. Ambedkar was a leader, reformer, constitutionalist and economist whose contributions have touched every aspect of life of modern India.

(Rajendra Pal Gautam is the Minister of Social Welfare and SC/ST in the Delhi government and a senior Aam Aadmi Party leader.)

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Printable version | May 16, 2021 7:03:04 PM |

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