The Role of Caste in Economic Transformation : Daily Current Affairs

Relevance: GS-1: Salient features of Indian Society;

Relevance: GS-2: Issues Relating to Development and Management of Social Sector/Services relating to Health, Education, Human Resources; Issues relating to Poverty and Hunger.

Key Phrases: Jobless economic growth; Arthur Lewis, Theodore Schultz, accumulation of physical capital, need for human capital for transformation.


  • Decades of jobless economic growth and rising poverty have resulted in simmering discontent in rural areas which is also evident from the following:
    • ongoing protests against the Agnipath programme;
    • recent agitations against farm laws; and
    • agitation for reservation by agriculture castes etc.

What is caste?

  • English word ‘caste’ is actually a borrowing from the Portuguese casta, meaning pure breed.
  • The word refers to a broad institutional arrangement that in Indian languages (beginning with the ancient Sanskrit) is referred to by two distinct terms, varna and jati.
  • Varna, literally ‘colour’, is the name given to a four-fold division of society into brahmana, kshatriya, vaishya and shudra, though this excludes a significant section of the population composed of the ‘outcastes’, foreigners, slaves, conquered peoples and others, sometimes refered to as the panchamas or fifth category.
  • Jati is a generic term referring to species or kinds of anything, ranging from inanimate objects to plants, animals and human beings. Jati is the word most commonly used to refer to the institution of caste in Indian languages, though it is interesting to note that, increasingly, Indian language speakers are beginning to use the English word ‘caste’.
  • Caste is an institution uniquely associated with the Indian sub-continent. While social arrangements producing similar effects have existed in other parts of the world, the exact form has not been found elsewhere. Although it is an institution characteristic of Hindu society, caste has spread to the major non-Hindu communities of the Indian sub-continent. This is especially true of Muslims, Christians and Sikhs.

Ways in which caste impedes

There are 3 ways in which caste impedes the economic transformation in India:

  • Restriction in Land ownership
    • Inequality in land ownership has also resulted in productivity failure within the farm sector.
  • Elite bias in higher education.
    • Also, historical neglect of mass education has resulted in the perpetuation of socially backward castes to also remain educationally backward in most of the cases.
  • Caste-based entry barriers and exclusive networks in the modern sector.
    • This hasn't allowed most of the socially backward groups to integrate into the modern economy causing them to remain economically backward.

Noble Prize in Economics, 1979

  • Arthur Lewis and Theodore William Schultz won the prize for their pioneering research into economic development research with particular consideration of the problems of developing countries.
  • Arthur Lewis, emphasised the accumulation of physical capital for economic transformation in the developing world,
  • Theodore William Schultz underscored the need for human capital for a better transition to modern sectors.

Important Initiatives taken by the Government to deal with discriminations on the basis of caste and promote transformation

Recent intervention by Government for Human Resource Development:

  • Pradhan Mantri Kaushal Vikas Yojana (PMKVY):
    • It aims to mobilise youth to take up skill training with the aim of increasing productivity and aligning the training and certification to the needs of the country.
  • SANKALP Scheme:
    • Skills Acquisition and Knowledge Awareness for Livelihood (SANKALP) is an outcome-oriented programme of the Ministry of Skill Development & Entrepreneurship (MSDE) with a special focus on decentralised planning and quality improvement.
  • Stand Up India Scheme:
    • It was launched in April 2016 to promote entrepreneurship at the grass-root level focusing on economic empowerment and job creation.
    • To leverage the institutional credit structure to reach out to the underserved sector of people such as SCs, STs and Women Entrepreneurs.
  • Pradhan Mantri Mudra Yojana:
    • It provides funding to the non-corporate small business sector through various last-mile financial institutions like Banks, Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs).
    • Loans have been given to disadvantaged sections of society such as women entrepreneurs, SC/ST/OBC borrowers, Minority community borrowers, etc. The focus has also been on new entrepreneurs.

Challenges in India

Land ownership and productivity

  • India has one of the highest land inequalities in the world today.
  • The land reform of post-independence also largely excluded Dalits and lower castes.
    • It emboldened and empowered mainly intermediate castes at the expense of others in rural India. Eg Yadavas, Kurmis etc., in Northern India, Kapus in Andhra Pradesh and Telangana etc.
  • Green Revolution did not alter land inequality as it was mostly achieved through technological intervention.
    • India saw surplus food production but the castes that were associated with this land pattern and benefited from the Green Revolution tightened their social control over others in rural India.
    • The land, still, defines social status and pride in many parts of rural India.
  • Land still works as a source of inheritance, family lineage and speculative capital.
  • In that sense, the economic reforms of the 1990s were a watershed moment.
    • The farm lobby lost its power. As they were unable to transform their status from cultivators to capitalist entrepreneurs in the modern sectors.
    • Reasons behind this -
      • historical neglect of education and
      • the entry barriers erected by the upper castes in modern sectors.
        • Eg. The recent agitations by the Jats in Haryana and Punjab, the Marathas in Maharashtra and the Patels in Gujarat, demanding reservation for their castes in higher education and formal jobs exemplify this new trend.

Neglect of education

  • If the strong growth in productivity within the farm sector is crucial for sustained economic growth, an educated workforce is equally necessary to move to the modern sectors.
  • The Indian education system suffers from colonial elite bias.
    • It can be seen in denial of mass higher education.
    • Only a few elites could garner a top position in Software companies.
  • Political scientist Myron Weiner has argued that India suffered from caste bias in education.
  • Chinese and other East Asian Countries invested in basic education and gradually shifted towards higher education. This augmented their human capital and nurtured their transformation from a rural agrarian economy to rural entrepreneurship along with becoming a manufacturing powerhouse.

The barrier to entrepreneurship

  • India did not witness capitalism from below except in a few cases.
  • Caste shaped policy outcomes, including India’s highly unequal land reform and lack of public provision of education and health, which in turn erected barriers to economic diversification.
  • Caste also worked in building social networks.
    • This denied capital access to vulnerable caste groups.

Way Forward

  • Investing in Human Capital augmentation
    • Removing elite bias in education and strengthening higher education infrastructure.
    • Skilling initiatives like SANKALP, NSQF etc., must be implemented in letter and spirit.
  • Access to Capital for Rural Entrepreneurship.
  • Rationalising Caste based reservation
    • So that the benefits of the reservation could reach the more deserving ones.
  • Land Ceiling and Land reforms to be executed in letter and spirit.
  • Helping the rural agrarian economy to transition to a rural manufacturing-based economy.
    • Food processing industries will be an initial step in this regard.
    • ODOP (One District One Product) is the right step in this direction.
    • Farmer Producer Organisations (FPOs) can be given access to capital to set up food processing industries for value addition.


  • Truncated transformation is partly an outcome of the interface between caste and economy. For caste is not a residual variable but, is an active agent which stifles economic transformation to a greater extent.

Source: The Hindu

Mains Question:

Q. Caste system in India has acted as an impediment in achieving the objective of inclusive growth. Critically examine the statement with the help of examples.