Contributions of Indian Economic Thinkers

Contributions of Indian Economic Thinkers

1. Thiruvalluvar

The economic ideas of Thiruvalluvar are found in his immortal work, Thirukkural, a book of ethics. Even though scholars differ widely over the estimation of the period of Thiruvalluvar, it is generally believed that, he belongs to the Sangam age in Tamil Nadu around third century A.D. Thiruvalluvar’s work is marked by pragmatic idealism.

A large part of Valluvar’s economic ideas are found in the second part of Thirukkural, the porutpal. It deals with wealth. Thiruvalluvaris a fundamental thinker. He believes that rains are the basic

support of life. Since rain provides food, it forms the basis for stable economic life. Agriculture which is the most fundamental economic activity depends on rain,”It is rain that both ruins and aids the ruined to rise”.

a. Factors of Production

Thiruvalluvar has made many passing references about the factors of production viz., Land, Labour, Capital, Organisation, Time, Technology etc. He says, “Unfailing harvest, competent body of men, group of men, whose wealth knows no diminution, are the components of an economy”.(Kural 61)

b. Agriculture

According to Thiruvalluvar, agriculture is the most fundamental economic activity. They are the axle-pin of the world, for on their prosperity revolves prosperity of other sectors of the economy, “The ploughmen alone”, he says “live as the freemen of the soil; the rest are mere slaves that follow on their toil”(Kural 1032). Valluvar believes that agriculture is superior to all other occupation.

c. Public Finance

Thiruvalluvar has elaborately explained Public Finance under the headings Public Revenue, Financial Administration and Public expenditure. He has stated these as 1)

Creation of revenue, 2) Collection of revenue, 3) Management of revenue 4) Public expenditure

d. Public Expenditure

Valluvarhas recommended a balanced budget. “ It is not a great misfortune for a state if its revenues are limited, provided the expenditure is kept within bounds.” He has given certain guidelines for a budgetary policy. “Budget for a surplus, if possible, balances the budget at other times, but never budget for a deficit.” Valluvar advocates the following main items of public expenditure: 1) Defence 2) Public Works and 3) Social Services.

e. External Assistance

Valluvar was against seeking external assistance. According to Kural No. 739, countries taking external assistance are not to be considered as countries at all. In other words, he advocated a self-sufficient economy.

f. Poverty and Begging

Valluvar consideres freedom from hunger as one of the fundamental freedoms that should be enjoyed by every citizen. According to him ‘poverty’ is the root cause of all other evils which would lead to ever-lasting sufferings. It is to be noted that the number of people living below poverty line, begging, sleeping on the roadsides and rag picking in India has been increasing.

g. Wealth

Valluvar has regarded wealth as only a means and not an end. He said, “Acquire a great fortune by noble and honorable means.” He condemned hoarding and described hoarded wealth as profitless richness. To him industry is real wealth and labour is the greatest resource.

h. Welfare State

Thiruvalluvar is for a welfare state. In a welfare state there will be no poverty illiteracy, disease and industry. The important elements of a welfare state are 1) perfect health of the people without disease 2) abundant wealth, good crop 4) prosperity and happiness and 5) full security for the people.

2. Mahatma Gandhi

Gandhian Economics is based on ethical foundations. In 1921, Gandhi wrote, “Economics that hurts the moral well-being of an individual or a nation is immoral, and therefore, sinful.” Again in 1924, he repeated the same belief: “that economy is untrue which ignores or disregards moral values”.

Salient Features of Gandhian Economic Thought

1.        Village Republics: To Gandhi, India lives in villages. He was interested in developing the villages as self-sufficient units. He opposed extensive use of machinery, urbanization and industrialization.

2.        On Machinery: Gandhi described machinery as ‘Great sin’. He said that “Books could be written to demonstrate its evils… it is necessary to realize that machinery is bad. Instead of welcoming machinery as a boon, we should look upon it as an evil. It would ultimately cease.

3.        Industrialism: Gandhi considered industrialism as a curse on mankind. He thought industrialism depended entirely on a country’s capacity to exploit.

4.        Decentralization: He advocated a decentralized economy, i.e., production at a large number of places on a small scale or production in the people’s homes.

5.        Village Sarvodaya: According to Gandhi, “Real India was to be found in villages and not in towns or cities.” So he suggested the development of self-sufficient, self-dependent villages.

6.        Bread Labour: Gandhi realized the dignity of human labour. He believed that God created man to eat his bread by the sweat of his brow. Bread labour or body labour was the expression that Gandhi used to mean manual labour.

7.        The Doctrine of Trusteeship: Trusteeship provides a means of transforming the present capitalist order of society into an egalitarian one. It gives no quarter to capitalism. However, now India experiences both casino capitalism and crony capitalism

8.        On the Food Problem: Gandhi was against any sort of food controls. He thought such controls only created artificial scarcity. Once India was begging for food grain, but India tops the world with very large production of foodgrains, fruits, vegetables, milk, egg,meat etc.,

9.        On Population: Gandhi opposed the method of population control through contraceptives. He was, however, in favour of birth control through Brahmacharya or self-control. He considered self-control as a sovereign remedy to the problem of over-population.

10.   On Prohibition: Gandhi advocated cent per cent prohibition. He regarded the use of liquor as a disease rather than a vice. He felt that it was better for India to be poor than to have thousands of drunkards. But ,now many states depend on revenue from liquor sales.

3. Jawaharlal Nehru

Jawaharlal Nehru, one of the chief builders of Modern India, was the first Prime Minister of Independent India and he was there in that post till his death in 1964. He was a great patriot, thinker and statesman. His views on economics and social problems are found in the innumerable speeches he made and in the books he wrote.

a. Democracy and Secularism

Jawaharlal Nehru was a firm believer in democracy. He believed in free speech civil liberty,adult franchise and the Rule of Law and Parliamentary democracy. Secularism, is another signal contribution of Nehru to India. In our country, there are many religions - Hinduism, Islam, Christianity, Buddhism, Jainism, Zoroastrianism, Sikhism and so on. But there is no domination by religious majority. Secularism means equal respect for all religions.

b. Planning

Jawaharlal Nehru was responsible for the introduction of planning in our country. To Jawaharlal Nehru, the Plan was essentially an integrated approach for development. Initiating the debate on the Second Plan in the Lok Sabha in May 1956, Nehru spoke on the theme of planning. He said, “the essence of planning is to find the best way to utilize all resources of manpower, of money and so on. ” Planning for Nehru was essentially linked up with industrialization and eventual self-reliance for the country’s economic growth on a self- accelerating growth. Nehru carried through this basic strategy of planned development. Nehru’s contributiontotheadvancementofscience, research, technology and industrial development cannot be forgotten. It was during his period, many IITs and Research Institutions were established. He always in insited on “scientific temper”.

c. Democratic Socialism

Socialism is another contribution of Nehru to India. He put the country on the road towards a socialistic pattern of society. But Nehru’s socialism is democratic socialism.

4. B. R. Ambedkar

B. R. Ambedkar (1891-1956) was a versatile personality. He was the architect of the Indian Constitution, a custodian of social justice and a champion of socialism and state planning. Ambedkar’s writings included “Ancient Indian Commerce” (a thesis submitted to the Columbia University for the award of the Mater of Arts Degree in 1915), ‘National Dividend of India: A Historical and Analytical Study (a thesis for which he was awarded Ph.D). His thesis was published as ‘The Evolution of Provincial Finance in British India: A Study of the Provincial Decentralization of Imperial Finance”.

Ambedkar’s thesis on “Provincial Decentralization of Imperial Finance in British India” was accepted for the M. Sc degree in 1921. And his theis“ The Problem of the Rupee” was accepted for the award of the D.Sc degree by the London School of Economics in 1923. It is a miracle that RBI was conceptualized as per the guidelines presented by Ambedkar in his book, “The Problem of the Rupee;Its origin and its solution”. The main economic ideas of Ambedkar may be studied under four broad headings:

1. Financial Economics

Much of the work done by Ambedkar during his stay abroad mostly during the period 1913-1923, was in the field of Finance Economics. Ambedkar divided the evolution of provisional finance into three stages:

Budget by Assignment (1871-72 to 1876-77); (ii) Budget by Assigned Revenue (1877-78 to 1881-82); and (iii) Budget  by  Shared  Revenues (1882-83 to 1920-1921).

2. Agricultural Economics

In 1918, Ambedkar published a paper “Small Holding in India and their Remedies”. Citing Adam Smith’s ‘Wealth of Nations”, he made a fine distinction between “Consolidation of Holdings” and “Enlargement of Holdings”.

3. Economics of Caste

Ambedkar believed that caste was an obstacle to social mobility. It resulted in social stratification. He was of the firm view that individuals must be free to change their occupations. Moreover, the caste system caused social tensions. The caste system has resulted in the absence of social democracy in India as distinct from political democracy.

4. Economics of Socialism

Ambedkar was a socialist. He was a champion of state socialism. He advocated the nationalization of all key industries and suggested state ownership of land and collective farming. He was for state monopoly of insurance business. Not only that, he advocated compulsory insurance for every citizen.

There is no doubt that Ambedkar was a great economist. But his academic work as an economist was eclipsed by his greater contributions in the field of law and politics. Above all he was a great social reformer.

5. J. C. Kumarappa

Joseph Chelladurai Kumarappa was born on 4 January 1892 in Tanjavur, Tamil Nadu. A pioneer of rural economic development theories, Kumarappa is credited for developing economic theories based on Gandhism – a school of economic thought he coined “Gandhian Economics”.

Gandhian Economics

J.C.Kumarappa strongly supported Gandhi’s notion of village industries and promoted Village Industries Associations. Kumarappa worked to combine Christian and Gandhian values of “trusteeship”, non-violence and a focus on human dignity and development in place of materialism as the basis of his economic theories. While rejecting socialism’s emphasis on class war and force in implementation, he also rejected the emphasis on material development, competition and efficiency in free-market economies. Gandhi and Kumarappa envisioned an economy focused on satisfying human needs and challenges while rooting out socio- economic conflict, unemployment, poverty and deprivation.

Kumarappa worked as a Professor of economics at the Gujarat Vidyapith in Ahmedabad, while serving as the editor of Young India during the Salt Satyagraha. He founded the All India Village Industries Association in 1935; and was imprisoned for more than a year during the Quit India movement. He wrote during his imprisonment, Economy of Permanence: The Practice and Precepts of Jesus (1945) and Christianity: Its Economy and Way of Life (1945).

Several of Gandhi’s followers developed a theory of environmentalism. Kumarappa took  the  lead  in  a  number  of  relevant  books  in  the  1930s  and  1940s.  Historian Ramachandra Guha calls Kumarappa, “The Green Gandhian,” portraying him as the founder of modern environmentalism in India.

Kumarappa worked for the Planning CommissionofIndiaandtheIndianNational Congress to develop national policies for agriculture and rural development. He also travelled to China, Eastern Europe and Japan on diplomatic assignments and to study their rural economic systems.

6. V.K.R.V. Rao

According to P.R. Brahmananda, “ the great trinityofpre-independent and pos tindependent Indian economists consisted of D.R.Gadgill, C.N.Vakil and V.K.RV. Rao. These scholars were imbibed with a missionary zeal and analyzed the Indian economic problems with a view to designing and propagating economic policies/programmes and plans to India’s national advantage.” V.K.R.V: Rao was a prolific writer.

V.K.R.V: Rao was deeply interested in three large themes. They were:

i.               National Income,

ii.               Food, nutrition and the distribution of good; and

iii.               Employment and occupational distributions.

1. National Income Methodology

As an applied economist, Rao’s name is remembered for his pioneering work on the enumeration of national income of India. Rao was a pupil of J.M. Keynes and he of worked with Colin Clark. 

H.W Singer considered V.K.R.V Rao as “ the best equipped of all Keynes’ pupils. He attempted to develop the national income concepts suited to India and developing countries generally; (ii) to analyze the concepts of investment, saving and the multipliers in an underdeveloped economy; and (iii) to study the compatibility of the national incomes industrialized and underdeveloped countries. Rao’s paper on “Full Employment and Economic Development” was one of the earliest contributions in the field of development towards employment.

2. International Food Aid

Rao was influential in creating ideas and shaping policy in the international attack on world poverty, not only through his contributions to the question of international aid and improved flows of external resources, but also through his activities in the field of food aid.

3. Support for Socialism

During the early phases of planning in India, Rao supported the case of a socialist India, where the state would control the commanding heights of the economy and the public sector would play a dominant role in economic development.

4. Rao’s Views on Industrialization

In his pamphlet “What is wrong with Indian Economic Life?’ (1938), Rao gave the following reasons for low per capita income and low levels of per capita nutrition in India.

i.               Uneconomic holdings with sub-divisions and fragmentation;

ii.               Low levels of water availability for crops;

iii.               Excess population pressure on agriculture due to the absence of a large industrial sector;

iv.               Absence of capital;

v.               Absence of autonomy in currency policy, and in general in monetary matters encouraging holding of gold.

5. Village Clusters

Rao felt that rural communities had to be given a viable base.Therefore he suggested that a cluster of villages should form a unit for rural development, so that both social and economic interactions between villages could develop, and they could effectively generate and fashion their own development with a more meaningful participation by people.

6. Investment, Income and Multiplier

Rao’s examination of the “interrelation between investment, income and multiplier in an under developed economy” (1952) was his major contribution to macroeconomic theory. As a thinker, teacher, economic adviser and direct policy maker, V.K.R.V. Rao followed the footsteps of his great teacher, John Maynard Keynes.

7. Institution Builder

He founded three national level research institutes namely Delhi School of Economics, Institute of Economic Growth (both at Delhi) and Institute for Social and Economic Change (Bangalore)

7. Amartya Kumar Sen

The Nobel citation refers to Sen’s contributions to socialchoicetheory, d e v e l o p m e n t economics, study on poverty and famines and concept of entitlements and capability development (1998).

1. Poverty and Famines

Sen's Poverty and Famines: An Essay on Entitlement and Deprivation” (1981) is both a theoretical and an applied work. In the book, several famines have been studied in the working of a general theoretical framework from an original angle. He examined various meanings of poverty and drew attention to the incidence of absolute and relative deprivation.

2. Poverty and Inequality

Sen has carried out massive work on poverty and inequality in India. Sen’s major point has been that the distribution of income/ consumption among the persons below the poverty line is to be taken into account.

3. The Concept of Capability

The concept of capabilities developed by Sen has been cited as a better index of wellbeing than commodities or utilities. Capability, as defined by Sen, is the ability to transform Rawlsian primary goods to the achievement of wellbeing.

4. Entitlement

Sen has included the concept of entitlement items like nutrition, food, medical and health care, employment, security of food supply in times of famine etc. He considered famine as arising out of the failure of establishing a system of entitlements.

5. Choice of Technique

Sen’s ‘Choice of Technique ‘ was a research work where he argued that in a labour surplus economy, generation of employment cannot be increased at the initial stage by the adaptation of capital- intensive technique.

Conclusively, Amartyasen, more than just an economist, is an ethical philosopher. He is a lover of freedom and a humanist. He has focused on the poor, viewing them not as objects of pity requiring charitable hand–outs, but as disempowered folkneeding empowerment, education,health, nutrition, gender equality,safety net in times of distress; all are needed to empower people.