Prof Joydeep Baruah on the “Idea of Self-determination and Building a National Economy in the Contemporary Context”

Two ideas were central to late Parag Kumar Das’s thinking and writings i.e. idea of ‘self-determination’ and that of building a ‘national economy’ of Assam. He was experimenting with these ideas during the period of late eighties and early nineties when the World was witnessing a distinct transition, and Assam, in particular, was going through a phase of unprecedented socio-political uproar. Evidently, this was also a period of disillusionment of people of the state about the hope and promises generated by the Assam Accord. At the same time, this was also a period when most people started believing that larger questions of Assam’s economic development were increasingly getting sidelined. Against such a backdrop, many people like Parag Das, began to question the ‘Assam-India relation’, and felt that the very nature of that relationship, perhaps, require some reconfiguration for ending the woes and miseries afflicting the masses.

Although Parag Das articulated his views on the ‘Assam-India relation’ through a series of writings, his critical take on the subject is found in a more coherent way in his book Swadhinatar Prastab. The focal point of this treatise was to justify ‘self-determination’ for the ‘people’ of Assam. He tried to argue that historically and socio-culturally Assam was never a part of India; later it only got annexed to the ‘colonial India’. Most importantly, even after the Independence, the ‘colonial exploitation’ continued over Assam causing backwardness to the state and its people.

Consequently, he argued that Assam needs self-determination in terms of ‘full control over its resources’ so that the state can organise its ‘production system’ according to the needs of its people, which, ultimately results in building a ‘national economy’ of Assam. In fact, he tried to outline a blue print of such a national economy in his book Swadhin Asomor Arthaniti.

Parag Das’s thought and writings evoke several pertinent questions, which are not only of contemporary relevance but are also quite intriguing in general. The first relates to the framework of federalism which defines the relation between India and its constituent states. Many people see this federal organisation as grossly asymmetric, where a strong ‘centre’ tends to dominate the ‘states’. Naturally, question arises how, over the years, this asymmetric federalism is being made stronger, and what have been the resultant implications of this process on the states? The second relates to the question of continuation of the alleged ‘colonial exploitation’ of the states by the centre within this constitutional federalism- what are the nature and forms of such exploitation producing an internal colonialism? Finally, and most importantly, whether, given the present global regime, the idea of ‘self-determination’, ipso facto, would entail an operational autonomy in the sense that the idea of a national economy can be an envisioned as a realistic possibility?

This memorial lecture will like to engage with these questions critically in order to provoke a sensible debate over these ideas. After all, it is with these kinds of engagements we can, perhaps, pay our best tribute to Parag Das who was never afraid of experimenting with ideas. I would like to begin with the idea of ‘internal colonialism’ in India, which Parag Das was referring to quite often in his writings. To understand the notion and functioning of ‘internal colonialism’ one has to have a clear idea about what kind of relation constitutes colonialism and how colonialism operates as a process of accumulation.

In understanding ‘colonialism’ it is essential that we are able to comprehend the particular kind and form of transfer of goods and resources that distinguish it from all other kinds of transfers. In absence of ‘colonial relation’, transfers between, say, two sovereign countries would constitute what we usually call ‘export’ and ‘import’. If, suppose, such transfers happen from country A to country B, then it would typically constitute export for country and A, and import for country B, and those will figure in their national accounts (i.e. in their respective GNP). By definition, export would add to the GNP while import would make the GNP shrink. Therefore, under the usual circumstances, massive transfers occurred during the colonial period from India to Britain should have been counted as ‘exports’ and should have been beneficial to the India’s growth. Instead, such transfers are well-known as ‘drain of wealth’. The very fact that such transfers from the colonies to the Empire didn’t, in any sense, mean ‘export’ but, instead, constituted ‘drain of wealth’, indeed, underscores the defining form of colonial relation and the exploitative nature inherent to it.

The exact form of exploitation inherent in the colonial relation lies in the answer to the question how such export is actually getting financed or paid off. In normal ‘free’ trade, the country exporting receives income from the importing country, which the importing country finances by the revenues of their ‘own’ i.e. taxes collected from their ‘own people’. In colonial relation, however, this does not happen. Typically, the Empire also collects direct money revenues in the form of rents, taxes and variety of other sorts of levies from the colonies. These revenues acquired from the colonies by the Empire are used to pay off their balance of trade liabilities to the colonies through variety of accounting manoeuvring. What, therefore, effectively happens is that the colonies do not receive any ‘income’ from the Empire on account of the transfers happening from the colonies to the Empire; rather, the colonies, in practice, finance bulk of the liabilities of the Empire arising out such transfers by their own income. It, thus, implies that all transfers from the colonies come, in effect, free of cost to the Empire, which, consequently, become instrumental in suppressing the cost of production in the Empire contributing enormously to the process of accumulation in the Empire. It is, however, now quite well-documented that the Industrial Revolution in Britain as well as in the other colonial countries of the Europe, indeed, could receive momentum from such processes of accumulation.

Since the actual mechanism of exploitation inherent in colonial relation is not obvious, not many are aware of the economics of drain of wealth and therefore, there is not much discussion available on the subject. Notwithstanding, two Indians have researched and written about this very elaborately – one is by Dadabhai Naoraji and the other by R C Dutt. Both have identified that a substantial part of the tax revenue collected in colonial India was put under a budget head called ‘expenditure abroad’ and/or ‘home expenditure’ i.e. ‘expenditure in Britain’, which was then used to pay off the trade balance liabilities to India.

The second characteristic of the ‘colonial relation’ can be seen in the kind of trade that was encouraged and supported by the colonial regime. Several scholars have identified that there is a clear division of labour entrenched in the colonial trade relation. The colonies were supposed to produce and generate surplus of the ‘primary commodities’ – which included mainly the food stuff, raw materials - agricultural and mineral. The metropolises of the Empire, on the hand, were engaged in producing manufactured consumer goods that required constantly expanding market. Notably, the value of the manufactured product produced by the Empire, in aggregate average terms, was relatively higher compared to the value of the products acquired from the colonies.

Therefore, bulk of the trade liabilities of the Empire to the colonies were also settled by importing these manufactured commodities to the colonies. In fact, colonies were also used by the Empire as markets for their manufactured products, which, in turn, resulted in large scale deindustrialisation in the colonies. Herein, comes the third important aspect of the colonial relation. Due to imposition of wide variety of taxes, duties and levies on various economic activities and products viz. land revenue, salt, opium etc. coupled with large scale deindustrialisation, there was decline of income of the people in the colonies. Conspicuously, this systemic ‘income deflation’ in the colonies was also necessary to maintain an ‘export surpluses’ of the primary commodities for transfer to the Empire. This systemic income deflation was necessary for preventing these colonies having capital formation within, and countering the capital inflow that would facilitate an economic transition within the colonies. The question, however, arises, who were then the potential buyers of the imported products from the Empire in the colonies?

One of the most significant aspects of colonialism which often remains underappreciated has been the enormous role of migration of people from the Empire to the colonies, and its contributions to the process of accumulation. In fact, under the aegis of colonialism, a large number of British people belonging to both military and civil administration came to India, which with time grew to a sizable Anglo-British section of population. This section of population were engaged in running the British administration in India and the cost of the administration was borne by the taxes and revenues collected from the Indian people. The income of this section of people was maintained through continuous increase in the taxes and revenues which constituted the first ready market for the imported manufactured goods. As the British rule expanded in India, it required larger class of people who could be co-opted to the administration. This section included newly emerging class of landlords, revenue officials, government servants etc. which too constituted potential market for these products. Most importantly, ideology of colonial modernity was used to create markets for the manufactured goods imported from the Empire. What is important here is to note that the market for the imported goods was sustained with the help of the twin apparatuses of colonialism i.e. the ideology of colonial modernity and relentless internal transfer of income from the masses to the ruling/elite classes. The last but not the least colonialism was also characterised by the global flow of surplus capital out of the Empire to the colonies and elsewhere. The pool of surplus capital in the Empire was, in fact, the result of a peculiar process of accumulation, which was characterised by, inter alia, two very distinct tendencies. The obvious one was the increasing share of profit arising out of the rather low supply price of primary articles especially the raw materials and minerals, which is commonly referred to as the ‘drain of wealth’. The other not so obvious tendency was the rise of savings within the Empire consequent upon the rise in the average level of income in general arising out of the tightness in the labour market due to considerable outmigration to the colonies.

The colonial relation is, thus, characterised by five very important features viz. (1) drain of wealth, (2) international division of labour and resultant nature of trade, (3) mass income deflation giving rise to an artificial export surplus on one hand and deficient capital formation on the other, (4) instrumentality of the ideology of colonial modernity in expanding a market for imported manufactured products, and (5) mobility as well as spatio-temporal fix of the surplus capital caused by the colonial process of accumulation.

Let me now briefly turn to the question of asymmetric federalism in India and its impact on the centre-state relations during the post-colonial period. The Constitution proclaims India to be a ‘Union of States’. The making of the ‘Union’, however, had witnessed as well as gone through incredible political manoeuvres, and the proclamation reflects the obvious strains thereof.

Evidently, the word ‘Union’ obscures any reference to ‘subordination; rather connotes ‘integration’, wherein a new form is shaped by putting together ‘units’ of various shapes and sizes without distorting much the original features of the constituent units. At the time of independence, India had to integrate four sets of political entities – (a) the provinces which were under direct control of the colonial rule, (b) provinces that were princely states having relationships with the colonial rule defined by respective individual treaties, (c) provinces which were not under the colonial rule and at the same time didn’t maintain any relationship with it based on mutual treaties and (d) political units which were either ‘excluded’ or ‘partially excluded’ from the colonial administration functioning as sovereign territories at the different ‘frontiers’.

Post colonial India’s political imperatives, thus, included reconciling two seemingly opposite tendencies viz. building a nation-state based on the idea of indivisible, monopoly sovereignty for transforming a resource poor, impoverished economy into an industrialised, developed economy guided by the apparatus of central planning on one hand and negotiating with the most complex question of political integration of diverse ‘categories’ of units each being different politically, socially, culturally or otherwise – through various federal arrangements based on the notion of sort of divided sovereignty on the other. The nationalism in India, thus, both as a concept and as an ideology had many hues since emergence and growth of nationalism in response and reaction to the colonial rule varied according to these categories. The resultant outcome has been the political arrangements broadly referred to as ‘Indian federalism’ which is unique in several senses – often called as ‘quasi-federalism’ (Varsney, 1995) or ‘asymmetric federalism (Rao & Singh, 2004). Scholars argue that it is ‘quasi’ because the equilibrium of power is tilted towards a ‘strong centre’ i.e. the Union Government, thus, creating a tendency of ‘subordination’ of the states in the political arrangements. This also signifies vertical asymmetry of power between the Union Government and the states. Moreover, there are asymmetries horizontally as well, since the arrangements provide specific allowances to specific states.

The genealogy of the ‘Indian federalism’, however, dates back to the colonial rule in the country (Rudolph & Rudolph, 2010). Historically, the several federal features of the colonial rule articulated in different legislations and instruments of governance including the Government of India Act 1935 provided the foundation upon which typical federal arrangements in the post colonial India have been constructed. Scholars also argue that the philosophy of federalism was advanced by the colonial administration to counter the philosophy of nationalism which aimed at thwarting the colonial rule. It is, therefore, important to understand and contextualise federalism as a philosophy of state formation vis-a-vis the philosophy of nationalism and nation state. This is all the more necessary in the contemporary context when the idea of nation-state is being constantly challenged by globalised market economy, to which I shall turn shortly.

In India, the Part XI of the Constitution along with the seventh schedule defines the centre-state relations. In the strict economic sense, federalism in India provides for far greater power of taxation to the Union than the states and/or sub-state level political entities such as the PRIs. Such asymmetry in power of taxation among the various tiers of political units can be sourced to the power and ownership of natural resources as defined in the constitutional federal framework. We can see overlapping powers of the union, state, and PRIs over land, water, forest, minerals etc. Constitutionally, powers to own and manage all the ‘larger’ resources are accorded to the ‘higher’ tiers of the political organisations; for instance, inter-state rivers, heavy minerals, reserve forests etc. are subjects of the union. Characteristically, in most of the cases it was seen that the distribution of the natural resources was in obvious conflict with the federal arrangements of the ownership and management of these resources. This asymmetry in terms of ownership and management of the natural resources result in overwhelmingly asymmetric economic powers between the ‘union’ and the ‘states’, which consequently, leads to subordination of the states by the union.

It may, however, be noted that this asymmetry of economic federalism was, to a great extent, ecessitated by the India’s development experiment with the national planning, which required great deal of resources. It came with; inter alia, two important requirements – first it tried to achieve a ‘balanced regional growth’ with the ideals of equity through a series of state led investments. However, it ended up continuing with the colonial pattern of investments for achieving the ‘plan targets’. This resulted in further regional disparities within the country.

Second, it sought to encourage a well-developed ‘private’ sector – i.e. a national capitalist class to build a ‘national economy’ through various incentives and supports. This was tried with some degree of ‘delinking’ the Indian economy from the volatility and vagaries of the ‘global market’ through a series of ‘protections’ given to the domestic nationalist capitalist class. Over the period of time, this became entrenched in the system and the so-called relative autonomy of the state gradually gave way to a class-biased state. The economically and/or industrially advanced areas continued to receive flows of cheap wage labour from the areas which were economically and industrially poor. In the process, bulk of the resources went to these newly emerging capitalist classes. Altering this would have resulted in loss of profits to the capitalist class emerging in the country. Later, the political and capitalist/business class started to form a nexus which ensured this pattern of development to perpetuate.

It, thus, instituted a process of ‘internal transfer’ to the class of national capitalists at the cost of the people of the resource rich regions. It also created an ‘internal division of labour’ as well as of the distinct pattern of internal trade between the regions similar to that of the colonialisms. As the process of accumulation proliferated internal spatio-temporal fix of the capital began to show up. All these together fashioned an ‘internal colonialism’ in India.

With these tendencies, aspirations for self-determination and having an ‘own economy’ started to grow in the deprived regions and state. At the core of the idea of ‘self-determination’ – whether in the sense of autonomy or secession, there remains a sense of belief that the people of a given political unit and/or formation have the legitimate right to decide about their political and economic future. The idea of self-determination not only entails people’s aspirations regarding the form of political structure and governance but also, and more importantly, contains a belief that the people should have the full control and ownership of their resources. This implies that the idea of self-determination combines both political and economic sovereignty where one becomes inseparable from the other. Therefore, the idea of political sovereignty automatically comes combined with the idea of having a ‘national economy’ in the sense that once the desired degree of political sovereignty is achieved, the designing a national economy can be a possibility.

The contemporary globalisation, however, has brought about a fundamental change in the overall context. The present ‘global regime’ i.e. the arrangement and architecture of the political and economic powers is, contrarily, characterised by a distinct estrangement of political and economic sovereignty. This indicates that, in the current global regime, even if a country or a state is politically sovereign, it is not necessarily be fully sovereign in terms of economic decision making.

This is primarily due to the fact that the global production system currently operating functions asa ‘highly distributed value chain’. The idea of “national economy” serving the interests of the “national capitalist class”, accordingly, is fast waning. This waning of the typical, stylised nationalist concerns and interests has come as the biggest challenge as well as threat to most of the regions and smaller communities with regard to their socio-political and economic aspirations.

There is yet another question one has to be mindful of. If the ideology of nationalism is conceived as an ideology against ‘foreign dominance’, it has to negotiate with the larger question of whether it has been able to transcend the narrow boundaries of ethnicity, caste and religion, to attain a territorial solidarity founded upon interests arising out of the prevailing socio-economic relations and formations. As the process of globalisation pose biggest challenge as well as threat to the most of the smaller communities, the boundaries of ethnicity, caste and religion resurface even more rigidly. This makes the ideology of nationalism highly problematic to operationalise.

Evidently, in the contemporary regime of globalisation, typically characterised by preponderating big, metropolitan and global capital, with its predatory process of accumulation through either by dispossession or by encroachment/appropriation, the idea of self-determination and consequently that of a national economy, therefore, require very critical introspection. These ideas, possibly, can no longer be confined to the usual framework of non-negotiable, indivisible and/or absolute sovereignty. The contemporary global regime has made political and economic sovereignty of the nations subordinate to the big, metropolitan, transnational capital. It is, therefore, necessary that these ideas are revisited and re-examined. I, however, would like to leave this to the august gathering here and rather provoke everyone to think hard and offer a framework for engaging with these ideas. Let me end by putting up two questions before this august audience – whether restructuring of the federal structure with a greater and a better deal for the state can be thought of as a feasible alternative political arrangement given the contemporary context. Answer to this, however, I leave to you all.

Prof. Joydeep Baruah

Photo Curtesy - Prof. Joydeep Baruah

Joydeep Baruah is a renowned economist and social scientist. He is currently Professor and Director, Surya Kumar Bhuyan School of Social Sciences, Krishna Kanta Handiqui State Open University. This text authored by Prof Barua is the written English version of the Second Parag Kumar Das Memorial Lecture delivered by him on the topic "Idea of Self-determination and Building a National Economy in the Contemporary Context" on February 24, 2023. The Parag Kumar Das Memorial Trust organised the lecture.