Economic Exclusion and Poverty: Indian Experience of Remedies against Exclusion

Executive Summary This paper develops an understanding of caste-based economic exclusion and its consequences on poverty of excluded groups, and discusses Indian government strategy against exclusion/ discrimination and policy for empowerment. The caste system as an economic organization is based on the division of persons in social groups (castes) with fixed and unequal economic rights. Compulsory and unequal assignment of occupations and property rights implies exclusion of each caste from the occupation of other castes. Low caste untouchables suffer most as they are excluded from having any property rights except service to other castes. It is this exclusion of the low castes untouchables that lead to a high degree of economic deprivation and poverty. Exclusion and discrimination also adversely affects economic growth due to less than optimum use of Labour and other resources. Correcting market exclusion/discrimination therefore is an issue of both equity (and poverty reduction) and economic growth. Theoretical insights also indicate that increasing market competitiveness and state interventions in form of affirmative action policies are necessary to correct market failure associated with caste based exclusion /discrimination. Socioeconomic sketch of Schedule castes (SC) show the adverse consequence of past and present economic exclusion on the SC. This is reflected in high degree of inequality between them and other section with respect to ownership of capital assets, employment, and wage earning education and health situation and others indicators of human development. In 2000 about two-third of SC rural households were landless and near landless, compared to one-third among others. Less than one-third of households have acquired access to capital assets, compared to 60% among others. About 60% of SC households have to depend on wage Labour, much higher than the one-fourth for others. Employment rate and wage earnings also tend to be low. Disparities of similar magnitude are observed in access to educational and health service. Studies also show evidence on discrimination in various market and non market transactions including access to social service like education, health and housing and in political participation. Cumulative impact of these disparities are reflected in high levels of poverty: about 36% among SCs as compared to only 21% among others Poverty was particularly high among the SC wage Labour households in rural (60%) and urban area (70 %). SC also suffered from human right violation and atrocities, during the twenty year period between 1980-2000, annually an average of 23000 cases of human right violation …