Social inclusion in the official lexicon is but an empty phrase, a form of doublespeak in an economy that actually furthers exclusion.

If there are two ideas that seem to confer some sort of legitimacy to the policymaker’s social concern, they are the ‘poverty line’ and ‘social exclusion’. No country in the world has devoted so much time and intellectual capital doing a ‘Radcliffe’ demarcation between the poor and the not-poor. And, no policymaking machinery has based its legitimacy on directing resources to those below that line —however defined and accepted — as much as that in New Delhi.

Social inclusion found wide currency in Indian policy circles after Finance Minister P. Chidambaram’s first use of its narrower term, ‘financial inclusion’, in his Budget speech of 2006, when the economy was glowing and the policymaker could afford to point to those excluded from the party without arousing too much ire.

Binary opposites

Although the term ‘social exclusion’ originated in 1970s France to describe the exclusion of minorities from civic rights, the idea caught on when a committee was subsequently formed to inquire into the extent of exclusion, that, in turn, paved the way for a larger discourse on social inclusion. Soon, it formed the agendas for many seminars, research papers and soundbytes for talk shows across the country’s urban centres.

Most of the discourse on social (or financial) ‘inclusion’ in India (unlike the development studies debates on social ‘exclusion’) takes place in a vacuum, devoid of context. That could explain why so many are seen to be excluded (and these need not necessarily be poor as defined by the line), and for which policies have to be fashioned to achieve their “integration.”

When central bankers, following the C. Rangarajan committee set up soon after the 2006 Budget speech, talk, and they do so ceaselessly, of financial inclusion, it seems as if they have in mind a section of the population from another planet, a people forgotten by the mainstream economy in its rush towards self-fulfilment: Exclusion and inclusion are viewed as binary, mutually opposing modes of existence.

Banks, we are told, have to replace the usurer both in the rural and urban areas, the landless and the construction migrant worker have to be financially included as a first step towards social inclusion: Informal mechanisms have to be replaced by formal ones.

Exclusion expresses power

But social exclusion is not a self-imposed affliction, an act of voluntary abstinence or an accident of existence in the wrong place and time. It involves a history of both co-option and dispossession by market forces. That leads to exclusion from the very institutions that policymakers think they should be made part of.

If the urban poor, for instance, are “unbanked”, it is because they are part of the mainstream economy at its very bottom, and therefore lack the means to become part of the formal banking system. If they have no access to credit or a savings account, it is because the ‘inclusion’ or ‘alienation’ from the market-driven economy does not provide them the resources to gain that access; their “inclusion” has disempowered them.

Adverse Incorporation

Andreis du Toit, a South African development studies specialist takes issue with the idea of ‘social exclusion’, preferring the term “adverse incorporation” in his studies on post-apartheid poverty. That term serves us well in describing the urban poor, construction workers, migrant artisans, who are “excluded” in precisely the same way that the policymaker and central bankers would like us to believe because they have been ‘included’ into the mainstream economy. This is akin to the landless labourer being at the bottom of the rural economy, or at the bottom of pyramid of power and appropriation.

The terms of their engagement with the formal economy are what exclude them from those privileges that are accessed by the rest of the stakeholders.

Those terms, as studies reveal, are increasingly inequitable.

It used to be said that the informal economy was simply in the rural sector, a residue of the traditional economy that would be erased once the organised economy expanded. But informal labour conditions have become an intrinsic part of the formal economy, especially in sectors that are the main drivers of GDP growth.

A study by the by the US Deprtment of Labor’s Bureau of Labour Statistics on hourly compensation in India’s formal manufacturing sector for the ten years to 2007-08 showed an increase in contract labour among “production workers” and as a proportion of total employees. The NSS 66th Round also showed a rise in informal employment, while the Arjun Sengupta committee underscored the importance of the informal sector for employment.

As the formal economy pursues efficiency and productivity norms, contract labour seems to be the best option because it is the cheapest; it is also the safest because of the “law and order problems” permanent workers seem to create. In that sense, complaints about inflexible labour laws as deterrents to investments appear red herrings meant to distract attention from the increasing use of casual labour in the formal economy.

The irony about social inclusion and inclusive growth, as perceived by policymakers, is that the policies of the market economy to which they are committed are, in fact, responsible for social exclusion. Inclusive growth, without the instrumentality of the state, would be eminently feasible if the market were to pay fair wages and provide the kind of social security that the middle class seem to take for granted. But then that would not be market economics, would it?

(This article was published on February 20, 2013)
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