Book Extract | A Sixth Of Humanity: Independent India's Development Odyssey by Devesh Kapur & Arvind Subramanian

Book Extract

Excerpted with permission from the publisher A Sixth Of Humanity: Independent India's Development Odyssey,‎ Devesh Kapur & Arvind Subramanian, published by ‎ HarperCollins India.
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Failures and Disasters

All the major failures in India are primarily, and self-evidently, due to a failure of agency—the sum of policy actions and inactions taken by those in charge. They happened due to some distinctive interplay between these agency failures, legacy (historical/geographical) and contingency. Here we discuss three failures: Punjab, which witnessed a dramatic rise and fall, the latter caused by debilitating rents and the interplay of religion and politics; West Bengal, exhibiting the long-run reversal of fortune, failed as much by its intellectuals as by ideology and class conflict; and the Gangetic states, UP and Bihar, the once and always poor states that are stuck in a low-income trap and sapped by multiple inequalities and the absence of social harmony and basic rule of law, and the curses of natural resources (in the case of Bihar) and aid.

Failure Despite Spectacular Agricultural Crop Success: The Rise and Fall of Punjab Versus the Rise and Rise of Haryana
In the 1970s, the Indian states that seemed most likely to follow the East Asian model were Punjab and Haryana, where rising agricultural productivity and incomes provided the basis—savings, demand and entrepreneurship— for the next phase of structural transformation. That occurred in both for a considerable amount of time; yet Punjab collapsed while Haryana continued to surge ahead.

The pro-agriculture push that followed the crisis of the mid-1960s and the introduction of the Green Revolution—with the central government’s investments in seeds, extension, credit and fertilizer use—benefitted, by design, these two wheat-growing states disproportionately (and Western UP soon thereafter). Punjab and Haryana were chosen precisely because they were considered best positioned to give India the cereals boost due to their extensive irrigation network built during colonial India and subsequently the Bhakra canal system. At the time of Independence, 40 per cent of all irrigated area was in India’s northwest.

In the aftermath of the bloody mayhem of Partition and the exchange of populations, Punjab managed arguably one of the biggest land resettlement operations in the world. For approximately 2.7 million hectares abandoned by Hindus and Sikhs in what was West Punjab, there were only 1.9 million hectares left behind by migrating Muslims in the former East Punjab. The shortfall was worsened by the fact that the areas in West Punjab had richer soils and more irrigation. The massive discrepancy between the land left behind by refugees and the land now available to them (nearly a million acres) was addressed by a ‘graded cut’ (a sort of progressive tax) that ensured a relatively egalitarian allocation of land.

Punjab and Haryana were also the only states in India (along with Western UP) where, thanks to the efforts of Giani Kartar Singh and Chief Minister Partap Singh Kairon (both from farming families), land reallocation was accompanied by consolidation of landholdings. By 1969, 100 per cent of cultivated land was consolidated into more viable units, compared with 77 per cent in UP, 70 per cent in Maharashtra and negligible amounts in the other states.

Subsequently, the region was a major beneficiary of the Bhakra Nangal project, which was a rare exception in being financed entirely by the central government (almost all dams were financed by state governments). While the gigantic Bhakra Dam opened in 1963 in Himachal Pradesh, its waters and the electricity generated largely benefitted the downstream states of Punjab, Haryana and Rajasthan. At the onset of the Green Revolution in the late 1960s, Punjab was an outlier in the degree of access to power and water—more than double the all-India average in per capita electricity consumption and three times in percentage of cultivated land that was irrigated.

The rapid growth between 1960 and 1980 was experienced most by Haryana and Punjab, a testament to the Green Revolution. Punjab benefitted even more than Haryana from agricultural success, but failed thereafter. In some ways, its rise was no mystery; it benefitted from—indeed, was the target of—the massive central government push in agriculture, itself related to the state’s propitious initial conditions. But there was also a broad sense that Punjab’s farmers were among the most enterprising in the country and they seized on the new opportunities made available by the state.

Buoyed by robust growth in agriculture, Punjab was also developing a strong industrial base in the 1970s, with agro-industry and light consumer industry driving manufacturing growth. During the next decade, even as the state was racked by the violence that accompanied the Khalistan movement, its economy stood out compared to the rest of the country. Even as late as 1990, Punjab was the richest state in India.

It was widely expected that in the post-reform era, Punjab’s past economic performance would continue unabated. The state’s economy had been growing at a faster pace than the national economy until the late 1970s and was moving ahead at almost the same pace during the 1980s, despite central government licencing and location policies that discouraged investment in border states and penalized Punjab. The 1991 reforms seemed to reward the very feature that Punjabis are so proud of—their enterprise and work ethic. Yet, three decades later, its growth had slowed so dramatically that it was in the bottom half of the Indian states and facing an acute fiscal and economic crisis. This decline deserves analysis.

Three features of Punjab’s decline are noteworthy. The first is the fact that globalization, which worked so well for Kerala, did not work for it. The second relates to the role of a peculiar form of the so-called rent curse, which also speaks to the obvious question of why the considerable gains of the Green Revolution were not consolidated and transformed into broader structural transformation. The third is the role of contingency. Punjab, like Kerala, is a high-emigration state. Its share of remittances was nearly 13 per cent of total household remittances, third after Kerala and Goa. But by 2020/21, an RBI estimate put Punjab’s share in total remittances received by India at just 3 per cent, compared to Kerala’s 10 per cent, even less than UP’s 3.7 per cent and barely a tenth of Maharashtra’s 35 per cent.

Initially, at least, emigration and remittances contributed to Punjab’s early success. Emigration (especially of young men) mitigated pressures to subdivide land into smaller and smaller plots. Remittances boosted consumption and investments in land and machinery. But over time, the impact of remittances waned, unlike in Kerala. The Gulf’s dominance in Kerala’s emigration flow meant that its migration was largely circulatory. In contrast, Punjab’s migrant stream went more to the UK and the US (and later to Europe as well), where permanent settlement was more likely. Kerala’s migration led to much higher remittances and investments—people send back more money if they intend to return than if they have no such plans.

Most significant were the different effects the two migrant streams had on domestic politics. The violence in Punjab and the massacres of Sikhs following the assassination of Prime Minister Indira Gandhi by her Sikh bodyguards boosted both migration and long-distance Sikh nationalism, which has played an inimical role in fanning the conflict with its material and personnel support for militancy. Its main victims have been the people of Punjab, not the diaspora safely ensconced thousands of miles away.

In short, it is not that globalization is a sufficient condition for reaping opportunities. Rather, the nature of globalization—in this case, the particular features of migration—mattered in a way that has worked to Kerala’s advantage but much less to Punjab’s.

The second distinctive feature of Punjab’s decline is related to the rent curse. The so-called natural resource curse is an important theme in development. Historically, certain commodities—sugar and silver in the eighteenth and nineteenth centuries, and oil and minerals in the twentieth century—entrenched inequality, leading to conflict within states, increasing corruption and rent-seeking, reducing tax collections and eviscerating accountability from below while financing the ability to buy off dissent and exercise coercion from above. The result of this resource curse was enfeebled institutions that set back economic development.

This logic has broader applicability to all sources of manna that states can receive without exercising their own tax effort. It applies to foreign aid but also to other windfalls, which turned out to be large and distinctive in Punjab’s case. It is surprising how much rent it has received since the 1970s. It is arguably the state that has received the largest and most diverse forms of rent.

Remittances from overseas are a kind of rent, in that the possibility of exit from the state alleviates pressures to perform better. They are a safety valve that accommodates weak governance. Another source is military pension. Although recruitment from Punjab has declined over time, it accounts for a large share of the stock of retired military personnel—between one-sixth and one-fifth of the total—owing to intensive recruitment in the years before and immediately after Independence. The pension bill of the Indian Army thus benefitted Punjab the most. Of course, many retired servicemen live outside Punjab, but the state (including Chandigarh) probably receives pension benefits amounting to about 1 per cent of its GDP.

Next, Punjab’s farmers have been the biggest beneficiaries of agricultural rents but, over the long term, they trapped the state in an ecologically unsustainable agricultural model and stymied structural transformation. These are rents because they are transfers from the Centre and the rest of the country to Punjab. They include input subsidies (fertilizers and electricity, the latter from the state exchequer); output subsidies (ranging from guaranteeing minimum prices and procurement); stock subsidies (carrying stocks, mostly of wheat and rice, well in excess of the official buffer requirements and paying the resulting interest charges); fiscal subsidies (central government paying for the states’ taxes and fees levied on agricultural output); and direct cash transfers to agricultural households under the PM-KISAN scheme (started in 2019/20). In 2020, the combined effect was to transfer between ₹1.2 and 1.5 lakh per average agricultural household annually, about ten times the national average of ₹18,000–20,000 (in Haryana’s case, it was between ₹50,000 and 65,000, also well above the national average).

Combining all these, rents could amount to a hefty one-sixth of the state’s GDP. They underpinned higher consumption while raising the reservation wage and resulting in Dutch disease-like effects on land. A damaging consequence has been on the state’s finances, which are amongst the worst in India: Punjab’s debt-GDP, at 47 per cent (2023), is the highest amongst the large states and two-thirds higher than the average for all states. Capital expenditures since the 2010s have been a measly 6 per cent of total expenditures.

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Devesh Kapur & Arvind Subramanian, A Sixth Of Humanity: Independent India's Development Odyssey,‎ HarperCollins India, 2025. Hb. Pp. 760

India's journey has been distinctively 'precocious' in comparative terms. It opted for democracy before development and social change, promoted high-skilled services before and over low-skilled manufacturing and chose a globalization that favoured exports of talented people and short-changed the poor. The socialist state became an inefficiently capitalist one before providing the public goods of physical infrastructure and human capital. The outcomes have been surprising, with the country achieving success in creating and sustaining democracy, albeit flawed, and maintaining a modicum of order.

Four decades of economic dynamism and the emergence of a somewhat more capable Indian state has meant that it is able to build infrastructure and deliver the essentials of life to its population at scale-still not without disappointments, but a massive improvement over the past. Just as India's aspiration has lifted to building 'world-class' statues, temples, bullet trains, airports and digital systems, the undermining of some of the real achievements of democracy, federalism and nation-building stand in the way.

As the world gets radically upended, India's development odyssey is at a critical juncture. A Sixth of Humanity is an attempt to trace how one of the largest and most diverse countries in the world, uniquely and daringly, attempted four concurrent transformations-building a state, creating an economy, changing society and forging a sense of nationhood-under conditions of universal suffrage.

Jointly written by political scientist Devesh Kapur and economist Arvind Subramanian, both of whom have decades of academic and policy experience, this book encompasses perspectives that span disciplines, experiences and geographies. Ramachandra Guha says that “This is a deeply impressive work ... Every Indian who wishes to know their country better, to more fully understand its past, present, and possible future, should read it.” The 2024 Nobel Laureate of Economics, Simon Johnson, says “A brilliant and breathtaking tour de force. You will never think about India or economic development in the same way again.”

The extract on the state of Punjab that has been published here is taken from the chapter entitled “India’s Indias: Succeeding and Failing Uniquely”. After this section on Punjab, the authors proceed to discuss the state of Haryana.

Arvind Subramanian is Senior Fellow at the Peterson Institute for International Economics, Washington, DC, and former Chief Economic Adviser to the Government of India. He has previously worked at the International Monetary Fund, and the General Agreement on Tariffs and Trade, and taught at Ashoka, Brown, Harvard and Johns Hopkins Universities. In 2011, Foreign Policy magazine named him one of the Top 100 Global Thinkers. His previous books include Eclipse: Living in the Shadow of China's Economic Dominance, and Of Counsel: The Challenges of the Modi-Jaitley Economy.

Devesh Kapur is the Starr Foundation Professor of South Asia Studies at Johns Hopkins University School of Advanced International Studies. Earlier he was the Frederick Danziger Associate Professor of Government, Harvard University and Madan Lal Sobti Professor for the Study of Contemporary India at the University of Pennsylvania. His research focuses on the political economy of development. His recent books include The Other One Percent: Indians in America, Internal Security in India: Violence, Order and the State, and The Oxford Handbook of Higher Education in Asia and the Pacific.