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28 April 2011, Gateway House

Bubbling-Up vs. Trickling-Down

We need to deconstruct power and thus reconstruct India from the lower rungs of economy, of administration and of capability. It will heal the fissures of inequality and mitigate the evils of centralized power.

Development economist, activist and Gandhian

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There is palpable tension everywhere in India at the inequalities and the idea that the middle class is driving the economy. Bribery and corruption, robbery and social violence apart from suicides are increasing.

Egypt is warning us that gross inequalities, as well as the clearly visible accumulation of wealth and privilege by a few, and that too supported by the state, does anger and disturb civic order.

When this question of comparison was posed to our Prime Minister in his audience to the TV channels on 16th February, he said our democracy offers enough valves to express dissatisfaction, so there is no fear of such strong anti- state uprisings.

But all analysis shows that the violent and armed conflicts in tribal areas, the anarchy in many places is due to tangible injustice, the abrogation of the rule of law, the denial of the rights guaranteed by the Constitution and to the unequal  fruits of resource utilization . As some critics say, a dysfunctioning democracy.

Growth and surplus, it is being argued, is the necessary condition for removal of inequality and poverty. But as Amartya Sen has said in his recent article ‘Growth and other concerns’, “there are so many elements of arbitrariness in any growth estimate (the choice of prices for weighing is only one of the problems), but also because the lives that people are able to lead — what ultimately interest people most — are only indirectly and partially influenced by the rates of overall economic growth”

Further how the GDP figures are generated, as well as its composition, from what economic areas and how, is in itself an issue raised by respected economists the world over.

Can distributive justice be built into the growth path of India? Though not impossible, it certainly would require abandonment of the current over-the-top belief in corporate and FDI-led growth.

The Bubbling-Up theory, constructed by Gandhi as a counter theory to the ‘trickle-down’ approach to growth, argues that the process of removal of poverty can itself be an engine of growth, that the incomes and capabilities of those who are currently poor has the potential to generate demand which in turn will be the engine of production, but of goods that are immediately needed by the poor which are currently peripheral in production. The oiling, then, of this engine will bubble up and fire the economy, in a much more broad-based manner. Unlike export-led growth, it will not skew production and trade into the elite trap, which is accentuating disparities and creating discontent. Social and other networks are also creating that centrality of not only communication but also the proximity of production and consumption, as efficient economics. The commons are coming to legitimacy as efficient through the work of Nobel Laureate Elinor Ostrom.

Gandhi suggested that production and consumption should be proximate and based as far as possible on local resources, “the first concern of every village republic will be to grow its own food crops and cloth”. To provide dynamic institutional underpinning to operationalise these ideas on the ground, Gandhi held that a unified political and economic strategy was required. This entailed the creation of an institution in the political realm, “village republics,” to ensure that every adult had an equal share of political power as well as the duty to be an active custodian of political freedom. Swaraj – self-rule, was applied at all levels: Hind Swaraj – self-rule for India; Gram Swaraj – self-rule for the village; and Swadharma – self-rule for the individual. One could suggest that this was similar to or the same as affirming individual rights.

Gandhi argued that Indian ideas in Indian conditions were necessary to relieve the masses from the burden of economic oppression in the shortest time, with tools and techniques that were labour-absorbing and used minimum capital and energy. He was also, perhaps, one of the first to understand the nature of roving capital, and how it cannot only exploit for self-advantage the resources of the colonies, but also subordinate the mind of the colonised and gain partners among them.

In the present era, though the Gandhian ideas are relevant, it is not possible to simply adapt the concept of Gram Swaraj in its purist form for the reason that the institutional framework within which it operated then is obsolete for the world of today.  What does make sense is to re-invoke and question the overall adoption of something called modernity, socialist or capitalist, based on ideas that enabled colonialism such as central systems, or global markets and roving capital.

An arrangement for deepening democracy and deconstructing economic and administrative power was put into place by the 73rd Amendment to the Constitution. Generated from the ideas of Mahatma Gandhi, and taken forward by Rajiv Gandhi. It had evolved after much reflection and understanding of the current world. It could in fact be the tool with which India could re build itself into a people-led economy.

These institutions make possible progress through inclusion. Given that much of India’s industrial output comes from the informal economy, from the home-based work with no security either, amendments in the legal framework in the form of labour laws, or a strong revival of the hand product industries, a revival of the small farm and its production of food grains, where possible to be locally consumed, – could provide food security as well as ensure GDP with justice. Such a thrust would require complex undoing of not only the tax and credit policies but also the public investment and trade policies and approaches to infrastructural development.

A clear definition of inclusive growth needs to be restated as the inclusion of poor as the starting point. A village plan starting with the poor showing existing livelihoods through products which are unique to the local areas and enable the circulation through the local market places, could mean starting at the bottom. A strong push with backward-forward linkages to the industrial goods that the poor is producing in India could be another approach to growth with employment.

Decentralisation is a negative term. The need of the hour today is to replace it with the idea of deconstructing power and thus reconstructing India from the lower rungs of economy, of administration, of capability. This is a possibility and would heal the fissures and also mitigate the evils of centralized power, which in turn invites scams and deviations, as accumulation does tempt.

Devaki Jain graduated in economics from Oxford University before starting to teach the Honours course in Economics, at the Miranda House, Delhi University. She is a Gandhian, feminist economist and writer on public affairs, with special focus on poverty removal. 

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