Informal Labour in Urban India: Three cities, three journeys 9780415722339, 9781315737751

Table of contents :
Cover
Title
Copyright
Contents
List of figures
List of tables
Acknowledgements
1 India’s informal economy
2 Mapping informal labour in India
3 Mumbai
4 Bangalore
5 New Delhi
6 Informal labour and resistance
Appendix
References
Index

Citation preview

Tom Barnes has written a highly stimulating book on informal labour and capitalist development in urban India today. It provides new insights into Indian informalisation processes through a wide-ranging analysis of informal labour and uneven and combined development. Its focus on the growth of informalised wage labour, as opposed to self-employment, will provoke debate. Anyone concerned with informal work, wage labour and the underlying global and regional processes in India will appreciate this book. Jens Lerche, School of Oriental and African Studies (SOAS), University of London, UK The large informal economy of India, which has grown even in the formal sector during the period of liberalization, has been a complex phenomenon for mainstream economic theories. This book, which covers three large and growing though different kinds of urban regions in the country, offers new insights on this issue. While depicting the analysis on a longer term canvas, this work is grounded in both the existing social structure as well as the flexible global labour system. The book thus signifies an important endeavour towards understanding the functioning of contemporary labour processes in India. Alakh N. Sharma, Director, Institute for Human Development, New Delhi, Editor, Indian Journal of Labour Economics, India Tom Barnes has written a fascinating study of the unevenness of India’s renowned industrial transformation. He shows that the growth process has been partly driven by the interests of global capital, and that it depends crucially on informal labour drawn from the masses of people trying to scrape a living. The result is geographically unbalanced and class biased. Barnes combines empirical evidence, direct observation and careful political economic judgment to produce a cogent and insightful analysis. It is a thoroughly engaging book which changes the way in which Indian economic development should be viewed. Frank Stilwell, University of Sydney, Australia

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Informal Labour in Urban India

During the last two decades, rapid economic growth and development in India has been based upon the mass employment of informal labour. Using case studies from three urban regions, this book examines this growth in modern India’s cities and towns. It argues that India has undergone a process of uneven and combined development during its integration with the world economy, leading to a distorted form of urban development. This book is about work and resistance in India’s massive ‘informal economy’. It looks at the growth of informal labour in Bangalore, Mumbai and New Delhi during an era of neoliberal economic policymaking. Going beyond mainstream accounts, it argues that India’s rapid economic development has been based upon the mass employment of workers on low wages who lack basic social protection and rights at work. It discusses how urban development in India is characterised by a combination of industrialisation, industrial relocation, restructuring and informalisation. Departing from some existing studies of deindustrialisation, it re-frames informalisation as a process that complements, rather than contradicts, contemporary industrialisation in rapidly-emerging economies. The book adopts a ‘classes of labour’ approach, classifying each case of informal labour as a specific ‘form of exploitation’: as a different way for employers to lower production costs, control workers and increase enterprise flexibility. Offering a critique of existing data on the measurement and monitoring of informal labour and employment, the book is relevant to students and scholars of Development Studies, Economic Sociology, International Political Economy and South Asian Studies. Tom Barnes is a postdoctoral research fellow in the Institute for Religion, ­Politics and Society at the Australian Catholic University. His research background is in the comparative political economy of development, informal employment and labour movements. He is currently researching labour in the automotive industry in Australia and the United States, as well as India, Indonesia and China. He blogs at http://tombarnes.info/.

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Informal Labour in Urban India Three cities, three journeys

Tom Barnes

First published 2015 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2015 Tom Barnes The right of Tom Barnes to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Barnes, Tom. Informal labour in urban India : three cities, three journeys / Tom Barnes. pages cm. – (Routledge studies in the growth economies of Asia ; 125) Includes bibliographical references and index. 1. Informal sector (Economics)–India. 2. Labor market–India. 3. Rural development–India. I. Title. HD2346.I5B297 2015 331–dc23 2014024404 ISBN: 978-0-415-72233-9 (hbk) ISBN: 978-1-315-73775-1 (ebk) Typeset in Times New Roman by Wearset Ltd, Boldon, Tyne and Wear

Contents



List of figures List of tables Acknowledgements

1 India’s informal economy

xvi xvii xviii 1

2 Mapping informal labour in India

40

3 Mumbai

75

4 Bangalore

92

5 New Delhi

109

6 Informal labour and resistance

145



Appendix

172



References Index

176 195

Figures

2.1 2.2 2.3 2.4 2.5 2.6 3.1 3.2 3.3 4.1 4.2 5.1 5.2 5.3 5.4 5.5 5.6 5.7

Mapping labour in the informal economy Employment in EHWs by industry, India, 2005 Employment in OAEs by industry, India, 2005 Change, employment in OAEs by number of people per firm, India, 1998–2005  Employment in EHWs by number of people per firm, India, 2005 Change, employment in EHWs by number of people per firm, India, 1998–2005 Change, employment in OAEs by select major district, Maharashtra, 1998–2005 Change, employment in EHWs by select major district, Maharashtra, 1998–2005 Change, employment in EHWs by number of people per firm, Maharashtra, 1998–2005 Change (%), employment in OAEs by number of people per firm, Karnataka, 1998–2005 Change (%), employment in EHWs by number of people per firm, Karnataka, 1998–2005 Change, employment in OAEs by industry, National Capital Territory (NCT), 1998–2005 Change (%), employment in EHWs by number of people per firm, NCT, 1998–2005 Change, employment in EHWs by industry, NCT, 1998–2005 Change, employment by establishment type, Haryana, 1998–2005 Employment in EHWs by industry, Haryana, 2005 Change, employment in OAEs by district, Haryana, 1998–2005 Change, employment in EHWs by district, Haryana, 1998–2005

47 69 70 71 72 73 77 78 80 95 96 113 114 115 118 119 120 121

Tables

3.1 Change, employment growth (%) by time-period and firm type, Maharashtra 4.1 Employment share (%), EHWs by district and no. people per firm, Karnataka, 2005

77 97

Acknowledgements

This book is the product of seven years’ research on India’s economy. For most of this time, I was based with the Department of Political Economy at the University of Sydney, Australia, where colleagues have been extremely supportive of my research and offered me every opportunity to pursue fieldwork. Working in this environment has provided a constant reminder that economics can never be considered separately from social and political questions. With the echoes of the last global economic recession still reverberating, the work of political economists is more important than ever. Yet it is remarkable that Political Economy, at the University of Sydney and elsewhere, is continually forced to justify its existence to conservative minds that refuse to think outside the ‘square’ of mainstream economics and political science, as if these were solely capable of satisfying students’ intellectual curiosity and personal development. With few exceptions, Economics has continued to resist the critical self-appraisal desperately needed in the face of current challenges, including economic instability, inequality, ecological sustainability, poverty and uneven development. Political Economy at Sydney remains one of the few havens of heterodox economics and radical political economy – and long may it prosper. This work on contemporary development in India is, above all, a work of political economy and I hope it is a worthwhile contribution to this tradition. Several of the findings in this book come from collaborative research. My analysis of uneven and combined development in Chapter 1 was developed with the help of Bill Dunn. Readers of his latest book, The Political Economy of Global Capitalism and Crisis (2014, Routledge), will notice some similarities in our approach. Some of the national-level findings in the book appeared, in a condensed form, in ‘Theorising urban employment and informal labour in India: Evidence from the Economic Census, 1998–2005,’ Indian Journal of Labour Economics, 2012, 55(2): 245–63. My approach to the informal economy (Chapter 2) is an updated version of my analysis in ‘Marxism and informal labour’, Journal of Australian Political Economy, 2012, 70: 144–66. My work on the Economic Census in Bangalore (Chapter 4) is modified from an earlier article, ‘Informalisation and the social relations of production: Insights from urban Karnataka, 1990–2005’, Work Organisation, Labour and Globalisation, 2011, 5(1): 58–74.

Acknowledgements   xix As I mention in Chapter 5, much of my analysis of urban development in New Delhi comes from field research conducted there, with a particular focus on the local automotive industry. None of this would have been possible without the collaboration of colleagues and friends in India. Much of the analysis of the labour movement in Chapter 6 has been developed through ongoing work with Surendra Pratap from the Centre for Workers Education in Delhi. Surendra, Krishna Shekhar Lal Das and I spent many months talking to workers about life and work in the industrial zones of Faridabad, Gurgaon and South Delhi. Debal SinghaRoy of the Sociology Faculty at Indira Gandhi National Open University was a wonderful host during my field trips, as were colleagues at the Institute for Human Development in Delhi, especially Alakh Sharma and Preet Rustagi. Finally, many thanks to my wife, Dina Marissa, who put up with my bouts of fieldwork, long months traversing industrial areas and so much more. None of this would have happened without her unending love and support.

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1 India’s informal economy

In recent years, mainstream accounts of India’s economy have wavered between puffed-up optimism and weary disappointment. Near the beginning of the century, India was lumped into the group of ‘BRIC’ economies (Brazil, Russia, India and China), each with the potential to challenge the United States, Japan and Europe as global economic powers (Wilson and Purushothaman, 2003). Excited business academics even argued that India, with its huge domestic market, youthful demographic and democratic political institutions, could eventually overtake China to lead the pack of emerging economies (Khanna and Huang, 2003). India’s prosperous new economy was supposedly spearheaded by dynamic new industries like IT and business services (Friedman, 2006). There is no doubt, India has shifted from a comparatively low-growth to a high-growth economy since the 1970s. Rising growth has clearly been influenced by the gradual ‘liberalisation’ of trade and investment during this period, including ‘neoliberal’ economic reforms implemented in 1991.1 Between 2000 and 2010, the yearly average for economic growth per capita was 6 per cent, up from 3.7 per cent in the 1990s and 3 per cent in the 1980s. By comparison, average growth was 2 per cent in the 1950s, 1.5 per cent in the 1960s and 0.9 per cent in the 1970s.2 In the four years to 2007–08, India was the second-fastest growing major economy in the world. But since the Great Recession began in the West in 2007–08, Indian economic growth has declined significantly, even though it remains high by historical standards. Neoliberal scholars have been quick to point to ongoing barriers to prosperity like inadequate transport infrastructure, poor school education and ‘inflexible’ labour laws (Ahluwalia, 2011). Price inflation has been on the rise. The Wholesale Price Index, which gives a useful indication of price changes in agriculture and food, rose to 9.6 and 8.9 per cent in 2010–11 and 2011–12 respectively. This compares to a yearly average of 5.9 per cent between 1994 and 2005.3 Higher food and fuel prices have made life much harder in a country where millions remain in poverty. Most recently, India’s exposure to the stagnating world economy led to balance-of-payments instability, with the value of Rupee dipping sharply in mid-2013, pushing living costs even higher (Ghosh, 2013). Despite a number of new policies, the failure of government to ameliorate these problems has influenced major changes in the political landscape.

2   India’s informal economy For example, the Unorganised Workers’ Social Security Act 2008 was supposed to provide social security for ‘informal workers’. The Right to Education Act 2009 stipulated compulsory free education for all children below 14 years of age. The National Food Security Act 2013 is supposed to ration basic foods like rice and wheat. Perhaps most well-known is the Mahatma Gandhi National Rural Employment Guarantee Act 2005 (NREGA), which was passed to provide 100 days of voluntary manual work per year at the minimum wage for one member of each rural household. Despite passing these and other supposedly protective laws, the coalition government led by the Indian National Congress was routed at the 2014 general election. The new government is dominated by the right-wing Hindu nationalist Bharatiya Janata Party (BJP), led by Prime Minister Narendra Modi. Modi is also a lifelong member of a far-right group, Rashtriya Swayamsevak Sangh (RSS), which has been implicated in many violent attacks targeted, especially, at Muslims. One of the ironies of Modi’s victory in 2014 is that the BJP itself was unceremoniously, and unexpectedly, dumped from office 10 years earlier, having championed the virtues of India’s high growth economy while in office between 1998 and 2004. This book takes a critical, longer-term view of India’s economic transition. It focuses on employment and livelihoods in India’s massive ‘informal economy’. Most people in contemporary India scrape a living in small enterprises based in trade, manufacturing, construction or agriculture. But, alongside this ongoing reality, India has also experienced an industrial transformation that has been profoundly influenced by the country’s integration with the world economy as well as government efforts to lift restrictions on trade and investment. After lagging economic growth for decades, employment in large firms – the so-called ‘organised’ or ‘formal’ sector – has recovered since the mid-2000s. In some parts of the country, domestic and foreign firms have been adopting technologically-advanced ‘world’s best practice’ production. International trade and foreign investment have played a role in influencing this formal sector employment growth. However, many scholars have rightly resisted the conclusion that India is undergoing a transition to a Western-style industrial and consumer society. India has many distinctive historical, institutional and cultural characteristics that have conditioned the process of capitalist development. Furthermore, the very process of industrial development in the 1990s and 2000s, in India and globally, has been different from what occurred decades ago in the West or even northeast Asian countries like Japan or South Korea. Specifically, rapid economic growth and development in India has been based upon the mass employment of informal labour. As this book demonstrates, this has been based upon a major shift towards the employment of wage workers in informal enterprises and, in several key urban regions, the concentration of informal wage workers in large, formal sector enterprises. The book argues that this contradictory process has been driven by uneven and combined development: on the ‘combination’ of existing social structures of accumulation with the advanced features of global capitalism.

India’s informal economy   3 The growth of informal labour has been a complex, multi-faceted process. In part, it comes from myriad enterprises, many of which are linked to global markets, taking advantage of labour practices embedded in regional social structures of accumulation. These structures are based upon production in agriculture and in non-agricultural informal enterprises. India’s agrarian economy has experienced a process of growing economic inequality and social class differentiation over many decades, gradually exposing a divide between groups of prosperous commercial farmers, on the one hand, and marginal farmers and landless rural labourers, on the other. For rural households with marginal or very small landholdings, the balance of household income has shifted towards wages earned in ‘non-farm’ employment. For landless labourers, income is often scraped together from an assortment of precarious jobs in agriculture, trade or manufacturing. While most people are still based in rural areas, the agrarian economy can no longer provide stable livelihoods and income for the majority. This paradox has generated huge surpluses of rural labour. Many workers are on the move in search of wage work in various sectors like trade and construction. Some have found ongoing employment in manufacturing enterprises in new industrial zones or as self-employed traders and street vendors. Others remain as home-based workers, relying upon orders generated by large firms, vendors and merchants. In most cases, wages are very low and there is little social protection or income security. As I hope to show, emerging industries in the new India have taken full advantage of these surpluses of rural, migrant and home-based labour. Many of these things are well known and well established in India today. But this book is distinctive in its attempt to show how rapid economic development has encompassed the expansion of informal wage labour in formal sector enterprises alongside the expansion of wage labour in small, informal enterprises. As we shall see, these claims are quite different from those which emphasise the centrality of self-employment and petty-commodity production in Indian labour markets. The book also shows how these trends are driven by a global process that links regional social structures of accumulation to international markets through trade and foreign investment. As part of this process, informal labour practices have been transplanted into India from the global economy as well as being drawn from the surpluses of precarious labour spread across India’s rural and peri-urban economies. The result has been an industrial development of sorts. India has industrialised in a geographically uneven way, with pockets of large-scale industry thriving in some regions, while traditional industries have withered in others. Urban development has been a conflict-ridden process. Emerging industries have been facilitated by subsidies, tax breaks, cheap power and land. This has opened up new vistas of capital accumulation, including real estate development, financial speculation and new havens of retail consumerism. Urban development has had an unequal and, sometimes, divisive impact on regional communities. In some regions, a minority of landowners and cultivators have benefited from inflated land prices. In others, marginal farmers and their families have been dispossessed without adequate compensation. Some traditional centres of industry have been ‘hollowed out’ while, in a few other regions,

4   India’s informal economy high-growth industrial zones have emerged within a single generation to dominate regional production and employment. India has undergone a partial and uneven process of industrialisation during a period of economic liberalisation and global economic integration since the 1980s. I hope to show that, while this process has marked a new phase in India’s economic history, this is not something to be celebrated: rather, this new phase is based upon new forms of dispossession, exploitation and resistance. Focusing on industrial development and employment in key urban regions provides a way of observing, measuring and analysing changes to the structures of labour forces. It means that we can look, in a systematic way, at new forms of exploitation and inequality and make some assessment about the challenges that face civil society organisations, especially trade unions, labour NGOs and progressive political parties, that attempt to organise or represent these workers. The book studies labour market data and looks at case studies of industrial development and employment growth in three urban regions: Greater Mumbai, Bangalore and the National Capital Region surrounding New Delhi. While this book does not analyse every region of India, it does compare changes in these three regions with national-level trends in industry and employment in the 1990s and 2000s. Urban development in these regions also occurs against the wider background of India’s predominantly rural society. While one could legitimately focus on changes in rural villages and towns, I argue that analysis of changes in major urban regions provides a useful way of understanding a crucial part of India’s development experience. It focuses on the geographical interface between national–regional development and the global economic integration which has underpinned so many of the recent changes in Indian society. Large urban regions also operate as conduits between villages, towns and cities for millions of people who migrate in search of employment. Migration and ongoing rural– urban ties have shaped the employment practices of industrialists. As we shall see, these ties have strongly influenced a systematic preference for informal employment arrangements that enable employers to keep wages low, maximise ‘hire-and-fire’ flexibility and combat attempts to collectively bargain through trade unions. This opening chapter introduces the themes and approach of this book by, first, looking at India’s record of industrial development since economic liberalisation began in the 1980s. The second part of the chapter frames this as a case of uneven and combined development. It explains the origins of this theory and how it can be applied to contemporary India to help explain the process of informalisation. Third, this chapter looks at the various factors that have contributed to rising informal employment. Finally, the chapter explains how these themes will be pursued throughout the book.

Industrial development in contemporary India There is no question that informal labour dominates employment in India. By the early 2000s, over 93 per cent of employment was informal (ILO, 2002a). In fact, informal labour plays a dominant role in labour markets across the Global

India’s informal economy   5 South. By the early 2000s, it accounted for about half of all employment in Latin America (Portes and Hoffman, 2003). Nearly half of China’s urban labour force was employed under informal arrangements by 2005 (Park and Cai, 2011). But what does ‘informal’ mean? The term is often used to refer to the absence of state regulations, tax avoidance or even criminal activities. Sometimes it is used to refer to the ‘black’ or ‘cash’ economy. In other cases, scholars have written of an ‘informal sector’ comprised or small or ‘micro-’ enterprises run by selfemployed workers and their families. In fact, there is disagreement about exactly what ‘informal’ is supposed to mean. In this book, informality is defined as a category of disadvantage, as the absence, relaxation or systematic avoidance of state regulations and as a dynamic historical and geographical process that changes the relationship between different types of work and employment – or, following Banaji (2010), what I will call different ‘forms of exploitation’. Chapter 2 explains in detail how I have arrived at this definition. The intention, for now, is to introduce the concept of informalisation – the idea that labour has become more informal – as a process that has occurred in the context of India’s rapid economic development in recent decades. To begin with, India’s informal economy has clearly intersected with its ­economic and industrial development. This is not just a story about micro-­ enterprises and self-employed workers. In fact, formal sector employment has grown since the mid-2000s, having lagged behind economic growth in previous decades. In India, this is known as the organised sector, which generally applies to non-agricultural firms with 10 or more workers.4 Most people work in the unorganised sector, or in firms that employ fewer than 10 workers. Scholars have pointed to a recovery in organised sector employment growth since the early 2000s. Organised sector employment grew by 7.2 per cent between 2004/05 and 2009–10 compared to 1.2 per cent between 1999–00 and 2004–05 (Ghose, 2012). During the earlier period, many scholars were worried that economic growth was relatively ‘jobless’: in other words, employment was growing much more slowly than output (P. Patnaik, 1997; Mathur, 2009; Naidu, 2009). So clearly there has been some sort of recovery in more recent times. Organised sector manufacturing grew at an average annual rate of 7.6 per cent between 2003–04 and 2008–09. It grew particularly quickly in some states, such as two we will analyse in this book: Haryana (13.8 per cent) and Karnataka (8.7 per cent) (Goldar, 2011).5 While this suggests that some kind of industrialisation has been underway, it does not mean that India’s economy is following a path similar to earlier phases of industrialisation in countries in North America, Western Europe or Northeast Asia. Many scholars have resisted the idea that rapid development in India means it is transforming into a ‘modern’ industrial society. One reason to be sceptical is that India’s path of economic development has been ‘services-intensive’ or even ‘services-led’. While the proportion of people employed in agriculture has been falling for decades – by 2011–12, the proportion of people employed in the primary sector had dropped to 48.9 per cent (Government of India, 2013) – this has not carried over into a significant rise

6   India’s informal economy in the manufacturing share of employment. Manufacturing steadied at roughly 16 per cent of national output from 1980 to 2002, while services increased from 37 to 49 per cent (Singh, 2008: 235). For urban areas, the proportion of people employed in ‘tertiary’ activities increased from 55.9 in 1994–95 to 58.3 per cent in 2011–12. In 2011–12, the largest share of tertiary employment was represented by trade (33.6 per cent), followed by transport (12.7 per cent), education (9.4 per cent) and public administration (7.1 per cent). There was some growth in manufacturing in urban areas during this period. The number of people employed in ‘secondary’ activities increased from 33.2 to 35.0 per cent of total employment over this period. Manufacturing was the largest share of secondary employment in 2011–12 (69.0 per cent) followed by construction (27.2 per cent). However, most of this growth was represented by the construction sector, not manufacturing.6 Many scholars thus argue that there has not really been any transition to an ‘industrial society’ in India. Some characterise India as an economy based on small-scale or ‘petty’ commodity production, mostly located in small towns and villages where people struggle to find ongoing employment as sustainable livelihoods have gradually atrophied in agriculture (Basile, 2013). Some argue that land redistribution measures during in the postcolonial period were inadequate. They could not produce the transformation in agrarian production necessary to accumulate investable surpluses of a sufficient scale to stimulate growth and employment in manufacturing (Mazumdar, 2010). This helps to explain the ­services-intensive character of the Indian economy today. For others, this means that India has developed a peculiar variety of capitalism – a ‘post-agrarian’ rather than an ‘industrial’ capitalism: The trajectory of capitalist development which has come to dominate the South Asian landscape seems to be significantly different, on the one hand, from the earlier factorised production characteristic for the process of industrialisation and urbanisation during the nineteenth century in the North Atlantic part of the world and, on the other hand, from the brand of industrial capitalism that has emerged more recently and so forcefully in parts of East Asia. (Breman, 1996: 264) Elsewhere, Breman has written that the: history of industrialisation suggests an evolution that finds its climax when the great majority of the working population has become factorised. This is the classic path of economic development which structured western society. However, the capitalist route followed in India during the second half of the twentieth century has clearly not been in accordance with this dominant model. The importance of agriculture has certainly decreased, but the labour expelled from it has not been absorbed by urban factories. (Breman, 1999a: 428)

India’s informal economy   7 These critical insights contrast sharply with excitable mainstream views about India’s transition to high growth, like those cited at the beginning of this chapter. But these mainstream arguments have not merely received an audience because of intellectual fashion. An important reason why they have currency is that parts of the Indian economy appear to have undergone an industrialisation process of sorts. Government measures to liberalise international trade and investment since the 1980s have influenced the expansion of powerful firms. Industries have taken advantage of foreign technologies, management practices and work organisation. Key examples include the IT and the automotive industries. The IT industry expanded from humble beginnings in the 1980s to become a world-leader in software services in the 2000s. The peak employers’ organisation for the industry, NASSCOM,7 claims that employment in the IT industry grew by eight times between 2000 and 2009, reaching about 2.2 million and generating indirect employment for around eight million people. While its impact on total employment is small relative to the Indian economy as a whole, IT firms have had a major impact on India’s macroeconomic stability during the 2000s by providing substantial export earnings (Barnes, 2012). The industry’s rise has been driven by enormous support from governments, including cheap power and tax cuts for export-oriented firms and foreign investors based in ‘Special Economic Zones’ (SEZs) (Pinglé, 1999; Upadhya and Vasavi, 2006). It has also been driven by the rise of affluent and middle-income earners – the so-called ‘middle classes’ – who have provided IT firms with a large reservoir of well-educated young workers (Murphy, 2011). The largest and most successful firms represent a powerful set of corporate interests demanding ongoing assistance from government. This relationship has been characterised as a ‘New Delhi–Bangalore–Hyderabad consensus’ (Dutta and De, 2009). Named after some of India’s key urban IT ‘hubs’, this reflects a widespread policy view that the IT industry is indispensable to regional growth, tax revenue and job creation. In the case of Bangalore, the intervention of the Government of Karnataka was crucial in providing land, tax breaks and technological infrastructure. Automotive production is another example of an industry which has significantly expanded since the 1980s as India opened itself to global trade and investment. Until quite recently, cars were regarded as a rare luxury in India. In the 1980s, Japanese firms began to invest in joint ventures in India, pioneered by Suzuki and Honda. Suzuki’s investment in Maruti Udyog (later Maruti Suzuki), initially a state-owned enterprise, transformed automotive production in the 1980s and 1990s. Economic liberalisation reforms in 1991 abolished ‘licensing’ restrictions on industry, enabling auto firms to expand and diversify. In the last 15 years, many quantitative import restrictions have been removed and 100 per cent foreign ownership of production has been allowed. Since the 1990s, most major global automotive manufacturers have established operations in India. Total industry production increased by nearly five times between 1991 and 2006 (Government of India, 2006). From its base in the industrial town of Gurgaon, Maruti Udyog transformed the auto industry in the National Capital Region (NCR) of New Delhi. Adopting Japanese ‘lean production’ practices, it led to an

8   India’s informal economy expansion in output and employment among automotive suppliers in the NCR (Becker-Ritterspach, 2007; Gulyani, 2001). Like the IT industry, the state has offered auto companies a range of generous financial incentives. For example, the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) provided land at below-market rates and channelled investment into major road, electricity and telecommunications infrastructure (Government of Haryana, 2006). The clustering of local industry contributed to Gurgaon’s transformation from a medium-sized town into a major industrial and financial centre in a single generation (Debroy and Bhandari, 2009). In a similar vein, Ford and Hyundai were attracted to the city of Chennai by the Government of Tamil Nadu, which offered tax exemptions, infrastructure investment and hundreds of acres of subsidised land (Gulyani, 2001: 133–5). Today, most global auto manufacturers have major operations in India, which has become the world’s sixth largest producer of passenger cars and commercial vehicles (OICA, 2012). Recognising this, the Government of India has cooperated with the peak industry body, the Society of Indian Automobile Manufacturers (SIAM), in an ambitious Automotive Mission Plan (AMP) to raise automotive output to 10 per cent of GDP by 2016 (Government of India, 2006). The AMP called for infrastructure investment, investment subsidies, radical taxation reform and ‘Special Auto-Component Parks’, similar in concept to ‘Software Technology Parks’ used to promote the growth of IT firms (Government of India, 2006: 36). New industrial firms have emerged in the broader context of India’s engagement with globalisation, starting with the increasingly ‘pro-business’ orientation of governments in the mid-1980s (Subramanian and Rodrik, 2008). Favourable business policies have attracted considerable foreign capital, but they have also assisted many of the large industrial enterprises that already existed in India. By 1976, the 20 largest businesses in India controlled nearly two-thirds of total productive capacity in the private sector (Bardhan, 1998: 43). Several large familyowned conglomerates emerged in the 1980s with significant economic and political power, despite anti-business measures taken by previous governments, such as the Monopolies and Restrictive Trade Practices Act 1969, which restricted the size and diversity of industrial firms, and the Foreign Exchange Regulation Act 1973, which restricted firms’ access to foreign technology and investment. In addition, there were substantial restrictions placed on organised sector firms by industrial relations (IR) laws, including Prime Minister Indira Gandhi’s decree requiring employers with more than 300 workers to seek state permission before sacking workers. Prior to economic liberalisation in the 1980s, many large firms had already reacted by restructuring their labour forces to evade these regulations. Industrialists segmented their labour forces into permanent or regular workers, casuals and workers hired by labour contractors. They also made use of subcontracting or workers employed in ancillary production. As we shall see, industrial capital’s adaptation to the restrictive policy environment of the 1960s and 70s, through the restructuring and segmentation of labour forces, pre-empted the expansion of informal employment that came with economic liberalisation in the 1980s and 1990s.

India’s informal economy   9 By the time Rajiv Gandhi was elected prime minister in 1984, an ‘irreversible’ process of liberalisation had begun (Chibber, 2003: 253). Export firms were particularly favoured under the new regime. The government’s 1985 budget allowed 50 per cent of profits from exports to be deducted from company tax bills. This was raised to 100 per cent in 1988. Cheaper credit was reserved for exporters. After October 1986, exporters were able to buy imported capital goods duty-free. The government also began removing restrictions on the activities of large-scale industry. It allowed large firms in 28 industries to diversify production. For example, car manufacturers were now allowed to start manufacturing trucks. Anti-monopoly restrictions on the size of firms were lifted in 27 industries. Price and distribution controls on cement and aluminium production were abolished. It is in this context that India began its gradual shift towards a high-growth economy. As part of this process, there was the emergence of new industry and a gradual expansion in foreign investment as transnational corporations began to establish operations in India. The desire to nurture a strong industrial sector is, of course, much older than this. Industrialisation was a long-held goal of Indian governments following independence in 1947. Even under the colonial regime, ideas about industrial planning and employment relations emerged earlier in the twentieth century based on assumptions that India could eventually transform into a ‘modern’ industrial society if the right economic policies were pursued. These ideas were absorbed by the newly independent state, which was dominated by the Indian National Congress (hereafter Congress). In the belief that the economy would gradually modernise, an IR system was envisaged to regulate work and employment in the organised sector. This concept came into use with the drafting of the first Factories Act in 1911 and, later, the 1931 Royal Commission of Labour (Holmström, 1984: 53). For various reasons, including a belief that small-scale, labour-intensive establishments required minimum regulatory interference to grow and generate employment, agriculture and the non-agricultural unorganised sector were exempted from many planning and IR laws. The core principles of the IR system were drafted towards the end of the colonial period. With a small number of exceptions, the regulatory core of the IR system has remained unchanged since the late 1940s. Working hours and other employment conditions for ‘workmen’ in the organised sector are regulated through the Factories Act 1948. Wage fixing is centralised through the Trade Union Act 1926 and employment levels in the organised sector are regulated through the Industrial Disputes Act 1947 (Shyam Sundar, 2005; Hill, 2009). Relations between state institutions and industrial capital in this period have been interpreted in different ways. A neoliberal view is that industrialists foolishly acquiesced to a central planning regime based on public sector reservations and import substitution, thus stifling their own interests. This view focuses criticism on the Bombay Plan, released by leading industrialists in 1944–45, which was widely interpreted as a call for state intervention to build national self-­ reliance (Das, 2001: 87). In contrast, a radical institutional approach tends to see the postcolonial planning regime as an initial success story that was later blown

10   India’s informal economy off course by unpredictable events, such as successive droughts and falling foodgrain output in 1965–66 and the 1965 war with Pakistan. McCartney (2009) argues that liberal and critical economists alike have failed to distinguish the period from 1950 to 1965 as an ‘episode of growth’, compared to the ‘episode of stagnation’ from 1965 to 1980. According to this view, the Indian state successfully mobilised public investment in the 1950s and early 1960s, driving output and productivity growth in capital goods and machinery. Congress was instrumental in managing conflict and ensuring that this period was relatively prosperous. A third view is an adaptation of the ‘developmental state’ approach, which blames India’s economic stagnation on the failure of governments to develop autonomous, technocratic elites capable of disciplining industrial capital (Pinglé, 1999). According to this argument, ‘appropriate growth-promoting policies’ were more likely to emerge following the creation of a ‘developmental ensemble’ epitomised by ‘a cohesive state structure, bureaucratic autonomy from societal interests, encouragement from political superiors, and informal channels of communication between bureaucrats and industrial actors’ (ibid.: 2–3). This view was shaped by Peter Evans’ concept of ‘embedded autonomy’ (Evans, 1995), which in turn is linked to arguments that developmental states must ‘govern’ markets (Amsden, 1989; Wade, 1990).8 A fourth approach is to focus on the interaction of classes in the process of economic development. As we shall see below, there are several different versions of a class-oriented approach (Jha, 1980; Bardhan, 1998; Harriss-White, 2003; McCartney, 2010). Chibber (2003) provides one intriguing version in which industrial capitalists successfully sabotaged the implementation of a ‘developmental state’ from the beginning (see also Kudaisya, 2009). India’s industrialists ‘refused to countenance a state with wide-ranging regulatory and interventionist powers, and organised effectively against it’ (Chibber, 2003: 9). For example, they were prepared to accept state subsidies but not subsidies tied to performance targets, like those advocated by developmental-state theorists. Tariffs, central government decrees, licenses to control investment and tax controls were acceptable to a degree, but not disciplinary planning. A much earlier analysis, which accords with this view, comes from Kidron (1965), who argued that industry’s ‘major preoccupation in the first years [after Independence] was to set the limits of state economic activity’ (ibid.: 83).9 The opposition of industrial capital contributed to the emergence of an incoherent planning regime. There was little coordination between the Planning Commission and the Ministry of Commerce and Industry, which was charged with issuing licenses for industrial production. Applications for licenses accumulated without clear guidelines for dispersal and large firms were able to ‘work’ this system to their advantage. According to Chibber, the largest 20 firms captured 41 per cent of all new licenses between 1956 and 1966: ‘Large houses typically filed several applications for the same project, from different divisions or firms under their umbrella. This gave them an enormous advantage over smaller and medium-sized firms that were strapped for resources’ (Chibber, 2003: 190–1). The planning regime

India’s informal economy   11 was badly affected by a foreign exchange crisis in 1956–57. India’s external balance had already come under pressure due to the loss of agriculturally-rich areas to Pakistan and some poor harvests, pushing up demand for grain imports (Kidron, 1965: 97–8). Under the First Five Year Plan (1951–56), large firms also imported a larger volume of capital goods as the dispersal of industrial licenses increased. But, with little coordination between the industry and finance ministries, nobody knew how much foreign exchange was available to satisfy licensing requirements. A resulting shortage of foreign exchange in 1956–57 contributed to several problems, including scaled-back public sector investment envisaged in the Second Five Year Plan (1956–61) (Kidron, 1965: 136; Chibber, 2003: 198; Kudaisya, 2009: 974). This argument suggests that industrialists were not the victims of state over-reach, as implied in neoliberal accounts; rather, they were major players in determining the institutional framework that contributed to India’s economic stagnation. However, there is no doubt that the peculiarities of India’s planning system also had an impact on industrial capital, which influenced the later expansion of informal employment. The Industrial Disputes Act 1947 placed limits on the freedom of employers in large firms to close down operations or retrench workers, which were tightened further under Indira Gandhi’s prime ministership. Anti-monopoly laws prevented firms from diversifying production or raising productive capacity beyond a certain limit. There were few incentives under this regime for capitalists to seek improvements in productivity through large-scale investment in labour-saving technology (Clark and Wolcott, 2003; Felipe et al., 2008). Even McCartney, who generally praises the state’s role during the 1950s and early 1960s, agrees that there was a ‘general lack of investment in technological upgrading and plant maintenance’ in key industries such as steel, machine tools and aluminium (McCartney, 2009: 138). Illustrative examples can be found in the history of Mumbai’s textile mills, a heartland of Indian industry for most of the twentieth century (Van Wersch, 1992; D’Monte, 2002). In Mumbai, mill owners appeared reluctant to modernise capital equipment throughout the postcolonial period. According to a study by the economist C. P. Chandrasekhar, 43 per cent of machinery used in Mumbai’s textile mills in 1951 was over 40 years old and another 27 per cent was over 25 years old. This proportion remained roughly the same, he argued, for a sample survey conducted in 47 mills in 1976 (cited in D’Monte, 2002: 85). The closure or government takeover of unprofitable production units was one consequence of this problem once the mills were exposed to greater international competition in the 1980s and 1990s. Part of the justification for restrictive industrial policies was the fear that labour-saving technology would undermine attempts to provide employment in a country with large surpluses of labour. Until the mid-1980s, government planners assumed that textile mill production had to be restricted in order to protect the livelihoods of workers in the handloom sector. The effects of this policy were significant. Apart from the lack of technological innovation, fully automatic looms were only allowed to operate to meet export obligations. Yarn could not be freely exported and mills could not use spare capacity to bring in outside

12   India’s informal economy jobs. Like many other large-scale industrial establishments, many textile mills were prevented from closing down (D’Monte, 2002: 87). However, industrialists found ways to adapt employment practices to these restrictions. The manipulation of employee musters or payrolls, the restructuring of workforces into smaller units and the subcontracting and hiring of workers through labour contractors all appear to have taken place over several decades with impunity for the legal system (Hensman, 2000: 249). The process of informalisation since the 1970s has been influenced by the ineffectiveness of regulations, restrictions and protections built into the state planning frameworks. It has long been argued that legal restrictions on the exploitation of workers by employers in India are weak: ‘Their loopholes are big enough for the proverbial bus to be driven through them’ (Harris-White and Gooptu, 2000: 103). Many registered firms, including those registered under the Factories Act 1948, have found it straightforward to avoid legal protections for workers, such as minimum wage laws, access to social security or restrictions on hiring through labour contractors (Singh and Sapra, 2007: 68). Employment practices developed over many decades proved very useful to industrial capital during the period of economic liberalisation that began in the 1980s. In particular, the recovery in organised sector employment from the mid-2000s has largely been premised upon the mass employment of informal workers. According to government survey data, informal employment grew at an annual average of 11.6 per cent from 2004–05 to 2009–10, compared to 0.4 per cent between 1999–2000 and 2004–05. The growth of informal employment in this latter period is particularly significant when we compare it to total employment growth. Between 1999–2000 and 2004–05, total employment grew at an annual average of 2.4 per cent and, between 2004–05 and 2009–10, 1.7 per cent. For organised sector employment, average annual growth for these two time periods was 1.2 per cent and 7.2 per cent respectively. For unorganised sector employment, it was 2.5 and 1.0 per cent.10 Based on these figures, we can say that informal employment grew nearly seven times faster than total employment between 2004–05 and 2009–10 and nearly 12 times faster than employment in the unorganised sector. This data also suggest that a very large proportion of the employment growth in the organised sector in the latter half of the 2000s was based upon informal employment. One indication of this trend can be found in Annual Survey of Industries (ASI) data, which shows a recent rise in the proportion of workers hired through labour contractors in organised sector manufacturing firms, from 31.9 per cent in 2008–09 to 33.9 per cent in 2010–11.11 As this book will make clear, the employment of workers through labour contractors is a very important manifestation of informal labour in contemporary India. The following section will demonstrate how much of the behaviour of industrialists during the neoliberal era, as documented throughout this book, has been strongly influenced by social and economic structures that have existed since the colonial period. For instance, the circular migration of workers from rural areas has conditioned the strategies of industrialists in urban regions. The system of labour organisation ‘was an adaptation to the migratory pattern of the workers, rather than the other

India’s informal economy   13 way around’ (De Haan, 1999: 279). Circular migration has shaped the systematic preference of employers for informal workers over ongoing or regular labour (Breman, 1996). The prior existence of ‘footloose’ urban and rural labour markets meant that industrialists had considerable flexibility to adapt in the period of economic liberalisation in the 1980s, 1990s and 2000s. This feature of labour markets, I argue, is a product of India’s uneven and combined development.

India’s uneven and combined development There is no question that India’s transition to high economic growth has been accompanied by a huge expansion in the proportion of informal economic employment in the economy. But why has the informal economy and informal employment grown so significantly? While there is no simple or straightforward answer to this question, some answers can be located in different places. These answers depend, first of all, on one’s understanding of informality. As mentioned above, the conceptualisation used here draws upon Marxist, structuralist and institutional economic thinking, defining informality as a category of disadvantage, as the absence, relaxation or evasion of state regulations and as a dynamic historical and geographical process that changes the relationship between different ‘forms of exploitation’.12 If we adopt this conceptual approach, then addressing why informal employment has expanded means addressing how and why the balance between these forms of exploitation has changed in India. This is the primary task attempted in this book. To do this, the book makes use of a broader framework for capitalist development at the global level: the theory of uneven and combined development. The starting point for this approach is to situate India’s national economic development, including the informalisation of its labour markets, in the context of global economic development and relations between countries and regions. The development process in all countries and regions is affected by this global context. National economies do not develop in isolation from each other and their particular development paths are influenced by global as well as local factors. One consequence of this reality is that relatively poor countries are capable of adopting some of the features commonly observed in much more affluent countries. D’Costa’s studies of industrial development in India are a useful demonstration of how this approach can be used in development scholarship. For instance, he has argued that the IT industry’s ‘coexistence with slowgrowing agricultural and industrial sectors makes the [national] development process convoluted’ (D’Costa, 2003: 212) leading to ‘significant pressures on Indian resources, namely human capital, to serve the needs of software and not much else’ (ibid.: 214). More recently, D’Costa has described India’s economy as a form of ‘compressed capitalism’: ‘Compression refers to phases of capitalism such as primitive accumulation that coexist with advanced forms of accumulation such as innovation-led economic expansion in a global setting’ (D’Costa, 2014: 319).

14   India’s informal economy As we shall see, this argument is very similar to the conceptual approach taken in this book. As D’Costa suggests in his earlier work (D’Costa, 2003), the theory of uneven and combined development can help to frame this approach. This theory originated with the Marxist political economy of the Russian revolutionary Trotsky at the dawn of the twentieth century. Marxist political economy has strongly influenced radical interpretations of India’s postcolonial development (Bhaduri, 1983; Patnaik, 1990; Bardhan, 1998). As in many other countries, this approach has been strongly criticised. Some have gone as far as suggesting that Marxist views about capitalist development are similar to liberal modernisation theory, with its sense of ‘transition, a break with a “before” and an “after”, in which one “order of things” gives way to another’ (Sanyal, 2007: 40). Many of the debates about India’s agrarian capitalist development were ‘couched in the terms that: “If the mode of production is correctly specified then its laws of development will be understood and correct lines of political action determined” ’ (Harriss, 1991: 17). However, I argue that Trotsky’s theory of uneven and combined development was an attempt to theorise an alternative logic of capitalist development within the Marxist paradigm. His original intent was quite specific to his time and place: he wanted to explain how several of the features of European industrial capitalism were able to flourish in Russia’s agrarian economy. Unfortunately, attempts to generalise Trotsky’s analysis as a ‘law’ of development ‘came to represent a theoretical and conceptual embarrassment in the Marxist tradition’ (Smith, 2006: 182). Despite some serious re-engagement with the theory by Marxist scholars in recent years (Dunn and Radice, 2006; Rosenberg, 2006, 2009; Callinicos and Rosenberg, 2008; Allinson and Anievas, 2009) and some notable analyses of national economic development in countries like Iran (Matin, 2007) and Mexico (Morton, 2013), there remains a relative lack of in-depth empirical engagement with the theory in the context of national and regional paths of capitalist development. This is a shame because the novelty of Trotsky’s approach emerged from his empirical engagement with Russian (national) economic history, as well as his practical engagement with the revolutionary movements of the Tsarist period. While he inherited the historical materialist approach of Marx, he rejected the assumption that the features of capitalism appeared in a predictable order. Trotsky first outlined an alternative framework in 1904. Following the defeat of 1905 Russian Revolution, he published his ideas as Results and Prospects. He wrote a further book, 1905, which used more ‘elaborated concepts’ (Löwy, 1981: 52).13 He also outlined the theory in his History of the Russian Revolution, first published in 1930. It is necessary to explore Trotsky’s approach to development in some detail, not only because it represented a significant modification to the Marxist tradition, but also because it provides a framework that is very useful in capturing aspects of postcolonial development in India. Because the core of Trotsky’s theorisation relied upon a detailed empirical analysis of Russian economic history, some of what follows appears to be particular to the Russian social formation. While much of ­Trotsky’s empirical engagement is of dubious relevance to India’s path of

India’s informal economy   15 e­ conomic development, it is necessary to explore aspects of it in order to tease out his novel conceptual approach. Trotsky argued that the internationalisation of capital in the nineteenth century made it necessary to view capitalist development as a globally-integrated process. Poor countries did not develop in stages by copying the path laid by the Western European powers: ‘A backward country assimilates the material and intellectual conquests of the advanced countries. But this does not mean that it follows them slavishly, reproduces all the stages of their past’ (Trotsky, 1934: 26). The coexistence of non- or semi-industrialised economies with industrialised powers meant that they were ‘compelled to adopt some advanced features’ even if they could not ‘take things in the same order’ (Löwy, 1981: 87). World development was filtered through a process of international competition between states and capitalist firms: The privilege of historic backwardness – and such a privilege exists – permits, or rather compels, the adoption of whatever is ready in advance of any specified date, skipping a whole series of intermediate stages. . . . The development of historically backward nations leads necessarily to a peculiar combination of different stages in the historic process. Their development as a whole acquires a plan-less, complex, combined character. (Trotsky, 1934: 26–7) A range of historically and spatially specific factors, including local politics, geography, culture and military conflict, determined the degree and means in which countries ‘assimilated’ the ‘advanced features’ of industrial capitalism. Trotsky argued that Russia’s development had been conditioned by several of these factors: its comparative lack of social and economic development, its gradual emergence from feudal relations of production, the vast geography of the Russian empire and its sparsely-populated, agrarian economy. He also saw Russia’s absolutist state as central to its form of development. He argued that the state was parasitic; its expansion drew capital from the artisans and craftsmen of the towns and villages, preventing their transformation into a local class of small capitalists as had occurred in early modern Europe (Trotsky, 1962: 169–70, 1922). He argued that Tsarism took advantage of its links with European financial and commercial capital during the urban industrialisation of the 1880s and 1890s, expanding its political powers over Russian society (Trotsky, 1934: 29, 1962: 175). Consequently, the growth of urban society was driven by the expanding military and administrative demands of the state rather than by the gradual emergence of small-scale capitalists. To take one example, Trotsky examined the state’s role in establishing a national system of railways. The empire’s vast geography meant that the state had to siphon investment into transport infrastructure in order to facilitate trade between its growing urban centres (Trotsky, 1962: 180). He argued that the enthusiasm of state actors for such projects was underpinned by military and geopolitical concerns: ‘Russian absolutism developed under the direct pressure of the Western states’ (ibid.: 183).

16   India’s informal economy International competition compelled the state to make changes to the organisation of production, Trotsky argued. He claimed, for example, that the state’s decision to abolish serfdom in 1861 was partially a response to Russia’s defeat in the Crimean War (1853–56). Key policymakers realised that the empire’s iron and agricultural sectors were too weak to compete with Western European countries: The main reason for this stagnation was slave labour, which rendered the application of new technology quite impossible. Cheap cotton is manufactured for the use of peasant serfs themselves; but iron presupposes a developed industry, towns, railways, railway engines. None of this was compatible with serfdom. . . . Hence the abolition of serfdom became a pressing demand of economic development. But who could put it into effect. . . . The state had to pronounce the decisive word. (Trotsky, 1922: Ch. 2, p. 2) Thus, he argued, the creation of a ‘free’ rural labour force coincided with the expansion of urban industry in response to the growing bureaucracy of the state. The abolition of serfdom was undertaken in the context of highly unequal agrarian social relations. Heavy taxation and unequal land distribution meant that the majority of peasants lacked the capital and technology necessary to substantially lift rural productivity. Despite granting legal freedoms to former serfs, the 1861 reforms (and, later, the 1906 Stolypin policy) worsened rural inequality by enabling landed nobles to annex communal land (Trotsky, 1922: Ch. 3, p.  4). The centralisation of land ownership and the growing commercialisation of agriculture generated a class of landless labourers. Some of these workers were able to migrate in search of work. Others were so poor that they were forced to work on the estates of formerly feudal landowners (Trotsky, 1922: Ch. 3, pp.  5–6). Consequently, Trotsky believed that rapid capitalist development and growing state repression had created an agrarian crisis. He saw little hope that the peasantry could organise themselves to independently achieve redistribution. Nor did he believe that enlightened individuals would emerge within the state to reform the structure of Russian agriculture. Like Lenin, he turned instead to economic and political agitation among the nascent working class concentrated in the industries of Petrograd and Moscow, believing that they had the potential to build a social movement capable of overthrowing Tsarism. His political orientation was influenced by the ‘feverishly rapid growth’ of Russia’s cities during the 1890s (Trotsky, 1962: 179). Like Lenin, Trotsky observed that this industry was highly advanced: ‘Russian industry in its technique and capitalist structure stood at the level of the advanced countries, and in certain respects even outstripped them’ (Trotsky, 1934: 31). Russian industry concentrated workers in larger units than in Western Europe or the United States.14 He also pointed to the even faster growth of industry in the cities of Odessa, Rostov, Yekaterinoslav (now Dnipropetrovsk) and Baku in the resource-producing south of the empire (Trotsky, 1922: Ch. 4, p. 2).

India’s informal economy   17 Together, he argued, these industrial centres contributed a disproportionate amount to national product: ‘Not less than half the nation’s annual income is produced by 3.3 million workers’ in mining, transport, building and commerce (Trotsky, 1922: Ch. 4, p. 5). The rapid concentration of capitalist social relations in heavy industry, transport and raw materials production transformed and radicalised the Russian polity: ‘The factory industrial system not only brings the proletariat to the forefront but also cuts the ground from under the feet of bourgeois democracy’ (Trotsky, 1962: 181). In other words, the politically-active workers in the cities were likely to push for political and economic reforms that were far more radical in nature than those demanded by Russia’s new industrialists. The disruption of World War I further destabilised Russian society. The demands of wartime production, the social effects of the war and state repression contributed to political radicalisation among workers (Trotsky, 1934: 63). Thus, Trotsky’s predictions about the character of the Russian Revolution were remarkably accurate. Political strikes against the state increased from 1912 to 1914 and, during World War I, culminated in a period of revolution and civil war in 1917–18. Whatever other conclusions one may draw from this analysis, it should be clear that Trotsky assembled it by assessing a range of historical, geographical, geopolitical, military and economic factors. There is little evidence of economic determinism in his approach. But questions remained about its general applicability. Trotsky repeatedly implied that his theory was universal in nature, occasionally describing combined and uneven development as a ‘law’ (e.g. Trotsky, 1934: 27). For example, he argued that the ‘law of uneven development’ was applicable to China’s development in the 1920s (Trotsky, 1927, 1928).15 But, lacking knowledge about the specifics of Chinese political economy, his analysis of China was noticeably less concrete than his early writings on Russian development (Cliff, 1991: 221). This comparative lack of empirical engagement beyond Russia casts doubt upon the universal nature of the theory. Despite this problem, some general characteristics can be identified. It is possible to outline general propositions that flow from Trotsky’s analysis of Russian social and economic history. Three issues seem to stand out from this discussion: (1) national economic development must be understood in a global context; (2) this development generates spatial and sectoral economic inequality; and (3) national economic development transforms relations between social classes. The first point suggests that uneven development is a universal phenomenon. It is reasonable to say that some societies develop their productive potential – their ‘forces of production’ – at a faster pace than others. Uneven development simultaneously leads to a process of combined development within relatively poor countries. This means that forms of production characteristic of the richer countries can, to varying degrees, also be found in the poorer countries alongside traditional forms of production. The second point of analysis involves inequality between geographical areas as well as sectors of the national economy. The adoption of advanced features has a geographical or regional manifestation. Spatial inequality exists because

18   India’s informal economy the new forms of production emerge and take root in some regions of a country but not in others. The institutions, including private firms and state institutions, that facilitate the arrival of new forms of production are concentrated in particular regions. Sectoral inequality exists because some industries are directly influenced by the new forms of production, including new capital inflows, forms of technology, applied scientific knowledge and management practices, while others are not. These spatial and sectoral inequalities can lead to the formation of new urban centres of industry and employment, generating demands for land to satisfy new industrial and commercial development and tensions over land ownership. New markets for land acquisition and asset price speculation can arise. New industrial zones also create implications for living space, residential property and rent flows. New forms of financial and industrial capital create new opportunities for merchant capital, with new routes for trade and commerce between regional centres. These interests pressure the state to create the transport and infrastructure necessary to facilitate connections between new markets, with further implications for debt and financial development. Thus, the study of spatial and sectoral inequality is, to a large extent, the study of capital formation and its spatial manifestations. The third point of analysis looks at the formation of new classes and the transformation of old ones. Class relations in rural areas are a key area of analysis in the countries of Asia, Africa and Latin America. In many cases, agriculture continues to directly provide a livelihood to a large cross-section of the population. One of the features of development in countries like China and India in recent decades has been the decline of agriculture in total rural employment. Another key area is industrial employment. On this point, Trotsky, like other Marxists, assumed that the ‘proletariat grows and becomes stronger with the growth of capitalism’ (Trotsky, 1969: 62). Yet he was aware that the radical path of Russian workers would not be followed everywhere. He also observed important differences in working class formation within the Russian empire. While workers in the Petrograd metal industry had ‘made a complete break with the country’, the industrial workers of the Urals were ‘half-proletarian, halfpeasant’: ‘A yearly inflow of fresh labour forces from the country in all the industrial districts kept renewing the bonds of the proletariat with its fundamental social reservoir’ (Trotsky 1934: 33). Industrial employment may expand in new urban centres or may involve growing employment in established industries. It can incorporate both small-scale and large-scale industry, as well as home-based work. This analytical approach must take stock of employment conditions within numerous small-to-medium-sized enterprises and explore how these interact with the new centres of industry, commerce and living spaces. The role and character of migration, rural-to-urban, rural-to-rural and urban-to-urban needs to be understood, including the way that this fosters physical and cultural relations between workers. Some migration will be permanent in character, while some will involve the circulation of workers searching for seasonal employment. And studies of the various classes of labour must incorporate the different economic survival strategies and strategies of resistance that emerge,

India’s informal economy   19 including the role of civil society organisations such as trade unions, Non-­ Governmental Organisations (NGOs) and political parties as well as other forms of political and cultural expression. This framework is similar to the ‘linkagency’ approach developed by some radical political economists. This approach analyses the interaction of ‘linkages’ between global and domestic economic forces and the ‘agency’ of classes to implement collective strategies (Fine, 1992; Fine and Rustomjee, 1996; Saraswati, 2008). However, the interpretation of uneven and combined development used here goes further in articulating the concept as a coherent theory of development rather than just a critical analytical framework. The concept can be regarded as a theory in a meaningful way if treated as a ‘research programme’. This opens up the possibility of distinguishing the theoretical core of Trotsky’s approach while being methodologically flexible enough to share useful analytical tools with other approaches. In this way, it is possible to retain much of the analytical framework outlined above alongside claims about the theoretical ‘hard core’ that motivates it. It also allows us to incorporate some predictive power into the approach. The concept of a research programme is able to do this because it is clearer about the role of predictions in building theories within social sciences, giving them a more defined role as a subset of theorisation; as a method that flows from the core of theory and that feeds back into theory and allows for its modification. This idea comes from Burawoy (1989, 1998) and has been adapted by some other Marxist scholars (Blackledge, 2006; Callinicos, 2006). Burawoy argues that Trotsky’s approach was a pre-emptive version of what Imre Lakatos called a ‘progressive research programme’ (Lakatos, 1970). According to Lakatos, scientific knowledge developed through attempts to falsify claims emerging from coherent clusters of ideas or theoretical frameworks. Lakatos saw this as a modified and stronger version of Karl Popper’s account of falsification. In practice, researchers held to the ‘hard core postulates’ of their intellectual community by convention or shared belief. The ‘negative heuristic’ of science, Lakatos argued, was the unquestioning defence of this hard core by advocates against detractors from outside their intellectual community. Sometimes defence of this hard core would reduce the empirical relevance of a research programme or lead to the treatment of empirical anomalies or unpredicted outcomes as exceptions. Lakatos used the term ‘degenerating research programme’ to describe such cases. This he contrasted with a ‘progressive research programme’, in which new theoretical explanations were introduced to enhance the explanatory power of the hard core. The ‘positive heuristic’ of science accounted for novel attempts to explain anomalies in ways that were logically and theoretically consistent with the hard core: ‘In other words, a progressive defence of the hard core takes the form of an expanding belt of theories that increase the corroborated empirical content and solve successive puzzles’ (Burawoy, 1989: 761). Defending the hard core of a research programme meant continually testing and adding to its intellectual ‘periphery’. The relationship between the concept of uneven and combined development and Marxist political economy fits closely with this understanding of ‘theory’.

20   India’s informal economy Trotsky identified several factors in the development of capitalism that cast doubt upon ideas widely accepted by Marxists during his time, including the belief that capitalism developed through stages that would follow a similar historical order to the development of capitalism in Western Europe. Trotsky’s questioning of these beliefs was based upon an adoption of Marx’s historical materialist framework and methodology. For Burawoy, this was an example of refutation that ‘does not lead to the rejection of the Marxist research program but to the construction of new theories on the same Marxist foundation’ (Burawoy, 1989: 764). We can conclude that any research programme based on Trotsky’s approach to development must be able to produce empirically-testable propositions or predictions about the process of development itself. So it makes sense to treat the ‘protective belt’ of uneven and combined development as a series of propositions about economic and political change in developing countries. It is helpful to see these propositions as flowing from the second and third points outlined above: spatial and sectoral inequality within countries and the transformation of class relations. First, predictions will involve the character of spatial and sectoral inequality between, say, rural and urban regions or between industry and agriculture. Second, the research programme must be able to produce testable hypotheses about the transformation of classes. Some of these will relate to the economic conditions of classes. Others will invoke the character, if not the outcome, of class conflict that is likely to result. This final use of prediction seems quite fundamental to the research programme. A research programme of this type must produce empirically-testable propositions about the future dynamics of class conflict, about the potential for class conflict or, more particularly, for class conflict that can generate radical changes in the political arena. Even if the centrality of class conflict is accepted at the heart of the research programme, this does not resolve all outstanding questions about Trotsky’s approach. The historical materialist core of the theory suggests that societies advance through successive modes of production. If this logic is consistently applied, then the research programme seems to assume that the ‘advanced features’ sought by elites in less-developed countries are features of ‘capitalism’. This is a highly problematic assumption in a contemporary world dominated by capitalist social relations. There are hardly any places today that have not been profoundly shaped by capitalism. If this is true, then to what, exactly, do the ‘advanced features’ of uneven and combined development refer in a contemporary context? Rosenberg (2006) has extended the concept to incorporate societies throughout human history, suggesting that the theory refers to a historical combination of ‘types of social existence’. Several scholars have preferred to limit the application of the theory to the period of capitalism (Barker, 2006; Allinson and Anievas, 2009, Ashman, 2006): ‘only with the emergence of capital relations does “combination” in Trotsky’s explicit sense of the interpenetration of two or more modes of production in a social formation occur’ (Allinson and Anievas, 2009: 61). However, insisting that uneven and combined development is a specifically capitalist phenomenon leads to different problems. First, it is possible to chart combined development in countries and historical periods prior

India’s informal economy   21 to the industrial age. Even if we leave aside Rosenberg’s ancient examples, Trotsky’s discussion of wartime industry in eighteenth-century Russia described uneven and combined development occurring before the Industrial Revolution in Western Europe and a century-and-a-half before the great manufacturing and metal factories emerged in Russia’s cities. Second, capitalism is now dominant on a global level. While there are non-capitalist social relations, such as kinship, family and friendship, and global capitalism itself has an inherently uneven character, there is no question that capitalist social relations play a dominant role in almost all societies today. Perhaps another way to address this problem is the idea that uneven development within the global economy leads to the combination of different ‘varieties of capitalism’. A large scholarly literature has emerged in recent times to analyse different varieties of capitalism, stemming from a distinction between ‘liberal market’ economies like the United States and ‘coordinated market’ economies like Germany (Hall and Soskice, 2001). Although there are some notable exceptions (Amable, 2003; Peck and Zhang, 2013; Witt and Redding, 2013), most of this literature has focused on rich economies in North America and Europe. Furthermore, it has focused on the character of state institutions and firms, including analysis of different modes of finance, management, firm–supplier relations and employment relations. This reflects its roots in institutional theory in international relations and mainstream economics. This mainstream framework does not sit so easily with the idea of uneven and combined development if we accept that the ‘hard core’ of this research programme is rooted in Marxist political economy. According to this tradition, a central characteristic of capitalism as an economic system is the accumulation of capital. A society based on capital accumulation is characterised by generalised commodity production, competition between firms and relations of surplus value production and extraction between capitalists and workers. Types of markets and industries, forms of competition and forms of exploitation will, of course, vary from country to country. While the institutional features described in the ‘varieties of capitalism’ framework are somewhat relevant, the Marxian core of uneven and combined development presupposes an analysis of the capital accumulation process itself. For this reason, it makes most sense to think of the ‘advanced features’ of uneven and combined development as different forms of capital accumulation as well as the institutional features of states and firms found in different countries. As highlighted by Banaji (2010), Marx’s distinction between the ‘formal’ and ‘real’ subsumption of labour by capital is a useful way of distinguishing two general forms of capital accumulation. The formal subsumption of labour refers to capital accumulation that approximates ‘simple reproduction’: firms tend to be small, the production process tends to be labour intensive and profits tend to cover the costs of new rounds of production. In this scenario, profits are based on ‘absolute surplus value’, appropriated by lengthening the working day or intensifying the pace of work. The real subsumption of labour refers to capital accumulation that approximates ‘expanded reproduction’: some firms are able to accumulate above-normal profits and grow in size and market power, creating

22   India’s informal economy the scope for investment in physical capital and new technology. Profits are largely based upon the extraction of ‘relative surplus value’ through improvements in the productivity and technical efficiency of the production process. As Banaji argues, these processes can be regarded as analytically and historically coeval. While the real subsumption of labour may eventually emerge from the formal subsumption of labour as described in the first volume of Capital, it is incorrect to assume that capitalist production undergoes such a linear evolution at all times and in all places. The formal subsumption of labour can be seen, historically and today, in industrial outwork and home-based production in which the limits to surplus value are primarily determined by the length of the working day or the sheer physical effort of workers. This concept also captures the activities of financial and merchant capitalists, who provide physical inputs into the production process and circulate commodities without directly influencing the manner of their production. To this dichotomy, we can add those capitalists who accumulate wealth through the acquisition of financial assets, in the form of land or securities such as company shares, bonds or derivatives. These represent a third form of capital accumulation and, they too, are incorporated into the process of uneven and combined development. To take the example of land as a financial asset, the commodification of land and the commercialisation of agriculture are important questions in the course of capitalist development. As Harvey (2003) insists, ‘accumulation by dispossession’ is a feature of contemporary capitalism in which public goods or commonly-owned assets are seized in order to further the process of capital accumulation. This concept has been creatively applied to the role of public land acquisition and real estate development in India’s ‘Special Economic Zones’, with state institutions and private firms collaborating to generate new sources of financial revenue whilst undermining the basis for traditional livelihoods in the agrarian economy (Levien, 2011). Thus, the combination of the ‘advanced features’ of the global economy today refers to the advanced institutional features of leading capitalist economies (including new technology, management practices, sources of credit and employment relations) as well as the combination of different forms of capital accumulation, including methods of surplus extraction used by large capitalist enterprises, such as investment in productivity- and efficiency-enhancing technology and physical capital, as well as the appropriation of financial assets, such as land, often with the collaboration of local state institutions. As mentioned above, this framework is very similar to D’Costa’s (2014) notion of ‘compressed capitalism’. For D’Costa, the combination or ‘compression’ of ‘primitive accumulation’, ‘petty commodity production’ and ‘mature capitalism’ is both a response to the lack of capitalist transformation in agriculture and an explanation for the massive expansion of precarious employment.16 These concepts are broadly congruous with those used here. Primitive accumulation, like Harvey’s concept of accumulation by dispossession, refers to financial accumulation through the seizure of public goods or commonly-held assets. The ideas of petty commodity production and mature capitalism broadly reflect the

India’s informal economy   23 formal and the real subsumption of labour by capital, respectively. Whichever terms we use, we can say that the process of capitalist development today combines many of the advanced features of global capitalism with the traditional features and social structures of developing countries and regions. The following section outlines these social structures in the context of India’s postcolonial development. For now, we can say that the adoption of the advanced features of the global economy in poorer countries and regions occurs under the pressure of global economic integration. This includes forms of global competition, such as economic competition between transnational corporations as well as geopolitical competition and military rivalry between states. The economic and geopolitical logics of escaping domination or ‘catching up’ underlie the pressure on poorer countries to adopt the advanced features of the world economy. The theory of uneven and combined development represents an important way of capturing this process and of modifying the Marxist paradigm. This theory frames the explanation of informalisation offered in this book. The expansion of informal employment in India during the period of economic liberalisation since the 1970s can be addressed as part of India’s uneven and combined development. Focusing on labour and workers also stays true to the Marxist core of the theory which, as explained above, is closely tied to analysis and predictions about the transformation of class relations. The understanding of informal labour offered in this book utilises a class-based approach. It is also based upon an understanding that the process of informalisation is linked to the prior existence of informal labour as India undertook its gradual integration with the world economy. This means we must understand the social structures that characterised India’s economy before the period of liberalisation began and before India began to adapt many of the ‘advanced features’ that have underpinned its transition to a fast-growing regional power.

Informal labour and class formation In part, the informalisation of labour markets and employment in India have been predicated upon the ability of employers to take advantage of long-­ established social structures of accumulation. These structures pre-date the expansion of informal employment which began in the 1970s, although they have also been conditioned by India’s uneven and combined development. While new and dynamic industries have emerged in India during the liberalisation period, these have developed alongside more traditional features, including longestablished institutions and forms of capitalist accumulation. Agrarian production remains crucial to India’s economy in terms of food production and employment. Agriculture accounts for about two-thirds of employment in India and about one- quarter of its economic output (Radhakrishna, 2009: 73). Widespread landlessness and poverty persist in rural areas (Rawal, 2008) and the vast majority of farmers work on marginal holdings of less than one hectare (Bernstein, 2010). Poverty, inequality and marginal land holdings all contribute to

24   India’s informal economy poor agricultural productivity, even in the more wealthy states (Gupta, 2008). Waged labour relations have also become a normal feature of the agrarian economy, where production largely remains labour intensive and, in Marxian terms, based upon the formal subsumption of labour by small-to-medium-sized agrarian producers. The small enterprises that dominate rural non-farm production, based in trading firms and households, also tend to reflect this characteristic form of capital accumulation. Social relations in small firms and households are shaped by gender, which influences the occupational division of labour and place of employment in different ways. There are significant differences in workforce participation by women in different regions of India. For example, government survey data from 2011–12 show that female labour force participation is much higher in the southern Indian states of Karnataka and Maharashtra (24.7 and 24.6 per cent respectively) compared to the northern Indian states of Delhi and Haryana (15.5 and 15.2 per cent respectively) (Government of India, 2013). These statistics reflect long-observed socio-cultural and economic differences between the status and economic participation of women in different regions of India. Furthermore, social relations, hierarchies and occupational roles in both agrarian and nonagrarian production tended to be strongly influenced by caste, with its associated social obligations, rituals and prejudices. Waged employment is important, but is often precarious and based upon large surpluses of migratory labour, with many workers seeking ways to supplement household income from cultivation and capital-labour intermediaries, or labour contractors, often playing a key role connecting groups of migrant workers to employment in the informal economy. Agrarian production and informal employment have roots in the colonial period, when regional development was shaped under the influence of a colonial state apparatus. As outlined earlier, India’s uneven and combined development was shaped by the desire of the country’s top political leaders and economic policymakers to pursue a path of industrial modernisation following Independence. Policymakers combined new institutions, like the Planning Commission, with arrangements adopted during the colonial period, like industrial planning and labour laws for organised sector firms. By the mid-1950s, import substitution was the guiding ideology of policymakers, predicated upon state ownership and state-guided capital goods production. As this planning regime faltered alongside flagging economic growth and industrial development in the 1960s, the national government, under Indira Gandhi’s prime ministership, placed further restrictions on large-scale industry and financial institutions, driven by a desire to appeal to dominant rural classes. This exacerbated the lack of capital investment and technological innovation in private industry and encouraged industrialists to find creative ways of eluding restrictions in industrial planning laws, including the evasion of IR laws designed to protect workers. Uneven and combined development occurred during this period – even during the import substitutionist period, India maintained important economic and political links with actors and institutions in the world economy. However, the combination of  the advanced features of global capitalism was a slow-moving process in

India’s informal economy   25 comparison to the changes that were to come later. When the economic development process sped up after the 1970s, events were shaped by social structures of accumulation that were already present and, in some cases, dominant in India’s economy. The concept of a ‘social structure of accumulation’ comes from the work of radical political economists in the 1980s, who linked it to ‘long-wave’ theories of economic crisis used to explain the unravelling of the long post-war economic boom in the United States (Gordon et al., 1987; Kotz, 1987). The basic idea is that long periods of capitalist expansion and prosperity rely upon the interaction of social and political institutions unifying to form a ‘social structure of accumulation’. These institutions are very broad in scope, ranging from the structure of the nuclear family to the regulation of labour and consumer markets. A strength of this approach is that it internalises various political, social and, to some extent, cultural institutions in explaining the process of capital accumulation (Jessop, 1990). This has been applied to Indian economic development in analyses of the role of caste and gender in the occupational division of labour, commercial and labour relations. For example, caste has some features of a formal institution (it is formally recognised in the Indian Constitution) as well as an informal institution and ideology that shapes social relations at the local level. Caste cuts across class divisions in the production process and plays a central role in regulating market activity and employment (Harriss-White, 2003; Basile, 2013). Mezzadri (2008) has used the case of the export garments sector in the New Delhi urban region to demonstrate this approach. She argues that export garments production links a sophisticated global production network with traditional forms of production in rural households. In this case, local production is based upon a combination of unskilled factory employment among male migrants from poorer states and embroidery work (embellishment), which is mostly subcontracted to women, and often children, who work in rural households, particularly in the Bareilly district of Uttar Pradesh. One could frame this process as an expression of uneven and combined development, in which mass production for world markets during a period of trade liberalisation is combined with traditional production in households. Successful integration of the export garments sector in this region relies upon entrenched forms of social organisation, incorporating gender, caste and ‘space’: ‘the informal economy and its regulatory mechanisms are increasingly incorporated into neo-liberal global production structures’ (ibid.: 605). In this way, India’s uneven and combined development is predicated upon linkages with social structures of accumulation that already rely upon the mass employment of informal labour. Uneven and combined development provides one way to frame the combination of such regional social structures with the advanced features of global capitalism in the process of national economic development. However, in the case of India, a more influential radical framework has come from Kalecki’s analysis of ‘intermediate regimes’ (Kalecki, 1967). This has been adopted by several scholars who tried to explain the causes of economic stagnation and political instability in India during the late 1960s and 1970s (Jha, 1980; Harriss-White,

26   India’s informal economy 2003; McCartney, 2010). The framework suggests that some developing economies represent ‘intermediate regimes’ that generate ‘intermediate classes’. In India, these included commercial farmers, small-scale entrepreneurs in trade and manufacturing, including many self-employed own-account operators, and even many public sector employees engaged in corrupt activities. This framework distinguishes these groups from the economic interests of large-scale industrialists or industrial workers. For Kalecki, an intermediate regime was characterised by incomplete land reform, non-alignment in international relations and an interventionist or developmental state. It is certainly true that India’s postcolonial land reforms were highly ineffective and created new dimensions of economic inequality in agriculture although, as we shall see, there are doubts about Kalecki’s other points. Following Independence, India’s ruling Congress Party was faced with the enormous difficulty of attempting to modernise an economy characterised by highly unequal agrarian social relations. At this time, most cultivators used traditional technology and there was little use of electricity and irrigation. There were relatively few roads or schools. In addition, the colonial system had bolstered the power of many of India’s wealthiest landowners. The agrarian economy was characterised by highly centralised land ownership, competing groups of ‘rentier’ landlords, tenants, sub-tenants, intermediaries, landless labourers and bonded labourers. The reproduction of these social relations was commonly justified on the hereditary basis of caste (Le Mons Walker, 2008). The effectiveness of agrarian reforms was limited by regional power structures left intact after Britain’s departure (P. Patnaik, 1997; Rao, 1997). The political legitimacy of the Indian state, steered by the intellectuals and policymakers of Congress, partially depended on its ability to adapt to established social structures of accumulation. The organisation of agrarian production and the relations between classes varied from region to region depending on the formation of local labour forces, the relations between dominant and subordinate castes, the size of landholdings, the types of crops sown and technologies implemented, the level of investment in irrigation, the availability and nature of credit and the extent of trade and market exchange. Relations between different agrarian owners, producers and labourers were also shaped by the legacy of the colonial state. The Permanent Settlement of Bengal and its surrounds in 1793 marked the transformation of zamindars from revenue collectors under the Mughal state into landlords with property rights, reflecting British fantasies that they would ‘become a solid class of bourgeois property and replicate Britain’s agrarian capitalism’ (Bernstein, 2010: 47). The power of landed property was extensive although uneven. Elsewhere, the British used different means of subjugation and control. In the states of Bombay and Madras, the British encouraged the ryotwari system, in which some cultivators were afforded limited property rights in exchange for annual tax payments. State–society relations in different regions influenced very different class relations. Consequently, India had a multiplicity of ‘local class configurations’ (Harriss-White, 2003: 22). Actors within the postcolonial state were compelled to adapt to the established power structures of the agrarian economy in order to guarantee their political

India’s informal economy   27 legitimacy. The state was, thus, ‘representative of an array of dominant class interests’ (Byres, 1997a: 53). This conditioned the state’s policymaking framework and there are strong grounds for believing that the state’s adaptation to agrarian class structures was instrumental in the ineffectiveness of its land reform policies. In the 1950s, Congress implemented policies that were supposed to reduce absentee ownership, to secure long-term leases for tenants and set limits to the concentration of land ownership. Despite the formal abolition of the zamindari system, many former landlords continued to flourish by evading the reforms and exploiting legal loopholes (Radhakrishna, 2009: 77). Former absentee landlords were compensated with cash or bonds, enabling some to invest in business and political administration and enabling many to buy back significant acreage. Many landlords living in villages preserved their status by claiming that their land was ‘personally cultivated’, allowing them to bypass land redistribution policies (Breman, 1985: 174). The absence of written leases meant that millions of peasants were denied the right to long-term occupancy. Furthermore, landlords were often able to evade limits on land ownership by exploiting vague definitions and numerous legal exemptions. So Kalecki’s point about inadequate land reform fits closely with India’s postcolonial experience. However, the other two features of an ‘intermediate regime’ are more questionable. Kalecki did not clarify exactly how political neutrality led to different social structures within a country. And his notion of a developmental state assumed that the local capitalist class was too weak to carry out national-developmental goals by itself. As discussed above, there is evidence that the Indian capitalist class, while distorted by British colonialism, retained significant power over the state after Independence (Chibber, 2003). Nevertheless, Jha’s (1980) analysis of Indian economic stagnation in the 1970s applied Kalecki’s framework in an innovative way, providing a powerful explanation for the descent of the Indian state into political and economic crisis in the 1970s. Jha’s explanation focused on the expansion of intermediate classes during this period and their apparent capacity to disproportionately influence policymaking. McCartney (2010) recently modified this framework to clarify the fact that the intermediate regime facilitated but did not create intermediate classes in India. This distinction helps to explain why many intermediate classes continued to wield political and economic influence in the 1980s and beyond: ‘Even if the Intermediate Classes have less influence at the apex of policymaking and formulation, they have a profound influence on the day-to-day implementation of policy’ (ibid.: 127). Many of the groups comprising these intermediate classes form crucial parts of India’s informal economy today, including small- and medium-scale cultivators as well as proprietors in informal enterprises. However, this book takes matters in a slightly different direction by analysing the historical development of these classes in relation to the production process. In fact, the intermediate classes represent different social and economic groups with distinctive economic interests and survival strategies. Jha (1980) subsumed these differences by defining these groups as part of a class united by an economic interest in exploiting shortages and avoiding taxes. This defines class in

28   India’s informal economy relation to markets (price inflation) and the state (tax avoidance). This is quite different to the classical Marxist notion of class used in this book, which is understands class in relation to the production process. Consequently, different ‘intermediate classes’ are in fact distinctive socio-economic groups, some of which approximate social classes. Rather than subsuming these groups into a single class interest as Jha did, this section looks at them separately, with a particular focus on commercial farmers and small-scale entrepreneurs. To begin with, the role of commercial farming in India in the 1960s and 1970s demonstrates how a new class of prosperous farmers, cultivating medium-sized plots, grew during the Green Revolution and successfully mobilised smaller land-holders and agricultural labourers in the cause for substantial fiscal support, including subsidised water, power and fuel. Jha (ibid.: 45) argued that these farmers helped to forge a new ‘parallel economy’ based on black market prices and rampant tax evasion. Although the implementation of land reforms did not fulfil the objective of social redistribution, it nevertheless influenced changes to the social organisation of agriculture. Many landowners were given an incentive to commercialise agriculture as land ownership became more centralised in some regions. The money economy expanded as prosperous cultivators purchased capital inputs for farming and, increasingly, hired wage workers. The Green Revolution of the late 1960s and early 1970s accelerated trends in commercial agriculture that were already underway. This involved the introduction of new High-Yielding Variety seeds (HYVs) and the increased use of commercial fertilisers, pesticides and irrigation (Singh, 2009). The Green Revolution itself was an expression of uneven and combined development. The introduction of HYVs occurred after India suffered severe drought and food shortages in 1965–1966, forcing the government to seek foreign assistance. By the 1970s, HYVs had contributed to higher agricultural output and productivity (Grabowski, 2009). This is also in the period that Indira Gandhi’s government began to prioritise agricultural subsidisation over industrial development (Pinglé, 1999: 22–3). State spending on HYV technology, especially in wheat and rice, investment in tube-wells (bore water for irrigation), rural electricity and grain silos, and tax cuts for fuel, agricultural machinery, fertilisers and irrigation pipes, was concentrated in northwest India, particularly in Punjab and Haryana, as well as in some parts of Uttar Pradesh, Gujarat and Rajasthan. State subsidies in these areas generated a new impetus for large-scale commercial farming. This was accompanied by the expansion of financial institutions into rural areas, especially after the nationalisation of banks in 1969: ‘The growth of a political economy of agricultural rentseeking after the mid-1960s led to the systematic diversion of developmental expenditure from infrastructure and industry to agricultural subsidies and higher procurement prices’ (McCartney, 2009: 146). Agrarian change led to new kinds of rural inequality. For Bernstein (2010) this process represented an accelerated form of class differentiation, with some already-rich farmers able to exploit the Green Revolution technologies while many other cultivators accumulated sufficiently large surpluses to become new

India’s informal economy   29 capitalist farmers. Rich farmers and some middle-class farmers used more capitalintensive farming techniques and were able to purchase substantial quantities of the ‘inputs’ required to get the best yields from HYVs, including tractors, ­irrigation pumps and fertilisers (ibid.: 6–7). In state like Punjab, some farmers were able to become very affluent, with land ownership becoming more concentrated and many prosperous farmers investing in industry. Many marginal and landless peasants were able to obtain seasonal waged employment with these farmers. However, many more were forced to migrate in search of waged employment as ‘interstate distress rural migrant workers’ (Radhakrishna, 2009: 85). This phenomenon continued in the period of economic liberalisation. Lowcaste workers from poorer regions, such as Bihar, Orissa, Andhra Pradesh and Chhattisgarh, make up a large proportion of the country’s migrant labour force. One analysis of 1991 census data found that Uttar Pradesh and Bihar, two of the poorest states in India, were responsible for a third of the country’s inter-state out-migration (Pattanaik, 2009: 24). Commercial farming in India has, thus, incorporated different social classes, including agrarian commodity producers – small, medium and large – agricultural wage labourers and those workers who fall into an intermediate group, relying on both wage income and marginal cultivation to generate household income, as well as the family workers who work for them and other home-based commercial enterprises. Changing social relations in agriculture influenced the growth of rural non-agricultural employment, reflecting the growing proportion of marginal cultivators and landless workers unable to survive from agricultural livelihoods alone. The large surpluses of rural labour generated by unequal agrarian social relations influenced the expansion of informal labour in other parts of the economy. As this suggests, the ‘flexibility’ required to take advantage of labour forces of rural migrant workers was at the disposal of industrialists long before the economic liberalisation process began in the 1980s. The eventual relaxation of state industrial planning and IR laws facilitated a process that had already been under way. For example, the maximum workforce-size of firms requiring state permission to retrench workers under the Industrial Disputes Act 1947 was reduced from 300 to 100 in 1982. This was followed by the passing of the Sick Industries and Companies Act 1985, which made it easier for large firms to close unprofitable operations. Voluntary Retirement Schemes were increasingly used to reduce the size of workforces. Employers, who had long relied upon the employment of ‘informal workers’, accelerated this process during the 1970s and 1980s, ensuring that labour was informalised ‘through subcontracting, putting-out, and casualisation even in so-called “organised” firms’ (Harriss-White, 2003: 19). The ability of industrialists to take advantage of already-existing surpluses of informal labour during India’s economic liberalisation underscores their economic power as well as the importance of social class differentiation in rural areas. Agrarian change in the 1960s and 1970s inspired a large literature on agrarian social relations (Harriss, 1991; Bernstein and Byres, 2001). One manifestation was a ‘modes of production’ debate, in which several scholars argued that a new

30   India’s informal economy type of capitalist farming emerged in the 1960s from previously non-capitalist agrarian social relations (Patnaik, 1990). Polemics were written over which label to ascribe to the Indian social formation (capitalist, feudal, semi-feudal or colonial). Another version was to argue that India’s ‘backward’ economy combined coexisting ‘forms of surplus extraction’ (Bhaduri, 1983: 9): [Our] characterisation of the ruling agrarian class structure corresponds to a complex coexistence of ‘feudal remnants’ (or ‘semi-feudalism’) sustained largely by a nexus of forced commercial relations and ‘capitalist tendencies’ expressing themselves in the form of expansion in agricultural production through ‘progressive farming’. (Ibid.: 129) According to this argument, a solution lay in the state aggravating interests among the dominant agrarian classes by encouraging capitalist farmers to squeeze-out the feudal remnants who continued to benefit from ‘forced commerce’: [A] high level of productive investment in agriculture combined with an imaginative program of rural credit and marketing aimed at reducing the poor peasants’ dependence on forced commerce could well play a critical role in what may be described as ‘capitalistic’ transformation of the more stagnant agricultural regions in India. Indeed, to any political regime that rules out genuine land reform and reorganisation of private property rights in land, this could perhaps provide the only escape route for at least some years to come, until new contradictions begin to mature with ‘capitalist’ agriculture. (Ibid.: 141) The suggestion here is that an agriculture-based economy requires a transitional period of capitalist agriculture. This is rather reminiscent of the classical Marxist view that modes of production developed in ‘stages’. For example, Bhaduri echoed Lenin’s distinction between peasant-class differentiation from ‘above’ and ‘below’, which we shall explore further in Chapter 2. But this view assumes that radical redistribution – the transition to a ‘socialist’ society – requires the national development of capitalist agriculture. It also assumes that capitalist farmers play some kind of progressive historical role that enlightened policymakers should encourage. In fact, the emergence of successful commercial farmers in the Green Revolution states, and the extension of rural credit and subsidies by successive governments, had a destabilising impact on the development of capitalism in India. As I argue above, the shift towards agrarian subsidies undermined public and private investment in industry. Moreover, the ‘modes of production’ debate focused on the agrarian transition in the context of national economic development, severing analytical ties with the global capitalist economy. As suggested, one cannot grasp the development of India’s

India’s informal economy   31 economy by focusing only on the interaction of the forces and social relations of production within its regions. The contrast between the planning ambitions of policymakers in the postcolonial state and the persistence of highly unequal agrarian social relations needs to be understood in the context of India’s place in the world economy. Like the agrarian economy, the second ‘intermediate class’ of small-scale proprietors in trading and manufacturing enterprises also traverses different social classes in rural and urban areas. Some proprietors are self-employed, ownaccount operators who work alone or with the assistance of unpaid family members. Others hire small numbers of wage workers on either a temporary or an ongoing basis. Furthermore, there are those who occupy an ambiguous class position, like ‘self-employed’ producers, who rely upon subcontracting for larger firms in order to survive. These producers have both features of self-employment and wage labour, in the sense that representatives of industrial, financial and mercantile capital shape their labour through orders, deadlines and design specifications. As I discuss in Chapter 2, many home-based workers, such as some garment makers or beedi rollers, fall into this category. In relation to Jha’s (1980) analysis, we can certainly say that small-scale enterprises were important in India long before the onset of economic stagnation in the 1970s. McCartney (2010) argues that the later expansion of small-scale capital suited the interests of large industrial capital, much of which was benefiting from trade and investment liberalisation and India’s growing integration with the world economy. Like Mezzadri’s (2008) analysis of export garments in the New Delhi urban region, the phenomenal growth of garments production in the city of Tiruppur, Tamil Nadu, in the 1980s and 1990s demonstrates how larger firms linked to global supply chains took advantage of the mass employment of informal workers, including many female casual workers. The ability of small and informal enterprises to lower production costs and undermine the bargaining power of workers in large firms has proved extremely useful to industrialists (McCartney, 2010: 146). One of the key aims of this book is to explore in detail how economic activity and employment in small-scale and informal enterprises have massively expanded in India’s largest urban regions, often alongside the expansion of formal sector employment. In doing so, the book takes this discussion a step further by drawing out how this process has been based primarily upon the mass employment of wage labour in both small and large enterprises. The book’s emphasis on the role of wage labour is quite different to some other recent studies of informal labour. Some scholars argue that, for India and other developing countries, informalisation is characterised by a trend away from wage labour. For some, critics of informalisation must start with unemployment, or ‘wageless life’, rather than wage labour (Denning, 2010). Others represent informalisation as a trend towards non-capitalist production based upon self-employment. Basu and Basole (2011, 2011a) characterise informal manufacturing in India as a non-capitalist sector that has grown against the backdrop of rising capitalist relations in agriculture.17 Others have similarly characterised the informal economy as a non-capitalist sector (Sanyal, 2007;

32   India’s informal economy Sanyal and Bhattacharya, 2009; Bhattacharya and Sanyal, 2011). In this framework, a distinction is drawn between the profit-maximising behaviour of formal production in capitalist firms and the income-maximising behaviour of informal ‘petty producers’ in households. Based on an assumption that the share of these petty producers in economic activity has grown and that they now represent the majority of India’s urban workforce, it has been argued that the locus of exploitation has shifted from the capital–wage labour relation to a nexus between capital and the assets created by these self-employed producers. Selfemployment is ‘the quintessential form of livelihood in the informal economy . . . self-employed and petty producers may be the predominant form of the need economy in the face of predatory and exclusionary capitalist accumulation’ (Bhattacharya and Sanyal, 2011: 45). Basu and Basole (2011a) extend this logic by attempting to systematically prove the non-capitalist nature of informal economic activity. They focus on the activities of informal manufacturing enterprises, especially own-account workers who are often based in households. They define capitalism by the predominance of wage labour as a ‘form of extraction of unpaid surplus labour’ (Basu and Basole, 2011: 42). The activities of these workers are non-capitalist, they argue, because these workers do not hire wage labour and because most are genuinely independent producers who sell goods directly to consumers. They argue that a larger proportion of informal manufacturing enterprises sell goods to private individuals or households than sell to private enterprises. Only a minority, they argue, sell to a ‘middleman’ or ‘contractor’ (Basu and Basole, 2011a: 68). Like Bhattacharya and Sanyal (2011), and contra Banaji’s (2010) claims about the formal subsumption of labour by capital, they eschew any suggestion that some of these ‘petty proprietors’ may be engaged in a form of ‘disguised’ wage labour. The government data they use is based on rural and urban areas combined. Informalisation in India is linked to different forms of migration between rural and urban areas. Some of this migration is ‘distress’ driven, underpinned by rural inequality, landlessness, poverty and lack of employment and income security. Some of it is incentivised, linked to the promise of higher incomes in urban centres. In other cases, migration is circular in character, incorporating huge numbers of workers moving between rural and urban areas on a seasonal basis in the search for employment. But, as this book demonstrates, we get different findings if we focus on the growth of informal labour in urban areas, against the wider backdrop of India’s rural society. The evidence in this book suggests that these scholars have got it wrong. A key argument is that rising employment growth in urban areas has been characterised by rising waged employment. According to government survey data, waged employment accounts for more people than self-employment in urban areas.18 Furthermore, the share of people in waged employment has increased significantly. In urban areas, waged employment increased from 54.5 per cent of total employment in 2004–05 to 58.1 per cent in 2011–12. In 2011–12, regular waged employment comprised 43.3 per cent of total employment and casual work comprised 14.8 per cent.19 The trend for urban areas seems rather clear:

India’s informal economy   33 waged employment is the dominant type of employment and has been on the rise as India developed over the course of the 2000s. Even if we look at rural areas, where a majority of workers remain self-employed or unpaid, the proportion of workers employed in casual wage labour has steadily increased since the early 1970s alongside a gradual decline in the proportion of women and men engaged in self-employment. According to Chowdhury’s (2011: 25) analysis of National Sample Survey Office data, 54 per cent of rural male workers and 56 per cent of rural female workers were self-employed in 2009–10. These proportions have dropped steadily from 66 per cent for men and 65 per cent for women in 1972–73.20 While the proportion of regular wage workers has also fallen, the proportion of casual wage workers in total employment has steadily increased over the same period, from 22 to 38 per cent for men and 31 to 40 per cent for women. A further problem with Basu and Basole’s (2011, 2011a) approach is that they do not look at services, including the tens of millions of workers in India employed in retail trade, wholesale trade and transport. This book emphasises data from the ­Economic Census, which includes services-based activities as well as manu­ facturing, and can lead to some quite different conclusions. For instance, the 2005 Economic Census showed that considerably more people were employed in trade than manufacturing in ‘own-account establishments’ in urban areas. There were over twice as many people in urban areas employed in retail trade own-account establishments (5.2 million people) than in manufacturing ownaccount establishments (2.2 million) (Government of India, 2008). Clearly, it is important to analyse the changes to employment in services as well as manufacturing. This book presents evidence of the expansion of wage labour in large as well as small enterprises. As we shall see, however, most of this employment growth has occurred in small, informal enterprises. As mentioned above, the ongoing role of small-scale industry and trade during the economic liberalisation period has been linked to the enduring power of the ‘intermediate classes’, which, the argument goes, still ‘represent a powerful social structure of accumulation’ (McCartney, 2010: 119). McCartney argues that these classes have been instrumental in the successful emergence of the Bharatiya Janata Party (BJP) as an electoral force. Intriguingly, they have also allowed the BJP to incorporate popular opposition within a framework that has facilitated neoliberal economic policies. Since emerging in the 1980s, the BJP has been very flexible in adapting to different regional conditions while uniting support behind its distinctive ideology of right-wing Hindu nationalism. In Gujarat, for example, the BJP appealed to urban and rural voters and incorporated ‘other backward classes’ – a broad group of less-­ advantaged castes – as well as forward castes. In Rajasthan, the BJP has incorporated Rajput regional identity into the local party’s propaganda. In 1996, the BJP strengthened its traditional base in Madhya Pradesh and made breakthroughs in Bihar, Maharashtra and Haryana, with a variety of regional alliances. Thus far, our discussion of the intermediate classes has focused on commercial farmers and small-scale industry. The last of the ‘intermediate classes’

34   India’s informal economy described by Jha (1980) are public sector employees engaged in corrupt activities. Partly reminiscent of Bardhan’s (1998) analysis of ‘proprietary classes’, this category is not as developed as Jha’s analysis of commercial farmers and small-scale proprietors. McCartney (2010) suggests that these workers continued to form part of the intermediate classes during the liberalisation period and, during the 1990s, were also drawn towards the BJP. In fact, it is better to regard them as a subset of the broader salaried ‘middle class’. Prior to the liberalisation period, a group of public sector employees emerged with salaries and savings well above the national average, enabling them to access quality education and relatively secure employment for their children. D’Costa (2005) has labelled this process ‘embourgeoisment’, referring to the growth of ‘upwardly mobile, more affluent, consumer groups who can afford to participate in the growing industrial markets’ such as automobiles, electronic goods and other trappings of consumer society (ibid.: 46). This group has been able to aspire to many Western values and ideals. Many of its members have enthusiastically supported India’s engagement with globalisation since the 1980s. This group is commonly referred to as a new ‘middle class’ in orthodox economic parlance (Ravillion, 2010). In recognition of this, McCartney argues that the intermediate classes and middle classes have ‘differing objective interests’, yet ‘both were drawn to and underpinned the rise of the BJP during the 1990s’ (McCartney, 2010: 156). This further explains the breadth of social classes that underpinned the BJP’s rise to power. The Hindu nationalist movement successfully garnered votes from the middle classes, including college graduates, successful business families and civil servants, as well as the small industrialists and traders who thrived in the 1970s and 1980s.

What this book does The process of informalisation in India since the 1970s has been shaped by the practices of employers who have taken advantage of well-established social structures of accumulation in India. But it has also been shaped by global processes of international competition and exchange. A range of scholars have attempted to periodise informal labour practices, along with the rise of neoliberal economic policymaking, on a global scale. For Bernstein (2010: 80), ‘neoliberal globalisation’ has been characterised by state attempts to undermine social regulations, from wage and employment protections and entitlements to public healthcare, education and social security. It has also been characterised by global financial markets undermining state autonomy over macroeconomic policy and by ‘state-led’ development models unravelling under pressure from neoliberal economic policymaking doctrines. It has become normal for states in developing countries to incorporate liberalisation, structural adjustment and the privatisation of state-owned assets. Neoliberalism has been marked by a variety of state attempts to shift the costs and risks of social regulation from capital to labour. Without question, this broad framework has shaped the transition of economic policymaking in India since the 1980s. India’s policymaking transition was accelerated through a combination of well-organised interventions by

India’s informal economy   35 n­ eoliberal policy thinkers and changes in dominant global economic thinking. But there was also a good dose of happenstance: high levels of public debt accumulated during the 1980s were exposed by an unexpected event. The war that followed Iraq’s invasion of Kuwait in August 1990 caused a dramatic fall in remittance payments from Indian workers employed in the Gulf. The war also pushed up the price of oil, worsening India’s balance of payments position. Prime Minister Narasimha Rao’s government was compelled to borrow US$1.8 billion from the International Monetary Fund (IMF) in January 1991. This loan was conditional on the Indian government accepting certain reforms like spending cuts. But this was not enough to resolve the problem and, by June, India was on the brink of a currency default. In response, the government rushed out a new industrial policy in which it planned to abolish most of the industrial licensing system, cut tariffs, liberalise foreign investment rules and remove ‘anti-monopoly’ restrictions on private investment (Pinglé, 1999: 26–7). Apart from these major changes to trade and investment rules, the Indian government also allowed new domestic and foreign banks to operate and promoted the stock market as a new way of mobilising private savings. They allowed foreigners to invest on Indian stock exchanges, allowed Indian firms to invest on foreign stock markets and allowed Non-Resident Indians (NRIs) to buy shares in India without Reserve Bank permission. Consequently, Indian stock market capitalisation increased from 19.4 per cent of GDP in 1991–92 to a high of 54.2 per cent in 1992–93 (McCartney, 2009: 188). The sweeping nature of India’s trade and investment reforms reflected the new influence and credibility of liberal policymakers in the state. ‘Market radicals’ were able to successfully prosecute the case for these reforms, despite their minority status within the policymaking elite. Following their successful intervention in 1991, the idea of self-reliance as an economic goal was jettisoned in favour of a belief in the existence of a ‘benign (liberal-capitalist) order’ (Sengupta, 2008: 39). From then, planning would be intellectually conditioned by neoliberal ideology, including notions of IMF-style structural adjustment and the alleged superiority of private enterprise (Karbra, 2009). However, while they provided a new conceptual framework for legitimising policy reforms, these changes did not represent the withdrawal of the state from the regulation of private enterprise. Austerity measures designed to cut government debt were unevenly applied. While subsidies for fertilisers, fuel and food were cut, the government continued to implement tax breaks for investors, manufacturers and exporters (Upadhyay and Bose, 2009: 131–2). Fiscal restraint was justified as a form of ‘anti-statism’ even though support for powerful sections of industrial capital increased significantly (Byres, 1997). Informalisation has intersected with and, in some ways, complemented India’s engagement with neoliberal globalisation. As well as taking advantage of informal labour embedded in regional social structures of accumulation, employment practices have also been influenced by this global engagement. Some have suggested that there has been a ‘migration’ of ‘changes to employment practices affecting formal employment from high-income to middle-income countries, and

36   India’s informal economy even to small parts of the formal economy in some low-income countries’ (Carré and Heintz, 2010: 20). Management techniques based upon greater reliance on informal workers, including casual, seasonal and temporary workers, as well as workers hired by labour contractors, have been honed by many transnational corporations. These practices have been acquired as ‘best practice’ by other firms through processes of global competition. These practices are themselves a feature of uneven and combined development. Informal employment practices also reflect changes in state regulatory frameworks as well as employer preferences. Reforms to industrial and social regulation that make it easier for employers to take advantage of informal labour arrangements have been adopted in many countries through this process. Chang (2009) has applied this logic to argue that informal labour has become the norm across the advanced industries of Asian countries. Informal wage labour – which he calls ‘social labour’ – is ‘becoming the dominant form of capitalist labour in the global factory’ (Chang, 2009: 169). As I explain in Chapter 2, this process incorporates a new category of workers, which Chang calls ‘in fact informal labour’ (Chang, 2009). Thus, the informalisation of labour forces in India since the 1970s has been shaped by global as well as local social, political and economic processes. In this sense, informalisation can be conceptually tied to the country’s uneven and combined development. On one hand, the expansion of informal employment represents a corpus of small and large Indian enterprises taking advantage of well-established informal labour arrangements in existing social structures of accumulation. These enterprises have used these practices to adapt to the pressures of economic liberalisation, including import competition, foreign investment and the rush to secure land and other valuable financial assets. Informalisation represents the expansion and acceleration of a process that already existed in pre-1980s India. On the other hand, informalisation represents adjustment to a global process in which enterprises achieve competitive advantage by lowering labour costs by employing more informal workers. State institutions have facilitated these practices by reforming regulatory frameworks in line with neoliberal economic policythinking. In part, informalisation represents the international combination of ‘best practice’ corporate governance and employment relations practices. The result, in India and in many other places, is hardly something to celebrate. While India transitioned to a high-growth economy in the 1990s and 2000s, its development was underpinned by the mass employment of informal workers with low-income security and remarkably little social protection. The ongoing surpluses of circulating labour remain underpinned by the lack of sustainable livelihoods in agriculture. Most of these workers have few rights and entitlements in practice. Industries dominated by informal employment practices tend to rely upon the poorest, most vulnerable groups of people. Meanwhile, the informalisation of labour within the organised sector has been marked by evidence of falling living standards as regular workers become a shrinking minority. While the literature on informal labour in India is already extensive, the aim of this book is to contribute to the conceptual and theoretical development of radical political economic approaches and to offer new empirical insights. The

India’s informal economy   37 book’s claims about the impact of informalisation on the livelihoods, employment and income security of workers are drawn from a study of changes to employment in three key urban regions: Greater Mumbai, Bangalore and the National Capital Region of New Delhi. This study shows how informalisation has traversed small and large enterprises, even underpinning the recovery in organised sector employment growth in the 2000s, and how it has incorporated a shift towards wage labour in these regions. It aims to show how the structure of labour forces in these cities is a feature of India’s uneven and combined development. It shows how the informalisation of labour is both a product of the combination of existing social structures of accumulation in these urban regions and of the adoption of global flexible labour arrangements, as transnational corporations have sunk roots in different parts of the country and as Indian firms have become increasingly integrated into the global economy. The result, I hope, is a picture of a diverse labour force that is useful to students and scholars of India’s political economy and to activists concerned with the future of labour movements in the emerging economies of the Global South. This book uses three case studies of changing employment in urban regions. The following chapter defines informal labour as a prelude to these case studies. It explains what ‘informal’ and ‘formal’ refer to and how the informal economy became a policy focus in India. In particular, it looks at the measurement of informal employment by exploring, and critically evaluating, the main official data sources used to monitor changes in informal employment in urban regions. These include the Economic Census and the National Sample Survey Office (NSSO). The chapter explains the main categories of measurement used in each data source and what ‘real-world’ social groups these categories approximate. Most of this data covers a period from 1980 to the late 2000s, approximating the timeline of India’s economic liberalisation. Chapter 3 looks at the first case study of urban development, Greater Mumbai. Government data for Mumbai and other urban centres in the state of Maharashtra shows that employment in large firms fell between the late 1990s and the mid-2000s. This has been matched by a sharp rise in waged employment in informal enterprises. This chapter also shows changes in the geographical location of working populations, with both waged and self-employed workers continuing to shift their livelihoods and communities to peri-urban areas like Navi Mumbai or, much further afield, to new manufacturing zones in cities like Pune. Chapter 4 looks at Greater Bangalore which, like Mumbai, demonstrates a major rise in waged employment in informal enterprises during the period of economic reforms. However, unlike Mumbai, it also experienced a concurrent rise in waged employment in large formal sector firms over this period. In fact, wage labour in large enterprises expanded more quickly than in informal enterprises. The chapter also notes that this expansion of wage labour has taken a specific regional form, with employment expanding in the region’s call centres, IT firms and garments factories. Chapter 5 turns to the experience in the National Capital Region (NCR). Local-level data on employment and enterprises is ­contrasted for two states that form part of the NCR: the National Capital Territory of Delhi and the state of Haryana. This comparison enables us to outline

38   India’s informal economy contrasting trends of informalisation within one urban region. The evidence shows a combination of ‘Mumbai-type’ and ‘Bangalore-type’ informalisation. Like Mumbai and Bangalore, there was a sharp rise in wage labour in informal enterprises. In Delhi, there was a concurrent decline in wage labour in large formal sector firms between the late 1990s and the mid-2000s, reflecting a similar experience to Mumbai. However, this is quite different to the experience on the southern and eastern fringes of the NCR, where new industrial zones have thrived since the 1980s. In particular, industrial activity in Haryana is dominated by peri-urban industrial zones in Gurgaon and Manesar as well as Faridabad. These satellite cities have become important centres for garment and automotive manufacturing and large service sector firms operating call centres and other business services. In these areas, there has been a significant rise in wage labour in large formal sector firms during the period of India’s economic reforms, reflecting a trend that is closer to the Bangalore experience. The rise of these new industrial zones contrasts significantly with the ‘hollowing out’ of largescale industry in metropolitan Delhi. The spatial implications of this are also analysed in Chapter 5. Like Mumbai, this evidence shows that working populations have shifted into new communities in peri-urban areas. Each of the three chapters on urban regions also goes beyond the government survey data offered by the Economic Census and other sources. They reveal problems, contradictions and flaws with these data sources and discuss alternative findings from secondary source material on informal employment and economic development. For example, the process of informalisation in Greater Mumbai cannot be understood without some analysis of industrial restructuring in the region since the 1980s. In particular, the historical demise of Mumbai’s textile mills occurred in response to out-dated technology, industrial conflict and new strategies for capital and financial accumulation by the city’s industrialists. Alternatively, informalisation in the NCR requires some examination of manufacturing in the region, including in the garment and automotive factories, where evidence suggests that employers have systematically replaced regular workers with informal workers such as casuals or, more commonly, workers hired through networks of labour contractors. The final chapter, Chapter 6, summarises the findings and results for each of the three urban regions, teasing out the key similarities and differences between these experiences of informalisation. It also offers some suggestions for future paths of class conflict and looks at the efforts of trade unions and other civil society organisations that continue to struggle against the onslaught of neoliberalism and informalisation. As the title of this book suggests, each urban region represents a different ‘journey’: a different historical and geographical process of informalisation and a different route to the informalised labour forces that dominate employment across India today.

Notes   1 There has been a lot of debate among economists about the origins of the high-growth period. In brief, some scholars emphasise the importance of trade and investment

India’s informal economy   39 l­iberalisation implemented in 1991 and after (Joshi and Little, 1994; Ahluwalia, 2002) while others point, in different ways, to political and social changes that occurred in the 1980s (DeLong, 2003; Subramanian and Rodrik, 2008; McCartney, 2009).   2 Author’s calculations based on data from RBI (2012).   3 Ibid.   4 20 or more workers for firms without power.   5 There has been some debate about the causes of higher organised sector employment growth. Some have attributed this to labour market reforms in different states (Goldar, 2011). Others have demonstrated a weak correlation between these reforms and employment growth, emphasising that organised sector employment growth has continued to lag behind investment and output growth during the 2000s (Nagaraj, 2011).   6 Author’s calculations based on National Sample Survey Office data (Government of India, 1997, 1998a, 1998b, 1998c, 1999, 2001, 2003, 2003a, 2005, 2005a, 2006a, 2008b, 2010, 2011, 2013).   7 National Association of Software and Services Companies.   8 For the similarities and differences between Pinglé’s and Evans’ approaches to the developmental state, see Pinglé, 1999: 12–13.   9 In this book, all italicised words in quotations are identical to the original source. 10 These figures are based on calculations of National Sample Survey Office data from Ghose (2012). 11 Author’s calculations based on data from Government of India (2011a, 2013a). 12 See Chapter 2 for a full explanation of this concept. 13 In this chapter, the book 1905 was retrieved online (Trotsky, 1922). Hence the unorthodox referencing format that refers to chapters as well as page numbers, e.g. (Trotsky, 1922: Ch. 1, p. 2). 14 Trotsky provided detailed information on ‘the exceptional degree of concentration in Russian industry’, comparing output and factory units with government data from Belgium, Germany and the US (Trotsky, 1922: Ch. 2, p. 3). 15 His writings on China are compiled in Trotsky (1969). 16 Intriguingly, D’Costa (2014) also applies this argument to China. 17 Using a combination of marginal land ownership and landlessness as a proxy for class position, they argue that most rural households are ‘effectively landless’ and must rely on wage payments to survive. This trend is underpinned by the gradual decline of tenant cultivation and sharecropping which, they argue, has left a residual semi-­ feudalism concentrated in poorer states such as Bihar or Orissa. This line of argument is reminiscent of the longer-standing ‘modes of production’ debate (see main text). However, Basu and Basole (2011, 2011a) do not really address the structural mechanism that could have facilitated a tendency towards capitalist social relations in agriculture but away from capitalist social relations in manufacturing. 18 There are three categories of employment measured in National Sample Survey Office (NSSO) data: self-employed, regular wage/salaried employee and casual wage labourer. The essential features of self-employment are that they ‘have autonomy (decide how, where and when to produce) and economic independence (in respect of choice of market, scale of operation and finance) for carrying out their operation’. Regular wage/salaried employees are those who ‘received salary or wages on a regular basis’. Casual wage labourers are people with a ‘daily or periodic work contract’ (Government of India, 2013: A4–5). In this analysis, regular wage and casual work are taken together to represent total waged employment. 19 Author’s calculations based on NSSO data (Government of India, 2006a, 2008b, 2010, 2011, 2013). 20 The only exception to this decline is 2004–05 data which recorded a one-off increase in the proportion of self-employed workers in total employment.

2 Mapping informal labour in India

What is ‘informal labour’? What does it mean for work, employment and labour to be ‘informalised’? Does ‘informality’ refer to a distinct sector of the economy, to a group of people undertaking particular economic activities, or is it a relationship between people or a process? This chapter explains what ‘informal’ and ‘formal’ mean and how these terms have been used in the Indian context. It draws on existing studies and source material to explain how and why the informal economy became a policy focus in postcolonial India and how informal employment has become a central feature of Indian labour markets. In particular, it looks at the measurement and monitoring of informal labour. It explores, and critically evaluates, the main official data sources used to measure and monitor changes in informal employment in urban regions. These include the Economic Census and the National Sample Survey Office. This chapter explains the main categories of measurement used in different data sources and what ‘real-world’ social groups these categories approximate. The data cover the period of India’s economic liberalisation since the 1970s. As discussed in Chapter 1, this reflects the historical intersection of trade and investment liberalisation, informalisation and, after 1991, neoliberalism. The analysis offered here feeds into the narratives of urban regions in following chapters. It suggests an across-the-board trend towards waged employment in informal enterprises in cities and towns, especially for manufacturing and retail trading firms. This has accompanied a shift towards employment in informal enterprises in some areas and a shift towards employment in large-scale industry in others. This process is framed as a differentiated form of proletarianisation, which has also led to a re-composition of the division of labour for homebased commodity production, which remains widespread and important in India today. The analysis demonstrates both what the official data shows us and what it does not, including areas in which the evidence conceals potential findings or contradicts other studies of informal labour. This includes an analysis of formal and informal enterprises, and informal employment within these enterprises. The understanding of informal labour taken in this book synthesises three perspectives on the informal economy: first, that it is an analytical categorisation of disadvantage and disempowerment; second, that the informal economy is a diverse grouping of economic activities in which state rules and regulations are

Mapping informal labour in India   41 absent, relaxed or systematically evaded; third, that it is a dynamic historical and spatial process that links various types of work and employment. Furthermore, informal labour is framed using a version of the ‘classes of labour’ approach (Bernstein, 2010). In this version, each type of work and employment represents a different ‘form of exploitation’ (Banaji, 2010) in which part of the total economic surplus is transferred from labour to capital in the process of production or exchange. Consequently, ‘mapping’ informal labour involves the observation and analysis of changes to the composition of these ‘forms of exploitation’ within labour forces. Using Indian urban regions as case studies, it is argued that informalisation has affected the configuration of these forms of exploitation. It has, in other words, influenced the proportional role that different forms of exploitation play in capitalist economic systems. As we shall see, informalisation has altered the relative share of different categories of self-employment and waged employment within the Indian labour force as a whole. This has important implications for how critical scholars and activists understand informal workers and their relationship to social movements and civil society organisations, including trade unions and political parties. First of all, this chapter outlines competing theoretical approaches to the study of informal enterprises, employment and labour. Second, it looks at the inability of state regulatory frameworks, particularly in India, to keep pace with the evolution of intellectual debates undertaken by scholars and activists in this field. Third, we return to the Marxist theoretical approach: how it compares to alternative approaches and the extent to which it can play a meaningful role in the development of new ideas, policies and movements. Finally, the chapter outlines the methodology used in this book and, in doing so, offers a means of testing theoretical claims about the relationship between the development of capitalism, the structure of labour forces and the emergence of informal labour in India today.

Theories of informal labour In order to outline this framework, it is first necessary to briefly explain the competing theoretical approach to the study of labour and employment in the informal economy. These must be distilled from a vast literature spanning ‘the core sub-disciplines of social science and history’ (Adam and Harriss-White, 2007: 15). Drawing on existing overviews of the informal economy (Chen, 2006; Maiti and Sen, 2010; Barnes, 2012a), we can identify several important theoretical frameworks. The earliest studies of informality assumed that it was an anomalous aspect of economic development in poor countries. The term ‘informal sector’ was first analysed in studies by the International Labour Organisation (ILO) on Kenya and by English anthropologist Keith Hart on Ghana (ILO, 1972; Hart, 1973). Even as the concept came into use among labour activists and scholars, an assumption lingered, influenced by one or other version of modernisation theory, that the informal sector was a ‘holding ground for workers awaiting entry to formal activity’ (Harriss-White and Sinha, 2007: 2). It followed

42   Mapping informal labour in India that this marginal phenomenon would atrophy if countries made a successful transition to industrial growth. But the idea that poor countries have dualistic labour markets caused by low per capita economic growth is no longer credible. Since the 1970s, it has been widely accepted that the informal sector is a permanent and growing phenomenon, a significant provider of jobs and incomes, and a major contributor to economic growth (Chen et al., 2004; Harriss-White and Sinha, 2007). Similarly, the view that the informal sector comprises a black market of illegal or criminal activities has also declined. Today, one very influential view of informality sees it as a vast reservoir of emerging entrepreneurs working in micro-enterprises. These entrepreneurs choose to operate outside the regulatory framework of the state, it is argued, in order to avoid the costs, time and effort required to participate in the formal sector. The informal economy is seen as a ‘venue for economic dynamism and entrepreneurial creativity’ (Maiti and Sen, 2010: 1). This argument is principally associated with the Peruvian economist, Hernando de Soto (De Soto, 1989). It draws upon neoliberal economic ideas about rational human behaviour, incentivisation and the benefits of free markets and ‘small governments’. De Soto has made a broad contrast between his view of the informal economy as a group of entrepreneurs, whose behavioural norms are repressed by the state, and what he characterises as the fallacious, radical left-wing belief in the existence of a ‘proletariat’ (ibid.). This has been described as a ‘legalist’ approach because of its emphasis on the formalisation of property rights as the key policy response to the expansion of the informal sector (Chen et al., 2004). De Soto has argued that property rights would enable entrepreneurs to benefit from the ownership of assets, as well as providing incentives to acquire ownership. Part of the logic of this argument is that people working in the informal economy may do so for ‘positive’ reasons. The legalist approach emphasises the entrepreneurial spirit and productive potential of people who have effectively made a rational choice to operate informally. A large literature has evolved in mainstream development economics and development studies, in which the informal sector is said to offer better financial opportunities, economic choices and working conditions through a ‘successful transition into entrepreneurship’ (Henley et al., 2009: 992; see also Maloney, 2004; Perry et al., 2007). This approach has been challenged by a range of scholars. Many have associated informality with higher levels of poverty. We know, for example, that there is a much higher percentage of poor people subsisting in the informal economy than in the formal economy (ILO, 2002a: 12). Most people in this category work for a living, suggesting that poverty is related to the nature of employment as well as the availability of employment (Chen et al., 2004). It has been argued that over 94 per cent of Indian workers in the most poor and vulnerable groups are informal workers (NCEUS, 2009). This does not mean that informalisation is universally associated with impoverishment. For example, Breman has demonstrated a growth in informal work in non-agricultural activities in the Indian state of Gujarat over many decades alongside an improvement in some development indicators in tribal communities, including falling mortality rates, better access

Mapping informal labour in India   43 to food, clothing, durable goods and primary school education (Breman, 1993). On the other hand, he has argued that the consequences of informalisation for workers have generally been negative. His study of former textile mill workers in the Indian city of Ahmedabad, a former ‘Manchester of the East’, illustrates this position (Breman, 2004). Former mill workers perceived job losses as a loss of living standards: ‘Without exception our informants described their current situation as “miserable” in comparison with the life they led as mill workers’ (ibid.: 182). For those now working in informal enterprises, hours were longer and most workers’ incomes had dropped by over half (ibid.: 179). Similar arguments about the negative impact of informalisation have been made in studies of ex-mill workers in Mumbai (Bhowmik and More, 2001). We can go further and suggest the virtually all studies of informal labour, including neoliberal or ‘legalist’ studies, understand informality as a category of disadvantage. However, neoliberal studies tend to frame this disadvantage in relation to the state – informal workers are, in other words, making a rational and necessary choice to escape the stifling influence of state regulation. More critical studies tend to frame disadvantage in terms of material standards, such as household income, consumption of basic goods or employment opportunities. Such arguments do not disprove the claim that some people enter the informal sector through free choice, or even that some informal workers are able to achieve higher living standards. But they cast serious doubt upon assumptions that participation has generally positive consequences in comparison to formal sector employment. A second view is that informality represents a discrete sector of the economy: an ‘informal sector’. Informality has been historically characterised as a sector comprised of small-scale industry based in workshops or households, the use of primitive or dated technology, labour-intensive production and a combination of paid and unpaid labour. In this version, informality was ‘seen as a characteristic of enterprises, not of employment relations’ (ILO, 2002a: 15). This view is now widely regarded as an over-simplification and as rather misleading (ILO, 2002a; Chen et al., 2004), although its influence lingers. The evolution of the ILO framework on informality is an example of how this view has changed. Until the mid1990s, it was more common to attempt to quantify an ‘informal sector’ based upon the number of employees per enterprise. The contribution to output and employment of enterprises below a certain size was used to approximate informal economic activity. Later, the ILO’s framework was modified to define informality in terms of employment: ‘Under the expanded concept, informal employment is understood to include all remunerative work—both self-employment and wage employment—that is not recognised, regulated or protected by existing legal or regulatory frameworks and non-remunerative work undertaken in an income-­ producing enterprise’ (ILO, 2002a: 11). This broader definition of informality has not always been adopted by governments in their efforts to measure informal economic activity. In India, for example, there has been little change in the official view that ‘employment size is the basic criterion for distinguishing enterprises in both the formal and informal sectors’ (Narayana, 2006: 94). The National Commission for Enterprises in the Unorganised Sector (NCEUS), established by the

44   Mapping informal labour in India Government of India in 2004, continued to make use of the distinction between ‘organised’ and ‘unorganised’ sectors, based upon the number of employees per firm, to approximate ‘the formal-informal distinction in the international context’ (Mazumdar, 2008: 27; Nachane, 2009).1 In India, the informal sector has thus long been regarded as approximating the unorganised sector. While an enterprise-based definition like this has some uses, it tells us little about the historical process in which the informal economy has expanded or about the possibility of ‘informal workers’ finding employment outside informal enterprises. The weaknesses of an enterprise-based approach to informality – in particular, its treatment as a separate economic sector of small-scale enterprises – has influenced the more widespread use of the term ‘informal economy’ instead of ‘informal sector’. This view stems from a third, ‘structuralist’ approach to informalisation (Chen et al., 2004) in which economic development was framed as a process subordinating small firms and vulnerable workers to the economic power of large firms (Castells and Portes, 1989). This idea seems somewhat similar to the literature on ‘global value chains’ in which capitalist economic processes are understood in terms of the dominant role played by large ‘lead firms’ (Gereffi et al., 2005). However, the structuralist approach seems more generally applicable to national as well as global processes and is also focused on work and employment, which the global value chains literature has often neglected (Starosta, 2010; Barrientos et al., 2011; Coe and Hess, 2013). In structuralist accounts, the idea of informality as a marginal and transitory sector has been gradually replaced by the idea of an informal economy in which the formal and informal sectors are dynamically linked. For example, many informal enterprises produce for formal enterprises, supplying inputs, goods and services through commercial arrangements like subcontracting. In addition, formal enterprises have long been known to hire workers under informal employment arrangements; for example, through the hiring of casual workers, workers on short-term contracts and industrial outworkers or home workers (ILO, 2002a; Chen et al., 2004). An employment-based definition of informality, characterised by dynamic, economy-wide linkages, captures the realities of work and employment in the Global South more accurately than definitions that view it as a marginal, entrepreneurial or a small-scale sector. But the sheer breadth of this definition has created problems for researchers and policymakers who want to observe and quantify informal economic activity. It is tempting to streamline this problem by seeing informality as based upon ‘nonstate regulated processes of goods and services’ (Harris-White and Sinha, 2007: 1). In other words, if it is difficult to quantify the attributes of informality, it is perhaps easier to define it by what it isn’t. According to this logic, informality refers to the absence, relaxation or systematic evasion of state rules and regulations. This may refer to the absence of taxation or the monitoring and enforcement of state-sanctioned rules, either through the conscious design of policymakers or through an ineffective regulatory framework. This argument reflects a fourth, ‘institutional’ economic approach to the informal economy in which state rules and regulations are deemed to be too

Mapping informal labour in India   45 costly to enforce. For example, the potential tax revenue from the sales revenue, profits and expenses of small enterprises may be less than the administrative costs of collecting it (Harriss-White, 2003: 4–5). The informal economy is thus said to represent economic activities governed by norms and trust that are generated outside and beyond the state: ‘Informality may therefore exist in any society, but is more likely to exist in a society where formal rules and regulations are not in place or are not well enforced’ (Maiti and Sen, 2010: 5). According to one interpretation from this tradition, ‘we should move beyond formality and informality and tackle directly the policy interventions that will help the poor unlock their potential through groups and through markets’ (Guha-Khasnobis et al., 2006: 16). This does not mean that the state is completely outside the realm of informality. A distinction should be made between the ‘formal economy’ regulated by state planning regimes and the ‘formal regulatory environment’ comprising government policies, laws and regulations, many of which are intended to apply to people working in the informal economy (Chen, 2006: 83). Nevertheless, a definition of informality as an unregulated (or lessregulated) sector underscores the point that the concept rests upon normative assumptions about the role of the state in regulating the production and distribution of goods and services. It makes sense to view informality as a collage of economic activities in which state-based rules and regulations are absent, relaxed or ineffective. However, this view seems insufficient unless paired with an approach that ascribes some common, observable characteristics to informal economic activity. This is because the idea of the informal economy as economic activity free of most state regulation is consistent with a range of theoretical approaches which often sharply contradict each other, as outlined above. For example, this idea is consistent with the arguments of scholars who have described it as a marginal, a small-scale or as an entrepreneurial sector, despite the different theoretical assumptions used in each of these arguments. Within the institutional approach, some argue that the common characteristics of informal economic activity include norms and forms of trust generated by non-state and non-market processes and institutions. Harriss-White emphasises family relations, social reputations, gender inequalities and caste hierarchies in her explanation of tax evasion, rent-seeking and corruption in India’s informal economy (HarrissWhite, 2003: 72–5). This approach has been linked to explanations of India’s economic transition based on the ‘intermediate classes’ of small- and mediumsized commercial farmers, small-scale proprietors and public sector employees (Jha, 1980; McCartney, 2010). As outlined in Chapter 1, the approach taken in this book assumes that these groups represent, or overlap with, separate and distinct social classes. While the interests and activities of these classes provide convincing accounts for periods of stagnation and growth in India’s economic history, I do not accept that we can collocate these different groups into a single class with a single set of interests in relation to the state or that the rent-seeking behaviour of individuals within these groups is somehow symptomatic or typical of ‘informal economic activity’. These social classes may engage in particular

46   Mapping informal labour in India forms of rent-seeking, but they have separate interests in relation to specific production processes. They represent different classes of labour. For example, the character of commercial farming depends upon the type of crops cultivated which is influenced, in turn, by environmental and regional factors. This shapes relations between commercial farmers and agricultural wage labourers. The relations between small-scale proprietors and workers can also be very different, with some ‘own-account’ operators relying upon unpaid or family labour and other proprietors hiring wage labour on differing scales. In addition, the ‘intermediate class’ approach does not really address the informalisation of labour within formal sector firms. So how should we characterise informal labour in a more positive sense? The solution offered here is to synthesise conceptions of the informal economy as a categorisation of disadvantage and as the absence of significant state regulation with the view of informality as an employment-based phenomenon. This may seem rather general but, in fact, it allows us to incorporate a wider variety of work and employment types into a critical perspective on the informalisation process. In general, informality should be equated with jobs that exhibit most or all of the following features: low job security or lack of protection from arbitrary dismissal, irregular hours, low pay (often with no minimum wage safety-net), no or little social security (such as medical insurance or sick leave), no formal work contract, vulnerability to hazardous working conditions and a lack of collective bargaining rights and freedom of association (Ahn, 2007). While one might expect that the employment characteristics of informality are more commonly found in smaller, informal enterprises, where it is tougher for state institutions to monitor and enforce laws supposed to protect workers, this approach implies that degrees of informality can be located in a wide variety of enterprises and work and employment situations. It is possible to outline an analytical framework that incorporates empirical flexibility and openness with this employment-based approach to informality. Such a framework could be used to map the diversity of work types and employment arrangements in the informal economy and, in the longer term, could help address the ongoing debate about the trajectory of class formation in the Global South. Here the typological approach of Chen (2006) is adapted to do this. Based on this approach, it is possible to distinguish informal employment from formal employment and divide it into two types (Figure 2.1). The first type is selfemployment in informal enterprises (1A); the second type is waged employment in informal or unprotected jobs (1B). Type 1A incorporates all people who work, own, manage or supervise within informal enterprises, including employers who provide work for others (1Aa), own-account operators or sole proprietors, who may either be individual producers or people running small family-based enterprises (1Ab), and all unpaid workers who work within informal enterprises, including family members working for, or alongside, own-account operators (1Ac). ‘Informal jobs’ refers to a broader category of employment in which the characteristics of informality apply to employment in both large and small firms, including many firms counted as part of the ‘formal sector’. The common

Mapping informal labour in India   47

2. Formal employment

1. Informal employment

A. Selfemployment in informal enterprises

a. People employing others in informal enterprises

c. Unpaid workers and family members

b. Own-account operators (sole proprietors)

3. ‘In fact’ informal employment

B. Waged employment in informal jobs

a. Wage workers in informal enterprises

b. Domestic workers

c. Casuals and day labourers

d. Unregistered/ undeclared workers

e. Industrial outworkers (home workers)

f. Workers hired by labour market intermediaries

Figure 2.1 Mapping labour in the informal economy (source: adapted from Chen (2006) and Chang (2009).

characteristic for all workers in type 1B is that they exchange their labour time in return for a wage. This typology is modified from Chen’s original in two senses. First, Chen did not include workers hired by labour market intermediaries such as temporary help agencies, labour-hire firms and labour contractors (1Bf) as a separate category. Second, this framework includes a further category of ‘in fact informal workers’ (Type 3). This is derived from Chang (2009) and is explained below. This book goes a step further in adapting this analytical framework through a Marxist theoretical lens. Each ‘type’ in Figure 2.1 should not simply be considered as a particular legal construct of employment, a contractual relationship or a technically-defined type of work. Although these descriptors may be relevant, it is better to understand each type as a different means of connecting commodity production to the production and distribution of value. In each type, there are different ways of organising the production process in order to extract value from the labour time of workers. Each ‘type’ is thus considered as a ‘form of exploitation’. ‘Exploitation’ is understood in the Marxist sense. This is

48   Mapping informal labour in India d­ ifferent from the moral relativist use of the word that is common in everyday language. In Marxism, exploitation is understood as a technical description for a relationship in which an individual or an organisation extracts value from the labour of a worker which is greater than the value required to replenish the worker’s ‘labour power’: their ability to keep working. In reality, the value required to match labour power is highly subjective and is influenced by various social factors like culture, custom and practice, social attitudes and the existence and role of trade unions and other agents, economic factors like unemployment and political factors such as state regulations. These variables differ historically and from region to region. This approach is also influenced by Banaji’s analysis of modes of production in which capitalism is based upon ‘a multiplicity of forms of exploitation based on wage-labour’ (Banaji, 2010: 145). The analytical framework used here recognises that work and employment are broader than wage labour. Not all labour power is replenished in the form of wage payments. Banaji clarifies that his argument is not that all sharecroppers, labour-tenants, and bonded labourers are wage-workers, but that these ‘forms’ may reflect the subsumption of labour into capital in ways where the ‘sale’ of labour-power for wages is mediated and possibly disguised in more complex arrangements. (Ibid.) This analytical framework also incorporates a variety of labour forms that coexist within informal enterprises, including self-employment and forms of unpaid labour, including the contribution of family members. In doing so, it adopts Dunn’s (2011, 2014) argument that ‘value’ represents the labour time socially necessary for production in capitalist economies. Thus, forms of unpaid labour are also value-producing in the sense that they either directly contribute to the production of commodities (in, for example, informal enterprises based in households) or indirectly contribute by contributing to the value of labour power. This incorporates domestic labour and child-rearing activities, which do not directly produce goods and services for markets but which are necessary for the reproduction and replenishment of labour power. In this framework, ‘forms of exploitation’ are represented by different concrete types of unpaid labour as well as different types of waged labour. In each ‘form’, representatives of capital have different ways of appropriating value, of distributing value and various ways of organising the production process, while different groups of workers have diverse means of resistance and different economic survival strategies. The nature of these different forms of exploitation needs to be specified in order to more accurately grasp the impact of informalisation on the conditions of labour. For example, own-account operators (Type 1Aa in Figure 2.1) may not have identical interests with the people who work for them (1Ac). Workers remunerated with a wage (1B) have the common characteristic of having to sell their labour power on a regular basis to survive. But within the informal economy, the types of work available, the level of wages and the manner in

Mapping informal labour in India   49 which they are paid are highly variable. This reflects a ‘classes of labour’ approach in which labour power is exchanged under heterogeneous conditions (Bernstein, 2007, 2010): Classes of labour have to pursue their reproduction through insecure and oppressive – and typically increasingly scarce – wage employment and/or a range of likewise precarious small-scale and insecure ‘informal sector’ (‘survival’) activity, including farming in some instances; in effect, various and complex combinations of employment and self-employment. . . . In short, there is no ‘homogeneous proletarian condition’ within the ‘South’, other than that essential condition I started from: the need to secure reproduction needs (survival) through the (direct and indirect) sale of labour power. (Bernstein, 2007: 5) According to this view, the mass of the world’s workers rely, either directly through wages or indirectly through subcontracting arrangements, on the sale of labour power. For Bernstein, ‘the relative size and weight, and importantly the composition, of the informal economy varies significantly with historically specific patterns of capitalist development’ (ibid.: 8–9). This raises the need for historical and geographical concreteness in order to grasp changes to the structure of labour forces during the period of informalisation. By drawing upon an employment-based understanding of informality, this framework also incorporates various forms of informal labour that appear within formal sector firms. For instance, workers employed in informal enterprises (1Ba) may receive lower wages than permanent workers in the formal economy. They may have little or no medical insurance or pension benefits and may be vulnerable to arbitrary dismissal. But casuals and day labourers (1Bc) employed in the formal economy may share many of the same characteristics. Such workers dominate employment in particular industries in India, such as rice processing, match production, woollen carpets and toy manufacturing (NCEUS, 2009: 142–3). Some industries rely overwhelmingly on workers hired by labour contractors (1Bf), such as stone quarrying, beedi rolling, rice processing, brick kilns and construction. In 2008–09, an estimated 10.7 million construction workers, or 83 per cent of all workers in the construction industry, were employed through labour contractors. Typically, these workers do not receive any employment benefits or social protection and receive sub-minimum wages (NCEUS, 2009: 143). The incidence of low-caste tribal workers and children is estimated to be particularly high in these industries. In his studies of informal labour in Gujarat, Breman has used the term ‘neo-bondage’ to describe the plight of many of these workers, who migrate in search of paid work but whose mobility is often constrained by irregular wage payments and debt obligations to labour contractors (Breman, 2007). Neo-bondage has characterised the labour of many sugar cane cutters in south Gujarat (Breman, 1994) and many tribal workers recruited in Gujarati villages to work seasonally in Mumbai brickyards (Breman, 1993).

50   Mapping informal labour in India Breman has made a number of important points about the labour of these migrant workers. First, their migration, driven by the lack of employment in agriculture and the availability of low-wage work in industry and construction, has blurred the divide between rural and urban employment (Breman, 1994). Second, laws meant to restrict the exploitation of these workers have done little to discourage these employment arrangements. The clauses of the Inter-State Migrant Workmen Act 1979 and the Contract Labour (Regulation and Abolition) Act 1970, meant to prevent the exploitation of workers by labour contractors and employers, have been routinely ignored. Third, he has emphasised the role of labour contractors (mukadam) who police work and life in the labour camps, screening out troublemakers: ‘The mukadam are the ideal watchdogs over the workforce and labour costs’ (Breman, 1994: 266). In addition to the widespread use of contract labour in India, such studies imply the existence of large numbers of temporary, irregular and part-time workers paid sub-minimum wages, who do not receive medical insurance and other social security. Large firms have used a combination of employment arrangements to segment workforces, including situations in which workers under different employment conditions do similar types of work. It is common for regular workers, casuals and workers hired through labour contractors to undertake similar types of work in return for very different wage levels and employment conditions (Kaur et al., 2007). The segmentation of industrial labour forces is not a recent phenomenon. It was practiced in the textile mills of Mumbai and Ahmedabad for decades before informal employment began to expand in the 1970s and 1980s. In Ahmedabad, there was significant outsourcing of work to outworkers by the 1940s, despite some union efforts to prevent it. Most of these workers were women from low castes, who had been systematically excluded from employment within the mills. In addition, Ahmedabad’s textile mills employed thousands of badli (substitute) workers, who made up nearly a quarter of the workforce by 1979 (Breman, 2004: 122). Even among regular workers, wages and employment conditions were divided by craft and skill. For example, workers in spinning shops earned far less than weavers. Similarly, workers in Mumbai’s textile mills had long been divided between permanent and badli workers within the mills, and between mill workers and powerloom workers employed in small workshops outside the mills. These divisions were very important in undermining union activity, most famously during the great textile strike of 1982–83, which ended with the decimation of the union movement and eventual closure of many of the mills. During the strike, these divisions ‘allowed mills to continue production of cloth through sub-contracting, a practice which helped them to tide over the crisis’ (Van Wersch, 1992: 40). As argued in Chapter 1, the nature of the Indian industrial relations system suggests that there has long been an incentive for employers to restructure their employment records in order to avoid legal obligations required in the organised sector. Employers may restructure their accounts, reorganise labour forces into smaller groups or pool groups of permanent, casual and contract workers together in order to enable easier restructuring or the provision of inferior wages and employment conditions. Corporate restructuring has

Mapping informal labour in India   51 allowed many employers to circumvent labour laws by using subcontracting, casuals or temporary workers employed ‘off the books’, or misallocating work titles such as ‘apprentice’, ‘trainee’ or ‘manager’ (Hill, 2009). Some of these workers are deliberately hidden on payroll lists or employment musters – their employment is undeclared or unregistered in order to evade protective labour laws (see 1Bd in Figure 2.1). Employers have long demonstrated the flexibility to organise and restructure their workers into segmented groups in order to lower wage costs and enhance their control over the production process. This is one reason why one rarely finds examples of ‘pure’ formality or informality. For instance, one does not need to exhibit all of the features of informality listed above in order to be recognised as an informal worker. It is arguably more common for work and employment to exhibit several of these features, with different categories of informal labour exhibiting more or less of them. Work and employment relations may exhibit more or less of these characteristics at a given moment. It is for this reason that the ILO has acknowledged the existence of a continuum ‘with decent work deficits most serious at the bottom end, but also existing in some formal jobs as well, and with increasingly decent conditions of work moving up the formal end’ (ILO, 2002: 4). Understanding informality in this way suggests that types of work and employment relations change historically and spatially. Workers may move ‘along’ the continuum or work simultaneously at different ‘points’ on the continuum. For example, a self-employed garment worker may supplement his or her income by agreeing to subcontract for a large firm. A public sector worker may have a second ‘informal job’ (Chen et al., 2004: 16). Alternatively, emphasis may be placed on formal sector employees losing their jobs and being forced to seek work in informal enterprises. Breman’s study of Ahmedabad’s textile workers is an example of workers ‘sliding down’ the continuum, as income, job security and living standards have declined (Breman, 2004). This suggests that informalisation is a process in which work, production and employment relations are historically and spatially reorganised, often in a way that disadvantages and disempowers workers. The observation and measurement of informality is thus an attempt to take an empirical snapshot of a dynamic process. Estimating the scale of informal employment is always a difficult task. Recent attempts have been made to estimate economic activity and employment in the informal economy while taking stock of the employment-based characteristics of informality. One measurement used within the ILO framework has been to subtract the number of formal employees from the non-agricultural workforce, dividing the result between wage workers and the self-employed. A second method, which includes an estimation of informal workers employed in formal enterprises, takes the figure for informal employment as a percentage of the non-agricultural workforce and divides it between employment in informal enterprises and informal employment outside informal enterprises (ILO, 2002a: 18–21). Using the first method, informal employment as a percentage of non-agricultural employment in India in 1999–2000 was 83 per cent. Including agriculture, this figure was

52   Mapping informal labour in India 93 per cent (ibid.). Using the second method, 17 per cent of India’s non-agricultural informal employment was found in formal enterprises in 2001. Furthermore, there was evidence that informal employment accounted for nearly all employment in some sectors, including agriculture, trade, construction and the majority of workers employed in transport and storage (ibid.: 34–5). A more recent estimate of informal employment in the formal economy was included in the final NCEUS report, which found that 28.9 million informal workers were employed in the ‘formal/organised sector’ in 2004–05, compared to 33.7 million ‘formal’ workers (NCEUS, 2009: 13). Chang (2009) attributes much of the growth of informal employment in formal sector firms to neoliberal policies, such as the creation of export-processing zones or the erosion of trade union rights and freedoms which, he argues, adapt the economic policymaking framework to the logic of informal labour. As mentioned in Chapter 1, his novel contribution is the concept of the ‘in fact’ informal worker (Type 3 in Figure 2.1). This refers to regular or permanently-employed workers who are counted as part of the formal sector and formally covered by protective laws and entitlements but have no access to these protections and entitlements in practice. An example of this is migrant workers, who may be covered by the same laws and regulations as non-migrants, but lack knowledge about their rights or entitlements, lack the knowledge or expertise to take advantage of them and work under fear of state reprisal, such as deportment or visa restrictions (Chang, 2009). Finally, the analytical framework presented here is a further challenge to the idea that informalisation involves a dominant tendency towards self-employment. While an own-account operator may exhibit certain entrepreneurial features, the nature of their work and employment is different to an industrial outworker. In the latter case, control over the employment relationship and (indirectly) over the labour process may be exerted by larger firms (see 1Be in Figure 2.1). In these instances, the category of ‘self-employment’ may conceal a situation that closely resembles an employer–employee relationship (Breman, 2004: 176–7; Mazumdar, 2008: 27). Subcontracting arrangements may be ‘disguised’ as a commercial buyer–­ supplier or sales–purchase relationships, in which the economic power of the informal worker/producer is exaggerated (Chen, 2006). In India, there is evidence that between 25 and 30 per cent of informal enterprises operate under contract with larger enterprises. This trend has been increasing over time. Some studies, based on sample surveys of informal enterprises, put the figure at up to 46 per cent (NCEUS, 2009: 272). A NCEUS co-sponsored study of 60 informal enterprises in India found that most firms undertook subcontracting to larger firms. While most had two or more buyers (the average number was six), nearly 60 per cent of total output for each subcontracting enterprise was supplied to a single, major buyer (ibid.: 272–3). Other studies have emphasised the distinction between ‘home-based workers’ and ‘home workers’. ‘Home-based workers’ refers to a broad category of workers working from households, including own-account operators and employers with a relatively independent status, ‘home workers’ who work in households and whose status is dependent on subcontracting and, finally, wage workers who

Mapping informal labour in India   53 work in their employer’s home (Rani and Unni, 2009: 196–7). According to this view, ‘home workers often face problems of exploitation while the self-employed often face problems of exclusion’ (ILO, 2002a: 44).

The persistence of dualism The idea that informal employment represents a continuum of work and employment types – or, in this book, a continuum of ‘forms of exploitation’ – is now widely recognised among critical scholars and activists. But the policymaking framework of states has lagged behind this intellectual evolution. India, for example, retains a regulatory framework based upon dualistic planning and labour market policies. This framework maintains an enterprise-based definition of informality in order to regulate a core of larger enterprises, while relaxing regulation of investment, corporate governance and employment conditions for enterprises that employ the majority of people in the labour force (Hill, 2009). There have been strong arguments levelled against the persistence of policy dualism from a variety of theoretical perspectives. A neoliberal or ‘legalist’ interpretation of this problem has promoted the dismantling of preferential policies in order to reflect the reality of a large, permanent and growing informal economy. The existence of these policies, it is argued, retards the productive potential and entrepreneurial talents of workers in the informal economy. India’s industrialists have responded to state restrictions by, for example, increasing outsourcing to smaller firms or by making greater use of casual or temporary workers. There is no doubt that state restrictions have influenced the strategy and behaviour of industrialists. Bardhan has, for example, noted the evidence from the 1970s and 1980s of a ‘remarkable growth in the number and activity of small units (for example textiles with powerlooms, leather products, etc.), particularly where there have been serious restrictions on the output of the large-scale units in many products’ (Bardhan, 1998: 43). However, this truth has morphed into a misleading argument that restrictive industrial policies and dualistic labour market policies are the main cause of informalisation since the 1970s. This argument reflects neoliberal assumptions that frame states as a burden on economic development (World Bank, 1995). This is misleading because employers have long had the flexibility required to reorganise production processes, including the ability to evade regulations or exploit legal loopholes. While amendments to the Industrial Disputes Act 1947 in 1976 and 1982 required employers with 100 or more workers to seek state permission before retrenching workers, studies of Annual Survey of Industries (ASI) data in the 1990s reported very few cases in which large firms were refused permission to sack workers. Similarly, while the Contract Labour (Abolition and Regulation) Act 1970 was designed to limit the ability of employers to hire contract labour in core business activities, the percentage of contracted workers in total employment has continued to increase unabated (NCEUS, 2009: 15). But there are more fundamental reasons why the neoliberal view of informalisation is misleading. As outlined in Chapter 1, the roots of informal labour lie

54   Mapping informal labour in India deep in India’s colonial history and its agrarian economy, leading to the establishment of regional social structures of accumulation that industrial capital has been well placed to exploit. Flexible labour practices have been shaped by the availability of large surpluses of labour power as well as state-driven disincentives for management to improve productivity. The need to control labour-intensive production has influenced a systematic preference among employers for ‘footloose’ or precariously-employed labour (Breman, 1996). Labour contractors, foremen and other agents have played a key historical role in assisting industrial capital by taking on the organisation and supervision of workers. Much has been written about the role of these capital-labour intermediaries in India (Brass, 1990; Breman, 1993, 1994, 2007; De Neve, 2005; Roy, 2008). Demand for labour hired through labour contractors has been underpinned by the persistence of agrarian class inequalities. These inequalities have contributed to greater numbers of landless labourers as well as small land-holders who have sought wages as an alternative source of income. Breman’s analysis of ‘footloose labour’ in Gujarat provides a nuanced treatment of this problem. He has argued that the traditional hali system of attached labour in this region gradually declined from the 1930s until the early 1960s. Agriculture, while still important, was no longer able to provide enough of a livelihood for the mass of rural workers. A major reason for this, Breman argued, was a change in cultivation practices. For example, local cultivators gradually switched from sugar cane production to fruit growing. This was less labour intensive and could be satisfied by seasonal labour. Another reason was the demands of local labourers themselves, who sought incomes from new employment opportunities that had arisen due to the expansion of road and rail lines between Mumbai and Ahmedabad, especially following India’s independence. This opened lines of transport for migrant workers and also created employment opportunities in the towns. Changes in the organisation of agricultural production and in the mobility of labour in the region coincided with a rise in commercial relations at the village level (Breman, 1993). A further reason for labour migration was that ‘employers in various branches of industry, in the villages as well as in the cities, show systematic preference for alien over local workers’ (Breman, 2006: 48). Breman observed this in rural and urban areas. For example, he argued that employers in the city of Surat relied on migrants, mostly young unmarried men, from Maharashtra, Uttar Pradesh and Orissa. The preference for outsiders was partly driven by the ‘massive oversupply of migrant labourers’ driving wage costs down and weakening the bargaining power of local workers (Breman, 1985: 335). But the overriding cause, Breman argued, was that migrant workers were easier to control. Temporary migrant workers had little work to return to and few local ties, while their caste background and language limited their fraternisation with local populations (Breman, 2007a: 226). The result was that many landless workers left their homes and villages, but only temporarily because of insufficient demand for their labour: ‘the predominant pattern of labour mobility is not migration but circulation’ (Breman, 1996: 33). Breman concluded that most work in this region was undertaken by a ‘footloose’

Mapping informal labour in India   55 proletariat: by workers who found only temporary or precarious employment on low pay, without skills development or training. Other scholars have also noted a tendency for increasing numbers of workers to migrate in search of non-agricultural work in many other regions. For example, studies of labour in Uttar Pradesh have observed that men have tended to migrate in search of non-agricultural employment, while women have tended to remain in their villages to take up agricultural labour in the absence of their spouse or relatives (Kapadia and Lerche, 1999). These complexities suggest that the neoliberal view of informalisation, with its obsession with state regulation, only partially addresses and cannot explain why informal employment has grown so rapidly in periods of both economic stagnation and growth since the 1970s. If critics of neoliberalism are correct, labour reforms designed to dismantle dualistic policies and promote greater enterprise flexibility may only be ‘legalising’ or ‘formalising’ negative outcomes of informalisation such as precarious employment and higher poverty (Kaur et al., 2007). Despite the historical evidence ­suggesting that Indian industrialists have tended to take advantage of precariously-employed labour regardless of labour laws, calls to reform these laws have continued unabated. The main demands have been to remove or increase the limit on retrenchments under the Industrial Disputes Act for firms with 100 or more workers or to remove restrictions on employing workers through labour contractors under the Contract Labour Act 1970 (Singh and Sapra, 2007; Shyam Sundar, 2012). In light of these demands, what should be made of the dualistic labour market policies that persist in India? One critical response suggests that dualistic economic policy frameworks rest upon the false hope that employment in the informal economy can be ‘formalised’. This is unrealistic, it is argued, because most informal enterprises could not cope with the compliance costs of formalisation and this would undermine employment creation (Chen, 2006: 91). This perspective rejects the need to choose between normative prescriptions of greater informalisation/formalisation and, instead, problematises the relationship between organised labour and the state. The expectation that states should formalise work and employment relations, it posits, is both unrealistic and a distraction from the more important task of protecting and organising workers in the informal economy. Dualistic labour market policies are criticised, not because they undermine the flexibility of enterprises, but because they concentrate ‘privilege’ among a minority of relatively well-paid, well-educated employees in the organised sector. This group has been criticised as a ‘labour aristocracy’ by policymakers in institutions as different as the World Bank and the ILO (Breman and Das, 2000: 14). Elsewhere, the organised sector, and the public sector in particular, have been characterised as ‘islands of privilege’ (Rudolph and Rudolph, 1987: 267). Underpinning this argument is a tacit assumption that organised sector workers have been engaged in a form of rent-seeking by accumulating incomes and status to which they are not entitled. This raises difficult questions for trade unions, which have traditionally relied upon workers in formal sector firms for membership and finances. Critics of

56   Mapping informal labour in India dualism have called the policies, strategy and record of trade unions into question. The ‘proud reputation’ of ‘organised’ industrial labour as the political vanguard of the working class has evolved into ‘a very different qualification which places the emphasis on the elitist conduct of this privileged group’ (Breman, 2004: 246). Since the 1980s, labour market policies that regulate conditions for organised sector workers have increasingly been seen as ‘an unjust form of preferential treatment’ for a minority of workers with secure, permanent jobs (ibid.: 247). Calls to abolish these policies have entered the mainstream of academic and policymaking circles in India and elsewhere. There are certainly some workers for whom permanent employment in formal sector firms creates a relatively privileged status. For example, there are some firms in which a minority of regular workers monopolise managerial or supervisory roles that distinguish them from the majority of the workforce (Kaur et al., 2007). But the main problem with this approach is the evidence of significant differences of income, status and economic power among organised sector workers. According to government data, there was a 42 per cent increase in the number of ‘unorganised workers’ employed in the organised sector between 1999–2000 and 2004–05 (Hill, 2009: 404). This evidence underscores the point that informality represents an analytical category rather than a structural division in the economy. The fact that some activities are counted as informal and some are counted as formal does not, by itself, explain how incomes, wealth and economic power are distributed. One of the most useful illustrations of this can be found in the evolution of Holmström’s thinking (Holmström, 1976, 1984). In his early study of workers employed in four engineering factories in Bangalore, Holmström concluded that workers in factory employment formed a ‘citadel’ of relative economic privilege (Holmström, 1976). The ‘walls’ of the citadel structured the economic behaviour of people inside and outside factory employment. He argued that those with permanent jobs in factories, offices or government services organised to protect their wages and conditions, while those without competed to gain entry. Later, Holmström changed his mind: ‘There is no dual economy. The relatively well-paid are not privileged at the expense of the unorganised sector, and there is no way that making factory workers poorer could help the others’ (Holmström, 1984: 322). Nevertheless, the idea that labour employed in the formal sector constitutes a privileged elite persists, manifesting in several critical accounts that frame informalisation as ‘a countervailing force to full-lifetime proleterianisation’ (Tabak, 2000: 4) or, in earlier critical accounts of development theory, the ‘obverse of proletarianisation’ (Portes et al., 1989: 308). This argument relies upon an unorthodox interpretation of proletarianisation, which is understood as something that occurs in the interests of workers; a ‘social democratic compromise’ that limits the right of employers to cut costs and control production (Broad, 2000; Tabak, 2000). This is influenced by world systems theory, drawing upon Wallerstein’s argument that ‘semi-proletarian labour’ based on mixed livelihoods in households was the norm in early modern Europe. It also draws on Arrighi’s periodisation of world history into four phases of accumulation (Genoese, Dutch, British and

Mapping informal labour in India   57 American) in which periods of decline were marked by excessive financial expansion (Arrighi, 1994). According to this logic, informalisation is a recurring phenomenon in which elites seek flexibility to overcome declining profitability as long phases of production enter periods of stagnation; hence the trend for increased downsizing, subcontracting, irregular work and casualisation in both rich and poor countries since the 1970s (Broad, 2000: 38). Informalisation is viewed as a ‘spatial fix’, in which accumulation is bolstered ‘from without’ by grabbing new territories and taking advantage of non-proletarian forms of labour (family labour, slaves and peasants) and ‘from within’ by rationalising the costs of the existing proletarian workforce (Tabak, 2000: 5). Informalisation represents a ‘recasualisation of work and a revival of informal economic activities worldwide’ (Broad, 2000: 35). Thus, ‘with recasualisation and informalisation of work, capital has gone a great distance in emancipating itself from proletarian labour’ (ibid.: 43). A rather similar view has been recently expressed by Standing (2011: 7), who argues that the ‘proletariat’, along with similar phrases like ‘working class’ and ‘workers’, have become ‘little more than evocative labels’. Standing instead posits a new class hierarchy crowned by an economic ‘elite’, below which stands a ‘salariat’ of regular full-time workers in large corporations and public institutions, most of whom enjoy ‘the trappings of their kind, with their pensions, paid holidays and enterprise benefits, often subsidised by the state’ (ibid.), and ‘proficians’, who have the marketable skills to prosper as independent contractors or consultants. Below this stratum lies a ‘shrinking “core” of manual employees, the essence of the old “working class”. The welfare states were built with them in mind, as were the systems of labour regulation’ (ibid.: 8). Then comes the object of Standing’s argument: the ‘precariat’, defined as workers who lack ‘forms of labour-related security’ (ibid.: 10). Although his book focuses on OECD countries, his argument is also applied to developing countries. Like those scholars influenced by the world systems approach, Standing has a curious view of proletarianisation, which defines it in relation to state regulation.2 This contrasts with the ‘classes of labour’ approach. In this book, proletarianisation is understood, in the classical sense, as a historical process of class formation in which groups of workers begin to exchange their labour power for wages in different types of work and employment. The ‘proletariat’ is broadly conceived as representing the various ‘classes of labour’ that do this in order to survive. It reflects a view of social class defined in relation to the production process, not in relation to state regulation, however important the state may be in influencing workers’ behaviour. In this sense, what Standing describes as a ‘precariat’ is in fact very similar to the category of ‘informal labour’ used here. The precariat’s lack of ‘labour-related security’ reflects low incomes, insecure employment, lack of occupational identity and career progression, lack of training and skills development, lack of social protection and collective bargaining rights and other features which are broadly similar to the ‘decent work deficits’ used here to define informal labour. The odd treatment of proletarianisation in the hands of Standing and others reflects a tendency to conflate concrete features of work and employment with

58   Mapping informal labour in India class, as a social relation between individuals with different claims over the production process. It is far better to make a clear and unequivocal distinction between the idea of informality, which is defined in relation to the state, and social class, which is defined in relation to production. This makes it easier to understand the impact of informalisation on labour forces and the possibilities for resistance. By understanding informality and social class as distinctive concepts that interact in the process of economic development and global integration, it is possible to understand and explain what has been happening to Indian workers during the economic liberalisation period. This book sees the process of working-class formation as comprising a shift towards the mass employment of wage labour in formal and informal enterprises alongside the informalisation of employment as a whole. Observations of contemporary capitalist development allow us to see industrial development, proletarianisation and informalisation as distinctive but complementary, rather than contradictory, processes.

Marxism and informal labour As should be clear by now, this book takes up the conceptual and empirical challenge of addressing informalisation in India through a Marxist theoretical lens. As explained above, it does this by modifying an analytical framework, based on critical research on the informal economy, that presents the various manifestations of informal employment as different ‘forms of exploitation’. But there is also a sense in which Marxism transcends any study of informal labour. In this approach, social class is the key division in society, linking the process of capital accumulation with structural economic inequality and the forms of labour resistance that this process inevitably generates (Wright, 2005). In this way of thinking, informality is a secondary category of analysis that relates to state regulation in private markets. Informality is, after all, a concept of the late twentieth and early twenty-first centuries. It was not really used by any scholars until the 1970s. The challenge is, therefore, to adapt the Marxian theoretical framework in a way that can empirically describe and help to explain the process of informalisation during the period of neoliberal ­globalisation since this time. Stating the challenge in this way is controversial and there have been other radical theoretical attempts to meet it. In the 1980s, Cox and Harrod made a notable attempt to combine an analytical emphasis on social relations of production with a non-Marxist stratification of society (Cox, 1987; Harrod, 1987). Their attempt to make class analysis ‘relevant’ was based upon analytical snapshots of ‘forms of social relations of production’.3 While this terminology was influenced by Marxism, it rejected what these scholars saw as the crude determinism of historical materialism (Cox, 1987: 396). Some of the ‘forms’ they identified are similar to the ‘forms of exploitation’ identified here although, with the benefit of hindsight, they did not properly acknowledge the role of commodity production in households and adopted an enterprise-based understanding of informality (see, for example, Harrod, 1987: 196). More problematically, Harrod and Cox implied

Mapping informal labour in India   59 that the primary schism in developing countries was not social class, based upon individuals’ relationship to the production process, but the divide between ‘nonestablished’ workers and ‘established’ workers. Harrod put this view explicitly: Workers in enterprise corporatist social relations, that is, working for large dominant corporations, have better conditions of work and return than those in the small enterprises of the enterprise labour market and indeed may even live longer as a result. Yet they may be engaged in the same work and sector. The lack of privilege of one is the result of the transfers made to the other. . . . Objectively this is the case but of course this may not be the intention of those involved. (Harrod, 1987: 31–2) As discussed above, one cannot consistently and credibly argue that workers employed in large formal sector firms constitute a privileged elite. At best, only some workers, usually those able to access more senior or managerial positions, can be described in this way. Nevertheless, concerns remain about the capacity of any historical materialist approach to explain the relationship between contemporary economic development, class formation and social change. Based upon their early observations of England’s industrial society, Marx and Engels developed the belief that industrialisation influenced the formation of an industrial proletariat based primarily in towns and cities. From the early 1840s onwards, they saw the proletariat as both the product of historical forces and as a living subject shaping these forces (Engels, 1952; Marx and Engels, 2002). But many have questioned the idea that capitalist development generates a unitary tendency of proletarianisation. Some have seen capitalist development since the late twentieth century, and its inability to provide sufficient and meaningful paid employment, as changing the composition of urban classes in ways unforeseen in classical Marxist accounts. For example, Davis (2004) has emphasised the overlapping of urban slum communities with livelihoods to create an ‘informal working class’ or an ‘active unemployed’. While this informal proletariat has ‘little or no vested interest in the preservation of the existing mode of production’ (Davis, 2004: 28), its means of survival and collective organisation is different to that traditionally advanced by Marxists: [Because] uprooted rural migrants and informal workers have been largely dispossessed of fungible labour-power, or reduced to domestic service in the houses of the rich, they have little access to the culture of collective labour or large-scale class struggle. Their social stage, necessarily, must be the slum street or marketplace, not the factory or international assembly line . . . [Struggles are] usually focused on immediate consumption issues: land invasions in search of affordable housing and riots against rising food or utility prices. (Ibid.: 28–9)

60   Mapping informal labour in India Davis has argued that the vulnerability of these labourers has made them susceptible to the influence of powerful patrons with reactionary ideas. For example, he argued that populist Islamists, Pentecostal Christian activists or Hindu nationalists today ‘occupy a social space analogous to that of early twentieth-century socialism and anarchism’ in contemporary urban slums (ibid.: 30). More recently, radical scholars have advanced competing positions on problems raised by Davis. As outlined in Chapter 1, some scholars argue that urban change has enhanced the political and economic role of self-employed petty commodity producers (Sanyal and Bhattacharyya, 2009; Basu and Basole, 2011). This reflects a belief that the political and industrial organisation of waged labour at the ‘point of production’ can no longer be the focal point of social change within a Marxist perspective. In contrast, other radical scholars have pointed to the growing importance of wage labour in the Global South (Chang, 2009; Bernstein, 2010). An alternative view has been posed by Silver (2003). Her analysis of labour examined the importance of place and relative power, drawing upon Wright’s (2000) concepts of structural and associational power. Structural power flows from the position of workers within capitalism as a system of production and distribution. It can take a marketplace bargaining form, as a consequence of tighter labour markets, and a workplace bargaining form derived from the strategic location of groups of workers in chains of commodity production. Associational power flows from the collective organisation of workers. Silver argued that the ‘place’ of contemporary labour forces in global commodity chains has enhanced their collective power. However, she suggested that associational power is becoming strategically more important: the ‘contemporary decline of labour militancy might be traced to a trend toward the overall weakening of labour’s workplace bargaining power’ (Silver, 2003: 172). Such questions about the tendency of contemporary class formation, including the composition and economic power of labour forces, mean that it is necessary to briefly review some aspects of the Marxist tradition on class formation. Marx and Engels’ views on proletarianisation were more complex, and perhaps contradictory, than critics often imagine. They famously argued, in The Communist Manifesto, that the formation of an industrial working class threatened the ongoing existence of capitalism (Marx and Engels, 2002). But writings penned in other contexts were more nuanced than this. In his earliest observations of the English working class, Engels wrote that the collective organisation of workers tended to be directed towards the improvement of wages and employment conditions without consciously aiming to undermine capitalist social relations. He posed the history of wage campaigns as ‘a long series of defeats of the workingmen, interrupted by a few isolated victories’ (Engels, 1952: 216). The conceptual tension between workers’ organisations as defensive or conservative institutions and their role in challenging the stability of capitalist society, was under-developed in Marx and Engels’ writing. But later, in writing his manuscripts on British political economy, Marx developed a methodology that could begin to capture these intellectual quandaries. In the first volume of Capital, this entailed the deliberate use of simplifying assumptions in order to outline historical

Mapping informal labour in India   61 processes. Empirically-based statements were then introduced into these schemas, testing assumptions step-by-step (Callinicos, 2006; Kuhn, 2007). Marx tried to strike a balance between assumptions that legitimised practical intervention in class struggle and the need to modify these assumptions based on the available evidence. An important example of this method was Marx’s assumption that industrialisation would draw more workers into factory labour. One obvious objection to this view was that industrial society generated unemployment. Capitalism was driven to perpetually improve productivity, which meant that more output was possible with the same number of workers. Consequently, capitalism appeared to endlessly generate surpluses of unwanted labour. This process was dynamic: some workers were surplus to requirements in one part of the system while others were drawn into factory employment elsewhere (Marx, 1939). The result was a dynamic market for labour power in which waged employment overlapped with ‘a relatively redundant population of workers; that is to say a population larger than suffices for the average needs of the self-expansion of capital – in short, a surplus population’ (Marx, 1939: 695). Marx implied that competition between workers for jobs undermined the collective power that he and Engels had attributed to waged workers. He pointed to the existence of three kinds of surplus population (ibid.). First, a ‘floating population’ which subsisted around centres of industry, rising and falling with the economic health of industry and following it as it became established in new areas; second, a ‘latent population’ of agricultural labourers, which was ‘continually on the move, in course of transference to join . . . the manufacturing proletariat’; and third, a ‘stagnant population’ with irregular employment, the conditions of which ‘fall below the average conditions of the working class’. This third group offered capital ‘an inexhaustible reservoir of available labour power’ (ibid.: 711): This stratum is persistently recruited from among the superfluous workers belonging to the fields of large-scale industry and of agriculture; and especially, likewise, from decaying branches of industry, such as handicraft industry when it is being crushed by manufacturing industry, and the latter, when, in its turn, it is succumbing to the competition of machine industry . . . [It] forms a self-reproducing and self-perpetuating element of the working class, and it takes a proportionally greater part in the general increase of that class than do the other elements. (Ibid.) Marx also briefly discussed a fourth group encompassing ‘the lowest sediment of relative surplus population, which dwells in the world of pauperism’ such as petty criminals, vagrants, prostitutes, orphans and homeless children, the ‘demoralised, the degenerate, the unemployable’ (ibid.: 711–12). Finally, Marx pointed to the existence of a fifth group of nomadic workers, which formed ‘the light infantry of capital, which moves them rapidly from point to point, as its need for them varies’ (ibid.: 734).

62   Mapping informal labour in India These examples demonstrate that Marx did not regard the working class as a homogeneous social category, despite the common characteristic of wage payments and the treatment of labour power as a commodity. Indeed, this passage of Capital has a distinctly ‘contemporary ring’ (Bernstein, 2007: 2). Marx here speculated that precariously-employed workers, surviving on low wages, constituted the largest share of employment growth in Britain at the time. He pointed to the existence of other types of workers, such as labourers contracted into mobile gangs. He also acknowledged the existence of conflict over living conditions, such as housing conditions and rent, as well as over the payment of wages. His typology was not absolute or static: ‘Like all other laws, it is modified in its actual working by numerous considerations, the analysis of which we are not here [in the first volume of Capital] concerned’ (Marx, 1939: 712). Underscoring the historical specificity of his approach, Marx looked in some detail at various sections of the working class, from low-paid workers living in overcrowded quarters in northeast England to poverty among Belgian workers. He examined a relatively well-paid group of workers, the British miners, the handicraft and other small businesses that grew in their wake and the struggles over housing conditions in mining communities (Marx, 1939). Marx assumed that these ‘numerous considerations’ were consistent with his belief that capitalism generated proletarianisation. But his discussion of the variations in class formation affected by the generation of surplus populations, and his acknowledgement of stratification among workers based on differences in wages, employment and living conditions, implied something equally important: while concepts such as ‘proletarianisation’ and ‘surplus population’ express general tendencies of capitalist development, the reality of class formation is an empirical question that requires assumptions to be tested. His theoretical perspective presents us with an analytical guide that is of little relevance without concrete historical engagement. There is thus a tension in Marxist theory between general trajectory and empirical contingency. This tension has been constantly revised by Marx’s followers. As argued in Chapter 1, Lenin’s and Trotsky’s writings on capitalist development in pre-World War I Russia pointed to the growth of relatively centralised employment in the industrial factory system, mines, metalworking and transport, in the context of an under-developed agricultural economy (Lenin, 1956; Trotsky, 1922, 1934, 1962). But the degree of concentration, forms of organisation and radical politics they described in Russia are not universally evident among workers as capitalism develops. It is worth briefly reiterating Lenin’s framework for understanding capitalist development, as this became very influential among socialists in developing countries, including India. Following the suppression of a revolutionary uprising in 1905, Lenin wrote that Russia had combined two paths of capitalist development (Lenin, 1978). Earlier, he identified economic differentiation of the peasantry into poor, middle and affluent income groups (Lenin, 1956). After 1905, he identified a fourth group; a ‘feudal latifundia far exceeding in dimensions the capitalist farms of the present period in Russia and deriving their revenues chiefly from the exploitation of the peasants by means of bondage and the labour

Mapping informal labour in India   63 rent system’ (Lenin, 1978: 226). What Lenin termed ‘latifundia’ had been called a ‘corvée economy’ or, in his earlier analysis, a system of otrabotki. This was based on payment in kind rather than money wages and bondage, through debt rather than ‘free’ labour (Lenin, 1956: 187–8). While he had initially argued that this system slowed the process in which former serfs were transformed into free wage labourers, he now argued that it represented an alternative path of development. Russia faced a choice, he argued, between these paths. One was a ‘Prussian path’, in which feudal landlords gradually implemented commercial agriculture and exploited bonded labourers on landed estates; the other was an ‘American path’, in which social revolution confiscated the feudal estates, redistributing land among the peasantry. Independent peasant production would lead to economic differentiation, in which some peasants would evolve into capitalist farmers, laying the basis for full industrialisation at some point in the future (Lenin, 1978: 239). The most important rural struggles, he argued, pitted former feudal landlords, who retained large plots of land, against small producers defending their livelihoods. Assuming that a period of capitalist development was necessary before socialism could be implemented, he suggested that the flowering of agrarian capitalism was conditional on the derailment of the Prussian path through the abolition of the feudal latifundia. One can observe the influence of this framework in the writings of Bhaduri (1983) and others, who suggested that the Indian state needed to encourage the emergence of a strong capitalist class in agriculture (see Chapter 1). But Lenin’s earlier study, written between 1896 and 1899, provides a considerably more detailed and impressive historical analysis than this (Lenin, 1956). Here, he described the process of economic differentiation within the Russian peasantry, the dispossession of small peasant producers and the emergence of a commercial ‘home market’. Richer peasants, he argued, had formed a ‘peasant bourgeoisie’ as they concentrated ownership of land, purchased capital goods and hired wage labour (ibid.: 78). Peasants who lost land were forced to accept wages or in-kind payments as the greater portion of their income. The small plots many continued to hold were not enough to maintain household income. These ‘allotment-holding wage workers’ became a ‘rural proletariat’ of farmhands, day labourers and builders (ibid.: 178). Rural proletarianisation was something of an a priori assumption in Lenin’s writing. But, like Marx, his preparedness to weigh assumptions against the available evidence was also important. Lenin introduced two complicating factors into his analysis. The ‘independent development of merchant and usurer’s capital’ was one factor, which retarded the disintegration of the peasantry by keeping workers tied to the land through debt obligation. The otrabotki system of in-kind payments was the second factor: ‘bondage, usury, otrabotki’ all retarded the process of proletari­ anisation (ibid.: 187–8). The main problem, Lenin argued, was that the 1861 abolition of serfdom had not generated significant land redistribution among the peasantry, so many ‘free’ peasants lacked enough land to pursue ‘independent husbandry’, turning increasingly to money wages and market interaction to survive (ibid.: 193). Lenin’s conclusion was that the ‘only possible system of

64   Mapping informal labour in India economy was, accordingly, a transitional one, a system combining the features of both the corvée and the capitalist systems’ (ibid.: 194). Lenin’s position incorporated the view that class formation could only be understood in specific historical contexts: [Our] literature frequently contains too stereotyped an understanding of the theoretical proposition that capitalism requires the free, landless worker. This proposition is quite correct as indicating the main trend, but capitalism penetrates into agriculture particularly slowly and in extremely varied forms . . . [The] English cottager is not the same as the small-holding peasant of France or the Rhine provinces, and the latter again is not the same as the knecht in Prussia. Each of these bears traces of a specific agrarian system, of a specific history of agrarian relations – but this does not prevent the economist from classing them all as one type of agricultural proletarian. (Ibid.: 178–9) Despite this qualification, Lenin assumed that the features of capitalist development that emerged in Western Europe would appear in roughly the same historical order in Russia. Like pre-industrial Europe, handicraft production would gradually emerge in households to supplement income. Finance capital would enable peasant producers to pay for inputs, while merchant capital would connect them with markets. As market exchange became more important, more workers would seek wages to raise incomes. Some small producers would hire casual workers. Others would become de facto wage workers, ‘working at home for the capitalist; the merchant capital of the buyer-up is here transformed into industrial capital’ (ibid.: 396). Like the proto-industry of early modern Europe, this cottage industry blurred the boundaries between subsistence farming and commodity production (Kriedte, 1981). Lenin argued that proto-industry of this type was a stage in Russia’s economic development. Handicraft production followed subsistence production and corvée labour, giving rise to a further stage of commercial agriculture and small-scale industry until, eventually, waged labour became the dominant social relation in both agriculture and industry (Lenin, 1956: 407–9). At the time of writing, Lenin believed that rural production retained a ‘transitional character’, between small-scale industry in households and industrial factory ­production (ibid.: 471). However, he also suggested that proto-industry had become an ‘appendage’ of factory-based manufacturing. This operated in two ways. First, merchant capitalists, who had previously linked proto-industry and markets, began to employ groups of rural workers in workshops. Second, some capitalists became wealthy enough to establish large-scale factory employment. The local markets generated by these factories stimulated the expansion of new small-scale industries. Lenin emphasised the contrast between the growth of large factories during the 1880s and 1890s and the expansion of small-scale production drawn to the fringes of the factory system. The new industry was exceptionally concentrated, with thousands of workers drawn into very large state-of-the-art factories and mines (ibid.:

Mapping informal labour in India   65 565). But new small-scale industries also employed many rural workers in building and construction, transport for coal and raw materials to factories and small producers servicing the factory labour forces. This interaction blurred the rural– urban divide, creating a mass of workers that belonged to ‘the industrial population of factory centres, or to the semi-agricultural population of the surrounding villages’ (ibid.: 587). Interpreted as a whole, Lenin’s writings on agrarian capitalist development and class formation between 1896 and 1907 imply a contradiction in his thinking that influenced later Marxist writing on this issue. On the one hand, Lenin assumed that the features of capitalist production emerged in an order that was similar to previous phases of industrialisation. On the other hand, much of his conceptual discussion and empirical engagement challenged this assumption. For example, his account of small-scale industry in Russian towns showed that it emerged not only as a consequence of gradual ‘proto-industrialisation’; it also emerged rapidly in the wake of investment in the factory system. Furthermore, the dispossession of peasant holdings was not necessarily a prerequisite for the emergence of factory production in the cities. Significant numbers of peasants continued to rely on long-established forms of rural production during the period of Russia’s industrial expansion in the 1880s and 1890s. Consequently, we can say that the idea of ‘stages’ or ‘laws’ of development is deeply problematic. This implies a universality of features and supposedly predicts the order in which they arrive. While this assumption can be located in several Marxist accounts of development, an alternative approach has long been available within this body of scholarship. As argued in this section, the historical engagement of Marx and Lenin contained insights that implicitly challenged the belief that development occurred in stages. Lenin’s record of the interaction between small-scale industry and factory production is an example of this. Trotsky’s concept of uneven and combined development was an attempt to theorise this alternative logic. Like Lenin, Trotsky observed the rapid development and exceptional concentration of large-scale industry in Russia against the backdrop of an agrarian economy. He also observed differentiation among the rural classes, with some ex-peasants becoming industrial workers and others retaining features of both, with livelihoods based in agriculture alongside wage labour in the factory system and the small-scale enterprises linked to it. But he went further in attempting to construct a novel theoretical explanation. Trotsky was particularly concerned to explain how several of the features of European ­industrial capitalism were able to flourish in Russia’s otherwise agriculturallydependent economy.

How to test the theory The usefulness of this framework depends upon its application in specific geographical and historical circumstances. As outlined in Chapter 1, the theory of uneven and combined development allows us to develop testable claims about the relationship between economic development and social class formation

66   Mapping informal labour in India drawn from the Marxist perspective. This method enables us to at least begin to distinguish between claims about economic development and the structure of capitalism that are of a general nature and those which are relate only to particular regions. This book offers one way of exploring the relationship between economic development and class formation by focusing on three of India’s most important urban regions. In these regions, as across India in general, informal employment dominates the economic landscape. As we shall see, this is based upon employment in large-scale, formal enterprises as well as informal enterprises. We shall also see how the informalisation of labour has intersected with a new phase of industrialisation during India’s economic liberalisation. The theory of uneven and combined development allows us to see how this process has incorporated established regional social structures of accumulation as well as forms of employment used around the world. In contrast to those scholars who emphasise self-employment and petty commodity production, the following chapters will demonstrate how the outcome has been a shift towards the mass employment of wage workers in both small- and large-scale enterprises. This will also help to outline the different ‘forms of exploitation’ that predominate in these regions. While most of these forms are also manifestations of informal labour, the book aims to retain a clear distinction between informality and social class. Informality is understood here as an analytical categorisation of disadvantage, as the absence, relaxation or systematic avoidance of state regulations and as a dynamic historical and geographical process that changes the relationship between different forms of exploitation. Social class is understood in relation to the forms of exploitation themselves, most of which fall within the informal economy but some of which do not. In maintaining this distinction, the book hopes to avoid two confusions. One is the confusion generated by scholars who conflate informality and social class by defining proletarianisation, wrongly, as a kind of state-centred protection monopolised by a privileged minority of workers. The other is the problem with states themselves, which continue to rely upon dualistic planning and labour market policy frameworks. India retains this framework, creating problems for any researcher who wishes to explore the impact of informalisation across the country. For example, the government’s Annual Survey of Industries measures output and employment for manufacturing firms in the organised sector only. The National Sample Survey Office (NSSO), which functions within the Ministry of Statistics, releases highly-detailed survey data on employment, unemployment and household consumption. Many social scientists in India (and India-focused scholars overseas) rely upon the regular release of NSSO survey data to draw conclusions about the progress of economic development. This data can be used to monitor many changes in employment. For instance, it measures three categories of employment: self-employment, regular wage/salaried employment and casual wage labour. As argued in Chapter 1, NSSO data demonstrates a long-term trend towards the employment of wage workers in India. More specifically, it demonstrates that wage labour has become the dominant type of employment in urban areas and has been increasing proportionally since the beginning of the century.

Mapping informal labour in India   67 In the following chapters, this argument is substantiated by exploring data from the NSSO, secondary sources on economic development and employment in each urban region and, especially, an examination of the measurement of employment and social indicators in India’s Economic Census (EC). This EC’s main purpose is to measure activities in the non-agricultural, unorganised sector. The EC has been conducted six times: in 1977, 1980, 1990, 1998, 2005 and, most recently, in 2013 by the Central Statistical Organisation (CSO) based at the Ministry of Statistics in New Delhi. Fieldwork surveys are conducted by the Directorates of Economics and Statistics in each state of India (Government of India, 2008). The EC excludes the vast majority of agricultural activities and there is a strong focus in the various EC reports on unorganised sector activities in urban areas. EC data is based on surveys of all households and firms that produce commodities (‘establishments’), excluding all crop production and plantations. Most of the EC data referred to in the following chapters was collected in 1998 and 2005, with some data collected in 1980 and 1990. This corresponds fairly closely with the period of India’s economic liberalisation. Data collection for the sixth EC was conducted from June to October 2013 but, unfortunately, new EC reports were not available at the time of writing. Evidence from EC reports is used to construct and analyse time-series data for the three urban areas. Data from four Indian states has been used: Maharashtra, Haryana, Karnataka and the National Capital Territory (NCT) (Government of Haryana, 1998, 2008; Government of India, 1998, 2008; Government of Karnataka, 2000, 2005; Government of Maharashtra, 2000, 2008; Government of the NCT, 2000, 2008). Maharashtra includes the urban region of Greater Mumbai, Karnataka includes the urban region of Bangalore and data from both Haryana and the NCT is used to cover the New Delhi urban region.4 Changes in employment trends in this data are contrasted with changes in the balance between ‘forms of exploitation’ in urban regions. This is done primarily by analysing changes to employment in two categories of establishment used in the EC: Own-Account Establishments (OAEs) and Establishments with Hired Workers (EHWs). OAEs are ‘normally run by members of the household’, while EHWs hire at least one wage worker ‘on a fairly regular basis’ (Government of India, 2008). As we shall see, changes to the number of OAEs and EHWs and the number of people employed in them, both in aggregate terms and by industry, reveal that significant changes have occurred to the composition of labour forces since the 1980s. While this data yields findings about changes to employment, there are also limitations that need to be acknowledged. For example, multiple ‘economic activities’ are often undertaken in a single ‘establishment’ (Government of India, 2004: 9). Furthermore, surveys commonly rely upon on the self-reporting of establishment owners in conjunction with the observations of data collectors. The enterprise-based definition of informality used in the EC reports can also conceal real changes that are underway. For instance, the EC excludes some ‘non-standard’ forms of labour such as domestic labour. It does not measure the employment of casual labour or workers hired through labour contractors and other intermediaries. By itself, the EC data tells us very little

68   Mapping informal labour in India about changes to the composition of labour within establishments. While the EC records the caste of establishment owners, it does not record the caste of the workers employed within establishments. These issues can be addressed if the data is treated with appropriate caution. In the following chapters, this data is combined with data from secondary sources, including field research projects, and, in Chapter 5, is supplemented by observations from the author’s own field research in the New Delhi urban region.5 The urban regions of Greater Mumbai, Bangalore and New Delhi are key centres of industry and employment. Mumbai is the financial and, formerly, industrial centre of the country, while New Delhi is its traditional administrative centre and the national capital. The ‘peri-urban’ outer fringe of each metropolis has witnessed major industrial and employment growth since the 1980s. As we shall see, the character of this growth is remarkably different for these two famous cities. Bangalore is, like Delhi, a traditional centre of public administration and also a base for the defence industry. It became renowned in the 1990s as a leading global city for IT-related services. Furthermore, each urban region represents states that have experienced relatively high economic growth since the early 1980s (RBI, 2012). Of course, India is geographically enormous, culturally and politically diverse and an economically ‘uneven’ territory. While we must careful about generalising findings from particular regions, there is considerable value in looking at changes at the regional level and comparing these to changes at the national level. These urban regions represent important cases in which we can illustrate the relationship between economic development and informalisation. Unless otherwise stated, the data discussed in the following chapters refers to non-agricultural activities in urban areas. Why focus on urban areas when most people in India remain based in rural areas and agrarian production remains a central feature of the economy? Much of the critical literature reviewed here, and in Chapter 1, suggests that a key feature of economic change in India has been the circular migration of people no longer able to sustain livelihoods in agriculture or searching for higher incomes in new centres of industry. The scale and diversity of these ‘surplus populations’ has shaped the behaviour of employers, who have developed a systematic preference for precariously-employed, migrant workers in key industries. Millions of workers remain ‘on the move’ between village, town and city in a perpetual search for income and security. Nevertheless, the empirical claims that emerge from this book’s theoretical framework are best tested in an urban context. India’s uneven and combined development suggests that most workers in urban regions now rely upon the payment of wages, and that this tendency has manifested in a range of enterprises, from large factories and offices, to small workshops, households and an assortment of ‘mobile’ activities without any observable premises. While most of these activities take place in medium-sized cities and towns, large metropolitan centres and their ‘satellites’ cities are an important space in which we can observe a wide variety of these changes. Like NSSO data, the EC demonstrates the dominance of wage labour in urban areas. Most workers in India’s urban areas were employed in EHWs in 2005.

Mapping informal labour in India   69 EHWs accounted for 78 per cent of total urban employment, while OAEs accounted for 22 per cent. While NSSO data confirms that employment in urban areas has continued to be ‘services-intensive’ (see Chapter 1), distinguishing between OAEs and EHWs helps to clarify the nature of this change. Manufacturing accounted for the largest share of employment in EHWs (26 per cent). This was followed by retail trade (23 per cent) and public administration and defence (11 per cent) (Figure 2.2). For OAEs, retail trade accounted for the largest share of employment (49 per cent), followed by manufacturing (21 per cent) and community, personal and other services (seven per cent) (Figure 2.3). Nationally, the change in employment in EHWs from 1998 to 2005 was dominated by retail trade and manufacturing. During this period, an additional three million positions in retail trade and 2.1 million positions in manufacturing and repairs were recorded, compared to a total rise in all positions of about 5.8 million. Employment in retail trade grew the most during this period (54 per cent). Employment grew by 24 per cent for manufacturing and repairs, although this was lower than post and communications (42 per cent) and restaurants and hotels (27 per cent). The total percentage increase in employment in EHWs during this period was 18 per cent. In contrast, total employment in OAEs in urban areas fell by 4.4 per cent over the same period. While employment in OAEs with fewer than six workers

10,000,000

9,779,584 8,464,426

Number employed

8,000,000 6,000,000

4,132,710

4,000,000 2,000,000

Community

Health

Education

Public admin.

Real estate

Finance

Communications

Transport

Restaurants

Retail trade

Wholesale trade

Motor vehicle repairs

Construction

Electricity

Manufacturing

Mining

0

Figure 2.2 Employment in EHWs by industry, India, 2005 (source: author’s calculations from Government of India (1998, 2008).

70   Mapping informal labour in India 6,000,000

5,203,842

Number employed

5,000,000 4,000,000 3,000,000 2,000,000

2,167,402

1,000,000

735,879

Community

Health

Education

Public admin.

Real estate

Finance

Transport

Communications

Restaurants

Retail trade

Wholesale trade

Motor vehicle repairs

Construction

Electricity

Mining

Manufacturing

0

Figure 2.3 Employment in OAEs by industry, India, 2005 (source: author’s calculations from Government of India (1998, 2008).

increased by 0.2 per cent, it fell by 35 per cent for OAEs with 6–9 workers and by 82 per cent for OAEs with 10 or more workers (Figure 2.4). The overall negative result of employment growth in OAEs appears to indicate a decline in the numbers of unpaid people working in informal enterprises, including households. As we shall see, this claim is consistent with the idea of growing numbers of people seeking paid employment. But there is much that this data does not tell us. While this data may be consistent with increased opportunities for women in paid employment outside the family home, there is little evidence of a significant increase in the number of women drawn out of unpaid positions in households into paid positions in non-household places of work. The female share of employment was 20 per cent for EHWs and 19 per cent for OAEs. This is reflected in a rise in the female share of employment in urban OAEs (including in agriculture) across India from 11.4 to 12.4 per cent between 1998 and 2005. The female share of employment rose by 42 per cent across India. Interestingly, the percentage rise for all four states studied in this project is lower than this: for Karnataka (34 per cent), the NCT (33 per cent), Haryana (28 per cent) and Maharashtra (18 per cent). If we look only at the female share of employment in urban agricultural and non-agricultural EHWs, then we see a similar modest rise, albeit from a higher base, from 12.9 to 15.5 per cent. As discussed in the following

Mapping informal labour in India   71

16,150

Change, number employed

0

–101,244 –200,000

–400,000

–397,943 –482,937

–600,000 1–5

6–9 10 or more Number of people per OAE

All categories

Figure 2.4 Change, employment in OAEs by number of people per firm, India, 1998–2005 (source: author’s calculations from Government of India (1998, 2008).

chapters, this evidence suggests that it is too simplistic to talk of a linear process in which women are drawn out of home-based work into paid employment. The EC data underestimates and conceals the full economic role that women play in commodity production. At the other end of the scale, some of the growth in waged employment has been captured by large enterprises. This is important, since many development critics have pointed to the growing importance of small-scale enterprises and households. The EC reports allow us to partially test these claims in the Indian context against evidence of changes to the number of people employed per establishment. They show a national trend towards smaller-scale enterprises until 2005. Nationally, the largest share of employment in EHWs was concentrated in establishments employing fewer than six people (42 per cent). Fifty-seven per cent of all employment was concentrated in establishments with fewer than 10 workers. However, there was also a significant share of employment in larger establishments: 30–99 (11 per cent), 100–199 (7 per cent), 200–499 (8 per cent) and 500 or more (8 per cent) (Figure 2.5). But most of the change in employment between 1998 and 2005 was represented by EHWs with fewer than six workers (Figure 2.6). There were falls in employment for all establishments employing between 10 and 99 people and for all establishments with 500 or more workers,

72   Mapping informal labour in India

15,911,151

Number employed

15,000,000

10,000,000

5,492,215

5,000,000

4,188,481 2,864,983

2,454,113 1,337,226

974,747

811,107

200–499

500 or more

Number of people per EHW

100–199

30–99

25–29

20–24

15–19

10–14

6–9

1–5

0

Figure 2.5 Employment in EHWs by number of people per firm, India, 2005 (source: author’s calculations from Government of India (1998, 2008).

although here, there were rises in employment in the 100–199 and 200–499 employment size categories. Interestingly, while the rise in employment in smaller establishments was numerically the most significant change, percentage rises for some small and large establishments were comparable. Employment in the 1–5 and 6–9 size categories grew by 53 and 50 per cent respectively, while employment in the 100–199 and 200–499 size categories grew by 42 and 41 per cent respectively. Also of note was the high growth recorded for the smallest establishments. While employment in establishments with fewer than six workers grew by 53 per cent, establishments with one person usually working grew by 137 per cent, followed by establishments with two (85 per cent), three (43 per cent), four (30 per cent) and five people usually working (24 per cent). These changes coincided with a decline in the average number of people working per establishment from 6.6 in 1998 to 5.1 in 2005. The national change in employment was dominated by changes in retail trade and manufacturing. Retail trade comprised 50.9 per cent and ‘manufacturing and repairs’ comprised 36.2 per cent of the total increase in employment in EHWs between 1998 and 2005.

Mapping informal labour in India   73

6,000,000

Change, number employed

5,478,286

4,000,000

2,000,000

1,828,926

726,283 832,383

0 –429,493 –1,041,025

–1,274,434

500 or more

Number of people per EHW

200–499

100–199

25–99

20–24

15–19

10–14

6–9

1–5

–2,000,000

Figure 2.6 Change, employment in EHWs by number of people per firm, India, 1998–2005 (source: author’s calculations from Government of India (1998, 2008).

So what do these national-level findings tell us? First, they suggest that the vast majority of workers in India’s cities and towns are wage workers. This is clearly demonstrated in the EC 2005 and, more recently, in NSSO data. This data also showed that most of the growth in urban employment has been among wage workers. According to the EC, most urban workers in 2005 worked in EHWs, especially in manufacturing and retail trade. However, it also recorded significant urban employment in OAEs. Nearly half of all OAE employment was represented by retail trade. The changes to urban employment in OAEs show that all growth between 1998 and 2005 occurred in establishments with fewer than six workers. This implies that large numbers of unpaid workers found waged employment during this period. The difficulties in garnering more information about this trend mean that we must turn to regional-level analysis by looking at state-level EC and NSSO data for key urban centres. Similarly, the national-level official data tells us something about changes to women’s role in labour markets, but only takes us so far. It suggests that the female share of employment has been increasing, although from a relatively low starting point.

74   Mapping informal labour in India But uncovering what this means for the structure of the wage labour force or how this has affected production within households also requires regional-level analysis. For instance, we know that female labour force participation varies significantly in different regions of India. As discussed in Chapter 1, there are major differences in female labour force participation if we compare northern regions like the NCR with southern regions like Greater Bangalore. Finally, the nationallevel data shows us that most employment is in informal enterprises and that most employment growth has occurred in informal enterprises. However, employment in large EHWs is still important, according to EC records, and grew significantly between 1998 and 2005. But the record of growth in large-scale industry has been uneven. As the following chapters demonstrate, this has been concentrated in particular urban regions. Growth in organised sector employment has been driven by a range of geographical, economic and political factors, which depend on the region in question. The evidence presented in the following chapters also suggests that, where large-scale industrialisation has occurred, the mass employment of informal workers has been extremely important to the employment relations practices of employers. We begin by looking at the record of India’s financial centre and a one-time bastion of factory employment, Mumbai.

Notes 1 See Chapter 1 for a definition of the organised sector. 2 See Breman (2013) for a polemical treatment of Standing’s arguments. 3 While Cox used the phrase ‘modes of social relations of production’ and Harrod preferred ‘forms of social relations of production’, the concepts are identical. Harrod’s term is used here in order to minimise confusion with the Marxist term, ‘mode of production’. 4 The New Delhi urban region is also known as the National Capital Region (NCR). The NCR centres on the National Capital Territory (NCT) of Delhi – or, simply, New Delhi – which is a separate union territory of India with its own provincial government. The NCR also includes parts of three surrounding states: Uttar Pradesh (UP), Haryana and Rajasthan. In this book, EC data for the New Delhi urban region comes from the NCT and Haryana. 5 See Appendix for a detailed explanation of the data sources and methodology used in this book.

3 Mumbai

This chapter focuses on Mumbai (Bombay). Evidence from government data demonstrates that there was a sharp rise in waged employment in informal enterprises in this urban region between the late 1990s and mid-2000s. Alongside this, there was a decline in employment in large firms. This chapter also demonstrates changes in the geographical composition of working populations over this period, with both wage workers and self-employed workers continuing to shift their livelihoods and communities to outer- or peri-urban areas such as Navi Mumbai or to different urban regions, like new manufacturing zones near the city of Pune, 150 km to the south-east of Mumbai. In this chapter, statistical data is supplemented with secondary source material from different critical studies of informal labour and economic development. Taken as a whole, the evidence suggests that industry has been profoundly restructured in Mumbai in recent decades. For example, the historical decline of Mumbai’s textile mills since the 1980s occurred in response to out-dated technology, industrial conflict and new strategies for capital and financial accumulation by the city’s industrialists. Rather than ‘de-industrialisation’, however, one finds the persistence of manufacturing activities on the fringes of the city, albeit with a concurrent shift to production in informal enterprises and informal labour practices. Mumbai is the most populous city in India, the country’s financial centre and a traditional centre of industry. It is rather famous as a city of extremes, from the glamour of the financial and film industries to the poverty of its densely-­ populated but economically dynamic slum areas. The political, cultural and linguistic divisions of the city have long reflected economic and social class divisions. Following India’s independence, local industrialists, who were dominated by Gujarati and Parsi communities, resisted attempts by local Maratha nationalists to make the city the capital of a united state of Maharashtra. In part, this conflict represented economic divisions between Bombay as a centre of commerce and industry and the dominant agrarian classes of the hinterland to the city’s east. The success of nationalists in local elections in the 1950s eventually forced the Congress government in New Delhi to allow the formation of Maharashtra, with Mumbai as its capital, in 1960 (Guha, 2007: 324). In this chapter, the focus is on the Mumbai Metropolitan Region (MMR), which includes the municipalities of Greater Mumbai, Thane, Kalyan, Navi Mumbai,

76   Mumbai Mira Bhayander, Bhiwandi and Ulhasnagar (MMRDA, 2003). According to the most recent Census of India, almost 21 million people live in the MMR. Greater Mumbai (or Brihanmumbai) refers to the traditional ‘island city’ of Mumbai and its ‘suburban districts’, covering nearly 440 square km and including approximately 60 per cent of the MMR’s total population. As well as government data on Greater Mumbai and other urban areas in the state of Maharashtra, this chapter draws upon studies of class struggle in Mumbai since the early 1980s, particularly Van Wersch’s history of the 1982–83 Bombay textile strike and D’Monte’s history of the city’s textile mills (Van Wersch, 1992; D’Monte, 2002).1 As I hope to show, the economic history of this urban region demonstrates that class formation is a ‘continuous process, not a one-time affair which comes to an end with the establishment of an industrial labour force’ (Sherlock, 1996: 37). This chapter is divided into two parts. The first part looks at official labour statistics and what they tell us about changes to informal employment during the neoliberal era in the 1990s and 2000s. As we shall see, there has been a phenomenal shift towards the employment of wage labour in informal enterprises in Maharashtra’s urban centres, including Mumbai. The second part looks at secondary source material to address what explains this shift in the structure and composition of the region’s labour force. As outlined in Chapter 2, this data focused on urban areas. In the following section, all data refers to urban areas unless otherwise stated.

Measuring informal labour in urban Maharashtra All data in this section comes from Government of Maharashtra (2000, 2008), unless otherwise stated. Government data allows us to quantify changes to economic activities, employment and labour forces at a state as well as an urban level. To start at the state level, Maharashtra is a large, diverse and fast-growing economy. Between 1993–94 and 2004–05, the average annual growth in Net State Domestic Product (NSDP) per capita was 3.6 per cent. Manufacturing was the largest component of NSDP during this period and also recorded comparatively high growth during the 2000s. Interestingly, trade and transport activities grew even more quickly during this period, reflecting a further shift in employment towards services in the state (RBI, 2012). This is reflected in National Sample Survey Office (NSSO) data, which show a rise in the proportion of people employed in tertiary industries (including trade) from 60 per cent in 1994–95 to 64 per cent in 2011–12. This shift was particularly pronounced for women, with a rise from 58.1 to 70.3 per cent over the same period.2 This relative decline in industrial employment has occurred in the context of a generally weak record of employment growth. The Economic Census (EC) demonstrates that employment grew very little in Maharashtra between 1998 and 2005. The EC has recorded a persistent decline in employment growth since 1980 (Table 3.1). Furthermore, there was decline in all forms of employment in Greater Mumbai between 1998 and 2005. As outlined in Chapter 2, the EC allows us to distinguish between employment in Establishments with Hired Workers (EHWs) and Own-Account Establishments (OAEs). As a rule, wage labour can be found

Mumbai   77 Table 3.1  Change, employment growth (%) by time-period and firm type, Maharashtra Period

All firms

OAEs

EHWs

Hired workers

1980–90 1990–98 1998–2005

33.1 10.4 2.1

34.3 30.3 0.4

32.8 6.6 2.5

31.7 4.9 3.4

Source: Government of Maharashtra (2000, 2008).

in EHWs, whereas OAEs are comprised of sole proprietors or small, family-run enterprises that use unpaid workers. As this EC data shows, the growth of employment in OAEs in Maharashtra was very low (0.42 per cent) between 1998 and 2005. During this period, employment in OAEs in Greater Mumbai fell by nearly 16 per cent (Figure 3.1). A 9 per cent rise in employment in Thane and 31 per cent rise in Pune suggest that there was some redistribution of OAE employment to other urban centres in the state. The NSS data shows that Maharashtra is broadly similar to the national trend towards waged employment (see Chapter 2). In fact, wage labour has become even more dominant here, with a rise from 62 per cent of total employment in 2004–05 to 64 per cent in 2011–12. This increase is mostly represented by

40,000

34,618

20,000 Change, employment

9,439 0 –6,546 –20,000

–40,000

–60,000

–53,477 Greater Mumbai

Nagpur

Pune

Thane

District

Figure 3.1 Change, employment in OAEs by select major district, Maharashtra, 1998–2005 (source: author’s calculations from Government of Maharashtra (2000, 2008).

78   Mumbai regular wage work among both male and female workers, with the proportion of casual work falling over this period from 15.5 to 9.4 per cent.3 However, as the overall employment growth record suggests, growth in waged employment did not compensate for low employment growth in OAEs in terms of generating employment alternatives at the aggregate level. Employment in EHWs grew by 2.5 per cent in Maharashtra between 1998 and 2005. In Greater Mumbai, employment in EHWs fell by over 14 per cent. There was above-average employment growth in other important urban centres in Maharashtra: Thane (15 per cent), Pune (32 per cent) and Nagpur (28 per cent) (Figure 3.2). This data implies that there has been a redistribution of employment from Greater Mumbai to other major urban centres in the state. However, this does not tell us what happened to more than 300,000 paid jobs that ‘disappeared’ in Greater Mumbai between 1998 and 2005 or what alternative employment was found by the large number of displaced workers that this finding implies. The EC data also reveals changes to the composition of workforces within OAEs. The evidence suggests that sole proprietorships became the dominant type of employment arrangement in Maharashtra’s OAEs. A sole proprietorship here refers to an individual worker producing commodities in OAEs without regular assistance from other individuals. Over 85 per cent of OAEs had just one

200,000 147,388 97,993

Change, employment

100,000

69,684

0

–100,000

–200,000

–300,000 –320,086 –400,000 Greater Mumbai

Thane

Pune

Nagpur

District

Figure 3.2 Change, employment in EHWs by select major district, Maharashtra, 1998–2005 (source: author’s calculations from Government of Maharashtra (2000, 2008).

Mumbai   79 person working in them in 2005. Nearly 12 per cent had two workers. Furthermore, there was a trend towards smaller-scale production between 1998 and 2005. While the number of OAEs with fewer than six people working grew by 12.5 per cent, they fell by over 34 per cent for OAEs with between five and 10 workers and by over 17 per cent for OAEs with 10 or more workers. Between 1998 and 2005, there was also a trend away from retail trading activities towards manufacturing within OAEs. While retail trade employed nearly three times more people than manufacturing in OAEs in 2005, the number of people employed in retail trade OAEs fell by over 41,000 (6.5 per cent) while rising by nearly 50,000 (31 per cent) for manufacturing. Interestingly, this trend occurred in the context of falling employment in manufacturing EHWs (see below). This change implies some growth occurred in home-based manufacturing workshops staffed by own-account workers and unpaid workers. It appears that unpaid employment in manufacturing enterprises was rising at the same time as total waged employment had declined during this period. Given that nearly 1.4 million people were employed as waged workers in manufacturing in 2005 against just over 200,000 in OAEs, this trend seems to represent a gradual erosion of waged employment in manufacturing. While sole proprietors and unpaid labour in manufacturing and retail trading OAEs represented significant employment arrangements in 2005, most workers in Maharashtra were recorded as wage workers. Over 81 per cent of all workers were employed in EHWs. In Greater Mumbai, the proportion of waged labour was higher. Here 87 per cent of workers were employed in EHWs. Retail trade and manufacturing dominated the employment of waged labour in the state. While the largest share of employment in OAEs was comprised of retail trade in 2005, the largest share of employment in EHWs was comprised of manufacturing (25 per cent). This was followed by retail trade (20 per cent) and public administration, defence and social security (11 per cent). In geographical terms, Mumbai had the largest share of waged employment in Maharashtra in 2005. Nearly two million people were recorded as employed in EHWs in Greater Mumbai. This accounted for over 35 per cent of the state’s total employment in EHWs, followed by Thane (14 per cent), Pune (11 per cent) and Nagpur (6 per cent). While waged labour was clearly the main type of employment arrangement in urban Maharashtra in 2005, most waged workers were employed in small-scale establishments. The EC recorded that nearly 84 per cent of EHWs employed fewer than six people in 2005. This proportion is similar across all industries. This size category accounted for nearly 97 per cent of the change in the number of EHWs between 1998 and 2005. Significantly, all employment growth in EHWs between 1998 and 2005 was accounted for by establishments hiring fewer than 10 workers (Figure 3.3). This data demonstrates a significant trend towards employment in informal enterprises. Between 1998 and 2005, there was a rise of over 300,000 positions for EHWs with between five and 10 workers and almost 900,000 for EHWs with fewer than six workers. The fact there were about 5.6 million people employed in EHWs in 2005 gives some indication of the scale of this change. This evidence

80   Mumbai

Change, number employed

900,000

899,425

400,000 303,491 136,069

–100,000

–61,545 –60,226 –176,584

–51,986 –64,009 –203,138

–449,418

Total

500 or more

Number of people per EHW

200–499

100–199

25–99

20–24

15–19

10–14

6–9

1–5

–600,000

Figure 3.3 Change, employment in EHWs by number of people per firm, Maharashtra, 1998–2005 (source: author’s calculations from Government of Maharashtra (2000, 2008).

is consistent with a longer term fall in the number of workers per establishment since 1980. In 1980, the EC recorded 5.3 people working per establishment. By 1990, this fell to 4.7, then 4.2 in 1998 and 3.3 in 2005. This trend is particularly significant for EHWs. For EHWs, the corresponding figures for these four ECs were 10.5, 8.5, 8.4 and 5.4 respectively. It should also be noted that this data is skewed somewhat by the contribution of the public sector, which tends to centralise employment in greater numbers. In 2005, the ratio of employees to establishments in the private sector was 3 : 1. In comparison, the ratio of employees to establishments in the public sector was 19 : 1. Furthermore, employment in the smallest enterprises grew the quickest between 1998 and 2005. While employment in EHWs with fewer than six workers increased by 64 per cent during this period, it grew much faster for establishments with only one hired worker (195 per cent) and two hired workers (105 per cent). In contrast, there appeared to be a dramatic decline in waged employment in large-scale enterprises. Of the nearly 1.1 million jobs that were lost in establishments employing 10 or more workers in this period, 42 per cent were in establishments that employed 500 or more workers.

Mumbai   81 However, this growth trend did not represent the complete collapse of employment in larger-scale establishments. Despite a significant decline, a large numbers of workers remained employed in establishments with 10 or more hired workers in 2005. While nearly 57 per cent of employment was recorded in establishments with fewer than 10 workers, this was followed by size category 25–99 (12 per cent), 500 or more (11 per cent), 200–499 (6.5 per cent) and 100–199 (5 per cent). Large numbers of wage workers continued to find employment in large-scale industrial establishments in Greater Mumbai including manufacturing, electricity and telecommunications, as well as financial institutions and public sector units like hospitals and schools. The EC also records details of many urban ‘directory establishments’ (establishments with six or more hired workers) in Greater Mumbai, including prominent Indian firms such as Reliance, Tata, and the motorcycle and auto-rickshaw manufacturer Bajaj, as well as foreign firms like Sony, Pears and the financial services firm, HSBC. These large-scale production units coexisted with an array of smaller firms employing millions of wage workers engaged in the manufacture of a vast array of commodities, including textiles, paper products, chemicals, plastics, pesticides, paints, soaps, rubber tyres, glass, ceramics, domestic appliances, electric motors, car parts, furniture, iron and steel products. There were dozens of small building and construction firms and motor vehicle repairers, as well as thousands employed in transport, freight and the education sector and hundreds of retail outlets. For example, the EC recorded over a thousand directory establishments in retail trade in Greater Mumbai in 2005, each with 10–50 hired workers. ­Mumbai’s labour market thus appears to be a picture of diversity rather than one of stagnation or straightforward industrial decline. Large-scale industry continued to play a more important role in Mumbai’s economy than in Maharashtra’s other urban centres. In 2005, there were 232 directory establishments in Greater Mumbai with 500 or more workers. In comparison, Pune recorded 74 such establishments (such as Thyssen Krupp, Tata Motors and Veritas), Thane recorded 48 establishments (such as Cadbury, Bayer chemicals and IT firm Wipro) and the city of Nagpur recorded 23 establishments. Overall, this evidence implies that a gradual restructuring of industry has taken place in which small-scale and informal establishments have become more important rather than the imminent demise of factory production. Furthermore, the trend towards small-scale production between 1998 and 2005 may be related to the low employment growth recorded for most major activities. One exception to this is the significant growth recorded for employment in retail trade across Maharashtra. Employment in retail trade EHWs grew by over 358,500 from 1998 to 2005. This is a much larger contribution to employment growth than the next largest contributor (post and telecommunications), which grew by just over 31,300. Since all employment growth for EHWs over this period occurred in establishments employing fewer than 10 workers (cf. Figure 3.3), this data suggests that one of the most important characteristics of the state’s growing waged employment has been the proliferation of small retail trading establishments. While there were more people employed in manufacturing than retail trade in 2005, a

82   Mumbai rise of over 350,000 to a total of nearly 1.1 million is significant. It signifies ongoing structural economic change as well as a change in the occupational division of labour in the state. The evidence presented thus far points to the following conclusions. First, employment grew more slowly than output in the late 1990s and early 2000s. Between 1998 and 2005, employment in OAEs grew at a negligible rate. During the same period, employment in EHWs grew by about 2.5 per cent. Furthermore, employment declined for all establishments in Greater Mumbai over this period. Employment in OAEs in the district fell by nearly 16 per cent and for EHWs by 14 per cent. Positive employment growth in some other districts, particularly in Thane and Pune, suggests that some geographical redistribution of employment from Mumbai to other important urban centres has taken place. This evidence implies a redistribution of labour to Maharashtra’s second tier cities in the context of low aggregate employment growth. It may also suggest that Greater Mumbai’s economy has been approaching the limits of its employment-generating capacity, given the current level of its industrial base and the evidence of a long-term redistribution of manufacturing production from the island city to peri-urban areas in the MMR. There also appears to have been some redistribution of manufacturing employment in the state from the employment of wage labour in manufacturing establishments, which declined between 1998 and 2005, to the employment of unpaid labour in household manufacturing, which grew by about a third over the same period. This evidence points to a rise in the importance of home-based manufacturing workshops staffed by unpaid family members. It also points to a rise in the economic role of sole proprietors, who continued to dominate employment in OAEs in 2005. Overall, this evidence points to the gradual erosion of waged employment in manufacturing over the period. In contrast, commodity production in the state was overwhelmingly concentrated in EHWs in 2005. Furthermore, Greater Mumbai accounted for over a third of all wage labour in the state in 2005, despite the city’s poor employment growth record. Over two-thirds of all workers in the state were paid a wage. About a quarter of all waged employment in 2005 was accounted for by manufacturing, a fifth by retail trade and a tenth by public sector establishments. This distribution contrasts with non-waged employment, of which nearly half was accounted for by retail trade. This implies that the largest share of home-based production consists of the sale and distribution of commodities, while the actual production of commodities relies upon the employment of wage workers. Finally, changes recorded between 1998 and 2005 show a clear trend towards production in smaller-scale establishments. Most waged workers were employed in establishments with fewer than six workers in 2005. Furthermore, all of the growth in employment in this period occurred in establishments with fewer than 10 hired workers. There was a decline employment in all establishments larger than this. There were about a million fewer positions counted in establishments with 10 or more workers in 2005 than in 1998. Nearly half of this fall was accounted for by establishments with 500 or more workers.

Mumbai   83 The track record of urban areas in Maharashtra in the 1990s and early 2000s, including Greater Mumbai, is consistent with the view that rapid economic development generates a tendency towards the employment of wage labour. While self-employed sole proprietors and unpaid workers in home-based manufacturing and retail trade enterprises remain important, most workers were engaged in some kind of waged employment relation. This is even more the case in Greater Mumbai. Nevertheless, self-employment and unpaid forms of labour remain extremely important to the livelihoods of millions of people. While retail trade accounted for the largest share of household production in 2005, there was higher growth for home-based manufacturing over the preceding period. The shift towards waged employment overwhelmingly occurred within informal enterprises. In fact, the trend towards smaller-scale production was present for both waged and non-waged forms of employment. This does not mean that employment in larger-scale establishments has completely collapsed. There clearly remain substantial numbers of workers employed in large establishments. The trend over the 1990s and early 2000s was, nevertheless, represented by growth for employment in establishments with fewer than 10 workers and a decline for all other establishments.

Wage labour and informal enterprises: explaining the trend Why has there been such a marked shift within the waged labour force towards small-scale production, particularly towards employment in informal enterprises? One explanation for this phenomenon is that there has been a large expansion in small trading and manufacturing enterprises since the 1980s. While government tells us something about this, it does not get us very far. In order to construct a clear hypothesis, we need to draw upon field research and other ­secondary sources, including evidence on urban development in Maharashtra and various historical and geographical narratives. One of the advantages of doing this is that it enables us to move beyond simulations of labour represented by descriptive data and to move more closely towards a picture in which workers are active participants in historical processes. As well as a rise in the number of small firms, there is evidence that supports three alternative explanations for the shift towards waged employment in informal enterprises: the closure of factories and other large-scale production units; the reduction of large-scale workforces by laying off workers or using Voluntary Retirement Schemes (VRS) to effectively force workers into the unorganised sector; and the restructuring of these workforces into smaller units in order to avoid legal obligations required under industrial planning and labour laws. These explanations seem especially relevant given that the EC recorded a fall in employment in EHWs in the largest size category (500 or more workers) from over a million to fewer than 600,000 between 1998 and 2005. They are here examined in order to explore the meaning of this empirical change. The first explanation is that many large production units have been closed. Consequently, workers have been made redundant and forced to seek work in

84   Mumbai smaller-scale establishments, including many informal enterprises. Some of the EC data appears to support this explanation. Between 1998 and 2005, the number of EHWs with 500 or more workers dropped from 739 to 520. The  number employing 200–499 workers dropped from 1,414 to 1,207, while the number employing 100–199 workers dropped from 2,415 to 2,090. This data is consistent with earlier accounts of the decline of employment in Mumbai’s large chemical and manufacturing units, particularly its textile mills. Textile manufacturing was widely viewed as central to India’s industrial development after Independence (Van Wersch, 1992: 18). Yet the number of people employed in textile mills in Mumbai fell from nearly 250,000 at the beginning of the 1980s to around 50,000 in the first half of the 2000s (D’Monte, 2002). The EC data implies that factory workforce attrition has been an ongoing process. The decline in employment in textile mills is part of an overall decline in employment in all textile manufacturing across Mumbai in the last three decades (Patel, 2007: 75). This trend is also reflective of a decline in factory employment during the 1980s. According to D’Monte’s figures (2002: 34), total factory employment in Greater Mumbai fell from 604,000 in 1981 to 447,000 in 1991, falling at a compound annual rate of 3 per cent over this period. In addition to several dozen textile mills closing since the mid-1980s, there have also been ongoing factory closures affecting silk mills, pharmaceutical factories, chemical plants, metal works and engineering works. Even in outlying regions of the MMR like Thane, hundreds of factories were closed in this period. Additionally, the 1980s and 1990s saw the attrition of hundreds of factory positions through the use of VRS (D’Monte, 2002: 35). A persistent lack of technological innovation and upgrading was probably a contributing factor to these closures. There is evidence that mill owners were reluctant to modernise capital equipment and to significantly improve the productivity of the labour process throughout the postcolonial period. This is part of national-level evidence that the absence of technological innovation continued for decades after Independence (see Chapter 1). One of the consequences for the textile industry was that textile mills were unable to remain profitable, particularly once trade and investment liberalisation reforms were introduced in the 1980s and 1990s. In Mumbai, widespread mill closures were a consequence of these problems. Furthermore, mill owners developed a strategy over many decades of dividing the mill workforce into permanent, casual and contracted labourers in order to reduce costs, effectively substituting for a lack of capital deepening and technological innovation (Van Wersch, 2002: 46). This orientation seems to have partly been the consequence of restrictions on the operation and expansion of industrial enterprises during the postcolonial period. For instance, new looms were not allowed in textile mills until 1985. These restrictions reflected the protectionist logic embedded in India’s system of planning and industrial regulation. Limits on the restructuring of large-scale enterprises were partially driven by the fear that technological progress would be capitalintensive, undermining efforts to provide employment in a country with large surpluses of workers, especially in rural and peri-urban areas.

Mumbai   85 Between the late 1960s and the late 1970s, industrial policies were also influenced by the system of state patronage under successive Congress-led governments in New Delhi. In 1968, the National Textile Corporation (NTC) was established as part of a new system of industrial controls and restrictions to take over the operation of ‘sick’ mills. This policy was meant to keep workers employed in inefficient and often unprofitable firms. This approach evolved into a system of nationalisation. By the mid-1970s, about 18 per cent of India’s mill workforce had come under direct government control (D’Monte, 2002: 88–90). The political and economic thinking underpinning these policies changed in 1985 with the introduction of the New Textile Policy (NTP). The NTP was introduced with the aim of making textile mills internationally competitive. The first step of policymakers was to recommend the closure of unprofitable mills. Implementation of this policy was gradual, with some nationalisation continuing after 1985. However, VRS were used to reduce the size of the mill labour force. In some cases, downsizing was a prelude to closure. About 40,000 workers in Bombay textile mills were shed through VRS in 1992 alone. Following this, the Government of Maharashtra pushed for mill closures and the sale of mill land to real estate developers (ibid.: 90–2). Factory closures in Mumbai have influenced the claim that the city has undergone a process of ‘de-industrialisation’ (Pendse, 1995; Kennedy and Zérah, 2008). But the scale of factory closures should be kept in perspective. While the evidence from the EC appears to show a decline in large-scale industry in Greater Mumbai, it continued to play a significant role in the provision of employment in 2005. Rather than ‘de-industrialisation’, it seems more accurate to describe these changes as ‘a spatial reorganisation, combined with an everincreasing territorial expansion of the effective economic boundaries of the city’ (Sherlock, 1996: 34): Thus the central (southern) areas of the city have become less important as manufacturing centres, and production has moved out into the suburbs, and to satellite centres such as Thane, Kalyan and Navi Mumbai. Other production is moving still further to nearby cities such as Pune and Nasik. The older precincts have instead become increasingly devoted to Mumbai’s burgeoning service industries, including finance, tourism, retailing and entertainment. (Ibid.)4 There is evidence to support this claim of geographical displacement. For example, the residential population of Greater Mumbai fell in the 1980s according to the 1991 national census, even though numbers of people commuting there for employment grew. According to the 2001 census, two-thirds of Greater Mumbai’s then 12 million inhabitants lived in the outer suburbs, compared to about a third in 1961. By 1991, half of all industrial and commercial establishments were based in the outer suburbs of the MMR (D’Monte, 2002: 20). This change does not necessarily represent the stagnation of employment in the ‘island city’. Nearly half of the city’s total employment growth in the 1980s was

86   Mumbai concentrated in the central business district. Much of this was represented by new white-collar jobs in offices. This reflects the emergence of commercial realestate, with much of this office space based upon the sale of land formerly used for industrial and textile mill production. The spatial reorganisation of the MMR partially reflects an urban development strategy inspired by other urban regions in Asia, such as Singapore, Hong Kong or Shanghai. These cities all evolved into regional financial and business services centres out of old centres of the textile and garment trade. Land acquisitions and real estate speculation in Mumbai were part of various attempts to boost the accumulation of capital in the city, which coincided with economic liberalisation policies (Adarkar and Phatak, 2005; Banerjee-Guha, 2009). While a minority of industrialists were able to benefit from these new opportunities for financial capital accumulation, the gradual displacement of industrial employment in Greater Mumbai overlapped with a significant rise in slum communities located across the MMR (Panwalkar, 1995; Shaban, 2008). In some cases, slums have been cleared to make way for further real estate development. In 2004–05, over 90,000 slum dwellings were demolished in the city. The famous Dharavi slum is a notable target of such policies. Consequently, land acquisition and real estate development policies affect not only traditional large-scale industry but also ongoing livelihoods in informal enterprises, including those located within slum communities. Dharavi, for example, is home to significant levels of production in leather products, pottery, machine parts, recycling and repairing, garments and foodstuffs (Banerjee-Guha, 2009). A second explanation for the trend towards small-scale production found in the EC data is that large industrial units have continued to operate with fewer workers. There is some evidence of this occurring on a large scale in Maharashtra since the 1990s. While the EC shows that employment in EHWs with 10 or more hired workers fell between 1998 and 2005, RBI data shows that average annual per capita NSDP growth was 3.64 per cent between 1993–94 and 2004–05. Manufacturing was both the largest component of NSDP growth in this period and was fast-growing compared to most other major activities (RBI, 2012). In other words, manufacturing output grew significantly over roughly the same period that the number of workers in large-scale industry fell. There is even stronger evidence of more capital-intensive growth at a national level, with a significant rise in output per manufacturing worker since the 1980s (Kannan and Ravenndran, 2009). Between 1980–81 and 1990–91, the average annual rate of growth for gross value added (GVA) in manufacturing was 8.7 per cent compared to average annual employment growth of 0.5 per cent. Taking a longerterm view, employment in manufacturing grew by an annual average of 0.8 per cent between 1981–82 and 2004–05. Manufacturing has thus experienced very low ‘employment elasticity’: a low percentage change for employment in response to a percentage change for manufacturing GVA. For textile manufacturing, employment elasticity between 1992–93 and 2004–05 was negative (− 0.03 per cent). Between 1981–82 and 2004–05 it was – 0.1 per cent. In other words, there was a negative correlation between value added by manufacturing

Mumbai   87 and manufacturing employment. There was also a doubling of labour productivity in manufacturing (measured by GVA per employee) over the same period. The share of wages in GVA over this period fell from 41 per cent to 25 per cent. Controlling for the share of supervisory and managerial employees, the wages share of all other employees in GVA fell from 27 per cent to 12 per cent over this period (Kannan and Ravenndran, 2009). This macro-level data is consistent with the claim that production in Mumbai’s textile mills became more capitalintensive during the 1980s and 1990s as employers used VRS to displace workers from organised sector employment (Datta, 1999). Most of the workers who lost their jobs as a consequence of these policies were unable to find new employment in the organised sector (Barse, 2001). A third explanation for the recent decline in employment in large-scale industry is that industrialists have successfully restructured their workforces into smaller units. As explained in previous chapters, India’s industrial relations (IR) system is largely based upon a series of rules designed to regulate work and employment in the organised sector. In the context of a growing informal economy, this suggests that there is an incentive for industrialists to restructure their workforces and employment records in order to lower costs and evade protective labour laws. Employers can restructure their accounts, reorganise labour forces into smaller groups or pool groups of regular or non-regular workers together in order to establish greater control over the workforce or provide lower wages and inferior employment conditions. Non-regular workers include casuals, day labourers as well as workers hired through labour contractors. There are numerous loopholes in the IR system that employers have been able to exploit. Employers in the organised sector have often been able to evade restrictions on retrenching workers by restructuring their workforces, subcontracting core activities, misallocating work titles or employing casual or contract workers ‘off the books’. It has been possible for employers in large industrial units to render workers ‘invisible’ to the legal system by not counting them as employees in their official records. Some of these problems are consistent with state-level findings from the EC in Maharashtra. As well as factory closures, workforce attrition and redundancies, this data is consistent with claims about workforce restructuring in which large numbers of people have been shifted into smaller production units as precariously-employed workers without formal contracts. If so, this represents the informalisation of labour driven by the intersection of an ineffective state regulatory system and the economic imperatives of industrial capital. There is also evidence that this represents a continuation of a process that has accelerated since the 1980s. Van Wersch’s account of the Mumbai textile strike of 1982–83 suggests that the resolution of this conflict was a turning point in the informalisation of the city’s labour forces. The restructuring of workforces in Mumbai’s textile mills was important before and during the strike. Its defeat contributed to the more widespread employment of informal labour by employers in the city (Van Wersch, 1992). For example, the Annual Survey of Industries (ASI) data shows that 41 per cent of all workers in organised sector manufacturing firms in

88   Mumbai Maharashtra were hired by labour contractors in 2010–11, up from 36 per cent in 2008–09.5 Tens of thousands of workers employed in textile mills, as well as workers employed in textile machinery, chemical and dye production plants, lost their jobs during the 1982–83 strike. Most subsequently found employment as informal workers (Van Wersch, 1992: 235–45). During the 1980s, thousands of migrant workers, mainly from Uttar Pradesh and Bihar, found employment in Bombay’s informal economy. One economic study of the Bombay labour market in the early 1980s showed that employment in small enterprises was dominated by poorly-paid, young migrant workers (Deshpende, 1983). Thus, ex-organised sector workers and recently-arrived migrant workers were competing for jobs in informal enterprises as employment opportunities in the organised sector continued to decline. The labour market structures that allowed employers to expand employment in informal enterprises were already in place prior to the strike. Mill owners had taken advantage of powerloom production since the 1950s in order to avoid labour and tax regulations (Van Wersch, 1992). Thousands of powerloom workers, based in small workshops or in households, were used as subcontracted workers, paid in piece-rate wages, to periodically supplement output from the mills. The use of subcontracted powerloom labourers, paid a fraction of the permanent mill worker’s wage, was common, although largely in contravention of the Factories Act 1948. The Government of India reacted by treating larger powerloom-operated workshops with the same regulations as the mills. Larger operators responded by splitting their workshops into units of no more than four looms in order to avoid the change. According to a 1956 study by the Government of Bombay,6 23 per cent of powerloom operations in cotton textiles had four or fewer looms, 42 per cent had between five and 25 looms and 35 per cent more than 25 looms. By 1974, roughly 90 per cent of powerlooms were concentrated in workshops with four or fewer of these machines (Van Wersch, 1992: 41). The use of powerloom labour became even more widespread after the textile strike. D’Monte estimated that, by 1990, most textile industry output in Mumbai was produced by powerloom operators and that perhaps half of ‘the most active powerlooms’ were owned by mill owners (D’Monte, 2002: 92). Van Wersch suggested that all privately-owned mills made use of subcontracted labour by the 1980s (Van Wersch, 1992: 43–5). The ability of mill owners to subcontract powerloom production was instrumental in their defeat of the 1982–83 strike and greatly increased during the strike (Van Wersch, 1992: 26; D’Monte, 2002: 10). Their strategy was aided by the ineffectiveness of labour protections in the IR system and by its bias against independent trade union organisation. The main union organising the strike (MGKU) was unable to gain registration as an official union. The registered union (RMMS) colluded with the Mill Owners’ Association (MOA) by undermining the registration campaign and victimising supporters of the MGKU. This period illustrates the problem of a trade union movement dependent upon state sanction. In Mumbai, this problem was manifested through use of the Bombay Industrial Relations Act 1946, which adapted

Mumbai   89 the national IR system to local conditions. Like the IR system as a whole, this legislation created a legal and political environment that undermined independent trade union activity (Sherlock, 1996: 36). Unfortunately, the political orientation of the MGKU was also highly problematic. Its leader, Dutta Samant, has been widely described as inflexible and career-driven, despite his popularity among the mill workers (Bakshi, 1986; Van Wersch, 1992; Sherlock, 1996; Breman, 1999). Despite the existence of some ‘workers committees’ in mills and ‘area committees’ in residential areas during the strike, there is evidence that most mill workers were simply unaware of the union’s activities, including rallies, money collection and food distribution. It seems that most of these workers did not actively participate in the strike. Van Wersch’s sample of 154 mill workers who had at least some involvement in the campaign shows that two-thirds worked for the majority of the strike. A third reported that they did not change their ‘lifestyle’ as a consequence of the strike (Van Wersch, 1992: 391–2). Sixty-two per cent had had no knowledge of the strike committees (ibid.: 165–6): Things might have been different had Samant felt the need for a well thought out strategy for conducting the strike. For the development of such a plan and its execution he would have required detailed information and cooperation from the activists among the workers, from a network of committees. But no such strategy providing for massive, coercive and sustained action existed. (Ibid.: 166) There was little to dissuade workers from seeking alternative employment as the strike continued: ‘at no point during the strike was there an acute shortage of cloth in the market which might have been followed by a subsequent rise in prices’ (ibid.: 44). Many workers sampled in this study had worked in powerlooms for weeks or months on end during the strike: ‘it appeared to be very difficult to make these workers understand that in doing so they had contributed to the failure of the strike’ (ibid.: 163). The MGKU inherited the problem of sectionalism common among Indian trade unions. Traditionally, some skilled and higher paid workers had been able to achieve improvements in wages and conditions by organising on the basis of craft or trade (Sherlock, 1996: 37). Although the MGKU attempted to represent all mill workers (including badli or ‘substitute’ workers), it continued to ignore the immensely difficult problem of representation in the powerloom sector. According to Van Wersch’s observations, most powerloom workers were concentrated in a handful of geographical areas, such as Bhiwandi in Thane district, northeast of Greater Mumbai. Although trade unionists were aware of this, they generally preferred ‘the easy access to the workers offered by the mills to the tiresome and unrewarding labour of organising the workers in the powerlooms’ (Van Wersch, 1992: 46). This choice persisted despite the appalling labour conditions often faced by powerloom workers. There was little discussion within the

90   Mumbai MGKU about the ongoing production of textiles by powerloom operators outside Greater Bombay during the textile strike (ibid.: 162–3). Thus, the existence of production networks outside the island city was central to the success of the mill owners’ strategy. The expansion of the MMR into a rural hinterland clearly pre-dates the strike. Its defeat accelerated a process of geographical restructuring in which textiles manufacturing was gradually moved from the mill areas of Greater Mumbai to the powerloom workshops and households of peri-urban areas. The blurring of rural and urban customs in these areas worked in favour of the city’s industrialists. Forty per cent of workers in Van Wersch’s sample owned a small plot of land and cultivation was the most important alternative source of employment outside the textile industry (ibid.: 391–2). There was little evidence that these ‘peasant-workers’ were less enthusiastic about supporting the strike in its initial phase. However, as the strike persisted without resolution, more and more workers returned to rural areas to seek employment (ibid.). The Mumbai textile strike illustrates the complex and articulated relationship between informalisation, the organisation of production and class conflict. Gradual informalisation of the labour force in response to the formal regulatory environment as well as expanding surpluses of rural labour entrenched a labour market structure that mill owners exploited during the strike. Their defeat of the strike laid the basis for an acceleration in the spatial restructuring of the industrial labour force and its further, rapid informalisation. This process had a disastrous effect on the labour movement. By the 1990s, the labour movement in Mumbai could ‘only be described as being in a state of crisis, with levels of unionisation at a very low point and lockouts outnumbering strikes’ (Sherlock, 1996: 35). Mumbai seemed to follow a similar path of communalisation like that described in Breman’s account of Ahmedabad’s textile mills (D’Monte, 2002; Breman, 2004; Shaikh, 2005; Kumar, 2009). The closure of factories, and the attrition, downsizing and informalisation of the factory labour force were followed by a rise in religious bigotry and periodic communal violence (Sharma, 1995). Riots in January 1993 caused perhaps 200,000 people to flee the city, including a disproportionate number of Muslim residents (Lele, 1995). In summary, the available historical accounts suggest that the recent trend towards employment in small-scale establishments recorded in the EC is best explained by a combination of factors since the 1980s: the expansion of informal trading and manufacturing enterprises; the closure of factories and large-scale production units; the reduction of factory workforces by rationalising production or attrition through VRS, thus forcing more workers into the informal economy; and the restructuring of industrial labour into smaller units in order to enhance control of the production process or to avoid protective labour laws. There is evidence to support all of these conclusions, suggesting that they provide complementary explanations for the process of labour market informalisation in Mumbai. The composition of factory production has been restructured, in a compositional sense, through the informalisation of labour and, in a geographical sense, through the displacement of manufacturing output from the factories of

Mumbai   91 Greater Mumbai to the informal enterprises of the outer and peri-urban MMR. This does not mean that factory production is moribund in Mumbai. Despite the prevalence of small-scale production, the EC records that about a fifth of all waged workers in 2005 remained employed in EHWs with 100 or more workers. Nevertheless, factory labour appears to have gone through a process of historical restructuring, spatial displacement and informalisation. There is very clear evidence that Mumbai’s industries have undergone factory closures, workforce attrition through use of VRS and the restructuring of workforces into smaller units in order to avoid protective labour laws. Historical records in Mumbai suggest that the employment of casual and contract labour is not new or unique to the period of economic liberalisation. This is consistent with the argument that the informalisation of labour cannot be reduced to a conscious strategy by industrialists; rather, it has taken place in circumstances in which industrialists are able to exploit the surplus of labour power and existing divisions with labour forces (De Haan, 1999). Nor can it be reduced to the period of neoliberal globalisation. As suggested in Chapter 1, contemporary processes of informalisation have incorporated forms of labour exploitation rooted in longestablished regional social structures of accumulation. The accounts of Van Wersch (1992) and D’Monte (2002) suggest that informal labour has increased in importance since the resolution of class conflicts in the 1980s.

Notes 1 Breman has argued that D’Monte’s historical study of Mumbai’s textile strike is one of a small number of works that have focused on the plight of Indian workers expelled from employment in the formal economy (Breman, 2004). Other examples he notes include his own study of Ahmedabad’s textile mills (Breman, 2004) and Joshi’s study of workers in Kanpur (Joshi, 2003). One can add Van Wersch’s study to this list. 2 Author’s calculations based on NSSO data (Government of India, 1997, 1998a, 1998b, 1998c, 1999, 2001, 2003, 2003a, 2005, 2005a, 2006a, 2008b, 2010, 2011, 2013). 3 Ibid. 4 Breman has made a similar criticism of the term, ‘de-industrialisation’, in his study of Ahmedabad’s textile mill workforce. While many ex-mill workers in his study found employment in transport, petty trade and construction, many others remained employed in industry and industrial textile production remained important in the city. He argued that the the labour force was now ‘scattered over small workshops or as homeworkers, either on their own account or as casual wage earners’ (Breman, 2004: 4). According to this view, ‘informalisation’ is a more appropriate term than ‘de-industrialisation’. 5 Author’s calculations based on data from Government of India (2011a, 2013a). 6 This report was completed prior to the foundation of the state of Maharashtra in 1960.

4 Bangalore

Bangalore (Bengaluru) is an urban region that was shaped by state-led economic development following India’s independence and transformed by India’s economic liberalisation in the 1980s and 1990s. It is the third most populous city in India, with over 8.4 million inhabitants according to the most recent Census of India. Like Mumbai, evidence from government data demonstrates a clear shift towards the employment of wage labour. However, unlike Mumbai, changes to employment in the 1990s and early 2000s incorporated growth in large-scale, organised sector enterprises alongside growth in informal enterprises. Bangalore’s transformation during the neoliberal era has incorporated the expansion of large-scale manufacturing and, especially, service-sector enterprises, including both large foreign and domestic transnational corporations. In this sense, Bangalore’s development is an excellent example of uneven and combined development. The city has emerged, rather famously, as a global ‘hub’ of information technology (IT) and business services. In addition to this, Bangalore remains a centre of light manufacturing and the home to some of India’s most important public sector institutions. Its growth has made the state of Karnataka affluent and fast growing by Indian standards. Economic expansion in its capital, the global IT-enabled services hub of Bangalore, has influenced a belief that it represents a model of services-led development for poor regions (Kadekodi et al., 2008; Narayana, 2008). However, rapid economic development in this urban region has been considerably more complex than this belief implies. As this chapter demonstrates, institutional conflict and generous state subsidies were crucial to the rise of these high-growth sectors. Financial accumulation through land acquisition and real estate development became more important for the development of export-oriented industry through the provision of cheap or free land and the establishment of ‘Special Economic Zones’ (SEZs). While some high-income households have benefited from this process, the growth of employment in both large-scale and small-scale enterprises has been dominated by rising informal labour, from the city’s garment and automotive factories to the thousands of informal enterprises that have grown during the neoliberal period. Like Chapter 3, this chapter combines analysis of government data on changes to employment with evidence from secondary source material. It too is divided into two parts: first, it looks at evidence from

Bangalore   93 government sources, chiefly the Economic Census (EC) but also National Sample Survey Office (NSSO) data, to explore changes to informal employment and enterprises in the 1990s and 2000s. Second, it uses a discussion of secondary source material to corroborate and critically reflect upon this evidence. As we shall see, Bangalore is very different to Greater Mumbai in that this recent historical period saw an expansion of wage labour employed in informal enterprises but an even faster expansion of informal wage labour employed in organised sector firms. Finally, like Chapter 3, the data in the following section refers only to urban areas unless otherwise stated.

Measuring informal labour in urban Karnataka All data in this section comes from the Government of Karnataka (2000, 2005) unless otherwise stated. State-level data demonstrates that Karnataka’s economy grew very quickly between the early 1990s and the mid-2000s. Net State Domestic Product (NSDP) grew at an average annual rate of 6.9 per cent between 1993–94 and 2004–05 (RBI, 2012). Agriculture, manufacturing and trade have been the largest contributors to NSDP, although banking and insurance, as well as real estate and business services, also grew significantly over this period, particularly in the 2000s. The NSDP data demonstrates a tendency for volatile growth in agriculture, which masks a low average annual performance of 1.2 per cent over this decade-long time-series. Average annual growth for manufacturing was 7 per cent, with 9 per cent growth for ‘trade, hotels and restaurants’ during this period. ‘Real estate, ownership of dwellings and business services’ (which incorporates most of the state’s IT industry) grew at a faster average rate of 10 per cent per year. But, despite impressive output growth, Karnataka’s overall record of employment growth is mixed. The EC has recorded a long-term trend in which the number of Establishments with Hired Workers (EHWs) grew more quickly than employment in EHWs between 1990 and 2005. Significantly, it recorded a decline of 2 per cent in total employment in EHWs between 1990 and 1998. Employment in EHWs grew by 29 per cent between 1998 and 2005. While this represents significant growth, it could also be interpreted as a form of recovery following the previous period in which several major industries experienced absolute falls in employment. Between 1990 and 1998, falls occurred for manufacturing, construction, restaurants and hotels, communications as well as community, social and personal services. There was a rise in employment for retail trade (the largest contributor to employment) and for finance, real estate, insurance and business services. However, this growth was not enough to prevent an absolute fall of 2 per cent in total employment in EHWs between 1990 and 1998. Consequently, total employment for all establishments, in both rural and urban areas, declined by 0.1 per cent between 1990 and 1998. Total hired employment declined by over 7 per cent during this period. The subsequent recovery of employment growth between 1998 and 2005 should be situated in this longer term context. Also, like Maharashtra, the majority of Karnataka’s

94   Bangalore urban working population is employed in ‘tertiary’ activities, especially trade. The National Sample Survey Office (NSSO) data shows that the proportion of urban workers employed in tertiary industries was 63 per cent in 2011–12.1 Like Maharashtra, economic growth in Karnataka during the neoliberal period has incorporated a rise in waged employment. The NSSO data shows that total waged employment rose from 57.9 to 60.8 per cent from 2004–05 to 2011–12. Remembering that female labour force participation is higher in southern states like Karnataka than in northern states of India (see Chapter 1), the trend towards waged employment was influenced by a sharp rise in the proportion of women employed in regular wage work over this period, from 37.1 to 53.3 per cent.2 This recent data is consistent with trends measured in the EC. The EC tells us that most workers in Karnataka’s urban areas were employed in EHWs in 2005. This was consistently the case across most major activity groups. The EC recorded that 66 per cent of all workers were hired and 79 per cent were employed in EHWs. The largest share of employment was recorded in retail trade, followed by community, social and personal services and manufacturing. Most employment during this period was created by employers hiring workers to help run small-scale establishments. The EC recorded that 83 per cent of all EHWs employed fewer than six people in 2005. It also showed that 39 per cent had two employees. The next largest group was in the 6–9 employment size category (11 per cent). For Own-Account Establishments (OAEs), 83 per cent had one person usually working and 14 per cent had two. In employment terms, 41 per cent of workers were employed by EHWs with fewer than six workers. A further 15 per cent were employed in the 6–9 employment size category. While the largest share of employment was recorded in smaller-size class categories, there was also significant employment in EHWs with 30 or more workers: in the 30–99 category (11 per cent), 100–199 (4 per cent), 200–499 (7 per cent) and 500 or more (10 per cent). This data showed that employment in middle-sized establishments (10–29 workers) was much smaller. Most establishments had either fewer than 10 workers (56 per cent) or 30 or more workers (32 per cent). Time-series data between 1998 and 2005 reveals a 5 per cent fall in employment in OAEs. The decline in jobs was moderated by a rise in sole proprietorships, which refers to individual workers producing commodities in OAEs without regular assistance from other individuals. There was also a fall in the number of OAEs across all size categories except for sole-proprietorships, which increased by 49 per cent. Interestingly, there was an inverse relationship between employment size category and employment growth. The larger the OAE in terms of people employed, the greater the percentage decline in employment (Figure 4.1). Employment in EHWs grew between 1998 and 2005. Small-scale production accounted for the largest share of this growth, with 93 per cent of the growth in the number of EHWs representing establishments employing fewer than six people. Of this, 86 per cent represented establishments with two people usually working and 12 per cent represented establishments in the 6–9 employment size category, with falls in employment for all establishments employing between 10

Bangalore   95

50

49

Change (%)

0 –5

–31

–50

–46 –53 –61

–64

–91

–100 1

2

3 4 5 6–9 10 or more Total Number of people per OAE

Figure 4.1 Change (%), employment in OAEs by number of people per firm, Karnataka, 1998–2005 (source: author’s calculations from Government of Karnataka (2000, 2005).

and 30 workers. However, percentage growth data for the number of EHWs between 1998 and 2005 suggests that growth in small-scale production is only part of the picture. While growth for establishments with two employees was significant (69 per cent), it was lower than growth in the 30–99 range category (243 per cent) and the 200–499 range category (89 per cent). Furthermore, the number of EHWs with 500 or more workers grew by 50 per cent, compared to total growth in the number of EHWs of 32 per cent. Employment size category distribution was skewed towards the larger end for some major activities. For firms engaged in ‘finance, insurance, real estate and business services’, there was 314 per cent growth in the 30–99 range, 263 per cent in 200–499 range and 167 per cent for the 500 plus range. This evidence is consistent with the fast growth of the IT industry and related activities associated with business services. Employment growth data reveals a similarly mixed picture. On one hand, smaller firms represented the biggest proportion of the change in employment in EHWs between 1998 and 2005. The EC shows that 52 per cent of the change in employment was represented by establishments employing fewer than six workers and 28 per cent of the change was represented by establishments with two employees. A further 20 per cent was in the 6–9 employment size category.

96   Bangalore There was a fall in employment for establishments with between 10 and 25 people working. Furthermore, there were significant rises for larger employment size categories: 200–499 (15 per cent), 500 or more (18 per cent). Employment growth for EHWs employing fewer than six people was 38 per cent and, for EHWs in the 6–9 size category, 41 per cent. However, growth was higher for EHWs with 200–499 workers (94 per cent) and EHWs with 500 or more workers (59 per cent) (Figure 4.2). Overall, this data suggests that three main employment trends were underway between 1998 and 2005: a large rise in small-scale firms (fewer than six workers), a smaller but significant rise in much larger employers (200 or more workers) and a shrinking middle (10–25 workers). District-wise, data in the EC suggests that employment growth in large firms is dominated by Bangalore. Bangalore, which accounts for about a third of the state’s population, had the largest share of large-scale industry in 2005. It accounted for 43.9 per cent of all employment in EHWs in the state. Out of a total of 27 districts, the next largest district shares were recorded in the districts of Mysore (4.9 per cent) and Dakshina Kannada (4.7 per cent). Employment in EHWs was especially concentrated in Bangalore for establishments employing 100 or more people (Table 4.1). Bangalore’s role in large-scale employment is 100

94

59

41

17

16

100–199

Change (%)

38

25–99

50

0

0

–17

500 or more

Number of people per EHW

200–499

20–24

15–19

6–9

1–5

10–14

–40

–50

Figure 4.2 Change (%), employment in EHWs by number of people per firm, Karnataka, 1998–2005 (source: author’s calculations from Government of Karnataka (2000, 2005).

Bangalore   97 Table 4.1 Employment share (%), EHWs by district and no. people per firm, Karnataka, 2005 People working per EHW

Bangalore (urban)

Other districts (n = 27)

1–5 6–9 30–99 100–199 200–499 500 or more All size classes

34.9 37.8 35.8 55.3 55.0 68.7 43.9

65.1 62.2 64.2 44.7 45.0 31.3 56.1

Source: Government of Karnataka (2005).

underscored if we take the growth of industry into account. The state capital accounted for 47 per cent of the total rise in employment in EHWs in the state between 1998 and 2005. This percentage share fell to 29 per cent for establishments employing fewer than six people. Furthermore, employment in this size category grew at a rate of 29 per cent, less than the 38 per cent figure for the state as a whole. However, this picture changes when we look at establishments with 100 or more workers. Bangalore accounted for 74 per cent of employment growth in the 100–199 employment size category, 61 per cent in the 200–499 category and accounted for almost all the growth for EHWs with 500 or more workers. To summarise the story so far, employment growth data for the period between 1998 and 2005 reveals a number of findings. First, there was an absolute fall in employment in OAEs during this period. This seems to reflect the growing incidence of people drawn from unpaid work into waged employment. However, most of the increase in waged employment took place within smallscale establishments. There was a sharp decline between 1998 and 2005 in employment in ‘middle-sized’ establishments that employed between 10 and 25 people. There was also employment growth for much larger establishments, including evidence for high employment growth for large IT and business services firms as well as manufacturing. Growth among the largest-scale EHWs was heavily concentrated in Bangalore. This represents a different employment record in comparison to urban areas in Maharashtra where, over the same period, all employment growth was represented by small-scale establishments. In contrast, the EC demonstrates that the growth of employment in small-scale and large-scale industry was concurrent in Karnataka’s urban areas, with employment in large-scale enterprises concentrated in Bangalore. This data for Bangalore and other urban areas in Karnataka is consistent with the idea that economic development draws greater number of workers into waged employment. It shows that most workers in Karnataka in 2005 were employed in EHWs and that employment in OAEs fell in the 1990s and early 2000s. The inverse relationship between the decline on OAE employment and the number of people working per OAE is particularly striking, with all employment growth in

98   Bangalore OAEs recorded among sole proprietors. While this may reflect people moving from unpaid work in home-based production into waged employment in greater numbers, this data also shows an ongoing role for sole proprietors in commodity production in these urban environments. In fact, the number of sole proprietors grew faster than the number of waged workers between 1998 and 2005. However, this trend should be kept in perspective. In 2005, there were approximately 2.3 million people employed in EHWs against 413,000 sole proprietors in OAEs. The fact that the number of people employed in OAEs fell in this period shows that there has been a polarisation between greater waged employment and greater sole proprietorship in small-scale enterprises. For Karnataka, and perhaps India as a whole, declining job creation in household industry is probably associated with greater volatility in household income. The transfer of workers from unpaid positions in OAEs to wage labour in EHWs also reflects employment changes within the informal economy. Most waged employment was generated within informal enterprises. This evidence is also consistent with the rising number of women engaged in waged employment, often outside the household. Even in Karnataka, where the female share of total employment is well-above the average for India, there was evidence that homebased work continued to coexist with waged forms of employment outside the home. This implies an ‘overlap’ in which individuals within households participated in both paid and unpaid forms of labour. One reason we know this is that EC data reveals that women in Karnataka’s urban areas are more likely to be employed in home-based manufacturing than India as a whole. While retail trade accounted for most employment in OAEs in Karnataka in 2005, the female share of employment in manufacturing was significantly higher than the national average. Women represented 39 per cent of employment in manufacturing OAEs against 23 per cent in manufacturing EHWs, compared to national-level data which showed figures of 16 and 12 per cent respectively. This data suggests that women were highly likely to be employed in manufacturing inside as well as outside households. This evidence suggests that it is too simplistic to talk of a linear process in which women are drawn out of home-based work into paid employment. Even in Karnataka, where female labour force participation is higher than in most other states, a dual process has unfolded in which many women continue to play a role in commodity production in households at the same time as some are drawn, gradually and unevenly, into areas of paid employment previously closed to them. Finally, the data for urban areas in Karnataka demonstrates significant employment growth in waged employment in large-scale enterprises, including factory-based production. Unlike Maharashtra, waged employment in large-scale industry grew alongside work undertaken in small-scale production units in Karnataka in the 1990s and early 2000s. While small-scale production accounted for the largest share of employment growth between 1998 and 2005, the growth of employment in large-scale industry was also important, with significant growth for employment in establishments with 200 or more workers. This data is ­consistent with the growth of large-scale industry in the manufacturing and

Bangalore   99 IT-enabled services sectors since the 1990s. Growth in the number of large establishments was higher than small establishments over this period, especially for firms engaged in business services. Employment growth in establishments with 200 or more workers was higher than employment growth in establishments with fewer than 10 workers between 1998 and 2005. In other words, employment grew more quickly in large organised sector firms than in informal enterprises.

Wage labour in formal and informal enterprises: explaining the trend Karnakata differs from Maharashtra in that the EC records substantial recent growth in waged employment in large-scale organised sector industry. Most of this growth has been concentrated in the Bangalore urban region. Given the evidence of informalisation across India outlined in previous chapters, this suggests that the informalisation of labour in Bangalore has included the expansion of informal employment in formal sector firms as well as the expansion of employment in informal enterprises. However, government data tells us very little about this process, since it relies upon an enterprise-based definition of informality (see Chapter 2 for discussion). In this section, we go beyond the government data by exploring other sources of research on employment and informal labour in the Bangalore urban region. First of all, we examine the nature of the industrialisation process in Karnataka, including the role of state institutions in facilitating industrial expansion through selective support and the targeted liberalisation of trade and investment. Second, the nature of informalisation is explored in this context by looking at examples of large-scale industry and, in particular, the response of trade unions and other labour organisations as employment in formal sector firms has been informalised over time. As mentioned above, Bangalore’s emergence as a global IT-enabled services hub has coincided with the gradual implementation of trade and investment liberalisation by state and national governments since the 1980s. Policymaking elites in the state and the private sector have influenced the formation of a growth-focused development strategy. In Karnataka’s case, this strategy has taken the form of a preference for high-technology services including IT, software services and IT-enabled services such as Business Process Outsourcing (BPO) and biotechnology. This includes a series of policy reforms designed to stimulate service exports to rich countries and to encourage foreign investment in the high-tech export sector. These policies have influenced claims that contemporary economic development can be ‘services-led’: that it can defy conventional views of modernisation by prioritising growth in the service sector, skipping over the prior development of a manufacturing sector. In this view, a modern manufacturing industry can emerge as a consequence, rather than the cause, of an internationally-competitive services sector (Singh, 2008). But the emergence of the region’s IT industry demonstrates that things are more complex than this. Rather than heralding a completely novel path of economic development,

100   Bangalore the emergence of the region’s IT industry was, in fact, the product of institutional conflict within the state and conflict between different sections of private industry (Saraswati, 2008). Nationally, this process coincided with the end of the Indian state’s model of import substitution and the liberalisation of state regulation over private sector firms. In Karnataka, services exports were encouraged through preferential treatment for private software service firms. This included the subsidisation of exporters, tax breaks on capital imports used for export production, and attracting investment through changes to foreign ownership laws. Land acquisition became more important for the development of export-oriented industry through the provision of cheap or free land and the establishment of Special Economic Zones (SEZs) (Upadhya and Vasavi, 2006). SEZs have grown in importance since 2000. The largest proportion of SEZs in Karnataka emerged with the specific aim of generating export income from IT and IT-enabled services (ITES). About 40 per cent of SEZs in Karnataka have been established for IT and ITES (Banerjee-Guha, 2008: 55). As explained below, these policies were eventually reflected in a change in the structure of local industry, as well as a change in the conceptual framework of policymakers. Bangalore has been a centre of large-scale industry for many decades. Bangalore was a textile-producing centre during the colonial period, with large textile mills spread across the city. After India’s independence, Bangalore’s industrial workforce was concentrated into large factories dominated by four state-owned firms: Hindustan Aircraft Factory (established in 1940 and later known as Hindustan Aeronautics Ltd), Indian Telephone Industries (ITI, established in 1948), Hindustan Machine Tools (HMT, established in 1955) and Bharat Electronics (BEL, established in 1956). The production of machinery, electrical equipment and aircraft was linked to the demands for military goods from the Indian Air Force. These firms were located in the city’s northern and eastern outskirts, separated by large areas of agricultural land (Nair, 2005: 81–2). Industrialisation was, thus, underway many decades before the neoliberal period, albeit in a stateled form. The rise of these public sector units reflected the country’s uneven and combined development: industrialisation was being partially driven by the military demands and the geopolitical ambition of state institutions, as well as by the guiding ideology of the 1950s and 1960s underpinned by policymakers’ faith in import-substitution and state ownership. It was also driven by the emergence of domestic textile and garment production during and after the colonial period. Bangalore has retained a large public sector workforce and a large garmentproducing industry along with new developments in the services sector since the 1980s. The state’s demand for manufactured aeronautics and aviation products is an important example of this ongoing role for the public sector. Some suggest that the public funding of industry and defence was a precursor to the expansion of the private sector IT industry in Bangalore (D’Costa, 2009: 634). The relationship between economic liberalisation and the IT industry in India was preempted by the demands of the state for electronic and software-based goods and services (Saraswati, 2006). However, the organised sector has also undergone a process of structural change in the context of liberalisation and the expansion of

Bangalore   101 the IT industry. By the mid-1990s, the public sector still accounted for over 60 per cent of all organised sector jobs in Bangalore. Hindustan Aeronautics employed over 40,000 people at this time (Nair, 2005: 83). However, there is evidence that since the 1980s, public sector units have used Voluntary Retirement Schemes (VRSs) to gradually shed workers (RoyChowdhury, 2003). Consequently, the strong growth for large-scale industry in Karnataka in the 1990s and 2000s is more likely to reflect the emergence of new private sector enterprises rather than an expansion of employment in the public sector. This claim is consistent with rise of new large-scale operations established by domestic and foreign firms during the period of economic liberalisation. For example, increasing foreign investment in the 1990s impacted upon the local manufacturing industry. The launch of motor vehicle production in Bangalore by Toyota in 1997, in partnership with the Kirloskar Group, was followed by investment by Daihatsu in 2005 and truck production by Volvo. The northern part of the city has seen enterprise concentrated around the international airport, which is also the base for a major domestic airline (Kingfisher) (Sastry, 2006, 2008). These developments are consistent with the EC data, which shows the concentration of the largest enterprises in Bangalore. Thus, the composition of the organised sector appears to have gradually changed. While the public sector continues to play a significant role in organised sector employment, recent growth appears to have been dominated by more recently-established, privately-owned service sector and manufacturing firms. However, we also know that small-scale production has accounted for the largest share of recent employment growth, as the EC confirms. This data shows that the expansion of new large-scale enterprises in the state has been accompanied by a rapid growth in informal enterprises. One estimate is that informal employment accounted for about 70 per cent of Bangalore’s labour force by the early 2000s (Nair, 2005: 119). Like other regions of India, most workers in informal enterprises in Karnataka lack basic protections like social security rights, including medical insurance and employer pension contributions. Furthermore, rising employment in the garments manufacturing sector since the mid1990s is another manifestation of informalisation, which incorporates an expansion of informal enterprises alongside greater informalisation within the organised sector. The garments’ workforce is largely composed of women whose employment falls ‘in the grey area between the formal and informal sectors’ (RoyChowdhury, 2008: 30). This industry is an excellent illustration of the contradictions of female labour force participation in India. Female labour force participation is higher in Karnataka than the Indian average and is particularly higher than the equivalent measure in northern Indian states (see Chapter 1). However, wages also tend to be lower for both men and women than in the northern states. While they are above the national average,3 wages in urban areas in Karnataka are significantly lower than in northern states such as Haryana and New Delhi (see Chapter 5). The NSSO data shows that the average wage for regular workers in Karnataka was ₹487 per day in 2011–12. In Haryana, it was ₹777 and, in New Delhi,

102   Bangalore ₹589. Casual wages are also significantly lower in Karnataka than Haryana or New Delhi. Importantly, female regular wages are significantly lower here than in Haryana or New Delhi. In Karnataka, average wages for female regular workers in 2011–12 were ₹392 per day, 62 per cent of equivalent average wages in Haryana and 57 per cent of the equivalent in New Delhi. Average wages for female casual workers in Karnataka are below the national average at ₹102 per day in 2011–12. So, while southern states such as Karnataka have significantly higher female labour force participation than northern states, wages for both women and men are significantly lower. A further, striking feature of this interstate comparison is that average wages for male regular workers in Karnataka in 2011–12 (₹519 per day) were lower than average wages for female regular workers in Haryana and New Delhi (₹636 and 684 per day, respectively).4 So it is reasonable to conclude that the centralisation of female workers in Bangalore’s garment factories and workshops reflects employers in this industry taking advantage of relatively low wages in the region. Changes to the composition of the organised sector have coincided with changes to the geographical structure of industry in Bangalore. Bangalore’s urban geography has historically reflected the physical proximity of its large industrial centres. Capital investment has historically ‘leapfrogged’ into relatively under-developed parts of the city’s surrounding areas. This investment has attracted the development of land, housing, consumer manufacturing and trade catering for new industrial workforces. The IT industry is an example of this geographical ‘leapfrogging and infilling’, having spread urban development to the suburban fringes of Bangalore (Sastry, 2008). Large software firms have been concentrated in the east of the city and in ‘Electronic City’ in the south. Much of this development has been supported through the establishment of SEZs, as mentioned above. There is evidence that local investment in the IT industry has engendered demographic as well as geographic enclaves. Survey evidence of workers in the IT industry suggests that they are a relatively homogenous group in terms of social status, educational background and caste. For example, most IT workers have received an education in a university or business college (Upadhya and Vasavi, 2006: 25–6). One sample study found that 84 per cent of workers’ fathers were managers or executives in public and private sector companies, government officers, professionals (such as doctors and university professors) or businessmen. Only 9 per cent had fathers in lower-level clerical (white-collar) or blue-collar jobs (ibid.: 37). Only 3 per cent claimed a family background in agriculture and only 5 per cent were born in rural areas. About half of this sample was made up of Brahmin Hindus. Including ‘dominant agricultural castes’, 86 per cent were from ‘upper castes and/or economically betteroff communities’ (ibid.: 38). Workers also tended to marry within the same caste and language group. Forty-five per cent of this sample was made up of people married to someone who also worked in the industry (ibid.: 112–13). This data is broadly consistent with survey results on call centre workers from other parts of India (Murphy, 2011). This evidence supports the view that the IT and ITES workforces tend to come from a narrow, socially homogeneous and

Bangalore   103 relatively affluent subset of the population. Claims about its ‘enclave’-type characteristics make sense in this demographic context (Upadhya and Vasavi, 2006; Majumder, 2009). Despite claims that the IT industry has contributed to Karnataka’s high income growth in the 2000s (Narayana, 2008), this industry only employs a small proportion of Bangalore’s total workforce.5 Like Maharashtra, there is evidence that the wider urban labour force has undergone a process of informalisation during the neoliberal period. Similarly, this process can only be fully explored by moving beyond the limitations of government data. In Karnataka, the EC data demonstrates recent growth in large-scale industry and its concentration in Bangalore, alongside a major rise in small-scale production. It does not tell us what proportion of this change is represented by growth in informal enterprises and what proportion is represented by the increased employment of informal workers in the organised sector. Finding answers to these questions requires further research that draws upon an employment-based definition of informality. One approach is to address this issue from the vantage point of labour organisations. This is because structural change in the organised sector has contributed to the displacement of union organisation. While unions are a relative newcomer to the ITES sector and marginal in the IT sector, their industrial and political power has declined in the public sector in which they have traditionally been concentrated (RoyChowdhury, 2003). As in the case of Mumbai, this decline has been linked to the fate of union campaigns in the early 1980s and to the dynamic of union activity since. RoyChowdhury (2008) has explored the fate of several of these campaigns. In 1979–80, workers at a German-owned engineering factory, MICO, now components in manufacturer Bosch, led an 88-day strike which led to the formation of a new union to unite MICO workers across the country. However, solidarity action was limited and the strike was defeated following intervention by the Government of Karnataka, which effectively outlawed further strike action. Despite this move, further strike action emerged. During a key, two-month long strike in the early 1980s, involving 80,000 workers employed at public sector unit Bharat Heavy Electricals, workers demanded wage parity with other public sector employees. During the strike, ‘area solidarity committees’ were formed to mobilise support in the wider community. Although the campaign involved solidarity action from workers employed in the other major public sector units in Bangalore, it ended in defeat (RoyChowdhury, 2003, 2008). These defeats were a blow to unions in the public sector and contributed to a new type of union activism. The class solidarity expressed in these disputes would be ‘completely lost in the character of industrial disputes in the years to come’ (RoyChowdhury, 2008: 35). According to this argument, industrial campaigns since the early 1980s have usually been led by newer, company-based unions that have not invoked inter-firm or inter-industry solidarity or registered support from wider sections of the urban working class. A review of five disputes in large firms between 1998 and 2003 (Larsen and Toubro, Guest Keen Williams, Widia India, Kirloskar Electric and Binny Textiles) illustrates this argument. While some of these examples involved strike

104   Bangalore action, all involved issues that were conceptualised as company-specific. Workrelated issues were not ‘anchored’ in the context of the economic policies that had generated workers’ grievances: ‘What is absent is both a movement-like character to the activities of trade unions, and a broad class-based character to workers’ struggles’ (RoyChowdhury, 2008: 34). Unions in the public sector have also struggled to cope with the restructuring process. A review of union responses to VRS in three public sector units in Bangalore (BEL, ITI and HMT) has demonstrated a high degree of accommodation to workforce attrition among union activists (RoyChowdhury, 2003). Several thousand jobs were lost in the public sector between the late 1980s and late 1990s as a consequence of VRS. It was reported, for example, that the union leadership at HMT ‘appeared to be convinced of the inevitability of change and their greatest challenge seems to have been to disseminate the logic of rationalisation to the workforce’ (RoyChowdhury, 2003: 39–40). The plight of unions in this region has been summarised in an important history of Bangalore’s urban development (Nair, 2005). In this study, it was argued that the evolution of the city’s new economy since the 1970s has ‘invisibilised’ the ‘industrial worker’ (ibid.: 87). Economic change, it is argued, has resulted in ‘an absence of proletarian culture in the city, since industrial labour has not carved out a distinct space for itself’ (ibid.): ‘the work culture of the new economy has strengthened the middle-class link, to foster a self-image that is far removed from any concept of a labouring self, emphasising work as a lifestyle whose goal is enhanced consumption’ (ibid.). There is certainly evidence that workers employed in the IT and ITES sectors have relatively positive attitudes to consumerist society and globalisation (Murphy, 2011). However, the working conditions of these workers are a more complex matter. For instance, there is a distinction between pay and status levels in the IT and ITES sectors (Saraswati, 2008). Particularly in the call centres of the ITES sector, there is evidence of problems of extensive monitoring of employees, the pressure of targets and a lack of rest time. Nevertheless, the union presence in the sector has been small (Taylor and Bain, 2005; Taylor et al., 2007). While unions have an important role to play here, this evidence is consistent with modest expectations about the success of union organising in ITES. A more alarming problem seems to be the lack of organisation and representation in the informal economy. Many of the long-established trade unions have not seriously attempted to break out of their isolation in the public sector. This is despite the evidence that the public sector’s share in organised sector employment has declined during the period of economic liberalisation. The last major strike action amongst public sector workers occurred in the late 1990s (Subramanian, 1997). Trade union successes achieved after agitating for housing, transport and improved working conditions for employees of the ‘Big Four’ public sector units (see above) have not prepared them to respond effectively to the relative decline of the public sector or to establish greater influence in the organised private sector (Nair, 2005). The isolation of unions in the public sector has coincided with new types of industrial conflict. For example, disputes

Bangalore   105 in garment factories frequently take the form of ‘spontaneous expressions of outrage and protest against managements’ coercive or abusive actions’ (RoyChowdhury, 2008: 29). Union activists who intervene in these disputes remain confined to agitation outside the factories. Employers’ recalcitrance, and the influence of NGOs, has meant that campaigns for better wages and working conditions have been organised as pitches to international retailers who purchase wholesale products of local manufacturers. Thus, there is disproportionate influence and practical guidance exercised by ‘outsiders’ in NGOs rather than activists recruited from among the garment workforces (ibid.: 30). Many unions have splintered into smaller organisations, breaking from or ignoring centralised federations to form independent, firm-based organisations that are ‘concerned exclusively with firm level issues, which typically arise within the factory or the shop-floor, and not on broader issues related to industrial wages, conditions of work, and so on’ (ibid.: 33): They thus typically embody a specific problem-solving orientation, rather than an ideological or political agenda. Firm level issues are taken up on an ad hoc basis, as and when they come up, lacking the conceptual/political anchoring from which these local issues might have been connected with broader policy issues. (Ibid.) The older unions have generally not responded proactively to these new organisations. Like the unions of Mumbai’s textile mills, this response may be related to their negative attitude to organising labour in the informal economy. Unions have found it difficult to relate to the insecurity of work in informal enterprises. This leaves some unanswered questions about the trajectory of union activity. RoyChowdhury (ibid.: 36) has asked whether ‘the objective basis of exploitation as also the face of class conflict is more amorphous than it was during earlier phases of industrialisation where manufacturing capital met labour face to face on the shop floor’ (ibid.). This is essentially a problem of subjective choice and objective circumstance. In other words, to what extent are the problems of labour organisations caused by structural economic change and to what extent are they caused by the strategic choices that labour activists make? The answer to this problem seems to depend upon the specific region we are referring to. For example, evidence from Maharashtra supports the idea that face of class conflict is ‘more amorphous’ than before. It shows that there has been both a spatial relocation of industrial labour processes, such as the closure of textile mills in Greater Mumbai and the gradual shift in textiles production to the outer reaches of the Mumbai Metropolitan Region, and a reorganisation of the labour process itself, which incorporates a shift to production in powerlooms based in households and small workshops. But the evidence from Bangalore’s centres of industry suggests that there has been a centralisation of production in the manufacturing and services sector alongside an expansion of informal enterprises. While the expansion of factory production appears to have incorporated

106   Bangalore much greater employment of workers under informal arrangements, the notion that conflict has become more nebulous in Bangalore’s industrial centres makes less sense. An important example of where more traditional forms of industrial conflict remain relevant can be found in the automotive industry. As mentioned above, Toyota entered a joint venture with the Kirloskar Group, a local industrial conglomerate, in 1997. This partnership established car production in the town of Bidadi, about 25 km southwest of Bangalore. Today, Toyota dominates this operation with an 89 per cent share (Choudhury and Thoppil, 2014). While the firm began production with a stable, relatively well-paid workforce, there is evidence that attempts by Toyota to rationalise production – with so-called Japanese ‘lean production’ – caused considerable disquiet among workers (Mathew and Jones, 2013). The Government of Karnataka responded to industrial unrest in the early 2000s by giving the operation ‘public utility status’. This effectively allowed the state to outlaw strike action and curb union activity. Toyota increasingly employed workers hired by labour contractors, increasing the proportion to 20 per cent of the total workforce in assembly production and 22 per cent in components production by 2005. These workers were paid 40–50 per cent of regular workers’ wages (Lal Das and George, 2006). This trend is more broadly reflected in government data on organised sector manufacturing, which records a rise in the proportion of workers hired through labour contractors. In 2011–12, 21.1 per cent of workers in organised sector manufacturing firms were hired through labour contractors. Although this is lower than the national average of 33.9 per cent, it represents an increase from 18.6 per cent in 2008–09.6 Unions at Toyota have suffered from many of the problems that have plagued public sector unions. By 2005, a union in Toyota’s assembly plant had been able to recruit 1,380 workers and a union in its components plant was able to recruit about 400 members, despite company and government opposition. But only permanent or regular workers have been able to join these unions (ibid.). Since industrial unrest in the early 2000s, Toyota has gradually increased the proportion of ‘contract workers’ in its total workforce. While union membership has grown, unions have continued to find it difficult to include these workers hired by labour contractors. More recently, the company has suspended workers and initiated a major lockout (Choudhury and Thoppil, 2014). As we shall see in Chapter 5, this record of firm-level ‘informalisation’ in large organised sector firms, and subsequent industrial unrest, is not unique to Karnataka. It seems that the informalisation of factory labour has strongly influenced the response of labour organisations. For instance, the attrition of regular workers and the growth in the employment of casuals and contract workers appears to have intersected with a recent tendency for firm-level collective organisation to increase. In some cases, particularly within the large garments sector, organisation has often lacked external orchestration by existing union federations. This has led to sharp outbursts of struggle, such as brief strikes or factory occupations, as well as some unfinished attempts to gain recognition for trade unions and, occasionally, some limited improvements in the conditions and rights of

Bangalore   107 informal workers. So it seems likely that a change in the structure of labour forces has conditioned changes in the collective response and organisation of workers. Thus, it also seems true that the gradual decline in the ‘movement-like quality’ of trade unionism in Bangalore is linked in a similar way to the changing composition of labour forces in the organised sector as well as to the expansion of informal enterprises. Government data shows that the largest share of recent employment growth has been concentrated in informal enterprises. Karnataka followed the trend of the other states examined in this book in that most of the increase in waged employment recorded in urban areas between 1998 and 2005 was concentrated in small manufacturing and trading enterprises. However, the data also demonstrates that there has been significant growth in waged employment in large-scale industry. This data is consistent with evidence of rapid growth in Bangalore’s IT, ITES and manufacturing sectors. There have thus far been limits to the influence of trade unions in the IT and ITES sectors, but it remains less clear whether the same limitations exist for workers employed in manufacturing plants. There is evidence that the segmentation of workforces into groups of regular workers, casuals and workers hired by labour contractors can act as a serious barrier to successful collective organisation and labour representation under these conditions. But that evidence also suggests that at least some of the success or otherwise of labour organisations is determined by the degree to which unions are prepared to accept and normalise the division of workforces into groups differentiated by pay, conditions, rights and status. As we shall see, evidence from the New Delhi region also points towards this conclusion. For Bangalore, far more research is needed into the relationship between structure and agency in the organised sector and, more broadly, into the strategic orientation of trade unions. For example, there is little systematic evidence available which outlines the employment of informal workers in Bangalore’s newer manufacturing firms. This chapter has contrasted findings from government data with evidence of the emergence of new services and manufacturing industries in Bangalore. It has also contrasted these findings with claims drawn from the study of labour organisations in the region. This analysis is generally consistent with the argument that industrialisation in Karnataka’s urban regions during the period of economic liberalisation has captured a dual process: first, that wage labour in informal enterprises represented the largest portion of recent employment growth and, second, that significant growth in wage labour has also been registered in largescale, organised sector firms. The evidence discussed in this chapter suggests that this growth reflects a compositional change in the region’s organised sector. It demonstrates an increase in the importance of privately-owned IT, ITES and new manufacturing plants to organised sector employment. However, more research is needed to fully support claims that informalisation here captures the greater employment of informal labour in the organised sector. Furthermore, the contrast between the process of informalisation in Greater Mumbai and the Bangalore urban region begs a crucial question: which historical trend is more representative of changes to the structure of labour forces in metropolitan India? The

108   Bangalore following chapter on the New Delhi urban region offers conceptual and empirical insights that can help to address this question.

Notes 1 Author’s calculations based on data from Government of India (2013). 2 Author’s calculations based on NSSO data (Government of India, 1997, 1998a, 1998b, 1998c, 1999, 2001, 2003, 2003a, 2005, 2005a, 2006a, 2008b, 2010, 2011, 2013). 3 In 2011–12, the average daily wage for regular wage workers in India was ₹450 compared to ₹170 for casual workers. Female wages are much lower on average. For female regular wage workers, the national average was ₹366 per day. For female casual workers, the average was ₹111 per day (Government of India, 2013). 4 Author’s calculations based on Government of India (2013). 5 See Barnes (2013) for a critical discussion of the economic impact of the IT industry on growth and employment in India. 6 Authors calculations based on data from Government of India (2011a, 2013a).

5 New Delhi

This chapter looks at the experience in the National Capital Region (NCR). A key feature of this analysis is that one finds different versions of informalisation within a single urban region. This is partly because the NCR traverses several states and territories. The chapter draws upon quantitative data for New Delhi and urban areas in the neighbouring state of Haryana, as well as qualitative data from Delhi, Haryana and, to a lesser extent, Uttar Pradesh. The evidence suggests that there has been a combination of ‘Mumbai-type’ and ‘Bangalore-type’ informalisation in the NCR. Like these cities, there has been a sharp rise in wage labour in informal enterprises. In New Delhi, like Mumbai, there was a concurrent decline in wage labour in large organised sector firms between the late 1990s and mid-2000s. However, things look very different on the southern and eastern fringes of this urban region, where new industrial zones have thrived since the 1980s. The NCR is an urban sprawl that traverses several states. At its heart, is the National Capital Territory (NCT) of Delhi – or, simply, New Delhi – which is a separate union territory of India with its own provincial government. It also includes parts of the surrounding states of Uttar Pradesh, Haryana and Rajasthan. According to the most recent Census of India, there are about 22 million people living within the NCR, of which about three-quarters reside within the NCT. Like Chapters 3 and 4, statistical data is supplemented with secondary source material from existing studies of informal labour and economic development in the region. In addition, some evidence from primary source material is presented in this chapter from the author’s field work in urban Haryana and New Delhi (see Appendix for details). This chapter is divided into four parts. The first two sections look at official labour statistics to explore how changes to informal employment and enterprises have been measured in the 1990s and 2000s. The first section focuses on New Delhi, while the second section focuses on urban areas in the neighbouring state of Haryana, especially the industrial centres of Faridabad and Gurgaon. This evidence is authenticated with evidence from secondary sources, documentary analysis and field research in the third and fourth sections on the NCT and urban Haryana, respectively. The evidence suggests that New Delhi’s satellite cities of Gurgaon and Manesar represent new centres for global automotive manufacturing, call centres and finance. Greater Noida, on the capital’s south-east fringe, has many similar features.

110   New Delhi Rather than a straightforward process of ‘industrialisation’, there has an expansion of large-scale industrial production and employment alongside an expansion of informal labour practices. In the region’s auto assembly and components plants, for example, there is evidence of the systematic replacement of ‘formal’ workers with ‘informal’ workers employed casually or through networks of labour contractors. In these cases, there has been a significant rise in wage labour in large formal sector firms during the period of India’s economic reforms, reflecting an experience closer to trends in Bangalore. This process contrasts sharply with the ‘hollowing out’ of large-scale industry in New Delhi itself. Like Mumbai, industrial production has gradually relocated to the outskirts of the city, although there has also been a concurrent rise in factory production in the city’s south, especially in the garment industry. This, in turn, has been complemented by home-based production in semi-urban and rural areas. The spatial implications of this – with working populations shifted into new workplaces and communities in outer metropolitan and peri-urban areas – is also explored in this chapter. Like the previous chapters, all data in the following sections refers to urban areas unless otherwise stated.

Measuring informal labour in Delhi All data in this section comes from Government of the NCT (2000, 2008) unless otherwise stated. This first section looks at key features of changes to employment in the National Capital Territory of Delhi (NCT) since the 1980s, particularly between 1998 and 2005 (ibid.).1 These include changes to the employment of wage labour, changes to the female share of employment and evidence on the geographical location of industry and employment. First, as the NCT is a highly urbanised area, agriculture has a much lower proportional contribution to economic growth than most other states. The largest contributors to growth (Net State Domestic Product) are ‘trade, hotels and restaurants’ (which includes both retail and wholesale trade) and ‘banking and insurance’. Also, ‘transport, storage and communication’ grew rapidly between 1999–2000 and 2004–05, rising from the fifth to the third largest contributor to growth in this period. Although manufacturing remained a major contributor to growth, its contribution fell from second place in 1994–95 to fourth place by 2001–02, behind trade, hotels and restaurants, banking/insurance and transport, and storage and communication. Another feature of the NCT’s economic growth record has been the significant rise in growth per capita in the late 1990s and early 2000s compared to the 1980s and early 1990s. Average annual net growth per capita was 3.6 per cent between 1980–81 and 1996–97. However, the average for the period from 1993–94 to 2005–06 was much higher at 10.7 per cent (RBI, 2012). Employment growth recorded in the Economic Census (EC) did not match this acceleration in economic growth since the mid-1990s. Employment in all non-agricultural establishments (urban and rural combined) grew by 42 per cent from 1980 to 1990 and a further 69 per cent from 1990 to 1998. However, it grew by just 2 per cent between 1998 and 2005. Changes to employment in

New Delhi   111 ‘manufacturing and repairs’ and ‘trade’ (retail and wholesale) contributed significantly to these changes in employment growth. Employment in ‘manufacturing and repairs’ grew by 37 per cent between 1980 and 1990, and by 126 per cent between 1990 and 1998, but fell by 16 per cent between 1998 and 2005. Employment in trade has grown at a more consistent level in the three timeseries, by 74, 56 and 52 per cent respectively. In contrast, employment growth in ‘electricity, gas and water’ has been erratic, growing by 1 per cent, 464 per cent then falling by 75 per cent for the respective time-series. Reflecting a similar decline, employment in ‘community, social, personal and other services’ grew by 20 per cent, 19 per cent then fell by 7 per cent. Employment in ‘finance, insurance, real estate and business services’ grew by 74, 7 and 43 per cent respectively. The aggregate trend was for total employment to grow by an average of 4.2 per cent per year between 1980 and 1990, rising to 8.6 per cent between 1990 and 1998, before falling to average annual growth of just 0.3 per cent between 1998 and 2005. Thus, the acceleration of employment growth between 1990 and 1998 data was not sustained between 1998 and 2005, despite the acceleration in economic growth that began in the mid-1990s and continued into the 2000s. Employment in manufacturing in fact shrank between 1998 and 2005 after having grown significantly in the previous period. National Sample Survey Office (NSSO) data shows that this decline represents structural economic change in Delhi. It shows a clear trend since the 1990s of employment shifting from secondary industries, especially manufacturing, to tertiary industries such as trade. The proportion of people employed in tertiary industries rose from 68.3 per cent in 1999–2000 to 73.1 per cent in 2011–12. For secondary industries, the proportion fell from 30.1 to 26.9 per cent. Interestingly, this trend seems to have been influenced by a sharp rise in the share of women employed in tertiary industries, from 69.7 per cent of total female employment to 89 per cent over this period.2 While employment growth was low and manufacturing employment declined between 1998 and 2005, Own-Account Establishments (OAEs) remained an important contributor to employment in the NCT. OAEs are overwhelmingly small-scale establishments. In 2005, 68 per cent of employment in OAEs in the NCT was represented by sole proprietors. A further 26 per cent of employment was found in establishments with two people usually working. Only 0.1 per cent of employment was found in OAEs employing 10 or more people. Employment was dominated by retail trade, which accounted for 59 per cent of total employment in OAEs in 2005. The next largest contributor was ‘community, social and personal services’, with just 9 per cent, following by manufacturing with 8.5 per cent. Compared to the southern states analysed in Chapters 3 and 4, a striking feature of employment in the NCT is the low female share of employment in the labour force. While it remains low, this share increased between 1998 and 2005. For OAEs, it increased during this period from 4 to 7 per cent. Similarly, the female share increased between 1998 and 2005 in Establishments with Hired Workers (EHWs) from 8.5 to 10 per cent. For both OAEs and EHWs, there were

112   New Delhi increases in the female share of employment for key areas such as retail trade and manufacturing. Thus, the NCT has experienced a modest rise in the female share of employment, albeit from a very low base. More recent data from the NSSO shows that female labour force participation rose sharply in Delhi, by 80 per cent, from 2009 until 2012. This seems to reflect the peculiar structure of Delhi’s labour market, in which there is very low female labour force participation but about three-quarters of the women who are in paid employment tend to work in relatively well-paid occupations in public sector units or in the education system. According to NSSO data, the average wage for female regular workers in 2011–12 was, at ₹684 per day, 20 per cent higher than male wages. There are limits to this ‘advantage’: female casual wages were, at ₹86 per day, just 30 per cent of male casual wages and 23 per cent lower than the national average.3 Workers in the NCT are overwhelmingly employed in EHWs. In 2005, 90 per cent of all employment in the region was concentrated in EHWs. Thirty-four per cent of all people employed in EHWs were employed in manufacturing establishments, followed by retail trade (21 per cent), community, social and personal services (17 per cent) and finance, insurance, real estate and business services (9 per cent). This distribution underscores the importance of manufacturing to waged employment in the region. Furthermore, between 1998 and 2005 all employment growth was captured by EHWs. Employment in OAEs fell by over 19 per cent, while employment in EHWs grew by over 5 per cent. Employment in OAEs fell by nearly 86,000 positions to just over 361,500 in 2005. Over 68 per cent of this fall was represented by OAEs employing fewer than six people. Like Karnataka (Chapter 4), there was an inverse relationship between employment growth and the number of people working per establishment. The larger the number of people working in OAEs, the greater the percentage decline in employment. While employment in OAEs employing fewer than six people fell by 14 per cent, it fell by 73 per cent for OAEs with 6–9 people working and 98 per cent for OAEs with 10 or more people working. This is consistent with the idea that increasing numbers of people have been drawn out of non-waged work into waged employment. Most of the decline in employment in OAEs between 1998 and 2005 was represented by community, social and personal services, followed by manufacturing, repair of motor vehicles, motor cycles and personal and households goods, although retail trade grew by over 40,000 positions (Figure 5.1). More recent NSS data tells us that regular wage work represented 61.5 per cent of total employment in Delhi in 2011–12. Again, although the female share of employment and labour force participation remains low, the dominant role of waged employment is influenced to some degree by the high proportion of women employed in regular (as opposed to casual) wage work (74.6 per cent of total female employment in 2011–12), especially in public administration, health and education.4 Although there was a clear trend towards waged employment measured by the EC between 1998 and 2005, there was a tendency for waged employment to concentrate in small-scale establishments. In 2005, nearly 32 per cent of total

New Delhi   113

Change, number employed

50,000

40,427

10,338

0 –14,169 –26,477 –31,947

–50,000 –61,031

–85,697

Total

Community

Finance

Communications

Transport

Restaurants

Retail trade

Wholesale trade

Construction

Manufacturing

–100,000

Figure 5.1 Change, employment in OAEs by industry, National Capital Territory (NCT), 1998–2005 (source: author’s calculations from Government of the NCT (2000, 2008).

employment in EHWs was concentrated in establishments employing fewer than six people. Establishments employing fewer than 10 people accounted for nearly 52 per cent of the total. However, there was also significant employment in establishments in the 200–499 (19 per cent), 30–99 (14 per cent) and 100–199 employee-size categories (12 per cent). The distribution of employees by size category suggested that workers overwhelmingly found paid employment in establishments with either fewer than 10 or more than 29 people working. Establishments in between these two poles (10–29 employees) accounted for less than 4 per cent of total employment in EHWs. Furthermore, between 1998 and 2005 there was a decline in employment in all EHWs employing 10 or more workers. While employment in EHWs with fewer than six workers and between six and nine workers grew by 41 and 57 per cent respectively, employment in EHWs with 10 or more workers fell by 19 per cent (Figure 5.2). Furthermore, changes to employment in EHWs between 1998 and 2005 were marked by a significant fall in manufacturing employment. There were nearly 196,000 fewer positions in ‘manufacturing, repairs of motor vehicles and motor

114   New Delhi

60

Change (percent)

40

57

41

20 5 0

–20

–19 1–5

6–9 10 or more Number of people per EHW

Total

Figure 5.2 Change (%), employment in EHWs by number of people per firm, NCT, 1998–2005 (source: author’s calculations from Government of the NCT (2000, 2008).

cycles, personal and household goods’ in 2005 compared to 1998. During the same period, there was an increase of over 327,000 positions in retail trade establishments (Figure 5.3). In percentage terms, retail trade employment increased by over 97 per cent during this period, followed by a rise of over 49 per cent in ‘finance, insurance, real estate and business services’ and over 40 per cent in ‘restaurants and hotels’. In contrast, employment in ‘manufacturing and repairs’ fell by over 14 per cent and in ‘electricity, gas and water’ by over 75 per cent. To reiterate, this reflects a clear tendency away from manufacturing employment towards retail trade between 1998 and 2005. This is a significant change given the importance of manufacturing to employment in the region’s economy. Although there was fall in manufacturing employment between 1998 and 2005, there was a rise in the number of manufacturing EHWs with fewer than 10 workers. Furthermore, there were 120 fewer manufacturing EHWs with 500 or more workers in 2005 than in 1998. On the other hand, there was also an increase of 482 in the 100–199 employment size category and 325 in the 200–499 category. This change may represent smaller firms increasing in size or, perhaps also, larger firms reducing the size of their workforces or restructuring or concealing the size of their workforces. In contrast to manufacturing, the percentage change in the

New Delhi   115

400,000 327,081

Change, number employed

300,000 200,000

158,457 92,081

100,000 0 –100,000 –200,000

–86,599

–195,718

Total

Community

Finance

Communications

Transport

Restaurants

Retail trade

Wholesale trade

Construction

Electricity

Manufacturing

–300,000

Figure 5.3 Change, employment in EHWs by industry, NCT, 1998–2005 (source: author’s calculations from Government of the NCT (2000, 2008).

number of retail trading establishments in the 100–199 and 200–499 categories was more significant than in the other employment size categories, growing by 300 and 1,160 per cent respectively. Alongside the overall trend towards smaller-scale production units, this increase in large retail trading establishments between 1998 and 2005, representing several thousand job positions, seems to be part of the structural economic change that has been underway in the region. The 93 per cent fall in the number of manufacturing EHWs with 500 or more workers suggests that all but a handful of the region’s largest manufacturing plants and factories either closed or significantly reduced their workforces between 1998 and 2005. Alongside this, there was a fall in the percentage share of establishments registered under the Factories Act 1948. This law regulates working hours and conditions for regular workers in organised sector firms.5 Although several industries were brought under the framework of this legislation between 1998 and 2005, there was a fall in the number of registered manufacturing establishments as a percentage of unregistered manufacturing establishments from 6.3 per cent to 2.4 per cent. This was a significant enough change to influence a decline in the share of all registered establishments from 1 to 0.7 per cent.

116   New Delhi EC-2005 data shows that most employment in establishments was situated in the outer districts of the NCT. There were fewer workers employed in the district of ‘New Delhi’ in comparison to other districts. This is the case for both OAEs and EHWs. While it is not possible to construct a time-series based on the available data, the EC reveals that New Delhi district had just 2,012 people employed in OAEs in 2005 compared to the average of 40,174 people employed in OAEs per NCT district. For EHWs, a total of 187,582 people were employed in New Delhi district in 2005 compared to a district-wise average of 346,015. A total of 526,226 were recorded in the southern district, which had the largest share of employment in EHWs in the NCT. This geographical distribution is consistent with the evidence of industrial and employment expansion on the southern fringe of the NCT, bordering the regional growth poles of Greater Noida (in the state of Uttar Pradesh) and, especially, Gurgaon and Faridabad (in the state of Haryana). Adding weight to this argument, the share of the south and south-western districts in total employment was greater for establishments in the 200–499 category (42 per cent) than in the 100–199 (23 per cent) and 30–99 categories (22 per cent). To summarise the data for the NCT, the EC demonstrates that commodity production is dominated by male wage workers. Alongside this, there has been a recent trend towards wage labour, with unpaid employment in OAEs declining by nearly a fifth between 1998 and 2005. The evidence that the larger the OAE in employment terms, the greater the percentage decline in employment during this period, is consistent with the proposition that greater numbers of workers, including greater numbers of women, have been drawn out of unpaid forms of employment into wage labour. However, wage labour has increasingly been concentrated in small-scale establishments, although employment in factories and other larger-scale production units remains significant. The shift towards smaller-scale production units has coincided with a shift in the distribution of economic activities from manufacturing to trade. The number of waged workers employed in manufacturing establishments fell between 1998 and 2005. Among manufacturing establishments, the data shows a rise in the number of small-scale firms as part of this overall decline. A notable change in this regard was the large fall in the number of establishments employing 500 or more people – a 93 per cent fall during this period. It is not clear from the data alone what the main driver of this change has been. It coincides with a rise in the number of firms employing between 30 and 499 workers. It is possible that this change represents some smaller firms in the 10–29 range becoming larger over the time series. However, in line with the overall picture of evidence presented for Greater Mumbai and Bangalore in previous chapters, it is also likely that it represents the restructuring of labour forces in the organised sector. This process has arguably been marked by a combination of factory closures, reductions in the size of industrial workforces through redundancies, layoffs and attrition, and, finally, the restructuring of these workforces by reclassifying job positions, increasing the proportion of non-regular workers or regrouping workforces into smaller units. But these claims require scrutiny. Furthermore, the data

New Delhi   117 indicates a modest rise in the female share of both paid and unpaid forms of employment. It also underscores one of the most striking features of employment in the Delhi urban region: the low participation of women in commodity production as recorded in official statistics. The recent rise in female employment has occurred from a very low starting point. Changes to the distribution of economic activities between 1998 and 2005 also point towards historical and geographical changes in the industrial division of labour. While manufacturing remains central to employment in the region, economic growth data reveals that the contribution of manufacturing to growth has become less significant than financial, real estate, business services, transport and communications activities. Employment in manufacturing grew in the 1980s and even more quickly between 1990 and 1998 before falling by about 196,000 positions between 1998 and 2005. During this latest period, the number of positions represented by retail trade increased by about 327,000. Coinciding with this variation in the industrial division of labour is evidence of a changing geographical division of labour in which industrial employment is concentrated in the outer districts of the Delhi urban region. Of note is the low share of New Delhi district in the share of employment and the comparatively large share of employment in establishments employing between 200 and 499 people in the southern part of the region, bordering the urban growth poles of Gurgaon, Faridabad and Greater Noida.

Measuring informal labour in Faridabad and Gurgaon This section focuses on evidence from the urban centres of Haryana.6 It draws particularly on evidence of changes to the state’s two main industrial centres, Faridabad and Gurgaon, which are both located within the NCR, bordering the southern edge of the NCT/Delhi. The analysis focuses on EC data recorded between 1998 and 2005 (Government of Haryana, 1998, 2008). This section proceeds by looking at the prevalence of wage labour in the state and its concentration in manufacturing. Results show that the employment of wage workers in the state of Haryana is particularly concentrated in Faridabad and Gurgaon, and that the largest share of the manufacturing waged workforce in the state was found in Faridabad. As in the previous section, it also looks at the changing relationship between the production of commodities in OAEs, the growing employment of waged labour and the role of a gender-based division of labour.7 The NSS data shows that, unlike the NCT, employment has tended to grow and concentrate in manufacturing. While there was a shift in Delhi from manufacturing to trade in the 1990s and 2000s, the trend runs in the opposite direction in Haryana’s urban areas. Between 1994–95 and 2011–12, the proportion of employment in tertiary industries fell from 64.1 to 59.5 per cent, while the proportion of employment in secondary industries rose significantly, from 24.4 to 34.3 per cent.8 This trend was present for both women and men and reflects the much more important role of manufacturing in Haryana. The EC shows that waged labour is the most important type of employment in Haryana’s urban areas where, in 2005, 77 per cent of workers were employed

118   New Delhi in EHWs and 65 per cent of all workers were hired for a wage. The employment of waged labour also grew more quickly than employment in OAEs between 1998 and 2005. Employment growth in OAEs was 2 per cent in this period, while employment growth for EHWs was 23 per cent (Figure 5.4). According to NSSO data, waged employment, including both regular and casual waged work, increased from 50.3 per cent of total employment in 2004–05 to 59.5 per cent in 2011–12. While male female labour force participation is much higher than female participation in Haryana, it is notable that the figure for waged employment is influenced by a steep rise in female regular wage work over this period, from 32.0 to 67.5 per cent of total female employment.9 While the largest portion of employment in OAEs was engaged in retail trade activities in 2005, by far the largest portion of wage labour was employed in manufacturing. Nearly 51 per cent of OAE employment was engaged in retail trade, followed by manufacturing (15 per cent) and ‘other community social and personal services’ (nearly 7 per cent). For EHWs, the distribution of employment changes to one dominated by manufacturing (34 per cent of employment), followed by retail trade (15 per cent), public administration, defence and social security (13 per cent) and education (9 per cent). This picture suggests that manufacturing has played a role as the most important driver of economic activity in the state (Figure 5.5). Growth data by major economic activity suggests that, after agriculture, manufacturing and trade are the largest contributors to net growth in Haryana

160,987 150,000

Change, number employed

126,068

100,000

50,000

4,828 0 OAEs

EHWs

Number of hired workers

Figure 5.4 Change, employment by establishment type, Haryana, 1998–2005 (source: author’s calculations from Government of Haryana (1998, 2008).

New Delhi   119

300,000

295,334

Employment

200,000

133,444 109,396

100,000 75,629

Other major activities

Education

Other community social and personal services

Health and social work

Public admin., defence and social security Sale, maintenance and repair of motor vehicles

Wholesale trade

Transport and storage

Retail trade

Manufacturing

Financial intermediation

Real estate renting and business services

Communication

0

Figure 5.5 Employment in EHWs by industry, Haryana, 2005 (source: author’s calculations from Government of Haryana (1998, 2008).

(RBI, 2012). The growth in waged employment was underscored by the gradual shift within retail trade toward the hiring of wage workers between 1998 and 2005 even though retail trade was the mainstay of production within OAEs. Considerably more positions in retail trade EHWs were created during this period than positions in retail trade OAEs. Employment in retail trade EHWs grew by 62 per cent, while employment in retail trade OAEs grew by 4 per cent. Growing waged employment in Haryana appears to have had an effect on the structure of employment in OAEs. Virtually all of the growth in the number of OAEs between 1998 and 2005 was represented by establishments with one or two positions. Like urban areas in Maharashtra (Chapter 3), there was a decline in the number of OAEs employing larger numbers of people than this. The data

120   New Delhi suggests that significant numbers of people were drawn from OAEs into waged employment. District-wise evidence further illustrates this claim. While employment growth in OAEs was nearly 2 per cent for Haryana as a whole between 1998 and 2005, there was a varied growth performance in different districts. For example, there was a fall in employment in OAEs in Faridabad and Gurgaon as well as the districts of Kurukshetra, Mahendragarh, Rewari and Sirsa (Figure 5.6). In Faridabad and Gurgaon, falling employment in OAEs coincided with a significant rise in employment in EHWs (Figure 5.7). These two districts comprised the largest share of waged employment growth in the state between 1998 and 2005. Gurgaon accounted for 20 per cent of the total rise in employment in EHWs in Haryana over this period. It also accounted for 23 per cent of the total rise in hired employment. In comparison, Faridabad also accounted for 20 per cent of the state’s rise in employment in EHWs and over 25 per cent of the total rise in hired employment. Like the NCT, the female share of employment in Haryana was remarkably low. Women represented only 4 per cent of employment in OAEs and 10 per cent of employment in EHWs. There were some exceptions to this low female share of employment, such as education (46 per cent of total employment) and health (25 per cent).

6,000

4,500

1,500

0

–1,500

Ambala Bhiwani Faridabad Fatehabad Gurgaon Hisar Jhajjar Jind Kaithal Karnal Kurukshetra Mahendragarh Panchkula Panipat Rewari Rohtak Sirsa Sonipat Yamunanagar

Change, number employed

3,000

–3,000

–4,500

Figure 5.6 Change, employment in OAEs by district, Haryana, 1998–2005 (source: author’s calculations from Government of Haryana (1998, 2008).

New Delhi   121

Change, number employed

30,000

20,000

10,000

Ambala Bhiwani Faridabad Fatehabad Gurgaon Hisar Jhajjar Jind Kaithal Karnal Kurukshetra Mahendragarh Panchkula Panipat Rewari Rohtak Sirsa Sonipat Yamunanagar

0

Figure 5.7 Change, employment in EHWs by district, Haryana, 1998–2005 (source: author’s calculations from Government of Haryana (1998, 2008).

Like Maharashtra, Karnataka and the NCT, most employment in Haryana was concentrated in small-scale establishments. In 2005, the EC records that over half of workers (both waged and non-waged) were employed in establishments with fewer than six people working. Most of the growth in the employment of wage labour between 1998 and 2005 was concentrated in small-scale establishments. The largest share of growth in employment in EHWs was represented by establishments with one or two people working. Over 69 per cent of the growth in the number of EHWs (rural and urban combined) was represented by EHWs with one or two workers and a further 14 per cent by EHWs with three workers. However, unlike the NCT and urban areas in Maharashtra, there was evidence of concurrent growth in employment in large establishments. While small-scale establishments accounted for the largest share of employment growth, employment growth in large-scale industry was also significant. Although over half of

122   New Delhi all workers in the state (waged and non-waged) were employed in establishments employing fewer than six people in 2005, 40 per cent worked in establishments with 10 or more people working. EC data also suggests that the growth of employment in large EHWs (rural and urban combined) between 1998 and 2005 was also significant. While the number of EHWs with one or two people working grew by 124 per cent, EHWs with 100 or more people working grew by 63 per cent. Interestingly, time-series data recorded a fall in medium-sized establishments. The number of establishments with 10–19 workers employed fell by 16 per cent in this period. In Faridabad the distribution of growth in EHWs was similar to this. However, in Gurgaon, the distribution was skewed further towards large establishments. While growth in the number of EHWs with one or two workers was 248 per cent, the number of EHWs with 100 or more people working grew by 180 per cent. This distribution seems consistent with the growth of large manufacturing and service sector firms in Gurgaon during this period, particularly those engaged in the real estate and business services sectors as well as in garment exports. In 2005, Gurgaon had the largest concentration of large firms in ‘real estate, renting and business services’ in Haryana. While Faridabad had nearly 18 per cent more EHWs (rural and urban combined) for this industry than Gurgaon, Gurgaon had eight establishments with 200–499 people working compared to five in Faridabad and 14 establishments with 100–199 people working compared to Faridabad’s four. As outlined thus far, Faridabad and Gurgaon accounted for the largest share of waged employment in Haryana in 2005. Faridabad represented 22 per cent of total employment in the state’s EHWs, while Gurgaon accounted for 10 per cent of the total. Together, these two districts accounted for about a third of all waged employment. They also accounted for the lion’s share of the change in employment in EHWs between 1998 and 2005. Manufacturing employment was particularly concentrated in Faridabad in 2005, which accounted for over 34 per cent of employment in manufacturing EHWs. This was followed by the district of Panipat (11 per cent), Yamunanagar (10 per cent) and Gurgaon (10 per cent). Faridabad accounted for nearly 12 per cent of all employment in EHWs in the state. This concentration of manufacturing jobs reflects a geographical division of labour between Faridabad and Gurgaon. Faridabad represented the largest share of manufacturing employment in the state, while Gurgaon represented the largest share of employment in large service sector firms. Faridabad’s place as the centre of Haryana’s manufacturing industries may also be connected to its leading role in retail trade. In 2005 it accounted for 11 per cent of the state’s employment in retail trade OAEs and nearly 16 per cent of employment in retail trade EHWs. This mix of economic activities seems to reflect a large and dynamic division of labour within Faridabad itself, incorporating households and small workshops coexisting with the city’s large manufacturing industries and their workers. So far, emphasis has been placed upon the importance of manufacturing to waged employment in Haryana and its geographical concentration in Faridabad. It is, therefore, interesting that employment in manufacturing OAEs grew much

New Delhi   123 more quickly between 1998 and 2005 than in manufacturing EHWs. Employment in manufacturing OAEs grew by 14 per cent in this period, compared to 3 per cent for EHWs. Hired employment in manufacturing grew by only 0.6 per cent. The evidence for manufacturing employment as a whole suggests a mixed growth performance. Although employment in manufacturing OAEs grew during this period, district-wise data shows a diverse result that included a 17 per cent fall in Faridabad. It appears that the decline in employment in manufacturing OAEs in Faridabad was not mitigated by a significant rise in waged employment in manufacturing firms. There were only 367 extra positions recorded for manufacturing EHWs in Faridabad in 2005, compared to 1998: a rise of 0.4 per cent. During the same period, 5,521 fewer positions were recorded in Gurgaon. In contrast, the EC recorded significant growth of employment in manufacturing EHWs in the districts of Jhajjar (7,528 jobs) and Yamunanagar (5,953 jobs). Combined with negligible employment growth in Faridabad and a decline in Gurgaon, the growth of employment in these districts implies that some geographical redistribution of manufacturing employment occurred in the state. According to its District Administration, the town of Jhajjar in southern Haryana has experienced significant industrial growth in recent years. It claimed over 1,500 ‘small scale’ industrial units and 37 ‘large and medium’ units, including firms engaged in the manufacture of ceramics, glass, textiles, footwear, steel, food products and chemicals (District Administration of Jhajjar, 2009). Overall, there was low employment growth in manufacturing EHWs compared to growth in other major economic activities. Manufacturing contributed less to total employment growth between 1998 and 2005 than retail trade, finance and insurance and wholesale trade. In Faridabad, manufacturing was the lowest contributor to employment growth during this same period, growing by just 0.4 per cent. In Gurgaon, there was a 16 per cent fall in manufacturing employment. Interestingly, manufacturing firms are more likely to be regulated under the Factories Act 1948 than other industries. This may be significant in the context of this structural change. A falling manufacturing share of employment is consistent with the claim that a greater share of the labour force has fallen outside the regulatory scope of the organised sector. For example, 1.7 per cent of all urban activities (including some agricultural activities counted under the EC) were registered under the Factories Act in 2005, while nearly 76 per cent of all urban activities were not registered under any statute. In comparison, activities covered by this legislation accounted for 4.3 per cent of manufacturing activities. This percentage was lower for other activities in 2005, such as real estate (1 per cent), real estate and business services (1.1 per cent), as well as other community social and personal services (1 per cent). The evidence presented in this section demonstrates that most of Haryana’s urban workers were wage workers in 2005. Most of these workers were employed in manufacturing and the largest share of wage labour was concentrated in the industries of Faridabad and Gurgaon. Together, these two districts accounted for about a third of waged employment in the state in 2005. The EC suggests that significant numbers of people who worked as family labourers in

124   New Delhi households have been drawn into waged employment since the 1990s. While women were more likely to find employment in EHWs in 2005 rather than employment in OAEs, only one in 10 workers in EHWs were female. Additionally, the fact that men were more likely to be employed in OAEs points to the gendered division of labour at the household level, with men more likely to engage in the production of commodities and women more likely to focus on forms of labour that do not directly produce commodities, such child-rearing. While most wage workers were drawn into small-scale firms between 1998 and 2005, a significant proportion was drawn into large-scale industry. In 2005, nearly 40 per cent of workers were employed in EHWs with 10 or more workers. In Gurgaon, the concentration of workers in large-scale firms was particularly noticeable for business services. To some extent, this reflects a geographical division of labour between manufacturing employment concentrated in Faridabad and employment in large service sector firms concentrated in Gurgaon. Finally, given the importance of manufacturing to the state’s economy, it is significant that employment growth in manufacturing was very low between 1998 and 2005. Overall, there was a rise in employment in trade relative to manufacturing. Employment in manufacturing fell in Gurgaon and grew by a negligibly low figure in Faridabad. This reflects the services-intensive character of employment growth in the NCR. There was also a larger proportional rise in employment in manufacturing OAEs. This data hints at a growing role for homebased manufacturing. There also appeared to be a geographical redistribution of waged manufacturing employment to less industrialised districts such as Jhajjar and Yamunanagar. The first two sections of this chapter have outlined and analysed descriptive data, mainly from the EC, to explore changes to non-agricultural employment in the urban centres of New Delhi and Haryana. Like the previous two chapters, the time frame for this data corresponds roughly with the period of trade and investment liberalisation in the 1990s and 2000s, particularly between 1998 and 2005. This data tells us something about the relationship between economic growth, urban development and class formation during this period. However, questions remain about what the data represents. In the remainder of this chapter, the strengths and weaknesses of these findings are assessed. We begin by describing the key similarities and differences between urban areas in the NCT and Haryana. The degree to which these findings can be generalised to different urban areas is also discussed. First, we can conclude that the vast majority of workers in urban areas in the NCT and in Haryana rely on wage labour to survive. This is confirmed by EC data from 2005, as well as more recent NSS data. In 2005, nearly 90 per cent of all employment in the NCT was concentrated in EHWs. Nearly 34 per cent of all people employed in EHWs were employed in manufacturing establishments, followed by retail trade (21 per cent), community, social and personal services (17 per cent) and finance, insurance, real estate and business services (9 per cent). Between 1998 and 2005, all employment growth in the NCT was captured by EHWs. Employment in OAEs fell by 19 per cent, while employment in EHWs grew by 5 per cent. Employment in OAEs fell by

New Delhi   125 nearly 86,000 positions to just over 361,500 in 2005. The larger the number of people working in OAEs, the greater the percentage decline in employment. These findings are consistent with the proposition that greater numbers of people have been drawn out of non-waged positions into waged jobs as the region’s economy has grown. In Haryana, waged employment was similarly the dominant form of labour in 2005. Waged employment grew more quickly than employment in OAEs between 1998 and 2005. While the largest portion of employment in OAEs was engaged in retail trade activities, the largest portion of employment in EHWs was engaged in the manufacturing sector. Manufacturing accounted for over a third of all employment in EHWs in urban areas. Second, the EC data shows that non-waged positions in OAEs fell relative to waged positions in EHWs. In the NCT, they fell in absolute terms from 1998 until 2005. Evidence from Haryana demonstrates a rise in the number of people drawn into waged employment in EHWs alongside a rise in the importance of sole proprietors in OAEs over this time-series. While there is some evidence of increased opportunities for women in paid employment, there is little evidence of a significant increase in the number of women drawn out of unpaid positions in households into paid positions in non-household workplaces. EC data for Haryana produced an unanticipated finding: in 2005, women made up a larger share of total employment in EHWs than in OAEs. While the female share of employment in EHWs remained low (10 per cent), the data shows that men were far more likely to engage in the production of commodities within households than women. By itself, the EC data does not really help us to explain this phenomenon. Overall, a striking feature of employment in the NCT and Haryana is the low female share of employment in all types of enterprise. For both OAEs and EHWs, this share increased between 1998 and 2005. However, the rise was modest and originated from a very low starting point. Third, most of the increase in waged employment in the 1990s and early 2000s was concentrated in small establishments rather than large factories or offices. In fact, NCT experienced a decline in employment in EHWs employing 10 or more workers. Unfortunately, the available data in the NCT’s EC-1998 regarding the number of employees per establishment is considerably less detailed than the other three states (see Appendix for details). This means that it is not possible to capture the change for every size category found in EC-2005. Nevertheless, a trend towards small-scale production could be identified in this time-series. Furthermore, changes to employment in EHWs over this period were marked by a significant fall in manufacturing employment. There were nearly 196,000 fewer positions in ‘manufacturing, repairs of motor vehicles and motor cycles, personal and household goods’ in 2005 compared to 1998. During the same period, there was an increase of over 327,000 positions in retail trading establishments. These changes reflect structural change in the region’s economy. Although retail trade was already a significant contributor to hired employment in the NCT in 1998, there was a clear tendency away from manufacturing employment towards retail trade over the ensuing seven-year period. This is a significant change given the importance of manufacturing to employment in the region.

126   New Delhi The fall in manufacturing employment in the NCT between 1998 and 2005 appears to have been moderated by a rise in the number of manufacturing EHWs with fewer than 10 people working. There were 120 fewer manufacturing EHWs with 500 or more workers in 2005 compared to 1998. But the NCT also recorded an increase of 482 EHWs in the 100–199 category and 325 in the 200–499 category. This change may represent smaller firms increasing in size or, perhaps, larger firms reducing the size of their workforces. It may also represent large firms restructuring or concealing the size of their workforces. The 93 per cent fall in the number of manufacturing EHWs suggests that most of the NCT’s largest manufacturing factories either closed or significantly reduced their workforces between 1998 and 2005. These changes were mirrored in the overall concentration of employment in small-scale establishments. In 2005, nearly 32 per cent of total employment in EHWs was concentrated in establishments employing fewer than six people. Establishments employing fewer than 10 people accounted for nearly 52 per cent of the total. The data from urban areas in Haryana is more mixed than this. In this case, waged employment in large-scale industry has grown alongside work undertaken in small-scale production units. This experience seems much closer to trends identified in Bangalore (Chapter 4) than the NCT, which seems closer to trends in Greater Mumbai (Chapter 3). While small-scale production in Haryana accounted for the largest share of employment growth between 1998 and 2005, the growth of employment in large-scale industry was also significant. In 2005, 40 per cent of employment in EHWs was captured by establishments with 10 or more people. In comparison, over 50 per cent of employment was captured by establishments employing fewer than six people. While the number of establishments with one or two people usually working grew by just over 124 per cent between 1998 and 2005, the number employing 100 or more people grew by over 63 per cent. In the industrial district of Gurgaon, the corresponding figures were 248 and 180 per cent respectively. This statistical picture is consistent with the growth of large firms in the real estate, financial and business services sectors. Thus, government data allows us to construct a basic picture of structural economic changes in the NCR, of changes in the geographical location of industry in the region and also allows us to analyse the character of employment growth. In the NCT and the urban satellite cities of Faridabad and Gurgaon, there has been a shift in employment towards wage labour. Like other states studied in this book, most of this employment has concentrated in informal enterprises. Men continue to dominate wage labour in this region. However, there are some clear differences between the recent development of industry and employment in the NCT and its southern neighbours. Most significantly, large-scale industry in the NCT has declined, particularly in large manufacturing establishments in the organised sector. In contrast, organised sector employment has expanded in Faridabad and Gurgaon. Faridabad remains a regional stronghold for organised sector manufacturing and Gurgaon a centre for large-scale employment in the services sector, particularly in large call centres and white-collar offices, although organised sector manufacturing is also very strong there.

New Delhi   127 Interestingly, employment growth in the services sector significantly outpaced employment growth in manufacturing in the late 1990s and 2000s, reflecting an ongoing ‘services-intensive’ pattern of economic growth. Nevertheless, manufacturing firms continue to dominate employment, especially waged employment, in this urban region. But how do we explain this geographical divergence, with organised manufacturing gradually shifting to the outskirts of the NCR? What is the significance of growing employment in organised sector services? While most wage labour has concentrated in informal enterprises, like most urban regions in India, what should we make of rising wage labour in organised sector firms in Faridabad and Gurgaon during the neoliberal period? To address these questions, we must move beyond the descriptive data analysed so far in this chapter in look to alternative source material. The following two sections look, first, at the transformation of industry and employment in the NCT and, second, at the impact of changes in Faridabad and Gurgaon. As well as secondary sources on changes in the NCT and Haryana, the remainder of the chapter draws upon field research conducted by the author in the NCR between 2007 and 2014 (see Appendix for details).

Delhi: geography, gender and industry The government data considered above suggests that there has been some historical and geographical restructuring of industry within the New Delhi urban region. This section tries to assess this process in three ways. First, it offers an analysis of the geographical structure of industry and employment in New Delhi. Evidence of the geographical redistribution of industry from the centre of the NCT to its southern fringe is discussed, as is the relationship between these changes and the decline in manufacturing employment described in the most recent EC time-series. The relationship between geographical displacement and the emergence of regional growth poles in neighbouring Gurgaon and Faridabad is also analysed. Second, the role of women’s labour is discussed by drawing upon EC data that demonstrates a modest rise in the female share of employment from a comparatively low base. Analysis is offered of trends in female participation in paid work, with emphasis placed upon the importance of female labour to the structure of the region’s labour force. This analysis is partially offered as a critique of the EC data; to show how changes in the composition of employment in OAEs and EHWs have obscured real developments in the exploitation of female labour. Third, the process of informalisation is examined by looking at evidence of industrial restructuring. It is argued that this process has occurred in ways that have affected the balance between waged and non-waged forms of work, the role of informal enterprises and the composition of workforces in Delhi’s manufacturing industries. The implications of a recent decline in manufacturing employment are analysed, as well as the evidence of falling employment in the region’s largest manufacturing plants. First, there is evidence that changes to the geographical structure of industry in the Delhi urban region have interacted with changes to the composition of

128   New Delhi industrial labour forces. The EC data demonstrates that industrial employment in 2005 was more concentrated in the outer districts of the region than in the centre of the NCT. ‘New Delhi’ district had a comparatively low share of employment in the NCT. Furthermore, there was a comparatively large share of employment in EHWs employing between 200 and 499 people in the southern part of the region, bordering the urban growth poles of Gurgaon, Faridabad and Greater Noida. These areas have been important to the development of industry in the NCR. While time-series data on the geographical distribution of industry is not available, the distribution of EHWs in 2005 is consistent with other evidence of the relocation of industry from the New Delhi area to the fringe of the NCR, incorporating the growth of large-scale industry in IT-enabled services (ITES) and manufacturing plants in Gurgaon, Faridabad and Greater Noida. One explanation for the ongoing geographical displacement of industry and labour can be found in the slum clearance policies of urban planners in New Delhi. Historically, there has been a tendency for informal enterprises based upon small-scale manufacturing and trade to cluster near large-scale industry. Informal enterprises have taken advantage of subcontracting arrangements and the physical proximity of markets. Home-based work has been an important feature of this informal industry. But these arrangements have been affected by the government’s slum clearance policies. Since the early 1990s, the Government of the NCT initiated slum clearances based upon notions of ‘public interest’, such as the creation of new public amenities or environmental protection. Judicial activism based upon environmental prerogatives like pollution in the Yamuna River, which runs through New Delhi’s east region, has played an important and controversial political role in this context. By 1998, about three million people lived in ‘squatter settlements’ potentially affected by these changes. These residents represented 27 per cent of the urban population residing on 6 per cent of the city’s land (Dupont, 2008). A further rationale for slum clearance was preparation for major public projects, such as the 2010 Commonwealth Games. As in Mumbai throughout the 1980s and 1990s, the accumulation of capital through land sales was a contributing factor in the determination of slum clearance policies: The economic rationale for the demolition of slums and their relocation in distant peripheral zones is that the value of the land occupied by the JJ [jhuggi jhopri] clusters in the city is much higher than that in the relocation sites. (Ibid.: 81) Environmental prerogatives for slum clearance have been linked to the relocation of industry. In 1996 the Supreme Court of India ordered the closure and relocation of ‘hazardous industries’ and ‘non-conforming industrial units’ in Delhi. It has been claimed that this decision led to the displacement and sudden unemployment of about two million people in about 98,000 industrial units (ibid.). Follow-up orders were issued in 2000 and again in 2001. These judicial

New Delhi   129 interventions probably played an important role in the substantial decline in manufacturing employment in Delhi recorded in the EC data between 1998 and 2005. Tens of thousands of people were affected by these changes, with many leaving the city and returning to their villages in rural areas as a consequence. One political study of these changes concluded that they reflected the different urban interests of environmental and judicial activism, urban planning and industrial capital: It cannot entirely be a coincidence that of the 168 ‘polluting’ industries closed down in the first round in Delhi [after 1996], many large factories were ‘sunset’ industries, the owners of which were looking for an opportunity to divert their capital to less risky and more lucrative ventures. They had been held back by labour laws that would have required them to pay out large amounts to workers in back wages, compensation, and so on. In addition, they occupied lands given to them at a subsidy by the government; from which, after the court order, they stood to make huge profits, by selling at market rates. The Supreme Court orders came at the right time as far as these were concerned. (Menon and Nigam, 2007: 77) Whether or not this claim is true, these courts orders accelerated the relocation and geographical restructuring of some industries. Furthermore, they provided an opportunity to accumulate financial capital by realising growing land values. The effect of these changes on livelihoods and residential space in many communities was dramatic. Perhaps 25,000 jhuggies (slums dwellings) were destroyed between 1990 and 1999. In 2000–01, 15,000 slum dwellings housing about 75,000 people were dismantled. A Supreme Court order in February 2000 ordered the Government of the NCT to remove unauthorised colonies that housed an estimated 350,000 people. Some local press reports in early 2003 claimed that 50,000 out of the city’s 600,000 jhuggies had been dismantled. Between January and May 2004, the ‘Yamuna Pushta’, a slum along the banks of the Yamuna River, was demolished, leading to the forced eviction of about 90,000 people (Padhi, 2007). Many people employed in this area worked as informal wage workers in wholesale markets near Old Delhi or in the east of the city. There were also large numbers of informal workers employed as waste collectors and traders, as roadside traders or as construction workers. Such policies have contributed to unemployment and, for those resettled, the problem of commuting long distances to pursue their livelihoods. Loss of income and increased travel time has been a significant problem for people affected by slum clearances and evictions. For home-based workers in Delhi, the resettlement of slum colonies has moved workers further to the urban periphery. It is doubtful whether the growth of industry in the ‘south’ and ‘southwest’ districts of the NCT, bordering Gurgaon and Faridabad or in the southeast border Greater Noida, has compensated for this displacement. These large-scale industries are not really capable of providing secure employment to the majority of

130   New Delhi informal workers affected by geographical and industrial restructuring in Delhi. Like Bangalore, the call centres and financial institutions of Gurgaon or Greater Noida generate very little direct employment for the urban poor (see Chapter 4). As we shall see below, displaced workers in Delhi have been more likely to find employment, along with thousands of migrant workers from different regions of India, as unskilled labourers in low-waged industries, such as garments, electronic parts and automotive components. EC data suggests that most new jobs have been created in informal enterprises. This data also illustrated a change in the industrial division of labour, with 196,000 fewer manufacturing positions in 2005 than in 1998 and 327,000 more positions in retail trade in this period. This reflects a concurrent shift towards waged employment in informal enterprises engaged in a variety of trading activities. This data is consistent with claims about the displacement of manufacturing employment across the NCT, as well as the central role of informal enterprises in providing livelihoods to people in Delhi. One cannot fully grasp these changes without analysing changes to the employment of women in the region. In her study of female workers in garments exports, electronics, home-based manufacturing and ITES, Mazumdar (2007) emphasised the high barriers to employment confronting women in the Delhi urban region. While organised sector employment growth in the 1960s and 1970s did not draw large numbers of women into industrial employment, sectors such as education, banking and white-collar clerical jobs in the public sector created employment for a relatively narrow stratum of educated, higher-caste women. This provides one explanation for the high regular wages of female workers in Delhi today relative to other states (see discussion in Chapter 4). But the informalisation of employment in the organised sector since the 1980s has undermined this modest increase in workforce participation, so that women have become marginal to paid work: ‘The broad consensus among practically all women’s groups in India is that more and more women are in need of employment or paid work’ (ibid.: 35). As indicated in previous sections, the female share of employment has continued to be remarkably low in comparison to southern Indian states with their higher levels of education and ‘relatively less seclusive traditions’ (ibid.: 87). There is also evidence that comparatively low female labour force participation in Delhi is explained by the gradually evolving structure of industry and labour markets in the region. In order to grasp this link, we need to begin by looking at the impact of migration on the city. Like Greater Mumbai, the historical structure of Delhi’s labour force has been shaped by migration, which was a constant feature of the region’s urban development throughout the twentieth century. The proportion of migrants living in the city rose from around 50 per cent in 1951 to 80 per cent in 1991 (ibid.: 314). The emergence of New Delhi as an administrative centre during and after the colonial period meant that its local industry was concentrated in the unorganised sector. This is because employment growth in the public sector, such as state administration, stimulated demand for manufactured goods and retail services. These were provided by a mass of

New Delhi   131 small-scale industries, drawing on a large surplus of migrant workers. Employment in informal enterprises proliferated in Delhi as its urban market expanded. Migration was generally characterised by male workers searching for work in small-scale industry. Those men who brought their families with them transplanted the patriarchal traditions of Indian villages into an urban environment. The event with the greatest single influence on the evolution of this maledominated labour market was the partition of India in 1947. It has been estimated that over 10 per cent of the 4.75 million refugees who entered India after partition settled in Delhi. Remarkably, most of this migration occurred during a few months in 1947, irreversibly transforming the city’s political and economic landscape (Datta, 1986: 287).10 Delhi became a destination for many thousands of refugees, particularly from Punjab. The city’s population grew enormously within a few months following partition. Most refugees settled in slums and refugee camps spread throughout the city or in the evacuated homes of Muslim residents. According to Datta (1986), many of these people were compelled to take up employment as petty traders, hawkers, repairmen or manufacturers in the unorganised sector. By the early 1950s, the urban economy had recovered to become a hub of small-scale manufacturing and trade. Reflecting this industrial structure, local authorities and city planners believed that Delhi should be composed of a large centralised state bureaucracy surrounded by a mass of small-scale manufacturing enterprises. This plan was envisaged to provide jobs and incomes for the majority of its residents. In the 1960s, new industrial estates were established for this purpose. One of the most important was the Okhla Industrial Estate, established to provide work for first and second generation refugees in South Delhi. By 1969, Okhla accounted for about 115,000 jobs. A minority of producers eventually became major manufacturers, establishing factory production to the south of the city in steel, pharmaceuticals, refrigerators and textiles (ibid.). By the late 1960s, the encouragement of industry in the outer districts of Delhi was part of a strategy by the Delhi Development Authority (DDA) to discourage large-scale and heavy industries near the city centre. Thus, the recent trend of expanding informal enterprises and relatively low female participation in paid work is part of a historical process embedded in the industrial and geographical structure of the region. Long before the period of economic liberalisation began in the 1980s, informal enterprises clustered around public sector units and administrative institutions, staffed by a large workforce of migrants and labourers from refugee families. More recently, informal enterprises have clustered around new locations of industrial production in the periurban areas of the NCR, just as they previously clustered around traditional industrial areas in Delhi itself. This change has been driven, in part, by the relocation of industry and by the clearance of slums. Government data discussed above suggests that the expansion of the informal economy has coincided with the recent concentration of male waged workers in small-scale manufacturing and trading enterprises. More and more workers have found themselves employed in informal enterprises since the 1990s.

132   New Delhi For some orthodox economists, the expansion of employment in these informal enterprises represents a rise in living standards. Some World Banklinked reports have concluded that rural migrant workers have been able to draw upon social networks to find higher-wage employment in informal enterprises (Gupta and Mitra, 2002; Mitra, 2006). The concentration of employment in informal enterprises is here presented as a necessary base for migrant workers to increase household incomes and reduce poverty. But there has been research conducted that challenges these claims (Kumar and Aggarwal, 2003). One study concluded that Delhi’s migrant workers were compelled to search for work by ‘distress’ rather than choice (Singh, 2002). It found a relationship between the landlessness or marginal land ownership of rural migrant workers and their concentration in Delhi’s ‘job squares’ (or ‘labour chowks’) where they plied for casual work on a daily basis among vendors and labour contractors. Many workers from cultivating castes have, in fact, preferred to seek precarious and seasonal non-agricultural employment in Delhi rather than work as agricultural labourers in their home districts (ibid.). This conclusion is rather similar to ­Breman’s findings about workers from cultivator castes seeking employment in South Gujarat’s labour gangs (Breman, 1993). There is also evidence that informalisation has incorporated structural change within the formal economy as well as the expansion of employment in informal enterprises. It is noteworthy, therefore, that the EC recorded a decline in employment in Delhi’s largest manufacturing plants between 1998 and 2005. While there is little doubt that part of this decline has coincided with a rise in employment in informal enterprises, the EC does not reveal the possibility that industrialists have misreported the real number of workers in their employment, or have restructured their workforces, in order to avoid obligations under labour laws. It seems likely that that Delhi, like Mumbai, has experienced a combination of factory closures, workforce attrition and labour force restructuring since the 1990s (see Chapter 3). For instance, it has been argued that the expulsion of male workers from factory employment in the organised sector has driven workers into home-based work, further squeezing out employment opportunities for women. Rani and Unni (2009) found that the growth of home-based work in India was dominated by male labour during the 1990s and early 2000s, as factories closed or shed workers, particularly in manufacturing facilities forced to compete with imports during the period of trade liberalisation. While not specific to Delhi, this evidence is consistent with Mazumdar’s argument that the informalisation of Delhi’s labour markets has undermined the workforce participation of women. The EC similarly demonstrates that the recent rise in waged employment has been dominated by men. The fact that most of these workers were drawn into small-scale establishments lends weight to Rani and Unni’s claims about the replacement of male factory workers with male home-based workers. Within households, the boundaries between domestic and commercial labour, household and workplace and private and public are blurred by the intersection of living and work spaces. Rising home-based work has intersected with the growth in firms subcontracting to home-based workers in order

New Delhi   133 to lower costs associated with overheads, supervision, inputs to the production process, social security and monitoring of the labour process. Half of the 150 female home workers surveyed by Mazumdar lived in jhuggi bastis, which tended to cluster around industrial centres that allowed ‘for closer links with the larger production and marketing institutions’ (Mazumdar, 2007: 189). These women produced a range of goods, including textiles, chemical products, paper and leather goods. Forty-six per cent were producing goods and services for factories in Delhi, 30 per cent were linked by contractors to traders in wholesale markets and 20 per cent were linked to local retail markets through shopkeepers, local tradesmen or by their own account (ibid.: 199–200). This evidence is quite similar to data recorded by the NCEUS, which shows how most home-based workers reply upon networks of vendors and employers in manufacturing supply chains (see Chapter 2). EC data for the NCR is mixed on this front: it shows that most OAEs operate in retail trade and tend to be dominated by sole proprietors or own-account workers with perhaps one or two unpaid helpers. In the NCT, there was a decline in employment in manufacturing OAEs between 1998 and 2005. However, in Faridabad and Gurgaon, the EC records a shift towards employment in manufacturing OAEs. Activity among informal enterprises has expanded in the wake of the large manufacturing firms that thrive in these satellite cities. Much of this, it seems, is represented by ownaccount workers based in households, whose incomes and livelihoods depend upon supply chains sustained by demand from large firms. As India’s economy has undergone a process of trade and investment liberalisation since the 1980s, much of this home-based work has been linked into global value chains. In the NCR, perhaps the most important example of this has been the export garment sector. In her comprehensive study of export garments in India, Mezzadri (2008) argues that the export garment factories in the Delhi urban region, which specialise in ladies’ wear, rely upon the ‘non-factory realm’. Making ladies’ wear requires a separate task of embroidery, or what exporters call ‘embellishment’. Adda embroidery is skilled, intricate work that is performed either by low-caste child labourers in Delhi or, more commonly, by home-based workers in rural Uttar Pradesh who work on contract with factories in the NCR. Moti embroidery (attaching glass beads to garments) is mainly undertaken by homebased female workers within the NCR, using materials supplied by small workshop owners who rely on export contracts (ibid.). Much of this work undertaken by women and their families is hidden from official statistics. In fact, there is strong evidence that the productive role of women in homebased work has been systematically concealed in government data. A 2006 survey of 447 households in Delhi found a significantly higher proportion of women in work than recorded in NSSO data (Sudarshan and Bhattacharya, 2009). It found that female workers were overwhelmingly employed in homebased enterprises. In 2007–08, the NSS recorded a female labour force participation rate of only 7.3 per cent in Delhi. This has risen significantly to 15.6 per cent in 2011–12.11 But this survey found a much higher rate of 24 per cent in 2006. Marital status was a very important factor in this result. For women aged

134   New Delhi 21–24 the figure was 34 per cent and, for unmarried women aged 18–60, 43 per cent. This research shows that female labour force participation is conditioned by a culturally-embedded process in which economic advantages from increasing household income through paid employment are balanced against expectations about women’s traditional domestic role. Over half of all women in this study reported that work ‘interfered’ with household duties, especially childcare, and nearly a third of the women who had withdrawn from the workforce cited household duties as the main reason (ibid.). Importantly, these researchers relied upon women responding themselves – not men responding on their behalf – and trained field workers to use ‘extensive probing’: During the survey, investigators reported a few cases in which immense probing was required to discover the nature of women’s work and earning status. The problems surrounding the perception of work appeared significant in areas, where women did not consider their unpaid assistance in family run shops or businesses as work. (Ibid.: 62) This research, thus, demonstrates how female labour force participation is also a process negotiated by women and men; it is strongly influenced by notions of ‘duty’ and ‘work’, and deeply-held assumptions about the boundaries that separate these concepts. Training field workers to ‘probe’ for this kind of information is not easy and, while government survey data gives us a reasonably comprehensive view of industry and employment patterns, this research suggests that female participation is systematically under-counted. This includes unpaid work in family-run, informal enterprises, piece-rated work undertaken in the family home (or an employers’ home) or a combination of these arrangements. The trends measured by the EC or the NSSO only reveal limited information about these processes. However, this data does demonstrate that female labour force participation, and the female share of total employment, has increased in recent years. A growing minority has been drawn into factory production in Delhi. Based on a survey of 150 female garment workers, Mazumdar (2007) estimated that nearly a third of workers in Delhi garments factories were women. In large factories with over 1,000 workers, the proportion of women was 45 per cent (ibid.: 99). She argued that these factories were shifting a minority of young women from piece-rate wages in households to timebased wages in factories. While most female workers remain employed in households and other informal enterprises, this evidence suggests a growing trend that partially reflects the Bangalore experience: employers in the garment industry taking advantage of surpluses of young women who can be employed on low wages (see Chapter 4). Mazumdar (ibid.: 92) argues that the growing employment of women as casual labourers in Delhi garment factories has enabled employers to lower wages and under-cut the employment conditions of regular workers. These changes to female employment in Delhi suggest that a contradictory process is underway among the waged labour force. On the one hand, growing

New Delhi   135 female employment in factories with time-based wages seems to hold the promise of greater economic security and opens new vistas of participation for a minority of women. On the other hand, it seems to reflect a strategy by employers in factories, large and small, to lower wage costs in labour-intensive, often export-led manufacturing. This also reflects the multi-faceted character of informalisation in this region. Informalisation has overwhelmingly concentrated wage labour in informal enterprises. Organised sector employment in Delhi in the 1990s and early 2000s was relatively stagnant, particularly in manufacturing. Of the minority of workers drawn into waged employment in large-scale enterprise, much of the evidence, particularly for female workers in garment factories, suggests that this has been undertaken to lower labour costs. Most of these workers seem to be casual workers: their employment is, in other words, another manifestation of informal employment. As the following section demonstrates, the informalisation of factory labour has been a more striking feature of employment trends in Faridabad and Gurgaon, where much of Delhi’s industry has been shifted during the neoliberal era.

Wage labour in formal and informal enterprises: Faridabad and Gurgaon compared Large-scale industry has massively expanded in Faridabad and Gurgaon since the 1980s. The importance of manufacturing and the growth in organised sector employment is recorded in EC data for both of these satellite cities. What this official data does not, and cannot, record are the changes to the composition of workforces within these firms. In this section, we look at the growth of organised sector firms and focus upon evidence of the restructuring and informalisation of factory labour forces. In Faridabad and Gurgaon, the informalisation of organised sector employment has accompanied the expansion of wage labour in informal enterprises. Unlike Greater Mumbai or Bangalore, there are few historical accounts of urban development and class formation in these urban centres. For example, there are no scholarly works that can match the historical detail provided by Van Wersch’s or D’Monte’s accounts of labour in Mumbai. However, there is substantial evidence on the informalisation of labour gathered by scholars and, in particular, labour activists in this industrial region. As this section demonstrates, these observers have recorded the transformation of the southern fringe of the NCR into a regional stronghold of manufacturing and services industries. Both Gurgaon and Faridabad have become bases for many foreign and domestic transnational corporations. Today, about half of the income tax collected in the state of Haryana is generated in these two urban districts (Debroy and Bhandari, 2009: 7). This section proceeds, first, by outlining the emergence of factory production in this region and, second, by looking at the evidence of economic restructuring and informalisation implied in some of the government data outlined above. Industrial development in Haryana serves as an important illustration of contemporary uneven and combined development. Until 1966, Haryana was part of

136   New Delhi the state of Punjab and, like Punjab, developed as a relatively affluent state dominated by commercial farmers with medium-sized landholdings. While urbanisation is higher than the national average, the Census of India shows that nearly two-thirds of the population still resided in rural areas in 2011. Many of the workers in Faridabad and Gurgaon retain social and economic ties to cultivation through family land ownership. The region’s development has also been profoundly shaped by trade and investment liberalisation since the 1980s. Haryana has become the base for many large transnational corporations in manufacturing, finance and the service sector, including the ‘business process offshoring’ call centres that cluster in the Gurgaon area (ibid.; Government of Haryana, 2009). Thousands of workers have found employment in these organised sector firms and many more have found employment in the small, often informal enterprises that have grown around them. Like Greater Bangalore, the shift to wage labour in this region has occurred in both formal and informal enterprises. A huge variety of large firms have emerged in Gurgaon and Faridabad. Alongside some state-owned firms like Hindustan Machine Tools and privately-owned domestic giants like Bharti Airtel, one finds foreign manufacturers in electronics, like Sony, and consumer durables, like Whirlpool. By the late 2000s, the Government of Haryana claimed that about half of India’s cars, half of its motorcycles, a third of its fridges and a quarter of its tractors and bicycles were manufactured in the state (ibid.). As the EC confirms, the largest share of the state’s manufacturing industry is found in Faridabad. Faridabad and Gurgaon are also home to large garment exporters, as well as fertiliser and chemical manufacturers. The state has played a facilitative role in this industrialisation process. The state government’s industrial policies in the 1990s synchronised with the economic liberalisation policies pursued at a national level, including efforts to attract Foreign Direct Investment (FDI). By the late 1990s, the Government of Haryana was providing incentives for privately-run infrastructure initiatives, organised through the state-run Haryana State Industrial and Infrastructure Development Corporation (HSIIDC). HSIIDC aimed to ‘re-establish industry as a key driver of economic growth. . . . To generate employment and entrepreneurial opportunities across all sectors of the economy [and to] develop economic hubs through infrastructural initiatives’ (Government of Haryana, 2005: 2). The government planned to achieve high rates of growth by encouraging the development of the export industry, channelling investment into infrastructure such as roads, electricity generation and telecommunications (Government of Haryana, 2006). The largest infrastructure projects involved the building of national highway and arterial road connections linking major industrial centres. The IT and ITES industries in Gurgaon were also to be connected to manufacturing firms in Faridabad and other firms across the southern fringe of the NCR. IT and ITES were initially linked to the demands of the state, organised through the state-owned Haryana State Electronics Development Corporation (HARTRON), established in 1983. The absence of a ‘municipal corporation’ in Gurgaon until 2008 meant that HARTRON was able to negotiate directly with private firms and investors without having to involve local government institutions

New Delhi   137 (Debroy and Bhandari, 2009). State-guided infrastructure investment contributed to Gurgaon’s emergence as a base for FDI in the services sector (Government of Haryana, 2007). The first significant off-shore services operation in Gurgaon was GE Capital’s 1996 investment which, in 2005, was changed into an independent company, Genpact. Gurgaon is also the base for several other foreign transnational corporations in IT and electronics, such as IBM, Siemens and Alcatel. Importantly, there are also large locally-owned ITES and business services firms like Tata Consultancy Services (TCS), Wipro, HCL and Daksh. Several giant global IT and financial services providers have off-shored call centre work to Gurgaon as well as Okhla in South Delhi or Greater Noida in Uttar Pradesh, including Microsoft, American Express, Dell, Citibank, Deutsche Bank and Hewlett Packard. Land acquisition has been a crucial part of this process, including the promotion of the state’s Special Economic Zone (SEZ) policy. The Haryana government has approved the construction of ‘industrial model townships’ that include ‘campuses for large industries, ICT parks, industrial plots, flatted factories, residential colonies, labour housing, commercial and institutional areas, entertainment zones, educational and health care facilities, etc’ (Government of Haryana, 2005: 4). The town of Manesar in Gurgaon district is a key example of this ­policy’s impact. Manesar, centred on the automotive industry and managed by the HSIIDC, has been envisaged by government as a model for other industrial sites. By 2006, the state government had requested that 26 industrial sites be similarly given SEZ status by the Government of India, following the passing of the SEZ Act 2005 (Government of Haryana, 2006). By mid-2008, Haryana held 38 out of India’s 462 SEZs, over 8 per cent of the national total (Banerjee-Guha, 2008). National legislation specifies that SEZs are designed to attract FDI, to generate factory employment in manufacturing and services, to develop infrastructure with public oversight of private investment, to increase the competitiveness of Indian firms and even to control the speed of rural-to-urban migration: ‘In short, they are the officially acclaimed carriers of India’s modern industrialisation that would create an all-round transformation and lead the country towards a modern mode of living’ (ibid.: 54). Aid and incentives designed to facilitate SEZs include duty free zones and havens from income, sales and service taxes; tax exemptions of up to 100 per cent for the first five years of an initial investment and 50 per cent for the subsequent five years; removal of restrictions on subcontracting; freedom from environmental impact assessment laws; exemption from import license rules; and priority status for infrastructure construction and delivery. In addition to these measures, the Government of Haryana has prioritised land acquisition for SEZ-based projects, providing large tracts of land to industry free of charge or at below-market rates (Government of Haryana, 2009a). Through this process, Gurgaon has become well known as a centre of real estate development, finance and retail consumerism. It is home to several large retail shopping malls and to two domestic airlines, IndiGo and SpiceJet. While the EC recorded the largest share of Haryana’s manufacturing employment in Faridabad in 2005, several global manufacturers have also established major facilities in Gurgaon. This includes electronics producers like Motorola as

138   New Delhi well as pharmaceuticals, and rubber and plastic components manufacturers. Export garment factories also play an important role in providing employment. The automotive industry provides an excellent illustration of how collaboration between state institutions, domestic producers and large foreign transnational corporations has transformed the regional economy. Automotive components manufacturers flourish in Faridabad and along the Delhi–Jaipur Highway that runs through Gurgaon district. This ‘Gurgaon–Manesar belt’ is one of the three main automobile-producing regions in the country.12 Many of these firms operate within a global production network dominated by Japanese corporations, Maruti Suzuki and Honda, as well as the domestic two-wheeler firm, Hero Motorcorp. Maruti Suzuki is the largest passenger car producer in India. Since 1982, it has operated a large factory in Gurgaon and, since 2007, a second factory in Manesar. Honda Motorcycle and Scooter (HMSI) has a major factory in Manesar, established in 2001. In addition, Hero Motorcorp produces two-wheelers at a factory in the town of Dharuhera, south of Gurgaon, and Honda Cars operates in Greater Noida in Uttar Pradesh. Until the 1980s, cars were regarded as a rare luxury in India and the industry’s rapid growth since then is as sign of the rise of domestic consumerism as well as industrial development.13 Since the 1990s, most major global automotive manufacturers have established operations in India, with total production increasing by nearly five times between 1991 and 2006 (Government of India, 2006). Average annual growth in passenger car and commercial vehicle production was 14.6 per cent from 2000 until 2011, enabling India to become the world’s sixth largest producer and, after China, the second-fastest major producer in the world (OICA, 2012). Economic liberalisation reforms in 1991 removed licensing for auto production, although many import restrictions remained until the 2000s. In the last 15 years, many quantitative import restrictions have been removed and 100 per cent foreign ownership of production has been allowed. A 1982 agreement between Maruti Udyog and Suzuki challenged Hindustan Motors’ ‘quasi-monopoly’ in passenger cars (Richet and Ruet, 2008: 449). The state played a crucial role in this operation by taking a controlling interest in the joint venture. Also, Honda established a joint venture with Hero in 1984, taking advantage of Hero’s national network of bicycle distributors accumulated from its base in Punjab since the 1950s. From Dharuhera, the joint venture established a dominant position in the two-wheeler market. By 2001, Hero Honda claimed that its facility in Manesar was the largest manufacturer of two-wheel vehicles in the world and represented about half of the domestic Indian market for motorcycles (Government of Haryana, 2009). Since the early 2000s, Manesar has become an important area for automobile production. Several major firms (such as Munjal Showa, Motherson, Bosch, Rico, Denso, Johnson Mathey and Napino Auto) have located factories there to supply parts and components to Hero Honda and Maruti Suzuki. Maruti Suzuki demonstrates how state institutions and transnational corporations have collaborated and, in the process, contributed to sustained industrial development in the region. The evolution of Maruti Suzuki in fact emerged from the failure to successfully develop the local

New Delhi   139 p­ assenger car industry by relying on import substitution. Maruti Limited was licensed in 1971 as a private enterprise to produce a low-cost ‘people’s car’. Spearheaded by Indira Gandhi’s son, Sanjay, Maruti Limited benefited from tax breaks and subsidies. It was given 330 acres of land at Gurgaon provided by the Government of Haryana. However, the company failed to move beyond prototype development and ceased production by 1977. In 1981, the company was nationalised and transformed into Maruti Udyog Ltd (Becker-Ritterspach, 2007). Suzuki’s foray into India provided an opportunity to revive this stalled venture. Suzuki saw India as an opportunity to import Complete Knock-Down kits (CKDs) for final assembly with low-cost labour and to sell to a nascent domestic market without having to risk major investments in capital and technology (D’Costa, 1995). For the state, Suzuki’s interest provided an opportunity to revive India’s flagging automotive sector (Becker-Ritterspach, 2007: 6). Once Suzuki expressed interest, the government moved quickly to protect it from foreign competition. It blocked Honda’s proposed joint venture with Telco (now Tata Motors) to produce passenger cars and Maruti Udyog was soon able to establish a dominant position in the passenger car market. Maruti Udyog’s rise to dominance in the passenger car industry transformed the automotive industry across the NCR. It adopted the Japanese practice of subcontracting to supplier firms. By the mid-1990s, approximately half of Maruti Udyog’s top 106 suppliers were located within 80 km of the Gurgaon assembly plant (Gulyani, 2001: 117–23). The state also placed some conditions on ­Suzuki’s involvement in India. While Suzuki wanted to assemble cars from imported CKDs, the government wanted to use the operation to develop linkages with the local automotive components industry. The government introduced a Phased Manufacturing Programme, with the highly ambitious aim of developing 95 per cent locally-produced content. This policy encouraged several foreign firms to set up component manufacturing operations in the area (Becker-Ritterspach, 2007: 9). But the state also encouraged Suzuki by offering a range of financial subsidies. HSIIDC provided land for Maruti Udyog at below-market rates and channelled investment into major road, electricity and telecommunications infrastructures (Government of Haryana 2006). The clustering of local industry contributed to Gurgaon’s emergence as a regional stronghold of industry. The character of the Maruti Udyog joint venture evolved throughout the 1980s and 1990s, with Suzuki gradually tightening its grip over ownership and management in Gurgaon. The joint venture continued to be shielded from international competition until the mid-1990s, when the government allowed the entry of several foreign competitors (Ishigami, 2004). In 1993, the government allowed automatic approval for all foreign investment in joint ventures of up to 51 per cent ownership. This change was followed by joint ventures between Daimler-Chrysler and Telco in 1994, Honda and Siel Limited in 1995, Ford and Mahindra and Mahindra in 1995, Fiat and Premier Automobiles in 1996 and GM and Hindustan Motors in 1999. In each case, the foreign partner gradually increased their equity stake. In 1996, Hyundai was allowed to establish a ‘greenfield’ site near Chennai. After 2000, the government allowed automatic approval

140   New Delhi for 100 per cent foreign ownership (Narayanan and Vashisht, 2008: 76). Increased competition – and deteriorating international economic conditions – contributed to falling after-tax profits for Maruti Udyog from 1997–98 until 2000–01, when it experienced its first annual loss (Becker-Ritterspach, 2007). These changes suggest that the joint venture model has gradually become less important to the Indian automotive sector. The domestic market has been flooded with corporations establishing 100 per cent foreign-owned operations. Recently, Hero Honda split into two firms following a dispute between Honda and Hero, which is operated by the Munjal family. In August 2010, Honda transformed Honda Siel into a full subsidiary, known as Honda Cars. The transition from an industry structure dominated by two joint venture operations to a more competitive structure dominated by foreign corporations has been accompanied by important changes in labour relations. Employers have steadily increased the proportion of casual and temporary workers on their books as they have sought to lower costs. There is evidence, outlined below, that employers in the large automotive assembly and components plants have systematically replaced ­permanently-employed or ‘regular’ employees with casual or temporary workers and, especially, workers hired through labour contractors. There is a further link between these changes in workforce composition and a reported rise in industrial conflict. Most recently, there was violence at Maruti Suzuki’s Manesar plant, including the death of a manager in July 2012 and mass retrenchments in August 2012. Prior to this, there were lockouts and factory occupations at the Manesar plant in June and October 2011. There have also been industrial conflicts in other firms. For example, there was a major strike at Hero Honda plant (now HMSI) in Manesar in 2005, as well as several other conflicts involving automotive component factories over the course of the 2000s. The actions of these workers influenced industrial action at several other firms in the area, including Munjal Showa, Suzuki Powertrain and Satyam Auto (GWN, 2011). Maruti Suzuki management in Gurgaon played a pioneering role in this informalisation of industrial labour. In the 1980s and 1990s, the firm gradually implemented Japanese work organisation and culture, such as ‘team work’, job rotation and ‘continuous improvement’ (Ishigami, 2004: 4–5; Becker-Ritterspach, 2007: 8–9). The introduction of productivity-based pay incentives in 1988 helped to facilitate these changes. But management responded to increased competition in the late 1900s, and squeezed profits, by making major changes to workers’ pay and conditions. From 1998, it began to push for a restructuring of the incentive pay scheme, as well as changes to pensions and promotions (Becker-Ritterspach, 2007: 13). By the late 1990s, the Maruti Udyog Employees Union (MUEU) complained that workers’ share of income was falling even as the Gurgaon plant continued to aggressively expand output. Industrial conflict between September 2000 and January 2001 ended with management defeating the MUEU and established a new company union, the Maruti Udyog Kamgar Union (MUKU). Having successfully implemented pay cuts for its workers and raised Suzuki’s equity share, management appeared on-track to successfully restructure its production facilities in

New Delhi   141 response to greater competition. After 2001, the company increasingly relied upon recruitment through labour contractors. Maruti Suzuki used Voluntary Retirement Schemes to reduce the size of its regular workforce from 5,770 in 2001 to 3,334 in March 2004 (Becker-Ritterspach, 2007: 40). By 2004, the firm employed fewer regular workers than it had in 1986. Labour activists reported that about 2,000 ­formerly-permanent positions were filled by temporary workers, each earning about a quarter of a regular worker’s salary (GWN, 2009). By 2004, the company began employing large numbers of workers hired through contractors. By 2007, the Gurgaon factory employed 1,800 ‘regular’ workers and 4,000 workers hired through at least 20 different labour contractors (FMS, 2011; Annavajhula and Pratap, 2012: 52). Using labour contractors represents a significant cost advantage as many of these workers are denied entitlements offered to regular workers, such as productivity and holiday bonuses, and a range of allowances, including attendance, dearness, rental, child education, transport and uniform cleaning. Recent studies have found that these labour practices have spread across the region (Annavajhula and Pratap, 2012). One sample of nine automotive components firms found that an average of 75 per cent of workers were hired through labour contractors, who earned approximately half of regular workers’ wages (Barnes et al., 2013). According to interviews with labour activists in 2011, Maruti’s Manesar plant employed 1,000 regular workers, 800 trainees, 400 apprentices working full-time as production workers and 1,200 workers hired through contractors. Regular workers earned ₹13,000–17,000 per month, compared to 1,200 workers hired by contractors earning about ₹6,500 (GWN, 2011).14 By 2009, HMSI in Manesar employed 1,872 regular workers and another 2,500 workers hired through contractors (GWN, 2009b). By April 2008, Hero Honda’s factory near Gurgaon (now Hero Motorcorp) reportedly employed 1,400 permanent workers, 1,500 casuals and 3,500 workers hired through five different contractors (GWN, 2009a). Regular workers earned between ₹30,000 and 40,000 per month. Casual workers earned between ₹5,000–6,000, while workers hired through contractors, some of whom had been employed there for many years, earned a basic wage of ₹2,800–4,800. Attempts by casual and contracted workers to unionise were met with a management lockout in October 2008 and the sacking of approximately 1,200 workers (GWN 2009b). HMSI has largely been unwilling to recognise unions and, like Hero Motorcorp, has initiated lockouts in response to unionisation drives, leading to a major protest movement in mid-2005 (Ahn, 2007: 9). In addition, there have been major strikes involving workers hired through contractors at Hero Honda in April–May 2006 and at automotive components firms such as Shivam Autotech, Rico Auto and Sunbeam Auto in September–October 2009 (GWN, 2007, 2007a, 2009, 2009b, Srivastava and Handique, 2009). Sunbeam Auto, a components manufacturer and part of the Hero Group of Industries, employed 650 regular workers, 2,500 casuals and around 600 trainees at its Gurgaon plant in 2009 (GWN, 2009b). Rico Auto employed 1,275 permanent workers and 1,675 contract workers (Handique, 2009). Campaigns for ongoing employment and union recognition have occurred at many other firms in the region during the 2000s

142   New Delhi (Ahn, 2007; Srivastava and Handique, 2009). The experience of labour relations in the automotive industry in Faridabad and Gurgaon shows how industrialists have attempted, often successfully, to reproduce an ‘informal environment’ within factory units (Sen and Dasgupta, 2008, 2009). The employment of workers hired by contractors, intermediaries and middlemen has long been widespread across India (see Chapter 2). This tradition has intersected with the process of rapid industrial development in the NCR. Industrialists have systematically divided and restructured their workforces to gain cost advantages, commonly surrounding a shrinking core of regular workers with a large mass of casuals, trainees and workers hired by multiple labour contractors. Most of these ‘informal workers’ seem to be hired as normal production-line workers. Government data suggests that 46.6 per cent of all workers in Haryana’s organised sector manufacturing firms were hired by labour contractors in 2010–11. This is significantly higher than the national average of 33.9 per cent.15 Reports of labour activists such as the Faridabad Mazdoor Samachar and Gurgaon Workers News (FMS, 2011; GWN 2014) and academic studies (Sen and Dasgupta, 2009; Annavajhula and Pratap, 2012; Barnes et al., 2013) indicate that these practices are repeated across many industries in the region, including garment manufacturing, chemicals, metal-working and automotive production. Like Greater Bangalore, the informalisation of organised sector labour has shaped the collective response of workers, with many lockouts by employers as well as short-lived, ‘wildcat’ strikes organised by workers without the involvement of formally-registered trade unions. Local labour laws make it extremely difficult for non-regular workers to join or register with trade unions (Shyam Sundar, 2012). In fact, there is evidence that the response of major trade unions has been problematic in dealing with the scale of informalisation in the region. While there are some exceptions, the main unions in the region focus on improving wages and conditions for regular workers or supporting campaigns to register plant-level unions with the Department of Labour. In cases where employers were prepared to recognise union rights for regular workers, concessions were commonly followed by a freeze on ‘regularisation’ (Barnes et al., 2013). One illustration of this problem is industrial action at Hero Honda in 2008. In April 2008, a request by a number of casuals and contract workers to join the regular workers’ union was refused. The following month, these workers went on strike after they were prevented from joining a ‘cultural program’ organised for regular workers and their families. The strike disrupted production at the factory and, following this strike, workers applied to register a new union (the Hero Honda Mazdoor Sangathan) in June, which initially attracted about 1,200 members. In October 2008, management implemented a lockout, leaving most of these workers without jobs. Most found new work or returned to their families’ villages. Throughout the process, the regular workers’ union cooperated with management and refused to support the non-regular workers (GWN, 2009b). This is not a universally-applicable story. The occupations and strikes at Maruti Suzuki in 2011–12 united large numbers of regular and contract workers.

New Delhi   143 There are other examples of this unity, such as a 2006 campaign at a Manesar auto parts supplier, Shivam Autotech, in which regular and contract workers occupied their plant for five days, successfully achieving a wage increase (GWN, 2007a). A further example is Napino Auto in Manesar, which supplies auto and electronic parts for Hero Honda and Maruti Suzuki. Workers here organised a joint campaign for improved conditions and equal pay for contract workers (Handique, 2009). Over the course of the late 2000s there was a rise in industrial conflict involving combinations of regular, casual and contract workers across the region (Bhattacharyya, 2009; Handique, 2009a). Nevertheless, the casual and contract workers who dominate organised sector manufacturing in the NCR face many barriers to achieving labour rights. Many of these workers are employed ‘off the books’, lacking insurance and pension protection. Many are paid below the Haryana minimum wage (Barnes et al., 2013). These workers are ‘in fact’ informal workers: they are entitled to the same rights and conditions as regular workers in the organised sector, but are denied these entitlements in practice. Despite numerous protections in labour laws, most do not have access to trade union representation. For example, the Contract Labour (Abolition and Regulation) Act 1970 is supposed to outlaw the employment of contract workers on a ‘continuous basis’ (for longer than 240 days) and only permits the employment of regular workers in ‘core’ business activities (Shyam Sundar, 2012). Yet the observations of scholars and labour activists in the NCR suggest that organised sector manufacturing relies upon the employment of contract workers and casuals as ongoing production-line workers. These findings add important detail to the analysis of changing employment patterns represented in official labour statistics. Analysis of the EC suggests that there has been a geographical shift in the centre of organised sector employment from the NCT to the outer fringe of the NCR, particularly to the industrial districts of Faridabad and Gurgaon. This is similar to the story in Greater Mumbai (Chapter 3), where informal manufacturing has shifted to the outskirts of the MMR over several decades in response to class conflict and the demands of industry. In Delhi, the expansion of the city’s informal enterprises must be seen in the context of urban planning that has tended to prioritise small-scale industry. The displacement of informal enterprises to the outer edges of the NCT has also been linked to slum clearance policies begun in the mid-1990s. But this industrial relocation is also related to the emergence of industrial growth poles in neighbouring Faridabad and Gurgaon, as well as Greater Noida, reflecting uneven and combined development in the region. The intervention of local state institutions in Haryana has been instrumental to the rapid industrialisation of these peri-urban areas. Further evidence shows that this process of industrialisation has been accompanied by the informalisation of industrial labour in the 1990s and 2000s. In particular, evidence from the automotive industry suggests that regular workers have been systematically replaced by casuals and workers hired by labour contractors in order to cut wages and undermine access to collective bargaining rights. There is also evidence to demonstrate that this has occurred in several

144   New Delhi industries, including export garments and electronics as well as auto production. At the same time, most workers in this period have found waged employment in informal enterprises. Many of these enterprises are linked to large firms operating in global value chains. While some represent self-employed proprietors and own-account workers who rely upon orders from vendors or larger firms, the evidence suggests that most are wage workers. So we can conclude that the trajectory of informalisation in the New Delhi urban region reflects a process that combines elements of change observed in Greater Mumbai and in the Bangalore urban regions. The final chapter synthesises these regional observations. It asks what these different regional experiences of industrial development and informalisation tell us about processes at a national level.

Notes   1 There are a few differences in measurement and calculations of EC data from the NCT compared with data from the other states in this book. See Appendix for details.   2 Author’s calculations based on NSSO data (Government of India, 2001, 2003, 2003a, 2005, 2005a, 2006a, 2008b, 2010, 2011, 2013). Available time-series data for Delhi starts at 1999–2000.   3 Ibid.   4 Author’s calculations based on data from Government of India (2013).   5 See Chapter 2 for a discussion of the organised/unorganised sector.   6 This analysis excludes the city of Chandigarh, the political and administrative capital of Haryana. Chandigarh is a separate union territory of India and has a special status because it serves as the capital of the state of Punjab as well as Haryana. Government data for Chandigarh is measured separately. Furthermore, Chandigarh lies about 250 km north of New Delhi and is well outside the NCR. For these reasons, Chandigarh has not been included in the empirical analysis.   7 There are a few differences in measurement and calculations of EC data from Haryana compared with data from the other states in this book. See Appendix for details.   8 Author’s calculations based on NSSO data (Government of India, 1997, 1998a, 1998b, 1998c, 1999, 2001, 2003, 2003a, 2005, 2005a, 2006a, 2008b, 2010, 2011, 2013).   9 Author’s calculations based on NSSO data (Government of India, 2005, 2005a, 2006a, 2008b, 2010, 2011, 2013). 10 Guha (2007: 113) puts the total figure for post-partition migration at closer to eight million. 11 Author’s calculations based on NSSO data (Government of India, 2010, 2011, 2013). 12 The other two main regions are the Chakan SEZ near the city of Pune in Maharashtra and the Chennai Metropolitan Area in Tamil Nadu (Gulyani, 2001). 13 See Chapter 1 for an outline of this ‘embourgeoisment’ process (D’Costa, 2005). 14 Since the end of major industrial conflict at Maruti Suzuki’s Manesar plant in 2012, reports indicate that wages have increased significantly for most workers, although several hundred workers involved in industrial action lost their jobs and dozens were jailed without conviction (GWN, 2014). 15 Authors calculations based on data from Government of India (2011a; 2013a).

6 Informal labour and resistance

The resurgence of industrial capital in India has been a partial rather than a universalising process. It is partial because new manifestations of factory-scale industrial capital have emerged, along with new financial institutions and business services enterprises, in some regions but not in others. The process of industrial development is connected to the inability of agriculture to sustain rural livelihoods along with the ongoing surpluses of ‘footloose’ labour moving within and between India’s diverse regions. This development is also linked to the continuing importance of regional social structures of accumulation characterised by informal enterprises, caste-based labour relations and home-based commodity production. These are some of the main reasons why Indian labour markets are so dominated by informal employment arrangements. They clearly suggest that India has not ‘modernised’ into a Western- or even an East Asianstyle industrial and consumer society. Nevertheless, and as previous chapters have demonstrated, significant pockets of industrial and consumer society have emerged in the neoliberal era across India’s expansive urban regions. In Bangalore, IT, business services and private manufactories have grown alongside the longer-standing garments factories and public sector units producing military goods and machine tools. In Greater Mumbai and the National Capital Region (NCR), industrial development has hollowed out the urban centres of industry. In Mumbai, finance capital and land speculation has supplanted many of the great industries of the island city – above all, its textile mills – shifting hundreds of thousands of workers into informal enterprises in the outer edges of the region linked to newer industrial centres like Navi Mumbai and Thane. In the NCR, the demands of urban planning and public infrastructure have undermined the livelihoods of similar numbers of workers, shifting industry to the southern fringe of Delhi. On its edges, in the old industrial town of Faridabad, in the Gurgaon-Manesar belt and in Greater Noida, public and foreign direct investment since the 1980s has generated new centres of industry based on garments factories, automotive plants and workshop ‘colonies’, financial institutions, IT and business services. Garments and auto factories are both linked to sophisticated regional supply chains that generate livelihoods for many more workers in informal enterprises. The ‘compressed’ character of this urban and peri-urban development (D’Costa, 2014) is symptomatic of India’s uneven and

146   Informal labour and resistance combined development. One of the main reasons why capitalist development looks so different in contemporary India is precisely this combination of global and regional, state-of-the-art and traditional, large-scale and small-scale, urban and rural and, importantly, formal and informal. Firms in some Indian regions have adopted technologically-advanced, ‘world’s best practice’ production techniques. This process, accelerated through the liberalisation of international trade and foreign investment, underpins much of the rise in organised sector employment in several of these regions during the 1990s and 2000s. But this industrialisation has not generated a universalising tendency towards a ‘modern’ industrial society; rather, it has pushed millions more people into wage labour in informal enterprises, transformed the production of commodities by home-based workers and overwhelmingly relied upon the employment of informal workers. Uneven and combined development has enabled India’s new and old generations of large industrial capitalists to take full advantage of the labour of people working in the country’s massive informal economy. This final chapter summarises the empirical evidence from the previous three chapters. It compares findings to the empirical propositions posed in Chapter 2 and offers a synthesis of these results with the theoretical and conceptual themes raised in Chapter 1. The first section briefly reiterates the first chapter’s explanation for the phenomenon of informalisation, pointing to different ways in which the empirical findings support this approach. Second, the chapter summarises the evidence from Chapters 3, 4 and 5 and compares these findings with the hypothesis raised in Chapter 2. Finally, the chapter offers a brief assessment of various ways in which civil society organisations, including trade unions and labour Non-Government Organisations (NGOs), have responded to the challenge of informalisation. In doing so, the chapter concludes with some ideas about the impact of major structural economic changes on the capacity of workers to survive, organise and resist.

What explains informalisation? As outlined in Chapter 1, there are multiple reasons why the informal economy has been historically so important in India and, especially, why it has expanded so much since the 1970s. First of all, India is traditionally an agrarian-based economy and, although cultivation no longer contributes most of India’s national income and no longer provides a living to the majority of people, it remains the largest source of livelihoods and employment. India remains a predominately rural society and circular migration between villages, towns and cities is the norm (Breman, 1996). Following Independence, policymakers in New Delhi adapted their political rule to the dominant castes and landowning groups across the different regions. In adapting to an array of regional elites, the Indian National Congress failed to implement a meaningful or far-reaching program of land redistribution, despite its ideological commitment to agrarian reform. Land reforms were full of loopholes and exceptions, enabling traditional landowning elites and some new groups of affluent farmers to maintain their privileges or to further dispossess marginal farmers, landless workers and poor rural households.

Informal labour and resistance   147 Agrarian class differentiation was already underway when commercial farmers in some regions began to sow high yield variety seeds during the ‘Green Revolution’ of the late 1960s and early 1970s. In the most affluent cultivating states like Punjab and Haryana, a new class of successful ‘middle’ farmers emerged as a major economic and political force. With industrial growth stagnating, Congress lurched towards a settlement with dominant rural classes, assisting and accelerating the process of agrarian class differentiation by fixing prices for fuel and other agricultural inputs, facilitating the expansion of formal credit markets in rural areas, offering favourable procurement prices and providing public funds for irrigation. While agrarian output and productivity surged in states like Gujarat or Punjab, economic inequality increased. Rural households with insufficient land to afford investment in Green Revolution technologies, or those without any land at all, created a new generation of mobile wage workers, with some working as seasonal agricultural labourers and others moving between rural and urban areas in search of precarious paid employment outside agriculture. This multi-layered reservoir of impoverished rural labourers remains the core of India’s informal economy and has fundamentally shaped the employment practices of industry, including organised sector firms which have long taken advantage of these ‘surplus populations’. Of course, the character and terms of employment vary from industry to industry. For the construction industry, millions of rural labourers are recruited as neo-bonded workers by labour contractors, who use wage advances and delayed payments to tie workers and their families to building sites, road works and brickyards. For the garments industry, factory production commonly relies upon a sophisticated network of vendor-merchants and homebased workers who are locked into subcontracting deals and effectively paid piecerate wages. These regional social structures of accumulation have been crucial to labour-intensive manufacturing in global markets.1 In both the construction and the export garments sector, wages are low, social protection is extremely limited and the employment of young children is endemic. Many of these are longstanding problems – the point here is that these practices have expanded in the neoliberal era as India has integrated with the global economy. A second reason for the expansion of informal employment involves the peculiarities of state-led development and planning. Even today, the distinction between an organised and an unorganised sector, based on the number of people employed per enterprise, is central to industrial planning and employment relations legislation. The rules and restrictions imposed on industrial capital by Congress planners in the 1950s and 1960s can be interpreted in a number of ways: while neoliberal thinkers typically regard them as misguided policies of state over-reach, they can be framed as a form of public investment-led growth in the Nehru era (McCartney, 2009) or, rather intriguingly, as a planning regime made incoherent by the power of industrial capital (Chibber, 2003). There seems little doubt that policy reforms imposed in the late 1960s and early 1970s, including the nationalisation of banks, restrictions on foreign investment and ‘anti-monopoly’ laws designed to further restrict the output and diversification of industrial

148   Informal labour and resistance capital, played a role in shaping the behaviour of industrialists. But above all, it was the ability of industrialists to ignore and evade labour laws that enabled them to take advantage of India’s overlapping surpluses of informal labour. Despite repeated and ongoing demands by industrialists, policymakers and international financial institutions for labour market deregulation (Shyam Sundar, 2012), the over-riding feature of India’s employment relations framework is its remarkable ineffectiveness at preventing employers from exploiting workers rather than its supposed capacity to undermine business freedom and flexibility. The rise in organised sector employment since the mid-2000s has occurred despite any significant change in labour laws at the national level. A striking characteristic of the neoliberal Indian state is the ongoing unwillingness of policymakers to do very much to strengthen implementation and enforcement of existing social protection. Third, class conflict has influenced the conditions in which industrialists have been able to systematically informalise labour forces, either by forcing ex-organised sector workers into waged employment in informal enterprises or by hiring informal workers within organised sector firms as casuals, trainees or through multiple labour contractors. All of these employment practices were commonly used prior to the great industrial conflicts of the 1970s and early 1980s. But their impact was much greater following the defeat of union campaigns among organised sector workers, above all the workers of Mumbai’s textile mills. Employers were able to work around the long strike by mill workers by continuing to outsource production to powerloom operators in peri-urban areas, giving them the upper hand throughout the conflict. As Indian governments began the gradual process of trade liberalisation in the mid-1980s, most of the old mills were closed down as ‘sick industries’, with land sold off to real estate developers and financial institutions. Although ex-mill workers found new jobs in a variety of informal enterprises across the Mumbai Metropolitan Region, the evidence suggests that wages fell and living standards dropped. The ability of far-right Maratha nationalists to capitalise on the suffering of workers was a striking feature of Mumbai society in the aftermath of the mill closures, with terrible consequences such as communal violence in the early 1990s and the rise of farright parties like Shiv Sena and Maharashtra Navnirman Sena as dominant electoral forces. Once can point to similar outcomes of the ‘de-industrialisation’ of Ahmedabad during the same period and the rise of the Rashtriya Swayamsevak Sangh (RSS) and the Narendra Modi-led Bharatiya Janata Party (BJP), currently India’s dominant ruling party. The communal agitation of these organisations among informal workers and their communities led not only to violence, such as the 2002 anti-Muslim program, but also established the Sangh Parivar – the ‘family’ of Hindu nationalist organisations – as the dominant political and ideological force in Gujarat. While political outcomes have been different in different regions, one can point to similar negative outcomes as a consequence of class conflict. In Bangalore, the informal economy expanded in the aftermath of major defeats suffered by unions in public sector units in the early 1980s. Elsewhere, the use of lockouts

Informal labour and resistance   149 by employers as an aggressive tactic, particularly in West Bengal in the 1990s, have drawn unions into long campaigns, which workers have struggled to sustain. Industrial capital’s attempts to restructure industrial labour in the context of trade and investment liberalisation, which has generated greater competition for local manufacturing from imported goods and some foreign corporations, has sparked major industrial conflicts. While organised sector workers have not passively accepted these changes, India’s unions have not been terribly effective in resisting the tide of industrial restructuring and informalisation. Surpluses of footloose rural labour, disjointed economic planning with ineffective labour laws and social protections, and class conflict are three crucial components in the story of informalisation since the 1970s. But informalisation is not just the result of regionally- or even nationally-generated political and economic processes. Indeed, many of these factors have been shaped by India’s engagement with the world economy and regional geopolitics. For example, industrial and agrarian stagnation in the mid-1960s underpinned India’s conflictridden rapprochement with the United States and the World Bank, influencing the adoption of Green Revolution technologies and rural class differentiation, and providing further impetus for the government’s lurch towards dominant agrarian classes in the late 1960s and early 1970s. Rural class differentiation has been a key factor in the process of informalisation since then. Alternatively, the aftermath of class conflict in urban regions in the 1980s intersected with rising imports and, later, foreign investment, encouraging industrialists to ‘hollow out’ the industrial zones of Greater Mumbai and New Delhi. As the theory of uneven and combined development suggests, it is a region’s interaction with global economic processes that partially drives its development. To this picture, we can add a fourth and final factor that addresses the process of informalisation in the context of global economic development. Trade and investment liberalisation has enabled Indian regions to transplant many of the ‘advanced features’ of the global economy. Crucially, this includes the informal labour practices that have become normal features of large global corporations operating in different regions. These practices incorporate the creation of supply chain relations by outsourcing production to smaller firms as well as the widespread employment of informal workers through ‘temporary help’ agencies and labour contractors, as casuals or even as interns and trainees. The automotive industry provides an important example of practices that have been transplanted into India by foreign transnational corporations. This has been pioneered by Japanese auto producers like Suzuki and Honda, followed by Korean, European and American firms and emulated by some local firms. Suzuki and Honda both ­established sophisticated supply chains in the NCR in the 1980s, shifting the focus of industry employment from retail spare parts production to subcontracted auto components manufacturing. Today, most workers in this industry work in small-to-medium sized firms clustered across urban regions like New Delhi or Chennai, many of which are informal enterprises dominated by larger firms ‘up’ the value chain. The large assembly and components firms completely relied upon labour contractors to provide new workers throughout the 2000s. As

150   Informal labour and resistance o­ utlined in Chapter 5, this practice has been the source of considerable class conflict in urban regions like the NCR. Labelling workers employed in this way as ‘informal’ has its limitations. For example, there is little evidence that workers self-identify in this way. Workers employed through labour contractors or under other flexible labour arrangements work under different conditions to workers employed in informal enterprises or households. However, while the recruitment and labour of these workers is different, their employment fits with the understanding of informality developed in this book. As outlined in Chapter 2, informality has been framed as an analytical categorisation of disadvantage, as the absence, relaxation or systematic avoidance of state regulations and as a dynamic historical and geographical process that changes the relationship between different forms of exploitation. Casuals and contract workers in organised sector firms seem to fit with the first definition, as they are commonly employed on lower wages and have inferior employment conditions and lower employment security compared to regular workers. Their experience fits with the third definition, as the manner in which capital extracts value from their labour is often different from workers employed in informal enterprises. For example, they may be employed as production-line workers or as machine operators in large factories. In this sense, their labour process is often not fundamentally different from many regular manufacturing workers. However, the mass employment of casual and contract workers is a means of intensifying the production of absolute surplus value by offering lower wages and poorer terms of employment. But does the experience of these workers fit with the second definition: is their work and employment ‘outside’ state regulation? In truth, there is not a ‘black or white’ answer to this question. The wages and employment conditions of casuals and workers hired by labour contractors in organised sector firms in India are supposed to be framed by some formal regulations. While they may not be regarded as ‘workmen’ under the Factories Act 1948, which is supposed to regulate working hours and conditions in the organised sector, they are entitled to minimum wage protection, basic medical insurance and pension contributions. The Contract Labour (Abolition and Regulation) Act 1970 is meant to abolish contract labour in ‘core’ business activities and outlaws the employment of contract workers for more than 240 days of ‘continuous service’. So these workers are supposed to be covered and protected by these, and other, state regulations. But there is considerable evidence – for example, from studies of garments or auto workers in New Delhi or Greater Bangalore – that employers continue to systematically evade and ignore these protections. In addition, many of these workers are prevented from forming or joining trade unions or engaging in meaningful collective bargaining. The experience of many of these workers fits with Chang’s (2009) concept of an ‘in fact’ informal worker: a worker whose work and employment is supposed to be regulated and protected by the state but who, in practice, is unable to benefit from these protections or access entitlements. For example, both domestic and international migrant workers’ precarious status and lack of local connections often make them effectively informal, regardless of their actual rights and entitlements.

Informal labour and resistance   151 For this reason, the shift towards the mass employment of casual and contract workers in organised sector firms in India can be framed as an important part of the informalisation process. While these practices have been used by employers for many decades, some of them have been transplanted by global transnational corporations since the era of economic liberalisation began in the 1980s. This does not mean that all new organised sector workers employed during this period should be regarded as informal workers. The IT industry is an important example of a workforce that is relatively well paid and has high status. Most of its workers form part of the well-educated ‘middle classes’ that underpin the retail consumerism spread across different centres of urban India. But the IT industry has not drawn in large number of poor workers. Its workforce is still largely comprised of young forward-caste workers whose parents held stable jobs in public administration, education or management. While there is evidence of very long working hours and high labour turnover in business services occupations, including many of the call centres that dot the skyline in parts of Bangalore and Gurgaon, these workers too are comparatively well paid. These cases involve a very small minority of India’s new workers. Informal labour is the norm, both in the informal enterprises and households where most people work and in the organised sector firms that rely upon casuals and workers hired through labour contractors. So informalisation is a central feature of India’s uneven and combined development. As outlined in Chapter 1, this framework for development must be able to enhance political economic theory by producing testable propositions or hypotheses about the transformation of social classes, the character and dynamics of class conflict and the potential for this conflict to influence radical political change. This book has not tried to present a comprehensive overview of all of these areas. Indeed, given its urban and regional focus, it does not encompass all or even most aspects of uneven and combined development in India. But the book has focused on the transformation of social classes in key urban regions during the 1990s and 2000s and, to a lesser extent, the dynamics of class conflict in these regions as part of India’s uneven and combined development. This final chapter offers some commentary about the potential for radical political change, but this is intended to provoke discussion among interested students and scholars of labour rather than come to any definitive conclusions. However, the evidence and analysis of changing class relations in Greater Mumbai, Bangalore and the NCR, which is summarised below, does point to much firmer conclusions about the structure and composition of labour forces in urban regions. The structure of labour – and the different forms of exploitation and capital-labour relations that underpin this – does not determine the potential for social and political change. But it does condition and shape this potential in crucial ways.

Labour’s changing structure: comparing the evidence This book has posed three specific propositions about the transformation of social classes in urban regions. First, it has argued that there has been a shift

152   Informal labour and resistance towards the employment of wage labour in urban areas. Second, the lion’s share of this rise in waged employment has been concentrated in informal enterprises. Third, the process of class formation has depended on the specific region in question. In Greater Mumbai, there has been a massive decline in large-scale industry and the displacement of employment to informal enterprises, particularly on the peri-fringe of the region. In Bangalore, wage labour has rapidly expanded in large-scale industries and services alongside its expansion in informal enterprises. The NCR has combined elements of both processes: organised sector industry in Delhi itself has, like Mumbai, been ‘hollowed out’ and dispersed to the southern fringe of the capital. But, like Bangalore, there has been a rapid expansion of wage labour in the organised sector in peri-urban areas of the region like Faridabad and Gurgaon. This section returns to each of these points, demonstrating how data from previous chapters supports each proposition. In addition, we look at the different types of informal labour present in each scenario and how these represent the diverse forms of exploitation first considered in Chapter 2. The chapter then goes one step further by considering how the diversity of these forms is linked to uneven and combined development – that is, how economic development in the 1990s and 2000s represents the combination of different forms of capital accumulation – and finishes with some discussion about the prospects for labour activism among different sections of India’s informal labour force. First, the book has demonstrated that there is an across-the-board shift to waged employment in urban regions. The EC data presented in previous chapters shows that the overwhelming majority of workers in the urban regions of each state were ‘hired’ for a wage. It also shows that most of the growth in urban employment since the 1990s has been among wage workers. These trends are also reflected in national-level data. India’s development has meant that a significantly larger proportion of its working population must exchange labour power for wages to survive. National Economic Census (EC) data presented in Chapter 2 shows that 78 per cent of employment in urban areas was accounted for by Establishments with Hired Workers (EHWs) in 2005. Unfortunately, data from the most recent EC, collected in 2013, was not publicly available at the time of this book’s publication. Nevertheless, National Sample Survey Office (NSSO) data shows that waged employment represented 58.1 per cent of total employment in urban regions in 2011–12 and had been rising during the 1990s and 2000s. Even in rural areas, where a majority of workers remain self-employed, the proportion of wage workers in total employment has been increasing steadily since the early 1970s, especially for casual labourers. EC data at a state level confirms a similar picture to NSS data for urban regions. In Maharashtra, 81 per cent of all urban workers were employed in EHWs in 2005. Over two-thirds of workers in the state’s urban areas were wage workers. All employment growth in urban areas in the late 1990s and early 2000s was represented by waged employment. In Karnataka, 79 per cent of urban workers were employed in EHWs in 2005. In New Delhi, the figure was 90 per cent where, like Maharashtra, all employment growth in the late 1990s and early 2000s was represented by

Informal labour and resistance   153 waged employment. In Haryana’s urban areas, most workers were similarly employed in EHWs in urban areas. Second, most of this growth in waged employment has been concentrated in informal enterprises, encompassing a variety of different work and employment types. Most employment growth in urban areas was concentrated in establishments employing fewer than six workers, particularly in retail trade and manufacturing. As outlined in Chapter 2, these types reflect different forms of exploitation, a diversity of ways in which different forms of capital extract value from the labour of workers. The common feature among these forms is that labour is employed in enterprises that fall outside the regulatory scope of the formal sector. In India, this represents all employment in agriculture and all employment in non-agricultural enterprises with fewer than 10 workers (or fewer than 20 for enterprises without electricity). While many formal regulations are supposed to apply to these workers, the evidence – some of which is outlined throughout this book – suggests that few workers in informal enterprises are meaningfully protected by labour laws or have significant collective bargaining power. Most of these workers fall outside the coverage or activities of trade unions. There are some groups of informal workers that seem to have grown in significance during the neoliberal era. Home workers (or industrial outworkers) are extremely important in some industries, such as textiles and garments manufacturing (see Figure 2.1 in Chapter 2). Lead firms and large factories outsourcing to small workshops and households are certainly not a new phenomenon. This was, for example, practiced by Mumbai’s textile industrialists for decades before liberalisation began. But trade liberalisation, in India and overseas, has enhanced the role of regional supply chains, generating larger and more sophisticated networks of vendors and petty traders connecting home-based workers with large factories, merchants and exporters. Home workers continue to represent an effective way for these powerful actors to put downward pressure on labour costs, to transfer the burden of management and supervision to workers and vendors and to devolve responsibility for work and employment conditions to workers themselves. The fact that lead firms in value chains are able to devolve this responsibility underscores the dual character of much home-based work. The labour of many home workers exhibits features of both self-employment and wage labour. Many home workers are described as self-employed because, at first glance, they appear to have a choice over whether and how much to produce and appear to exercise some autonomy over the working day and the labour process. Not all home workers produce under subcontracting arrangements. Some produce goods directly for retail sale and others work under a combination of direct market production and subcontracting. This is one reason why some scholars draw a distinction between ‘home workers’ who depend upon subcontracting, and a broader category of ‘home-based workers’ that includes more independent, self-employed producers (Rani and Unni, 2009). Although there are some different findings on this issue, one important government report argued that most home-based workers are, following the above definition, home workers because they rely on a single major buyer for their products (NCEUS,

154   Informal labour and resistance 2009). In these cases, the structure of the value chain, as well as the labour process itself, influences the transfer of value from the home worker to industrialists, merchants or exporters. Following Banaji (2010), this is here framed as the formal subsumption of labour by capital (see Chapter 1). In such value chains, value is appropriated from the labour of home workers by controlling the size and frequency of orders. Any choice that home workers exercise is constrained, first of all, by their need for income and, also, by their skills, tools, available hours and physical capacity to work. Marx labelled this form of value appropriation, based on lengthening working hours or intensifying physical effort, ‘absolute surplus value’. This form of exploitation raises specific issues for home workers, including the frequency of orders, the level of payment – effectively a form of piece-rate wages – as well as the blurring of commercial with other household ‘duties’. Evidence presented in this book from Mumbai suggests that this form of exploitation has become more important in the context of the informalisation of textiles production following the closure of the city’s textile mills in the 1980s and the shift towards powerloom production in periurban areas. Similarly, evidence from New Delhi suggests that the formal subsumption of labour is indispensable to the export garment sector. As a rule, this view can only really be verified with evidence from field research, including household surveys. Government data such as the EC can tell us very little about the class character of these workers. It does not really allow us to draw out this dual character of home-based work. The EC does not quantify the proportion of waged workers drawn into informal enterprises that have found employment as home workers. This is a problem when we try to compare changes in employment in EHWs with changes in Own-Account Establishments (OAEs). Using the EC’s definition, OAEs represent either self-employed or unpaid workers, not wage workers. As mentioned, time-series data from the EC suggests that large numbers of people have been drawn out of these positions into waged employment. For example, the evidence from urban regions in Karnataka and New Delhi shows that employment in OAEs fell during the late 1990s and early 2000s, while hired labour in EHWs grew. But the changes to employment in OAEs can be interpreted in different ways. Evidence shows, for instance, that there was an increased incidence of sole proprietorships in OAEs, as unpaid workers were drawn into waged positions in EHWs. The greater the number people employed per OAE over this period, the higher the fall in employment. One can conclude that this demonstrates the restructuring of commodity production in households rather than its decline. Moreover, the EC cannot tell us whether these sole proprietors are independent, self-employed workers or dependent ‘home workers’. If most of these workers fall into the latter category, then it suggests that the tendency towards wage labour is even greater than the time-series data suggests, assuming that these workers can be regarded as ‘disguised’ wage workers. A further complication is the problematic treatment of women’s labour. There are the grounds for suspecting that the EC and the NSSO have significantly under-estimated the contribution of women to production in OAEs. As outlined in Chapter 5, there is

Informal labour and resistance   155 strong evidence that women’s labour is much more important to commodity production in home-based enterprises than official labour statistics imply. This evidence suggests that separating unpaid ‘work’ from household ‘duties’ is difficult to achieve unless investigators train field researchers to probe respondents for information about the labour they actually do. For example, women and men may regard unpaid work in a family enterprise as a household or marital duty. So, while it is reasonable to conclude that many more unpaid home-based workers found waged employment during the 1990s and 2000s, one cannot rely upon official labour statistics to draw strong conclusions about the composition of commodity production in households. A final category of wage labour in households is domestic work. Domestic workers form a category of employment that blur the distinction between waged and non-waged forms of labour. Domestic workers are paid wages, but their workplace is within a household, includes tasks that may be traditionally performed by unpaid domestic labourers or family members and does not normally involve the direct production of commodities. This work is commonly ignored in labour statistics, including the EC (Government of India, 2008). The number of domestic workers has exploded in the last decade, along with the growth in middle-income households. The proportion of domestic workers in total female service sector employment increased from 11.8 per cent to 27.1 per cent in the five years to 2004–05. However, these figures are likely to underestimate the true scale of domestic work (Neetha, 2010). Most workers are women, which raises specific problems, such as low pay, long working hours, personal security and sexual harassment (Sankaran et al., 2008; Neetha, 2009; NDWM, 2010). The character of the labour process means that it may be difficult to define a ‘working day’. Many workers will be required to perform tasks during irregular hours, such as early morning or late at night. The value extracted from the labour of domestic workers is often related to the time required to replenish the labour power of the other workers living in a home (Dunn, 2014). The level of exploitation is related to the type of domestic work, such as whether the worker is ‘live-out’, in which case the worker may work in several homes, or ‘live-in’, in which their labour may be subject to the orders of family members over many hours, with even fewer hours for rest or recuperation. In addition, the phenomenon of temporary labour migration has incorporated waves of domestic workers migrating from South and Southeast Asia to North America, Europe or the Gulf States (Rosewarne, 2010). In her study of domestic workers in the US, Romero even suggests that relations ‘between middle-class employers and household workers replicated class tensions and structured contradictions between capitalist and proletarian’ (Romero, 2002: 98). The legal status of these workers as migrants creates an additional element of vulnerability, despite the potential income gains that contribute to workers migrating in the first place (Stasiulis and Bakan, 2005). Indian governments have historically resisted implementing measures to curb the exploitation of domestic workers. For example, in most states, there is no set minimum wage (Neetha, 2010).

156   Informal labour and resistance Overall, we can certainly conclude that the lion’s share of employment growth, including the shift towards the employment of wage labour, has been captured by informal enterprises. This takes us to the third proposition: there has been significant growth of wage labour in large organised sector firms in some urban regions during the neoliberal era. In this study, this is particularly true for Greater Bangalore, Faridabad and Gurgaon and can probably be observed in several other urban regions too. In Bangalore, and in other urban areas of Karnataka, employment in large organised sector firms grew faster than employment in informal enterprises between the late 1990s and early 2000s. The reason why organised sector employment has expanded in some regions, but not in others, comes down to the complex interplay of economic, political and geographical factors outlined in Chapters 3, 4 and 5. The book also contends that this growth has been dominated by the employment of informal workers. These workers are generally lower paid and have fewer rights than workers with regular or ongoing employment contracts. Employers often try to avoid implementing various protections that these workers should be legally entitled too. As outlined in Chapter 2 (cf. Figure 2.1), there are different categories of informal worker. First, there are casual workers and day labourers. These workers are hired on a temporary basis or under some other flexible arrangement that makes it easy for employers to discard them when their labour is no longer required. Importantly, these workers find employment in both formal and informal enterprises. Many of these workers are migrants moving between rural and urban regions in search of employment. Some find work as casual workers in organised sector manufacturing, while others are employed as helpers in workshops and on construction sites, or as canteen workers, cleaners or domestic workers. Others try to survive as street vendors or as beggars. Many of these ‘shelter-less’ and nomadic urban workers are not recorded in official labour statistics (Government of India, 2008). A common method of recruitment can be found on busy street corners, or ‘labour chowks’, where employers send staff or labour contractors to hire workers for casual labour. While most of these workers find work in informal enterprises, some are hired in large firms such as rice mills or toy-making factories (NCEUS, 2009). As outlined in Chapter 5, many casual workers are hired in the garment and auto parts factories and workshops of Faridabad and Gurgaon or, as Chapter 4 showed, many female casuals are hired in garment factories in Bangalore. A second category of informal worker found in large as well as small enterprises is the unregistered or undeclared worker. Many of these workers have very similar wages and employment conditions to casuals or day labourers, except that they are effectively employed on a permanent or ongoing basis. In order to keep wages low or deny these workers certain entitlements, employers in organised sector firms often conceal or distort their employment on their official payroll records or musters. This type of employment is very widespread in the organised sector (NCEUS, 2009; Hill, 2009), but is not properly recorded in official labour statistics. The EC does not record casual, intermittent or irregular workers (Government of India, 2008). As

Informal labour and resistance   157 argued in Chapter 1, the NSSO distinguishes ‘casual workers’ from ‘regular workers’. But the true count of regular workers is likely to be distorted if employers conceal the employment status of some of their workers. This practice is very common in organised sector manufacturing in, for example, Gurgaon and Faridabad. Large automotive manufacturers, for instance, employ trainees and, sometimes, apprentices as production-line workers on an ongoing basis. In other cases, unscrupulous employers can avoid paying pension or medical insurance contributions if they do not include workers on their payroll lists. As long as there is weak enforcement of protective labour laws from Department of Labour officials, then employers can get away with this practice. But, as Chapter 5 also explains, the employment of workers undertaking similar roles in organised sector manufacturing under very different employment conditions is likely to generate resentment and industrial conflict. The final category of informal worker considered here involves those workers hired by labour contractors. The recruitment of workers into ‘gangs’ of mobile labourers by labour contractors has been important in India’s labour history (Roy, 2008). These intermediaries have gone by a variety of names, like thekedar, maistry or mukadam, and they act as intermediaries between capital and labour. Breman has arguably provided the most systematic accounts of these workers in modern India. His studies of labour in Gujarat have emphasised the link between rural impoverishment, caste oppression and labour recruited by the mukadam (Breman, 1993, 1994, 2002, 2007, 2007a). Many of these people are bonded workers, enticed into employment by labour contractors who offer wage advances or locked into employment with a single employer by labour contractors who refuse to pay wages in good time or until their labour is no longer required. The role of the contractors is contradictory. They provide an opportunity for some workers to seek livelihoods, yet they also regulate the behaviour of workers on behalf of the industrialists and agricultural employers who ultimately benefit the most from this form of employment. As mentioned, the Contract Labour Act provides little protection for these workers in practice. Contract labour plays a particularly dominant role in construction and many types of labour-intensive manufacturing. As outlined in Chapter 5, the vast majority of workers in the automotive industry in the NCR are hired in this way. Labour contractors are used to lower wages, to increase ‘hire-and-fire’ flexibility, to outsource the burden of monitoring and controlling workers and to prevent workers from forming or joining trade unions (Barnes et al., 2013). However, workers hired by contractors are often employed under similar wages and conditions as casuals and temporary workers. This suggests that a common feature of casuals, temps and unregistered workers, as well as contract workers, is that employment practices are based on lowering labour costs or, again, what Marx called rising absolute surplus value. The fact that many of these workers are systematically recruited in organised sector firms suggests that the transfer of value from labour to capital is also based on efforts to improve the productivity of labour by investing in new technology or more durable capital goods – what Marx called ‘relative surplus value’

158   Informal labour and resistance or the ‘real subsumption’ of labour by capital. For instance, many of the large auto assembly and components manufacturers in regions like the NCR or Greater Bangalore use robot-operated assembly lines. In other manufacturing firms, computer-aided design is also used. However, some scholars have argued that the dominant role of informal enterprises and labour-intensive production means that India represents a ‘mercantile’ form of capitalism (Breman, 1996; HarrissWhite, 2003). This picture suggests that most value transfer in India is sourced through the appropriation of absolute surplus value and, for many sole proprietors and home-based workers, incorporates the formal subsumption of labour by capital. The evidence on employment growth in informal enterprises presented in this book is certainly consistent with these claims. But India’s economic development during the neoliberal era has also expanded more capital-intensive production processes among both domestic and foreign firms in manufacturing and services. For this reason, I argue that uneven and combined development is the best way of framing this process. State-of-the-art technology, products and work organisation have been adopted in organised sector firms against the backdrop of an economy dominated by informal enterprises based on labour-intensive, low-­ technology production processes. As outlined in Chapter 1, India’s development has combined different forms of capital accumulation. Given that most workers are employed in informal enterprises, and most employment growth has occurred in informal enterprises in urban regions, then this suggests that the dominant form of accumulation relies upon the appropriation of absolute surplus value by compelling workers to work longer or harder, whether directly through an employer– employee relationship or indirectly through commercial exchange in value chains. This form of accumulation dominates manufacturing, services and agriculture. A percentage of absolute surplus value is appropriated by intermediaries. For example, vendors, merchants and small money-lenders link home-based workers to factories and exporters. Individuals from each group of intermediaries accumulate income by charging fees to clients and carefully controlling piece-rates paid to informal workers. However, rising organised sector employment in some urban regions, driven by rising foreign investment since the 1980s or more successful domestic services and manufacturing firms, suggests that an increasingly important form of accumulation is represented by the appropriation of both absolute and relative surplus value through more capital-intensive, technologically-sophisticated production processes. The mass employment of informal workers in organised sector firms has enabled capital to increase absolute surplus by taking advantage of large surpluses of unskilled and semi-skilled labour, lowering wages, eroding employment conditions and removing workers’ access to protections and entitlements in labour laws. Again, a portion of value is taken by intermediaries. For example, labour contractors charge commission to employers for providing casual and temporary workers from labour chowks or by taking payroll management, workers supervision, attendance records and other ‘human resource’ services from the hands of industrialists. Naturally, employers will manoeuvre to ensure that these commission charges eat into wages rather than profits.

Informal labour and resistance   159 The evidence presented in previous chapters also suggests there is a third form of accumulation that has become more important in contemporary India. As argued in Chapter 1, capital has been increasingly accumulated through the acquisition of financial assets, in the form of land or securities such as company shares or bonds. In the 1990s, national governments promoted investment through private equity on stock exchanges in Mumbai and New Delhi (McCartney, 2009). ‘Accumulation by dispossession’ through land acquisition for industrial and urban development has also been a controversial issue. Special Economic Zone legislation has been used to enrich some ex-cultivators in states like Haryana, Gujarat or Rajasthan and to provide subsidised land prices for foreign and domestic transnational corporations, appropriating value from agricultural land and commonly-owned assets through the state and dividing it between agrarian, financial and industrial capital (Levien, 2011). In some urban regions, this process has intersected with the ‘hollowing out’ of industry. In Greater Mumbai and New Delhi, various coercive means have been used to clear high-value urban land of traditional industry, informal enterprises and working class communities. The geographical displacement of industry and employment is part of this financial accumulation process facilitated by states. This geographical relocation of industry has coincided with the informalisation of labour. Organised sector employment in these old industrial centres has been replaced by employment in informal enterprises. But even in the new centres of industry concentrated in peri-urban areas, most workers have found waged employment in informal enterprises. Most of the workers who have found employment in new organised firms in these areas have been employed on an informal basis. In this sense, informalisation is a complex, multi-faceted process that has transformed the structure of labour forces as a whole. It has changed the geographical location of labour forces, the manner of value transfer from labour to capital, enhanced the role of informal enterprises and systematically replaced formal with informal wage workers in the organised sector. While this book has focused on changes at the structural economic level, I have also tried to show that workers have not been passive recipients of these changes. Workers’ struggles have been central to shaping, and often resisting, the process of informalisation.

Workers’ resistance in the neoliberal era Workers’ struggles have been constrained by the structure of labour markets, particularly the enormous surpluses of rural and migratory labour, as well as the legal–institutional environment. In India, workers are formally permitted to organise into trade unions, which are traditionally linked to the state through numerous party-federations. Under this system, the state acts as the arbiter of disputes between employers and unions in the organised sector. In many cases, particularly in the public sector, it has effectively determined the wages and conditions of workers. This system has undermined the ability of trade unions to collectively bargain, to organise independently of the state or to increase their

160   Informal labour and resistance grassroots constituency by making them reliant upon state institutions and political patronage (Hill, 2009). Under India’s system of labour laws, trade unions were not guaranteed the right to collectively bargain: ‘Collective bargaining was held to be incompatible with economic planning’ (Shyam Sundar, 2005: 921). Anti-labour restrictions in the industrial relations system originated in the ­reorientation of Congress towards industrial capital in the late 1940s (Chibber, 2003). Although Congress leaders made some attempts to build support within trade unions during the 1920s and 1930s, the need to woo industrial capitalists to the nationalist cause influenced the adoption of a policy that heavily restricted the rights of unions (ibid.: 36). Congress policy during this period was designed ‘to regulate strikes and maintain uninterrupted production and control militant elements in union movement such as Communists’ (Shyam Sundar, 2005: 920). The accommodation of trade unions to this system after Independence put many of them in a weak position for building influence during the political and economic crises of the late 1960s and 1970s. This period saw the beginning of a process of fragmentation within the union movement. Dissatisfaction with the Congress-affiliated peak organisation, INTUC, led to the formation of alternative federations competing amongst each other, each with their own political party affiliation. A strike ban and wages freeze during the Emergency period (1975–77) pushed unions into a political confrontation with Congress. While some unions backed parties that would eventually support a new coalition government in 1977, others were kept under the political influence of Congress (ibid.: 925). Some of this was achieved through populist measures. It is in this period Indira Gandhi decreed that employers with more than 300 workers had to seek state permission before sacking workers (ibid.). Earlier, her government had introduced the Contract Labour Act. In the 1970s, unions became increasingly divided between those that achieved limited success independently campaigning for better wages and conditions and those that relied upon the state to arbitrate outcomes, especially those concentrated in the public sector (Hill, 2009: 398). The union movement has been in a weak position to respond during the period of economic liberalisation and informalisation that has engulfed India since the 1970s. As argued in previous chapters, unions fared very badly as a consequence of industrial disputes in the 1980s in, for example, Bangalore and, especially, in Mumbai. A further development during the neoliberal era has been the aggressive use of lockouts by employers in the organised sector. Many employers wanted to reduce the size of their workforces without bothering with state permission procedures under the Industrial Disputes Act 1947 (Shyam Sundar, 2003a). One estimate is that 60 per cent of work days lost to industrial action in the 1990s were due to lockouts (Sengupta, 2008a: 985), which were particularly concentrated in West Bengal’s jute mills (Datt, 2003). The privatisation of public sector units was another major ‘labour reform’ issue in the 1990s. Again, this enabled some employers to reduce the size of workforces without needing to negotiate with bureaucrats over state rules governing employment in the organised sector. India’s system of labour laws has been ineffective in securing the

Informal labour and resistance   161 employment, incomes and rights of workers in the informal economy. The industrial relations system seems relevant only to a small minority of the total labour force and many unions seem to have ignored the representation and organisation of workers employed in informal enterprises (Ahn, 2007). This period also saw the rise of new ‘independent’ and enterprise-level unions who lacked any allegiance to established unions federations or their political parties (Gillan and Lambert, 2013). As outlined in Chapter 4, this was a major issue among unions in Bangalore in the 1990s and 2000s. However, there are several examples of union activists responding in a much more positive way. Key developments include the foundation of the National Centre for Labour (NCL) as well as informal workers’ organisations like the National Fish Workers Forum (NFF) and National Forum of Forest People and Forest Workers (NFFPFW). There has been a spurt in organising activities over key legislation, such as the Mahatma Gandhi National Rural Employment Guarantee Act 2005 (NREGA) and the Building and Other Construction Workers Welfare (Cess) Act 1996. Despite their difficulties, unions remain a potent force in Indian politics. India’s labour movement is comprised of a vast number of trade unions and labour organisations. There is no single national peak body that can claim to represent all organisations. Trade unions are dominated by 12 Central Trade Union Organisations (CTUOs) that have been officially recognised by the government. Several CTUOs are linked to political parties. The AllIndia Trade Union Congress (AITUC) and the Centre of Indian Trade Unions (CITU) are linked to the two main Communist Parties in India. The Bharatiya Mazdoor Sangh (BMS) is linked to the far-right Rashtriya Swayamsevak Sangh (RSS), while the Indian National Trade Union Congress (INTUC) is linked to the Indian National Congress (Gillan and Biyanwila, 2009). In addition to these, there are numerous trade union peak bodies with significant union affiliation at the regional level. Data submitted recently to the national government by CTUOs suggests that there has been significant growth in their membership. INTUC claimed to be the largest organisation (33.3 million members), followed by the BMS (17.1 million), the AITUC (14.2 million), the Hind Mazdoor Sabha (HMS) (9.1 million), the CITU (5.7 million), the United Trade Union Centre (UTUC) (4.7 million), the All-India Central Council of Trade Unions (AICCTU) (2.5 million), the Trade Union Coordination Centre (TUCC) (1.6 million) and the Self-Employed Women’s Association (SEWA) (1.3 million) (Menon, 2013). While these figures are yet to be verified by government officials, they suggest that total union membership has continued to rise significantly in the past decade. Remarkably, this round of verification will be the first since 2002 (John, 2007), when the CTUOs could claim a total membership of nearly 25 million members (Government of India, 2008a). In itself, this represented a near doubling of union membership since 1989, when over 13 million workers were officially linked to nine CTUOs. This growth has incorporated the organisation of many informal workers, to which there are different approaches taken by different CTUOs. SEWA is perhaps the most important example of a CTUO which,

162   Informal labour and resistance while formally a trade union, has many of the characteristics of a labour-oriented NGO. Since the 1970s, it has demonstrated how to organise female workers en masse in a variety of informal occupations, such as weaving, pottery, garments, beedi rolling, street hawking, agriculture, domestic work and construction. SEWA has also succeeded in organising many home-based workers and offered novel tactics such as the promotion of employment opportunities to boost wages and increase women’s autonomy in the household (Ahn, 2007; Hill, 2009). However, the older CTUOs continue to dominate total union membership. Of the nine CTUOs who have submitted membership data for verification in 2012­–13, SEWA made up just 1.5 per cent of the total (based on the above statistics). Even if we take the older (verified) data from 2002, SEWA’s membership was about 2.8 per cent of total CTUO membership. Many established trade unions do not trust the motivations of SEWA, or other union-NGO hybrids such as the New Trade Union Initiative (NTUI), questioning their source of funds from governments or foreign institutions. Some unions have suggested that labour NGO activities are consistent with neoliberal propositions of state withdrawal in favour of service provision by ‘civil society’ (Gillan and Biyanwila, 2009). In part, this mistrust comes from fear of competition, but also from some international NGOs and ‘transnational feminist networks’, who receive funds from Western development agencies (Priyadarshini, 2011). This approach also problematizes the business-orientation often associated with initiatives such as self-help groups and cooperatives. Partly in response, these organisations continue to question the link between trade unions and political parties. There is no question that SEWA represents a different type of organisation than the older trade unions. SEWA stands out because its membership, primarily based in Gujarat and Madhya Pradesh, is mostly comprised of women who lack a clearly identifiable relationship with an employer. Although some rival CTUOs have also attempted to organise informal workers, they have not pursued this work in the same way. In addition, there is the National Centre for Labour (NCL), which was formed in 1995 as an alliance of organisations representing informal workers, including the National Federation of Construction Labour (NFCL), the National Fish Workers Forum (NFWF), the Kamani Employees Union (KEU) and other trade unions. SEWA was initially part of the NCL, but it broke away in the early 2000s. The KEU and other unions, including the NFFPFW, established the NTUI after this. In what sense do these organisations differ from the traditional trade union model? Trade unions continue to rely upon the state to engage employers in negotiations, often at the behest of Department of Labour bureaucrats or politicians at the local level. Many trade union leaders remain focused on recruiting members in organised sector firms with an identifiable employer–employee relationship, where there is a perceived potential to establish collective bargaining (Shyam Sundar, 2005; Hill, 2009). SEWA radically diverged from this approach decades ago. Recently, researchers linked to the International Labour Organisation (ILO) have outlined several different ‘models of organising’, which they present as alternatives to traditional trade unionism and a means of engaging

Informal labour and resistance   163 informal workers (Ahn and Ahn, 2012). Among these models are cooperatives, study circles, self-help groups, personal contact, friendship houses, skills development and social mobilising in the community. Initiatives to form cooperatives and self-help groups aimed at self-employed workers can lead in novel directions. For example, SEWA activists in Ahmedabad formed a cooperative in 2011 to organise around 300 female construction workers. The cooperative was able to find work for its members and, eventually, became the first women’s organisation to list as a labour contractor for the Indian transnational construction and engineering firm, Larsen and Toubro (Siddiqui, 2011). Acting as a labour market intermediary may be one means of creating space for women to create their own livelihoods, but it is radically different from the traditional model of trade unionism. Some scholars have gone as far as to argue that organising these informal workers changes the meaning of trade unionism (Chakrabarti and Dhar, 2008). The different models of organising required to relate to workers in different contexts implies that trade unions must either adapt and break out of their traditional model of organising solely focused on collective bargaining rights, or forge alliances with different types of organisations (Ahn and Ahn, 2012). Some have taken a pessimistic view about the potential of unions to adapt, pointing to ongoing mutual distrust between the mainstream CTUOs and other civil society organisations (Gillan and Biyanwila, 2009; Gillan and Lambert, 2013). The reasons outlined above – ongoing reliance on state sanctions and political patronage, the defeats and fragmentation of the 1970s and 1980s, heated industrial disputes and lockouts in 1990s and 2000s – all point to the difficulties of changing the orientation of unions. As outlined in Chapter 5, the experience in the auto industry in the NCR in recent years shows how major unions continue to struggle to relate to informal workers. In this case, CTUOs like AITUC and HMS have adapted to highly restrictive local and national labour laws by concentrating their efforts on a shrinking minority of regular workers. In other cases, genuine attempts to organise informal workers, such as some cases of powerloom workers and street vendors, have proved to be very difficult and beset with political interference designed to win votes in elections rather than to organise workers (Ahn, 2007: 93). It is probably reasonable to say that most workers in informal enterprises have never met a trade unionist and formal collective bargaining rarely exists within these enterprises. But there are also examples of considerably more successful efforts to organise informal workers. One novel response to the difficulties of meeting workers within the garments sector is to organise at an industry-level. Some labour activists linked to the NTUI have promoted the idea of a ‘floor wage’ for export garment industry workers in large factories (Asian Floor Wage, 2008). While the NTUI usually lacks ‘shop floor’ union organisation with a formal membership, this model is meant to adapt to the firm-supplier structure of value chains in these industries where commercial relations and labour standards are often dominated by lead firms. The idea is to try to influence industry standards by negotiating directly with lead firms, exporters and international branded companies. Other organisations in these sectors have focused on trying to organise

164   Informal labour and resistance workers over problems that arise directly on the shop floor. Unions with the largest influence are linked to CITU, especially in Tiruppur in Tamil Nadu, as well as AITUC, INTUC and HMS. In addition, there are major organisations linked to the two largest political parties in Tamil Nadu: the Marumarchi Labour Progressive Front, linked to the opposition DMK, and the Anna Labour Federation, linked to the current ruling party in the state government, AIADMK. There are other organisations affiliated to NTUI, such as the Garment and Textile Workers Union (GATWU) and the Garments Mahila Karmikara Munnade (Women Garment Workers’ Front). These organisations have established selfhelp groups among female workers, but they remain smaller than the CTUOlinked unions in the garments sector. Despite these efforts, it has been rare for workers to achieve formal collective bargaining in key export garments centres such as New Delhi, Bangalore or Tiruppur. Tobacco is another manufacturing industry where most work is undertaken by female home workers, with some also undertaken by street vendors. The dominant production process is beedi rolling, in which workers roll tobacco in a tendu leaf. In past decades, beedi workers have been involved in successful labour movements in some regions. While the scale of social protest is lower today, some labour organisations continue to organise beedi workers, including the All India Beedi Workers Federation (affiliated to CITU) and the All-India Beedi Cigar and Tobacco Workers Federation (affiliated to AITUC). Some of these organisations linked these activities to agitation for the Unorganised Workers’ Social Security Act 2008 which, as its name suggests, was supposed to provide social security for informal workers, including home workers (Sengupta, 2008a). However, there are several organisations working at a local and regional level. In Karnataka, for example, the SK Beedi Workers Federation has focused on winning the implementation of state minimum wages. SEWA activists have argued that lobbying for minimum wage implementation is only effective with employer and state involvement in ‘tripartite’ negotiations, otherwise employers will tend to shift work to areas where minimum wages do not apply or can more easily be evaded (Sinha, 2013). Other recent areas of activity among beedi workers include organisations raising demands around the delay or withdrawal of Labour Welfare Department scholarships for the children of labourers. These scholarships were designed to ensure implementation of Right to Education Act 2009, which stipulates compulsory free education for children below 14 years of age. The focus on education scholarships, as well as minimum wage implementation, shows that labour organising among beedi workers has moved beyond immediate ‘workplace’ concerns to address the wider social concerns of workers and their families. However, these examples also show that labour organisations in this sector are focused on winning workers’ access to their social security entitlements. Like garments workers’ organisations, there are rarely cases of collective bargaining at an enterprise level. A very different case involves the campaign for union registration and ‘regularisation’ of contract workers in the automotive industry in urban regions like the NCR. As outlined in Chapter 5, there has been significant class conflict in

Informal labour and resistance   165 this industry, with the most significant recent example involving Maruti Suzuki workers in Manesar in 2011–12. There has also been some conflict involving workers in electronics factories (Pratap, 2011). These struggles have often involved CTUOs like AITUC, HMS and CITU. Despite this upsurge in activity, the CTUOs involved in these disputes have struggled to achieve ongoing recognition from employers and have not been able to unionise significant numbers of contract workers. While employers and governments in Haryana have made it very difficult for unions to freely organise in organised sector manufacturing, there are some successful examples of union organising contract workers in other regions. In these areas, local unions have appealed to global union federations to counter the employment of contract labour by approaching global parent companies. Having failed to win permanency rights for workers through courts or by appealing to governments, some unions have won agreements with large corporations to curb the use of contract labour. For example, in 2005 the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF) formed an agreement with Coca Cola to win limited ‘regularisation’ and work guarantees for contract workers at its plant in the city of Hospet, Karnataka. In 2010, the IUF signed an agreement with the GlaxoSmithKline Horlicks factory in the town of Nabha, Punjab, to regularise all temporary workers (Shyam Sundar, 2012a). While these agreements remain the exception, they point towards new ways of providing rights for informal workers employed in organised sector manufacturing. There are also some success stories among retail trade workers. As outlined in previous chapters, there was a shift towards employment in retail trade across different urban regions in the 1990s and 2000s. This is a vast sector that encompasses small shops and bazaars, local markets, food and beverage stands and street vendors, as well as shopping malls and supermarkets catering for ‘middleclass’ people with higher disposable incomes. Consequently, there is a large variety of work types and employment arrangements. Street vendors, for example, are mainly self-employed sole proprietors. Among the millions of shop, stall and market workers that live and work in India’s urban centres, market towns and villages, the involvement of unions and NGOs is rare. Among street vendors, however, there are several organisations operating at a local and regional level. There are perhaps 250,000 street vendors living and working in Mumbai and about 200,000 in New Delhi (Austen Soofi, 2012). Most workers are from low castes, many are illiterate and few have attended secondary school. There are two main national platforms that claim to represent street vendors: the National Hawkers Federation (NHF) and the National Association of Street Vendors of India (NASVI). The NHF, based in Kolkata, identifies with left-wing political parties, whereas NASVI, based in Delhi, operates more as a service delivery organisation with funding support from international donors. Although most street vendors remain unorganised, both organisations have had some impact. The NHF claims 550 local organisations and 11 CTUO-linked trade unions as affiliates, with 1.1 million members across 25 states. NASVI was registered in 2003 as a ‘society’ and describes itself as a ‘coalition of Trade

166   Informal labour and resistance Unions, Community Based Organizations (CBOs), Non-Government Organizations (NGOs) and professionals’ (NASVI, 2012). It claims 300,000 members in 373 organisations across India and engages in policy advocacy, lobbying and local demonstrations, and provides support, education (through self-help groups), credit and financial advice to street vendors. Both the NHF and NASVI supported the introduction of the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Bill 2012. This is supposed to protect street vendors, who routinely face harassment, eviction or corruption in order to obtain permits to operate in public areas (Austen Soofi, 2012).2 The construction industry is another sector completely dominated by informal labour relations. The industry is divided between a few large construction firms at the ‘top’ of the industry and the fragmentation of employment among a huge number of subcontractors and informal enterprises at the ‘bottom’. According to the World Bank (2008), only 0.4 per cent of construction firms in India can be regarded as medium or large firms. Large real estate developers, industrialists and financial institutions control and finance major projects, but are removed from construction sites and do not directly execute projects. The structure of the industry allows employers to rely upon informal workers by shifting responsibility for labour recruitment, management and supervision onto a vast network of subcontractors and labour contractors. Most construction work does not require formal qualification, skills or even literacy. Most workers come from low-caste or, often, tribal backgrounds. The inability of agriculture to maintain stable livelihoods has influenced the creation of a floating labour force of people who migrate between their home villages and work sites on a seasonal basis. Lacking a strong social base outside their villages, this workforce is particularly vulnerable to serpentine employment arrangements and work conditions. Many workers are thus more focused on social outcomes at the village level, where their identity can be more visibly expressed and their collective rights asserted (Picherit, 2012). There are many labour organisations attempting to organise and help construction workers across India. While a serious presence at an enterprise level is rare, some trade unions exercise collective strength on a national level. There are also several state-level construction workers’ unions. The national-level federations are mainly affiliated to CTUOs. For example, the Indian National Building Construction, Forest and Woodworkers Federation (INBCFWF) is affiliated to INTUC and the Construction Workers Federation of India (CWFI) is affiliated to CITU. The agitation of these organisations is one reason behind the passing of the Building and Other Construction Worker Welfare (RE and Cess) Act 1996. Administered through construction workers’ welfare boards, this fund is designed to provide funds to workers to provide education for their children, tools for work and death benefits for families. But, like many other protective laws in India, the Cess Act suffers from poor implementation. Despite large amounts of money deposited with the welfare boards by collecting ‘cess’ from construction companies, comparatively few workers are registered with the board to receive social security benefits. However, the Cess Act has created some

Informal labour and resistance   167 scope in the last two decades to organise around workers’ rights and entitlements. Unionists try to list workers under the Act so they are formally eligible to receive entitlements. In order to do this, some organisations have appealed to solidarity at the community level. In general, unions try to make personal contact with workers in ‘labour chowks’. While the lack of worker bargaining power in labour chowks makes it extremely difficult for unions to exercise influence over workers, there have been some successes through the use of innovative organising methods. For example, the Delhi Shramik Sangathan (DSS) was able to organise construction workers in slum areas by forming a sister organisation for domestic workers, appealing to different labour identities within households. In addition, this organisation has linked labour demands to the housing rights of slum dwellers and the development of policies for rehabilitation and resettlement (Surendra Pratap, personal communication, July 2013). There are also organisations that try to organise and represent waste pickers. These workers collect waste or discarded material for commercial use, including rag-pickers and scrap collectors who recycle material or sell it to vendors. In many Indian cities, such as Delhi, the majority of waste-pickers are inter-state migrants. In some cases, there are labour organisations who act as co-operatives, organising employment for the workers. For example, the All-India Kabadi Mazdoor Mahasangh (AIKMM), formed in 2007, claims to represent over 17,000 waste-pickers in the NCR. Across India, the Alliance of Indian Wastepickers (AIW) is a national network of 35 organizations in 22 cities (WIEGO, 2013). Many of these organisations have attempted, sometimes successfully, to work with municipal government authorities to gain official recognition of informal waste-pickers and to include them in government programs to recycle and reduce waste. For instance, AIKMM has worked as part of the Government of Delhi’s waste management programs. As mentioned above, domestic workers are another category of informal workers and among the most vulnerable of all workers in India. Workers tend to be poor, low-caste and often illiterate, with little knowledge of their rights and entitlements. The position of domestic workers makes labour organising extremely challenging. It is difficult to organise workers in the sense of collective bargaining, either at an ‘enterprise’ (household) or even an industry level. Instead, most activists have campaigned to achieve formal recognition that these workers are disadvantaged and require special assistance from the state. For example, legislation proposed by the state-sponsored National Commission for Women attempted to push for registration of all domestic workers and placement agencies, the creation of a social security fund and the regulation of wages and working conditions. Recently, attention has turned to country implementation of the ILO Convention on Domestic Workers, which includes limits to working hours, minimum wage entitlements and freedom of movement for workers (John, 2012). In addition, there are many organisations claiming to organise domestic workers. Some organisations, like the National Domestic Workers’ Movement (NDWM), take an alliance-building network approach. Recently, the NCL-affiliated Karnataka Gruha Karmikara Sangha (KGKS) formed a new national trade union of domestic workers.

168   Informal labour and resistance Some organisations have responded at a regional level. For example, the Maharashtra Rajya Gharkamgar Kriti Samiti was formed in February 2011 as an alliance between domestic workers unions affiliated to AITUC, BMS, CITU, HMS, INTUC, NTUI and the Sarva Shramik Mahasangh to respond to shortcomings in the Maharashtra Domestic Workers Welfare Board Act 2008. After years of inaction, the Government of Maharashtra passed this legislation but provided little fiscal support (Patil and Ranade, 2011). Similar efforts have been organised in Delhi and Tamil Nadu. Other organisations focus on meeting workers in their places of residence (in the case of ‘live-out’ workers), some mobilise on the basis of regional identities, while others try to educate middleclass householders on their responsibilities as employers. SEWA even provides placement services itself, through cooperatives of domestic workers. It has organised training for women in ‘home nursing’, credit facilities, instructions on how to ‘carry’ themselves and outreach, in order to improve the social standing of domestic workers (Devika et al., 2011). Despite the variety of approaches, and competing organisations at a national and regional level, efforts to mobilise domestic workers as trade unionists has often been restricted to ‘live-out’ and part-time workers. In addition to the above examples, there are numerous other cases of unions and NGOs organising informal workers at a regional and local level. While they are not the focus of this book, there have been some notable efforts to organise rural and agricultural workers. Some organisations have tried to help workers access their rights under the NREGA, which was passed in 2005 to provide 100 days of voluntary manual work each year at the minimum wage for one member of each rural household. Organisations have tried to deal with problems in the programme, such as lack of work, late or non-payment of wages and corruption by local officials, while others have demanded higher wages. There are diverse approaches, with some organisations focusing on educating workers, while others are more focused on exposing non-implementation of the law. There have also been unions and political parties involved in rural movements against land acquisition, and other networks, like the National Forum for Forest People and Forest Workers (NFFPFW), have been established to organise and represent forest-dwelling peoples, who are mainly part of India’s diverse tribal communities and mostly self-employed. Finally, there are also unions and NGOs active in organising mining workers and their communities, including groups affiliated with several of the largest CTUOs, as well as networks in poor states like Chhattisgarh which have historical links to demands for regional autonomy. These cases illustrate the broad range of civil society organisations that attempt to organise, represent or relate to informal workers employed in various ‘forms of exploitation’. They include people who must migrate on a seasonal or temporary basis in search of waged employment. There are also many workers who would benefit from the full implementation of existing laws, such as the millions of construction workers yet to be formally registered under the Cess Act 1996. A further problem for labour organising in manufacturing and construction is the widespread involvement of labour contractors. A novel response to

Informal labour and resistance   169 this problem has been SEWA’s work as an alternative labour contractor for women in the Ahmedabad construction industry or through cooperatives of domestic workers. In other cases, organisations focus on assisting workers who are exploited through commercial relations in value chains. In urban areas, most of these are wage workers, although some are genuinely independent, selfemployed workers, such as street vendors who must earn enough ‘profit’ to survive. Street vendors must acquire products and establish a claim over the space needed to interact in local markets. There are other cases in which workers rely on vendors as suppliers and buyers and who, in effect, receive a wage income despite the absence of a traditional employer–employee or supervisory relationship. A large number of home-based tobacco and garment workers fall into this category. In these cases, the formation of cooperatives may be a very useful way of bargaining for regular work and higher prices. Waste-pickers and domestic workers can also benefit from a cooperative model, where there is no obvious employer–employee relationship and no realistic possibility of collective bargaining in the absence of an ‘enterprise’. Finally, there are numerous informal workers engaged in organised sector employment who would benefit from stronger labour organising of a more ‘traditional’ variety. For example, casuals or workers hired by labour contractors employed in large garment factories, automotive assembly, components manufacturing or electronics factories need unions that campaign for higher wages, employment security and union rights. As mentioned, there are a handful of cases of global union federations establishing collective agreements to ‘regularise’ workers with large employers where it has not been possible to implement existing contract labour laws. The impact of these efforts remains small, so it is likely that the debate about how best to respond to contract labour will continue. How do we assess the role of the different labour organisations, including the CTUOs, in these organising efforts? Clearly, several labour NGOs and some newer labour organisations have succeeded in organising groups of informal workers and establishing a meaningful profile. SEWA has established a presence organising garments, beedi and domestic workers into self-help groups and cooperatives. Other labour NGOs activities include the AIKMM’s work among wastepickers and NASVI’s efforts among street vendors. However, there seem to be more cases in which trade unions with links to the larger CTUOs have successfully organised informal workers. Despite concerns about trade union reliance on political patronage and regular workers in the organised sector, some unions have adapted positively to the process of informalisation over the past two decades, including those working among street vendors, beedi workers and, to a lesser extent, construction and domestic workers. Unions linked to the larger CTUOs like INTUC, AITUC, HMS and CITU have grown significantly and remain the numerically- and politically-dominant component of the labour movement. It seems inconceivable that ongoing problems with the representation and organisation of informal workers can be addressed without the core involvement of these unions. If progress is to continue, these unions must take on the lion’s share of organising efforts. The labour NGOs and NGO-like unions have not established the

170   Informal labour and resistance membership or the social roots to replace these organisations. A relevant labour movement orientation in India today primarily means encouraging efforts where unions have clearly adapted and pointing to ongoing weaknesses in existing efforts. For example, unions have not yet fully adapted to cooperative organising and industry-level bargaining for garment workers and domestic workers or, with a few exceptions, to the innovative methods needed to relate to construction workers. In some cases, adaptation means changing their internal strategies while, in others, it means alliance-building with labour NGOs and other civil society organisations. Within manufacturing, many unions remain pragmatically fixated with the representation of regular workers rather than the organisation of temporary and contract workers. Labour scholars can help to address these problems and omissions through critical participation as part of the growing trade union movement. Many of the campaigns to organise informal workers in recent years are more than just a challenge to the conservatism of sections of the trade union movement. Some represent a challenge to the notion of trade unionism itself, certainly as it has been historically conceived in India. Some campaigns suggest, for example, that unions should be part of broad civil society movements that intervene beyond workplaces into communities and households. This book has tried to address how uneven and combined development in the past three decades has transformed the structure of labour forces in India. Understanding the changing structure of labour is a very important part of strategising how more effective labour movements can be built. A common feature of this change has been the tendency towards the employment of wage labour. But capitalist development has never been a homogenising force: it has pushed workers into, arguably, a greater variety of jobs and occupations than ever before and created new problems and challenges. A major rise in waged employment in informal enterprises in urban regions suggests that workers now have fewer rights, fewer protections under labour laws, less collective bargaining power and less say over their wages and employment conditions. More home-based work means that workers have fewer opportunities to negotiate the terms of their labour. Employing more workers through labour contractors has made it harder for these workers to achieve decent wages, employment security and union rights. But workers also retain significant collective economic power. Although it represents a minority of workers, the organised sector concentrates workers together in much greater numbers at the point of production. From here, there is enormous potential to strengthen the base of the labour movement. Industrialists have concentrated casuals, day labourers, unregistered workers and workers hired by labour contractors together with regular workers, transplanting informal labour conditions into organised sector firms and generating enormous wage inequality, insecurity and resentment. These workers retain the power to not only collectively organise and bargain for their own wages and employment conditions, but to lead powerful social movements that can potentially include workers in informal enterprises, household and communities who lack this structural economic power. The history of Indian labour shows why this potential can never be fulfilled automatically. It requires critical self-reflection, strategic thinking and the political

Informal labour and resistance   171 desire to represent the interests of all workers. A crucial issue is whether unions continue to allow the segmentation of labour generated by informalisation to undermine this potential. Unions will not be able to thrive in the future unless they focus on the organisation of workers in informal enterprises as well as the interests of informal workers in the organised sector. The ability of capital to exploit divisions among workers has often been instrumental in thwarting union efforts. For these reasons, the ongoing isolation of trade unions in the organised sector will continue to undermine the labour movement’s relevance if not confronted in a strategic and systematic way: A trade union strategy which is content to do little more than attempt to prevent the deformalisation of enclave production, and which does not bother itself about the fate of the many more men and women who work in the ‘unregulated’ part of the economy, is doomed to failure before it even starts. (Breman, 1996: 248) The final chapter in this book has tried to point out some cases where changes are being implemented, while remaining focused on the enormous challenges that remain. Labour activists have a choice over whether the challenge of informalisation is confronted or whether labour organisations continue to focus on dwindling numbers of workers measured within an industrial relations framework of questionable relevance. Informalisation marks the most recent phase in India’s historical development, intersecting with the gradual implementation of neoliberal economic policies by successive governments. It has generated new modes of dispossession and exploitation among India’s hugely diverse ‘classes of labour’. Hope for the future lies with the resistance of these workers. Understanding how the structure of labour has changed can help us contribute to building this resistance.

Notes 1 See Chapter 5 for a discussion of this in the New Delhi region. 2 At the time of publication, this bill had just become a new law.

Appendix

As indicated in Chapters 1 and 2, this book uses a combination of methods. It uses data analysis from government-organised surveys of employment as well as critical analysis of secondary source material. In addition, Chapter 5 includes data from the author’s field research in the National Capital Region (NCR). This appendix is offered for those readers who are interested in more information about these methods. To begin with the government data, the main source, was the Economic Census (EC). As explained in Chapter 2, the EC’s main purpose is to measure activities in the non-agricultural unorganised sector. It has been conducted six times: in 1977, 1980, 1990, 1998, 2005 and, most recently, in 2013 by the Central Statistical Organisation (CSO) based at the Ministry of Statistics and Program Implementation in New Delhi. Field work surveys are conducted by the Directorates of Economics and Statistics in each state of India. EC data is based on surveys of all households and firms that produce commodities (‘establishments’). Crop cultivation is excluded from the EC, although it does record a few agricultural and related activities like livestock production, agricultural services, hunting, trapping and game propagation, forestry, logging and fishing (Government of India, 2008). As also indicated in Chapter 2, data collection for the sixth EC was conducted from June to October 2013, but new EC reports were not available at the time of writing. Evidence from EC reports is used to construct time-series data used for the analysis throughout the book. Constructing time-series data from the EC raises a few issues. First, the categories used to measure economic activity and employment have changed between different ECs. These categories are known as National Industry Classifications (NICs). There were some changes to NICs between the EC-1998 and EC-2005. The latter used NICs updated in 2004, whereas the former used NICs updated in 1987 (Government of India, 2004). In the book, I used the more recent NICs from 2004. These are: • • • • •

mining and quarrying manufacturing electricity, gas and water supply construction sale, maintenance and repair of motor vehicles and motor cycles

Appendix   173 • • • • • • • • • • • • •

wholesale trade retail trade hotels and restaurants transport and storage post and telecommunications financial intermediation real estate, renting and business services public administration defence and compulsory social security education health and social work other community, social and personal service activities other activities.

While the changes between NIC-1987 and NIC-2004 are often minor, they can potentially impact upon the accuracy of data analysis unless carefully managed. For example, education, health and social work, and public administration were all counted as part of ‘community, social and personal services’ in EC-1998. Additionally, ‘sale maintenance and repair of motor vehicles’ was included as part of retail and wholesale trade in EC-1998. In the book, my main approach to these problems was to exclude data that that had been substantially affected by major changes to NICs. As a general rule, I did not analyse time-series data on the number of establishments or employment for the following categories in order to eliminate problems with dataset comparison: • • • •

public administration education health other community social and personal services.

In the book, I also managed some data limitations for EC statistical reports at a state level. For Chapter 5, which uses EC data from the National Capital Territory (NCT) of Delhi and Haryana, the following limitations should be noted. For the NCT, changes to employment by the number of workers per establishment cannot be measured in as much detail as other states. Unlike Maharashtra (Chapter 3), Karnataka (Chapter 4) or Haryana, these changes could only be captured for establishments in three categories: fewer than six workers, 6–9 workers and 10 or more workers. Also, it is not possible to calculate time-series data for employment by district in the NCT due to the absence of the districtwise data in the EC-1998 report (Government of the NCT, 2000). Third, it is not possible to cross-tabulate data between specific industries and the number of workers per establishment for the NCT. Fourth, further changes to the NICs since 1998 mean that time-series data for changes to employment by industry are calculated by treating ‘manufacturing’ and ‘repair of motor vehicles, motor cycles, personal and household goods’ as a single category for EC-2005 and by

174   Appendix treating ‘transport’ and ‘storage and warehousing’ as a single category for EC-1998. Consequently, for all analysis of NCT data in Chapter 5: • • • • • •

‘manufacturing’ refers to ‘manufacturing, repair of motor vehicles, motor cycles, personal and household goods’ ‘transport’ refers to ‘transport and storage’ ‘electricity’ refers to ‘electricity, gas and water’ ‘restaurants’ refers to ‘restaurants and hotels’ ‘finance’ refers to ‘finance, insurance, real estate and business services’ ‘community’ refers to ‘community, social and personal services’.

Data limitations for Haryana (also in Chapter 5) are as follows. Unlike the other states, employment data in the Haryana EC has not been cross-tabulated with data on the number of people employed per establishment. Consequently, EC analysis for Haryana describes data in terms of: (1) industry cross-tabulated with the number of people working by district; and (2) the number of establishments cross-tabulated with the number of people employed per establishment. In addition, data for the number of establishments by employment size category is available only for urban and rural areas ‘combined’. I refer to this in Chapter 5 only where it affects the description of data in relevant sections. Since all EC data excludes crop plantation and production, most of the data captures trends for establishments in urban areas. As such, it is assumed that the inclusion of ‘combined’ data in some instances has not significantly distorted the description of trends in urban areas. Apart from EC data, the other major source of government data used in the book comes from the National Sample Survey Office (NSSO). As explained in Chapters 1 and 2, the NSSO provides highly-detailed information on employment, unemployment and household consumption based on regular household surveys. In this book, NSSO data analysis covers the period from 1993–94 (NSSO fiftieth round) to 2011–12 (NSSO sixty-eighth round). All NSSO employment data used in the book refers to occupations based on ‘usual principal activity status’ and ‘subsidiary economic activity status’ combined (Government of India, 2013). Usual principal activity status refers to the economic activity in which a person spent a ‘major’ amount of time in the year prior to the survey. Subsidiary economic activity status is activity in which a person spent a ‘relatively shorter time’ in the year prior to the survey; in other words, this activity was ‘subsidiary’ to the ‘principal activity’ during the previous year. This definition (written as ‘usual status ps+ss’) presents a more accurate picture of employment in India, as it incorporates activities that reflect people working in more than one job and takes into account people moving between jobs over the time-period of the survey (Government of India, 2013). Finally, Chapter 5 includes data from the author’s fieldwork in the National Capital Region. This fieldwork was based on interviews with workers, managers, trade unionists and labour contractors in Faridabad, Gurgaon and Manesar, as well as Ohkla in South Delhi, conducted over different periods from 2007 until

Appendix   175 2013. Workers in agricultural machinery production, business services, export garments and hospitality industries were interviewed. However, the majority of workers came from the automotive industry. I studied this industry for seven months in November–December 2011, December 2012 and February–May 2013, conducting semi-structured interviews with 65 workers, 11 employers, four labour contractors, eight trade union officials and one industry representative. Much of the specific analysis of the auto industry in Chapter 5 comes from Barnes et al. (2013). Among labour activists we spoke to were representatives from the All-India Trade Union Congress (AITUC), the Hind Mazdoor Sabha (HMS), the Centre of Indian Trade Unions (CITU) and the New Trade Union Initiative (NTUI). In addition to formal interviews, discussions with many workers took place informally in local communities, public areas and nearby work sites.

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Index

Page numbers in italics denote tables, those in bold denote figures. 1905 (Trotsky) 14 absentee ownership 27 absolute surplus value 21, 150, 154, 158; home-based labour and the appropriation of 158 accumulation: by dispossession 22, 159; primitive 13, 22; social structures of 2–3, 23, 25–6, 34–7, 54, 66, 91, 145, 147 agrarian class differentiation 147 agrarian economy: growing economic inequality and social class differentiation 3; traditional livelihoods, undermining of 22 agrarian reforms, limitations 26, 146 agricultural subsidisation, Indira Gandhi’s prioritisation of over industrial development 28 agriculture: impact of postcolonial land reforms on 26; regulatory exemptions 9; share of India’s economic output 23 Ahmedabad: consequences of informalisation 43; outsourcing history 50 All-India Trade Union Congress (AITUC) 161, 163–5, 168–9 anti-business measures, governmental 8 anti-monopoly restrictions: impact 11; removal of 9 Arrighi, G. 56 associational power 60 automotive industry: economic impact 138; growth in casual labour 143; growth trajectory 7–8; impact on industrial employment practices 149, 157; industrial unrest 142–3; labour

relations 106, 142, 164; and land acquisition 137; transformation 139 Automotive Mission Plan (AMP) 8 Bajaj 81 balance-of-payments instability 1 Banaji, J. 5, 21–2, 32, 48 Bangalore (Bengaluru): emergence as a global IT-enabled services hub 99; measuring informal labour 93–9; motor vehicle production 101; overview 92; population 92; public sector workforce 100–1; services-led development model 92; SEZ establishment 102; small-scale production, growth in 101; state-owned firms 100; technology sector 100; trade union movement 104–6; urban geography 102; wage labour trends in formal and informal enterprises 99–108 Bardhan, P. 53 Basole, A. 31–3 Basu, D. 31–3 Bayer 81 beedi rolling industry 31, 49, 162, 164–5, 169 Bernstein, H. 28, 34, 49 Bhaduri, A. 30, 63 Bharatiya Janata Party (BJP) 2, 33–4, 148 Bhattacharya, R. 32 black economy 5 black market 28, 42 Bombay Plan, criticisms 9 bonded labour 26, 48, 62–3, 157 Breman, J. 6, 42, 49–51, 54, 132, 157 BRIC economies 1 British colonialism, impact on land reform 26–7

196   Index Burawoy, M. 19 business policies, impact of favourable 8 Cadbury 81 call centres 102, 104, 109, 130, 136–7, 151 Capital (Marx) 22, 60, 62 capitalism: exploitation and 48; India’s peculiar variety of 6 capitalist development, India’s conditioning characteristics 2 caste: in EC data 68; and employment choice 132; formal recognition 25; influence in the export garments sector 25; influence on social relations and occupational roles 24, 26; and the IT industry 102; and limits to fraternisation 54; role of in occupational division of labour 25 caste oppression 157 caste-based labour relations 145 casual and temporary workers 158 casual/contract labour: characteristics 49; and cost reduction 84; in EC data 67; employment share 32–3, 78; and evasion of protective labour laws 51, 87; female 31, 102, 134–5, 156; formal enterprises’ hiring practices 44; gendered perspective 102, 112, 134–5; growth in automotive industry 143; historical perspective 91; impact on wages and working conditions 134–5, 141–3, 148, 150–2, 156–7; industrial unrest and 106–7; industry’s reliance on 143; and labour relations 141–2; legislation 50, 53, 55, 157, 160; off the books 87; and segmentation 50; Toyota’s employment policy 106; unionisation attempts 141–3, 164–5 casualisation 29, 57 Cess Act 1996 (Building and Other Construction Worker Welfare Act) 161, 166, 168 Chandrasekhar, C.P. 11 Chang, D. 36, 47, 52 Chen, M.A. 46–7 Chibber, V. 10 child labour 25, 49, 147 children, education provision 166 China: employment of informal Labour 5; Trotsky’s analysis 17 Chowdhury, S. 33 circulation/circular migration 12–13, 18, 54, 68, 146

civil society organisations 4, 19, 41, 146, 163, 168, 170 class conflict 20, 90–1, 105, 143, 148–51 class formation, informal labour and 23–34 class hierarchy, Standing’s proposal 57 classes of labour approach 41, 49, 57, 171 class-oriented approach, versions 10 collective bargaining 46, 57, 143, 150, 160, 162–4, 167, 169–70 collective organisation 59–60 commodity production: blurring the boundaries between subsistence farming and 64; and forms of exploitation 58; gendered perspective 71, 98, 116–17, 124, 155; home-based focus 145–6, 155; restructuring 154; role of sole proprietors 98; and unpaid labour 48; waged labour and 82 Communist Manifesto, The (Marx/Engels) 60 compressed capitalism 13, 22, 145 construction sector, share of secondary employment 6 cooperative model, of worker organisation 162–3, 167–70 corruption 45 corvée economy 63 corvée labour 64 Cox, R.W. 58 Crimean War 16 D’Costa, A.P. 13–14, 34 D’Monte, D. 76, 84, 91 Daihatsu 101 Datta, R.C. 131 Davis, M. 60 De Soto, H. 42 de-industrialisation 75, 85, 148 Delhi, female labour force participation rates 24 development: industrial, in contemporary India 4–13; uneven and combined 13 developmental state, capitalist sabotage 10 dispossession 3–4, 59, 63, 65, 146, 159, 171; accumulation by 22, 159 disputes 103–5, 140, 159, 165 division of labour 24–5, 40, 82, 117, 122, 124, 130 droughts 10, 28 dualism, persistence of 53–8 Dunn, B. 48 Economic Census (EC): employment data analysis 69, 70, 71, 72, 73;

Index   197 establishment categories 67; gendered perspective 70; main purpose 67; rise in female share of employment 70; scalar perspective 71–2 economic liberalisation 4, 8, 12–13, 23, 29, 36, 40, 66–7, 91–2, 100–1, 104, 107, 131, 151, 160 economic reforms, neoliberal, implementation of 1 economic stagnation, industrialists’ contribution to India’s 11 education: and employment in IT 102; employment trends and statistics 6, 118, 120; and female employment 130; funding 166; legislation 2, 164; women’s employment in 120 embedded autonomy 10 embourgeoisement 34 emerging industries, facilitation of 3 employment practices, adaptations 12 employment-based definition of informality, characteristics 44 Engels, F. 59–60 entrepreneurship 42, 45, 52 establishments with hired workers (EHWs) 67, 69–73, 76–83, 91, 93–8, 111–14, 116, 118, 120–2, 124, 127–8, 152–4; employment in by industry 69; employment in manufacturing 112; gendered perspective 120; impact of employment changes 113–15; scalar perspectives 71, 72, 84, 113, 121–2; share of urban employment 68–9 Evans, P. 10 exploitation 4, 13, 21, 32, 41, 47–8, 50, 53, 62, 66, 105, 150–5, 171; capitalism and 48; of female labour 127; forms of 5, 13, 41, 47–8, 53, 58, 66–7, 168; prevention legislation 50; weakness of restrictions on 12 export earnings, and the growth of the IT industry 7 Factories Act 1911 9 Factories Act 1948 9, 12, 88, 123 female labour force participation: cultural perspective 134; Delhi 112, 130, 133; increase in 134; Karnataka 102; marital status and 133–4; regional comparisons 24, 74, 101, 130; rise in 94, 112, 118, 134; types of employment 98, 101, 112; variance 74; and wages 102 feudal remnants 30 flexible labour practices 54, 150, 156

food security, legislation 2 ‘footloose’ labour 13, 54–5, 145, 149 Ford 8, 139 foreign capital, attraction of by favourable business policies 8 foreign exchange crisis, impact on the planning regime 11 Foreign Exchange Regulation Act 1973 8 foreign investment, expansion of 9 foreign ownership laws, changes to in Karnataka 100 formal sector employment, growth in 5 formal sector enterprises, expansion of informal wage labour in 3, 52 formal subsumption of labour 21–2, 24, 32, 154, 158 forms of exploitation 5, 13, 41, 47–8, 53, 58, 66–7, 168 Gandhi, Indira 8, 11, 24, 28, 139 Gandhi, Rajiv 9 Gandhi, Sanjay 139 Garment and Textile Workers Union (GATWU) 164 Garments Mahila Karmikara Munnade (Women Garment Workers’ Front) 164 gendered perspectives: casual/contract labour 102, 112, 134–5; commodity production 71, 98, 116–17, 124, 155; employment trends and statistics 70, 98, 116, 118, 120, 124; female labour force participation see female labour force participation; of informalisation 55, 130; OAEs 120, 124; retail trade sector 111– 12; self-employment 33, 163; social relations in small firms and households 24; trade union membership 162 general election, 2014 2 Global South: growing importance of wage labour 60; role of informal labour 4–5 global value chains 44, 133, 144 globalisation 8, 34–5, 104 Great Recession 1 Green Revolution 28, 30, 147, 149 growth of informal labour, overview 1–3 Gujarat 28, 33, 49, 54, 148, 157, 159; agricultural success 147; Breman’s analysis of ‘footloose labour’ in 54; informalisation and improvements in development indicators 42–3; migrant workers 49–50 Gulf War 35 Gurgaon, industrial transformation 8

198   Index Harriss-White, B. 45 Harrod, J. 58 Hart, K. 41 Harvey, D. 22 Haryana: corporate sector 136; employment trends and statistics, gendered perspective 24, 70, 118; importance of waged labour in 117; industrialisation process 136–43; rate of growth of organised sector manufacturing 5; urban centres of 117 health, employment trends and statistics, gendered perspective 120 Hero Honda 138, 140–2 high-growth economy, India’s shift to 1 High-Yielding Variety seeds (HYVs) 28–9 Hind Mazdoor Sabha (HMS) 161, 163–5, 168–9 hired workers, establishments with see establishments with hired workers (EHWs) historic backwardness 15 History of the Russian Revolution (Trotsky) 14 ‘hollowing out’ of large-scale industry 3, 110, 149, 152, 159 Holmström, M. 56 home workers 44, 52–3, 153–4, 164 home-based labour: and the appropriation of absolute surplus value 158; child labour 133; class perspective 31; and commodity production 82, 98, 145–6, 155; and cooperative formation 169; definition 52; and division of labour 40; dual character 153–4; employment trends and statistics 79, 83, 98, 124, 133; in the export garments sector 25; formal subsumption of 22; gendered perspective 71, 98, 130, 132–3, 155, 162; and global value chains 133; growing role 124; home-based workers vs home workers 52, 153 (see also home workers); impact of industrialisation on 146; and labour movements 162, 170; Maharashtra 83; significance of 145; and slum clearances 128–9; and social relations 29; subsumption of 158; supply chains 133; surpluses 3; unpaid 82; working conditions 3, 147 Honda 7, 138–40, 149 household industry, declining job creation 98 HSBC 81 human capital 13

Hyundai 8, 139 import-substitution 100 Indian economic growth: Marxist perspective 13–23; overview 1, 1–3; post recession decline 1 Indian National Trade Union Congress (INTUC) 160–1, 164, 166, 168–9 industrial capital: impact of India’s planning system on 11; partiality of resurgence 145 Industrial Disputes Act 1947 9, 11, 29, 53, 55, 160 industrial relations, regulatory perspective 8–9, 11 industrial technology, lack of investment in 11–12 industrial transformation, India’s 2 industrial unrest: automotive industry 142– 3; informalisation and 103–7; see also lockouts; strike action industrialisation: drivers 100; Indian government’s ambitions for 9; the path of India’s 4–7, 9, 59, 61, 63, 65–6, 100, 105, 107, 110, 143, 146; uneven process of 4 industry restrictions, removal of 9 inequality 4, 17, 23, 54 informal economy, three perspectives 40–1 informal employment: colonial roots 24; growth of in the 21st-century 12 informal employment arrangements, systematic preference 4 informal enterprises: clustering tendencies 128, 133; expansion of wage labour in 3 informal labour: meaning of 5; theories of 41–53 (see also theories of informal labour) Informal Labour in Urban India: content and function 4; focus 2–3; methodology 172–5; structure and aims 34–8; themes and approach 1–38 informal sector: characteristics 43; concept history and analysis 41–2 informalisation: consequences of 42–3; explaining 146–51; Faridabad and Gurgaon 135; impact on women 130; Karnataka 103; and labour’s changing structure 151–9; the process of 12; and workers’ resistance in the neoliberal era 159–71 informality: concept history 58; defining 5, 43–5; employment characteristics 46; enterprise-based approach, weaknesses

Index   199 44; evolution of the ILO framework on 43; measuring 51–2; as ‘obverse of proletarianisation’ 56; positive characteristics 46; and the role of the state 45; types of employment 46 intermediate classes 26–8, 31, 33–4, 45 Inter-State Migrant Workmen Act 1979 50 Iran 14 IT industry 7–8, 13, 93, 95, 99–102, 151; Bangalore 102; demographic perspective 102; drivers of growth 7; growth trajectory 7; Karnataka 102–3; work culture 104 Jha, P.S. 27–8, 31, 34 Kalecki, M. 25–7 Karnataka: economic growth in 93; employment trends and statistics 93–9; female labour force participation 24, 101; gendered perspective 70, 98, 101; high-tech services sector 99; industrial growth 101; industrial unrest 103–7; large-scale industry, waged employment growth 98–9; measuring urban informal labour 93–9; preferential treatment for software service firms 100; rate of growth of organised sector manufacturing 5 Kidron, M. 10 Kirloskar Group 101, 106 Kuwait, Iraq’s invasion of 35 labour, the changing structure of 151–9 labour laws (see also legislation) 24, 51, 55, 83, 129, 132, 143, 148, 153, 158, 160, 170 labour migration, reasons for 54 Lakatos, I. 19 land acquisition 18, 86, 92, 100, 137, 159, 168 land redistribution 6, 146 land reforms 27–8, 30, 146 landlessness: and employment choice 132; and footloose labour 54; and migration 29, 32; persistence of 23; and sources of income 3; Trotsky on the creation of 16 large-scale industry, ‘hollowing out’ of 3, 110, 149, 152, 159 Larsen and Toubro 163 latifundia 63 Latin America, employment of informal labour 5 legislation: casual/contract labour 50, 53, 55, 157, 160; education 2; exploitation

prevention 50; food security 2; foreignexchange regulation 8; industrial disputes 9, 11, 29, 53, 55, 160; livelihood protection 166; migrant workers 50; rural employment 161; SEZs 159; social security for informal workers 2, 164; unprofitable operations 29; welfare 161, 166, 168 Lenin, V.I. 30, 62–5 liberalisation, irreversible process 9 lockouts 140, 142, 149, 160, 163 Maharashtra: employment trends and statistics 76–83; female labour force participation rates 24; growth rate 76; large-scale production units 81; measuring urban informal labour in 76–83; rise in female share of employment 70 Mahatma Gandhi National Rural Employment Guarantee Act 2005 161 manufacturing: centralisation of production 105; Delhi 135; EC employment data 69; employment trends and statistics 6, 33, 40, 69, 72–3, 79, 86, 93, 111, 113–14, 116–17, 122–4, 135; erosion of waged employment in 82; and exploitation 153; gendered perspective 98, 112, 135; GVA statistics 86–7; Haryana 118, 122–4, 135–6; impact of EHW employment changes 113–14; importance of to waged employment 112; Karnataka 93–4, 97; labour organising challenges 168, 170; Maharashtra 79, 81; Mumbai 81; New Delhi 113–14, 117–18; and SEZs 137; share of NSDP 76, 86; and surplus value appropriation 158 mapping informal labour in India: Marxism and informal labour 58–65; persistence of dualism 53–8; regional analysis 68; uneven and combined development 65–74 (see also uneven and combined development) mapping labour in the informal economy 47 Maruti Suzuki (Maruti Udyog) 7, 138–42 Marx, K. 59–60 Marxist perspectives: of informal labour in India 58–65; modes of production development 30; similarities to liberal modernisation theory 14; surplus populations 61–2, 68, 147, 157; uneven and combined development see uneven and combined development

200   Index Mazumdar, D. 130, 132–3 McCartney, M. 10–11, 27, 31, 34 Mexico 14 Mezzadri, A. 25, 31, 133 MICO 103 micro-enterprises 5, 42 middle classes 7, 34, 151 migrant workers 3, 24, 29, 50, 52, 54, 68, 88, 130–2, 150, 155–6; Delhi 130–2; distress driven migration 32; dominance in the Bombay labour market 88; systematic preferences for 54 migratory labour, surpluses 24, 159 migratory patterns, and labour organisation 12 minimum wage 2, 12, 46, 49–50, 143, 150, 155, 164, 167–8 modes of production debate 29–30 Modi, Narendra 2 Monopolies and Restrictive Trade Practices Act 1969 8 Mumbai (Bombay): consequences of informalisation 43; diversity in the labour market 81; factories, closures and workforce attrition 84–5; measuring urban informal labour 76–83; outsourcing history 50; overview 75; population 76, 92; spatial reorganisation 85–6; studies of class struggle in 76; textile mills’ history 11–12; textile strike 87–90; wage labour and informal enterprise, explaining the trend 83–91 Muslims, targeted attacks on 2 National Capital Territory (NCT): geographical redistribution of industry 127; rise in female share of employment 70 National Fish Workers Forum (NFWF) 161 National Food Security Act 2013 2 National Forum of Forest People and Forest Workers (NFFPFW) 161–2, 168 neo-bondage 49 neoliberalism 34, 40, 55 New Delhi: employment trends and statistics 110–17, 117–27; gendered perspective 111, 116; geography, gender and industry in Delhi 127–35; industrial restructuring 127; informalisation, impact of 132; overview 109; slum clearance policies, and their impact 128–9, 131; wage labour in formal and informal enterprises 135–44

New Delhi–Bangalore–Hyderabad consensus 7 New Textile Policy (NTP) 85 non-regular workers, typology 87 organisations, informal workers’ 161 organised sector, definition 5 otrabotki 63 own-account establishments (OAEs) 31–2, 46, 48, 52, 79, 133, 144; employment in by industry 70; employment trends and statistics 77, 79, 94, 95, 98, 111–12, 113, 118, 120, 124; gendered perspective 120, 124; operational tendencies 133; scalar perspective 71; share of urban employment 69 Pakistan 10–11 payment in kind 63 Pears 81 planning regime: emergence of an incoherent 10; impact of the foreignexchange crisis on 11; ineffectiveness 12; influence on the expansion of informal employment 11; peculiarities of India’s 11 pollution, New Delhi 128–9 post-agrarian capitalism, India’s 6 poverty 1, 23, 42, 62, 75, 132; as driver of migration 32; persistence of in rural areas 23; scholarly association of informality with 42 precariat, definition 57 precarious labour 3, 22, 54–5, 62, 87, 150 primitive accumulation 13, 22 privatisation 34, 160 proletarianisation 40, 56–60, 62–3 proletariat 17–18, 42, 55, 57, 59 property rights 26–7, 30, 42 prosperity, barriers to 1 public investment, state mobilisation of 10 public sector 6, 9, 11, 26, 34, 45, 51, 55, 69, 79–82, 92, 100–1, 103–4, 106, 112, 118, 130–1, 145, 148, 159–60 Punjab 28–9, 131, 136, 138, 147, 165 Rani, U. 132 Rao, Narasimha 35 Rashtriya Swayamsevak Sangh (RSS) 2, 148, 161 reactionary ideas, vulnerability of informal labourers to 60 real subsumption of labour 21–3, 158

Index   201 recruitment 141, 150, 156–7 Reliance 81 rent flows 18 rent system 63 rentier landlords 26 rent-seeking 28, 45–6, 55 resistance 4, 18, 48, 58, 146–71 restructuring 8, 12, 50, 81, 83–4, 87, 90–1, 104, 114, 116, 127, 129–30, 132, 135, 140, 149, 154 Results and Prospects (Trotsky) 14 retail trade sector: EC employment data 69; EHW employment 81, 118–19; employment trends and statistics 40, 69, 72–3, 79, 82, 93–4, 111, 115, 117–19, 123, 130; gendered perspective 111–12; Haryana 115, 118, 122; home-based 83 (see also home-based labour); Karnataka 98; Maharashtra 81; Mumbai 81; OAE employment 33, 79, 98, 118– 19, 133; sector description 165 Right to Education Act 2009 2, 164 riots 59, 90 roadside traders 129; see also street vendors Roy Chowdhury, S. 103, 105 rural households 25 Russia 1, 17, 62–5 ryotwari system 26 Samant, Dutta 89 Sanyal, K. 32 secondary employment, manufacturing’s share 6 Self-Employed Women’s Association (SEWA) 161–4, 168–9 self-employment: among forest-dwelling peoples 168; centrality in Indian labour markets 3; and class 31; and EC definition of OAEs 154; gendered perspective 33, 163; and home-based work 153; as quintessential form of livelihood in the informal economy 32; and street vending 165, 169 (see also street vendors); and subcontracting arrangements 51–3; trends and statistics 32–3, 152; women’s association (SEWA) 161–4, 168–9 self-help groups 162–3, 166, 169 semi-feudalism 30 serfdom: Lenin on the abolition of 63; Trotsky’s views on the abolition of 16 services sector: EC employment data 69; employment trends and statistics 6, 118

services-led path, of economic development in India 5 Sick Industries and Companies Act 1985 29 Silver, B. 60 slave labour, impact on Russian economy 16 slums 86, 128–9, 131 small-scale enterprises, national trends 71 small-scale production, explaining the trend towards 83–91 social labour 36 social relations 16–17, 20–1, 24–6, 29–31, 58–60 social security 2, 12, 34, 50, 79, 118, 133, 164 social structures of accumulation 2–3, 23, 25–6, 34–7, 54, 66, 91, 145, 147 sole proprietorships 46, 77–9, 82, 98, 111, 133, 154, 158; definition 94 Sony 81, 136 South Asia, capitalist development, trajectory of 6 Special Economic Zones (SEZs) 7, 22, 92, 100, 102, 137; Haryana 102, 137; incentive provision 137; Karnataka 100; legislation 159 squatter settlements, New Delhi 128 Standing, G. 57 state ownership 24, 100 street vendors 3, 156, 163–6, 169 Street Vendors (Protection of Livelihood and Regulation of Street Vending) Bill 2012 166 strike action 50, 61, 87–90, 103, 142; Congress policy 160; Hero Honda 140– 2; MICO workers, Bangalore 103; outlawing of 106; public sector workers 104; textile industry 87–90, 148; wildcat 142; see also industrial unrest subcontracting 8, 12, 29, 31, 44, 49–52, 57, 87–8, 128, 137, 139, 147, 149, 153, 166 subsidisation 3, 8, 10, 28, 30, 35, 100, 129, 139, 159 subsumption of labour 21–4, 32, 154, 158; Marx’s distinction between the ‘formal’ and ‘real’ 21–2 surplus populations 61–2, 68, 147, 157; Marx’s typology 61 Suzuki 7, 139, 149 Tata Motors 81 tax avoidance 5, 28

202   Index tax breaks 3, 7, 35, 100, 139 tax evasion 28, 45 tax exemptions 8, 137 tax regulations 88 textile industry: Bangalore 100; exploitation in 154; lack of technological innovation 11; Mumbai 11–12; powerloom sector 88–9; strike action 50, 76, 87–90, 148; and trade liberalisation 153 theories of informal labour: ‘classes of labour’ approach 49; continuum theory 51; emerging entrepreneurs theory 42; employment-based approach 46; ‘institutional’ economic approach 44–6; intermediate class approach 45–6; sector theory 43; ‘structuralist’ approach 44; subcontracting trend 52–3; see also mapping informal labour in India Thyssen Krupp 81 tobacco industry (beedi rolling) 31, 49, 162, 164–5, 169 Toyota 101, 106 trade and investment liberalisation 31, 40, 84, 99, 133, 136, 149 trade union rights, erosion of 52 trade unions: collective-bargaining approach 4, 162–3; displacement 103; growth in membership 106, 161; impact of informalisation on 55–6; in the IT and ITES sectors 107; labour laws and 142, 159–60; link between political parties and 162; structural perspective 161–2; successes 104; women’s membership 162; and workers’ resistance in the neoliberal era 159–71 traditional livelihoods, undermining of 22 transport, share of tertiary employment 6 Trotsky, L. 14–21, 65 tube-wells 28 uneven and combined development: ‘advanced features’ 21; Bangalore’s development as example of 92; definition 2; exploitation and 152;

India’s 13–23; industrial development in Haryana as example of 135; informalisation as central feature of India’s 151, 158; and state-led industrialisation 100; testing the theory 65–74 Unni, J. 132 unorganised sector, definition 5 Unorganised Workers’ Social Security Act 2008 2, 164 unpaid labour 43, 48, 79, 82–3, 98, 116 urban development, impact on regional communities 3 Van Wersch, H. 76, 87, 91 Veritas 81 Voluntary Retirement Schemes (VRS) 29, 83–5, 87, 90–1, 101, 104, 141 Volvo 101 waged employment/labour: gendered perspective 116; growing importance of in the Global South 60; growth in 71; informal wage labour 3, 36; precariousness 24; share of employment in Maharashtra 77; share of people in 32; significant growth of 156 Wallerstein, I. 56 war 10, 17, 35 waste-pickers 129, 167, 169 Wholesale Price Index 1 women, regional workforce participation data 24 worker protection, lack of in informal enterprises 101 workers’ resistance in the neoliberal era 159–71 workers’ struggles, class-based character 104 workforce restructuring 87, 116 world history, Arrighi’s periodisation 56–7 Wright, E.O. 60 zamindari system 27