Dr. Ambedkar has made a realistic assessment of economic problems faced by the country during the British Rule. The taxation policy advocated by Dr. Ambedkar is known by only few people. He also advocated the necessity to divert the surplus labour from agriculture to industry. It is hardly known that Dr. Ambedkar laid the foundation for water resources and electricity development. He was instrumental in creating projects like Bhakra-Nangal and conceptualize the need of national grid.
Most people rightly remember Dr. Babasaheb Ambedkar as the principal architect of the Indian Constitution and as an emancipator of the poor and deprived. Dr. Ambedkar was not only a crusader against the caste system, and a valiant fighter for the cause of the downtrodden but also an elder statesman and a national leader. His contribution as the principal architect of the Constitution of India will be cherished forever. But an important aspect of Dr. Ambedkar’s multifaceted personality which has not attracted enough attention is the fact that Dr. Ambedkar was an eminent economist and contributed substantially to the formulation of postwar economic development plan in general and labour, water resources and electric power development plans in particular.
In all his earlier writings, such as The problem of the rupee – its origin and its solution’, Administration and finance of the East India Company, Evolution of provincial finance in British India and Small holdings in India and their remedies, Dr. Ambedkar has made a realistic assessment of economic problems faced by the country during the British Rule and had expressed his views very boldly about the administration of public finance, sharing of taxes between the centre and the provinces and decentralization of financial powers to the provinces. He also advocated that as India depends almost wholly upon agriculture, and has surplus landless labour, it was necessary to divert the surplus labour from agriculture to industry. Like many renowned economists and planners, he had rightly equated industrialization with modern economic development and sought rapid industrialization.
In his thesis which had obtained for him Ph.D. of the Columbia University in 1917 National Dividend of India – A Historic and Analytic Study wherein Dr. Ambedkar had traced the growth of the financial arrangements from the charter of 1833 granted to the East India Company by the British Parliament and critically examined the nature and growth of the provincial finances. He held the British bureaucracy responsible for the financial ills of the country. His thesis speaks volumes about the courage, and conviction of Dr. Ambedkar to criticize the British administration so bluntly, while he was so young and India was still under the British rule. Soon after the publication of the book in 1925, Dr. Ambedkar was called to give evidence before the Royal Commission on Indian Currency.
Dr. Ambedkar obtained a degree of Master of Science in Economics on Provincial Decentralization of Imperial Finance in India in June 1921 from the London School of Economics. He also joined Gray’s Inn, to study for the Bar. In October 1922, he completed his thesis on ‘The Problem of the Rupee from the University of London, for which he was awarded the degree of Doctor of Science in Economics. In this book Dr. Ambedkar revealed how the relationship of rupee to the pound was maintained in the interest of the British and how India suffered financially on this account.
Dr. Ambedkar knew clearly the problems in levying of taxes. He pointed out that it is very difficult to have proper taxation policies, as the governments which depend on the peoples’ vote to govern, would be always hesitant to mobilize the needed resources through requisite taxation and at the same time the government cannot take measures to reduce public expenditure by enforcing administrative economies. Dr. Ambedkar has effectively summarized the position by stating, “If however, the seat is a gift of the elector, a candidate to the Legislature who proposes to touch his pocket has a small chance of success, even though the new taxes are to result in more than proportionate benefit. In any case a political party which has won power from a bureaucracy by accusing it of heavy taxation cannot easily disgrace itself by continuing the same policy”. The result was that “the chances of an early equilibrium in provincial finances are very small.” Though Dr. Ambedkar expressed these views as early as in 1939, one wonders whether Dr. Ambedkar was talking of the present status of state finances in India.
Dr. Ambedkar who had analysed the evaluation of public finances in provinces never missed any opportunity to comment on the existing taxation policy and suggest an alternative tax policy. Dr. Ambedkar’s views on taxation were included in the election manifesto of his Independent Labour Party (1936). He had criticised then the government of Bombay in a public meeting held in Ahmedabad in 1938 for not reducing the land tax rates and for not taxing the rich people.
The following are the important components of the taxation policy advocated by Dr. Ambedkar:
a) A personal tax should be based on taxable capacity of the individual and not on his gross income,
b) The rates should be progressive, meaning the rich should be taxed more and the poor less,
c) There should be exemptions subject to a limit of income tax for tax payers.
Dr. Ambedkar had shown considerable concern about using taxation policy for reducing income inequalities between different sections of people. According to him, taxes should help achieve relative equity between different sections of people. He has also argued that “no taxation system should be manipulated as to lower the standard of living of the people”.
Dr. Ambedkar also argued for a strategy of transferring labour from agriculture to other sectors of the economy. He advocated that :
“The sponging off of surplus labour in non agricultural channels of production will at one stroke lessen the pressure and destroy the premium that at present weighs heavily on the land in India. Besides, this labour when productively employed in agriculture and industrial sector will cease to live by predation and will not only earn its keep but will give surplus and more surplus is more capital. In short, strange that it may seem, industrialization of India is the soundest remedy for the agricultural problems of India.”
When Dr. Ambedkar assumed the charge as Member, Labour, Irrigation and Power of Executive Council of Viceroy, the problem of reconstruction in India basically was limited to the lack of basic physical infrastructure itself and how to create and develop new infrastructure. Therefore, it was felt that there was a need for long term plan for building up of basic physical infrastructure in the country which was the main objective and strategy of the plan. As the development of infrastructure such as electric power, irrigation, communication, roads and transport services and technical manpower were treated as prerequisites for industrial and agricultural development, it received top priority in the Reconstruction and Economic Development Plan.
It was felt that development of infrastructure would bring a relatively higher growth in industrial output and help to absorb the surplus labour from agriculture. In a policy Committee on Public Works and Electric Power, Dr. Ambedkar emphasized that the country needed “cheap and abundant electricity”, without which no effort for industrialization could succeed and development of irrigation and electric power were essential to raise agricultural productivity.
Dr. Ambedkar had argued for an important place for labour and the depressed classes in the planned economic development of the country. He was particularly concerned that planned economic development should not only develop programmes but also translate them in terms which the common man could understand, namely, food, housing, clothing, education, good health and above all the right to work with dignity. The founding fathers of our Constitution wished to secure for all the citizens of this country, social, economic and political equality. In order to achieve this objective, it was realized that the persons belonging to the weaker sections should be given protection and concessions to emancipate them from the centuries old prejudices and exploitation that have characterized the Indian social scene. Special provisions were, therefore, incorporated in the Constitution to encourage and promote their economic, educational and social development.
It is hardly known that Dr. Ambedkar laid the foundation for water resources and electricity development, the two sectors which are so crucial for the development of the country when Dr. Ambedkar was Member, Labour, Irrigation and Electric Power Department in the Executive Council of the Viceroy during 1942-46.
The credit for recognizing the importance of high level technical authorities for exploitation of full irrigation potential and the power development of the country goes to Dr. Ambedkar. He laid the foundation of water resources and power development of the country and a major achievement of Dr. Ambedkar was the establishment of two technical organizations, presently known as Central Water Commission and Central Electricity Authority (CEA), that have contributed substantially for the development of irrigation and power in the country.
The proposal for creation of Central Irrigation, Waterways Advisory Board was approved by Dr. Ambedkar in September 1944. Subsequently, it became Central Waterways, Irrigation, and Navigation Commission (CWINC) and was approved by Dr. Ambedkar in April 1945 and subsequently by Viceroy two days later. It became Central Water Power, Irrigation and Navigation Commission (CWPINC) on 16th January 1948 and subsequently it became Central Water and Power Commission (CWPC) in April 1951. It was bifurcated into Central Water Commission and Central Electricity Authority in October 1974.
Dr. Ambedkar had approved the proposal to create Central Technical Power Board (CTPB) on 8th November 1944 which was subsequently merged with CWPINC and became Central Water and Power Commission (CWPC) in April 1951.
The policy framework of Dr. Ambedkar regarding irrigation had three components, namely, a concept of River Valley Authority on Inter State rivers, the concept of regional and multipurpose development of river valley basin as a whole covering irrigation, power, food control, navigation, and drinking water conference on Damodar Valley Scheme in August 1944, resulted in major projects like Damodar Valley, Mahanadi, Bhakra Nangal Project only to name a few. He strongly desired that the Damodar Valley Project should be developed on the lines of Tennessee Valley Authority.
A major initiative was taken by Dr. Ambedkar when he was member in-charge of irrigation and power during 1942-46 to take concrete steps to see that the Bhakra Dam project should be taken up on priority. An expert from the United States Bureau of Reclamation in 1944 was invited, who after examining the feasibility report recommended that the dam site was suitable for the construction of a dam with maximum reservoir level at 487.68m and suggested further exploration for foundation and abutments. This work was carried out during 1945-46, while Dr. Ambedkar was the Member of Irrigation of the Viceroy’s Council. He was of the opinion that the Krishna, Godavari and Tapi river waters should not go waste into the sea and had even suggested interlinking of these rivers.
The Central Electricity Authority (CEA) and its predecessor organizations as an apex national body for power sector have been playing a pivotal role in developing the electric power supply industry of the country from 1362 MW in 1947 to over 1,00,000 MW by March 2001.
The Central Water Commission has a very important role in respect of interstate issues related to water resources and in respect of cooperation between India-Nepal, India-Bangladesh and India-Bhutan.
Dr. Ambedkar was instrumental in creating the department of power and advocated autonomous state electricity boards.
He was also of the opinion that the central government should have the option to participate directly in the production and supply of electricity. He wanted abundant power supply and cheapest power for development of the country. Dr. Ambedkar also advocated that central government set up power projects, if deemed necessary with the creation of central sector agencies like NTPC, NHPC, DVC, power grid etc. In mid 1970s substantial generation capacities started getting added. In the early 1980s the concept of regional grids which was suggested by Dr. Ambedkar, was being extended to the creation of national grid. Dr. Ambedkar’s initiatives subsequently led to the creation of a Power Supply Department at the Centre. He was also an architect of economic planning and development policies of India.