Scaling Caste Walls With Capitalism’s Ladders in India

 * Click images to Enlarge.

December 21, 2011: PED, India — On his barefoot trudge to school decades ago, a young Ashok Khade passed inescapable reminders of what he was: the well from which he was not allowed to drink; the temple where he was not permitted to worship. At school, he took his place on the floor in a part of the classroom built a step lower than the rest. Untouchables like him, considered to be spiritually and physically unclean, could not be permitted to pollute their upper-caste neighbors and classmates.

But on a recent afternoon, as Mr. Khade’s chauffeur guided his shimmering silver BMW sedan onto that same street in a village in the southern state of Maharashtra, village leaders rushed to greet him. He paid his respects at the temple, which he paid to rebuild. The untouchable boy had become golden, thanks to the newest god in the Indian pantheon: money.

As the founder of a successful offshore oil-rig engineering company, Mr. Khade is part of a tiny but growing class of millionaires from the Dalit population, the 200 million so-called untouchables who occupy the very lowest rung in Hinduism’s social hierarchy.

“I’ve gone from village to palace,” Mr. Khade exclaimed, using his favorite phrase to describe his remarkable journey from the son of an illiterate cobbler in the 1960s to a wealthy business partner of Arab sheiks.

The rapid growth that followed the opening of India’s economy in 1991 has widened the gulf between rich and poor, and some here have begun to blame liberalization for the rising tide of corruption. But the era of growth has also created something unthinkable a generation ago: a tiny but growing group of wealthy Dalit business people.

Some measure their fortunes in hundreds of thousands of dollars, and a handful, like Mr. Khade, have started companies worth tens of millions. With their new wealth they have also won a measure of social acceptance.

“This is a golden period for Dalits,” said Chandra Bhan Prasad, a Dalit activist and researcher who has championed capitalism among the untouchables. “Because of the new market economy, material markers are replacing social markers. Dalits can buy rank in the market economy. India is moving from a caste-based to a class-based society, where if you have all the goodies in life and your bank account is booming, you are acceptable.”

Milind Kamble, a Dalit contractor based in the city of Pune in Maharashtra State, said that out of the 100 or so members of the Dalit Indian Chamber of Commerce and Industry in his city, only one was in business before 1991.

“We are fighting the caste system with capitalism,” he said.

An Immobile Society

Bollywood may love a rags-to-riches story, but historically India is not a nation of Horatio Alger stories. Social and economic mobility are limited, a product of India’s layers of cultural legacies: the Hindu caste system, the feudal hierarchies established by its many invaders and the imperial bureaucracy imposed by Britain. The idea that with hard work and determination, anyone could succeed found scant purchase here.

Independence changed that somewhat. India’s Constitution, which was largely drafted by a Dalit, Bhimrao Ambedkar, outlawed the practice of physical untouchability, which relegated Dalits to the bottom of the social ladder and condemned them to low-status jobs, like leather work and barbering.

It established affirmative action for Dalits and tribal people in politics and government jobs and education. The practice of physical untouchability, which prevented Dalits from walking on the same streets as upper-caste people, drinking from the same wells or even looking such people in the eye, has virtually disappeared, though it remains in practice in some remote areas.

Dalits still lag behind the rest of India, but they have experienced gains as the country’s economy has expanded. A recent analysis of government survey data by economists at the University of British Columbia found that the wage gap between other castes and Dalits has decreased to 21 percent, down from 36 percent in 1983, less than the gap between white male and black male workers in the United States. The education gap has been halved.

Another survey conducted by Indian researchers along with professors from the University of Pennsylvania and Harvard showed that the social status of Dalits has risen as well — they are more likely to be invited to non-Dalit weddings, to eat the same foods and wear the same clothes as upper-caste people, and use grooming products like shampoo and bottled hair oil.

For most of India’s history after independence, the government was the only thing that could improve the Dalits’ lot. For nearly all Indians but especially for Dalits, a government job, even a low-level one, was the surest ticket out of poverty, guaranteeing education, housing, a salary and a pension. Few in the socialist government or in India’s generally risk-averse society saw entrepreneurship as an attractive option.

But that has started to change. Since 1991, when India’s economy opened to the world and began its astonishing growth trajectory, hundreds of thousands of new businesses have been created, leaving an opening for millions of people who never imagined that owning their own business was even possible. A small handful of Dalits were uniquely poised to take advantage.

Caste is a delicate subject in Indian life, spoken of only sotto voce. The once strong connection between caste and occupation loosened long ago, and generalizations are risky, but certain cultural affinities remain.

Knowledge-based businesses like information technology have attracted large numbers of Brahmins, the traditional learned caste. The business castes tended to focus more on retail and wholesale trade than manufacturing. Messy industries like construction are closer to the traditional occupations of the lowest castes.

One Dalit businessman in Pune has turned the traditionally undesirable work of pest control into a million-dollar company. Mr. Kamble made his fortune in India’s building boom. Dalits have started small technology companies, installing networking equipment, while others have set up factories to make water pipes and sugar.

“In this complex society, Dalits are turning disadvantage into an advantage,” Mr. Prasad said.

Starting From Nothing

Ashok Khade’s rags-to-riches story stands out because of how completely he transformed himself, with some luck and some help from India’s opening economy, from an illiterate cobbler’s son to a multimillionaire player in the booming oil services industry.

He was born in a mud hut in Ped in 1955, one of six children. His parents were day laborers who toiled in upper-caste farmers’ fields for pennies. His father would often travel to Mumbai, then known as Bombay, to work as a shoe repairman. He came from a family of Chamhars, a caste at the very bottom of the Hindu hierarchy. Their traditional job was to skin dead animals.

They were poor and always hungry. One day, his mother sent him to fetch a small bag of flour on credit from a nearby flour mill so she could cook flatbread for dinner. But it was the monsoon season and Ashok slipped in the mud. The precious flour landed in a puddle.

“I came home weeping,” he said. “My mother was weeping. My brothers and sisters were hungry. There was nothing in the house.”

But that hunger gave him drive. “That was my starting day,” he said.

Mr. Khade got his first big break that year, when he won admission to a school run by a charity in a nearby town. Away from the village and its deeper caste prejudice, he thrived. Upper-caste teachers nurtured him, and he strived to impress them.

But caste was not entirely absent. In the school’s musty register from 1973, the year he finished high school, next to his name is his caste: Chamhar.

All through school, poverty gnawed at him. Students had to provide their own paper to write their exams, and one day he found himself without even a few pennies to buy the necessary sheets of foolscap. A teacher tore pages from the attendance ledger. Too poor to buy string to tie the pages together, he used a thorn from a tree. None of it mattered. He graduated near the top of his class.

Setbacks and Luck

Mr. Khade’s elder brother, Datta, had managed to get an apprenticeship as a welder at a government-owned ship building company, Mazagon Dock, in Mumbai. He persuaded young Ashok to move to the big city. The tiny room where Datta lived with relatives was already full, so Ashok slept for a time under a nearby staircase on a folding cot.

Mr. Khade dreamed of becoming a doctor and studied at a local college. But Datta, who supported the entire family, begged his younger brother to drop out of school and start working. Datta helped Ashok get a job as an apprentice draftsman at Mazagon Dock.

What seemed like a setback turned out to be a stroke of luck. His flawless drafting skills and boundless appetite for hard work won him promotions. In 1983, he was sent to Germany to work on a submarine project.

One day, he saw the pay slip of one of his German colleagues, who earned in one month more than Mr. Khade earned in a year. “I thought about my family’s needs,” he said. “My sisters needed to get married. I knew I could do better than working for someone else.”

When he returned from Germany, he began laying the groundwork to start his own company. The risk was enormous, and it was almost unheard of to leave a steady job to start a company. But his two brothers were expert offshore welders. They had good contacts from their years at Mazagon Dock.

And the economy was changing after years of stagnation as the 1991 reforms began to reduce the bureaucracy’s control of the economy and stimulate growth. “It was obvious there was a chance to make a lot of money,” he said.

The brothers used their savings to finance the small subcontract jobs they began with, and in 1993 they got their first big order, for some underwater jackets for an offshore oil rig, from Mazagon Dock.

Mr. Khade’s hunch was right, and his timing was impeccable. Faster growth meant India’s appetite for fossil fuels grew ever more rapacious. His company, which builds and refurbishes offshore oil rigs, has expanded rapidly and he is expanding to the Middle East. He recently signed a deal with a member of the royal family of Abu Dhabi to work on oil wells there, and he is building what will be India’s biggest jetty fabrication yard on the Maharashtra coast. He has 4,500 employees, and his company is valued at more than $100 million.

His two brothers are now in politics — one leads the Ped village council, the other is a member of the state assembly, both holding seats reserved for Dalits. Mr. Khade has bought vast tracts of land around his village, the same plots where his mother, now 86, used to work for upper-caste farmers for pennies a day. Now she dresses in expensive silk saris, rides in a chauffeured car and wears gold jewelry. The sons of upper-caste families now work for Mr. Khade’s company. By any measure he is a man who has made it, and big.

“An untouchable boy the business partner of a prince?” Mr. Khade said. “Who would believe that is possible?”

Mr. Khade probably would not be in business with a prince had he not attended a networking cocktail reception hosted by the Dalit Chamber of Commerce and Industry at the five-star Taj Mahal Hotel in Mumbai this year. There he met the Indian businessman who introduced him to the Arab sheik, who helped him to globalize his company.

These kinds of connections are crucial to the nascent Dalit business community. Because Dalit businessmen often lack the social connections that lead to business ideas, loans and other support, a group of Dalit entrepreneurs created the chamber in 2005. It aims to build those networks so Dalit business leaders can help one another grow. The group has about 1,000 members, all of whom run companies with an annual turnover of at least $20,000.

It recently organized a meeting where Dalit businessmen pitched ideas to Tata Motors, one of India’s biggest car companies. Mr. Kamble, the Dalit contractor, said that of the 10 companies that attended, 4 had signed deals and 4 more were in negotiations. “There was a time when people like us could not even approach a company like Tata Motors,” he said. “Now we go meet them with dignity, not like beggars. We are job givers, not job seekers.”

The group has persuaded the government to embrace contracting preferences for Dalits like the ones that have helped businesses owned by women and minorities in the United States. It also seeks to persuade private companies to embrace affirmative action policies that would create more jobs and business opportunities for Dalits.

Few Options for Women

Despite the success of men like Mr. Khade, a Dalit entrepreneur is still much more likely to be a poor woman who has no choice but to start a small, low-profit margin business because so few other options are open to her, said Annie Namala, a researcher and activist who has worked on Dalit issues. A survey completed this year of Dalit women entrepreneurs in Delhi and Hyderabad found that most made less than $100 a month from their businesses.

“These are basically survival enterprises,” Ms. Namala said. “These women would prefer a steady job, but no jobs are available so they start a small business and work very hard with very little return.”

Despite gains for some Dalits, a recent paper from the Harvard Business School that used government data from 2005 found that even after the economic liberalization, Dalits “were significantly underrepresented in the ownership of private enterprises, and the employment generated by private enterprises.”

Even for those who have had wild success in business, social acceptance has proved harder to attain. While wealth insulates them to some degree from lingering caste prejudice, barriers remain even for rich Dalits.

Names often reveal a person’s caste, so one Dalit businessman who installs solar water heaters changed his last name because he worried that upper-caste people would not want a Dalit installing an appliance associated with personal hygiene in their homes.

Even Mr. Khade, with all his wealth and newfound status, does not want to offend potential upper-caste clients. His business card reads Ashok K, leaving off the last name that reveals what he is: a Dalit.

Hari Kumar contributed reporting.