A Study of the Peri-Urban Bourgeoisie in the

region surrounding Pune City in Maharashtra

Introductory Note

This paper is an attempt to analyse the shifting trends in the character

of ‘Semi-Urban and Rural’ Bourgeoisie. It tries to explore the extent of
confrontation and collaboration of ‘Semi-Urban and Rural’ Bourgeoisie
class with metropolitan capital.

There has been a visible change in the Indian rural, Semi-urban setup
after the process of economic liberalization started. These changes
are necessarily a result of the Integration of rural- semi-urban economy
with the world economy. This paper proposes to undertake a study of
the role of the bourgeoisie1, which itself is undergoing transformations,
in this transforming set up.

For this purpose, we have chosen the region surrounding Pune city in
Western Maharashtra. This region is peculiar in the sense that
historically the Pune metropolis has been one of the prominent urban
centers in Maharashtra but not without a significant presence of
agriculture-based semi-urban semi-rural localities in its vicinity.
Agriculture has played a dominant role in this region’s economy
historically. However as a part of the process of green-revolution and
promotion of commercial agriculture the economy of this region had
been linked with the market forces, the process which received
impetus in the last two decades. This region has also witnessed the
process of industrialisation, albeit observed in a few restricted pockets;
this process has also contributed to the development of the linkages
between local bourgeoisie and market forces. Thus, provisionally it can
be concluded that the local bourgeoisie in this region was well
integrated with market forces at national level

This paper attempts to study the transformation in the character of

the said bourgeoisie, on interaction with ‘metropolitan capital in
general and globalised finance capital in particular’. While
understanding this inter- action, visible in last two decades, I t is
important to place in the abovementioned historical context and
specificity of this region.

The telling feature of the interaction between Local Bourgeoisie in the

semi-urban vicinities of Pune and metropolitan (finance) capital has
been the ‘Shift from the ‘Agricultural sector to Non-Agricultural sector,
In terms of land use as well as occupation structure. In our study we
propose to undertake a study of this ‘transformation in the principal
means of production (land) and thus the transformation in the
character of the ‘owners of this means of production, i.e. local
bourgeoisie.
The abovementioned shift is visible in two processes –
1. Use of land as a commodity in itself in ‘ real-estate’ sector

2. Use of Agricultural Land for Industrial ( secondary as well as

tertiary) Purposes

In our study we seek to analyse both these processes visible in the

Semi-Urban Semi-Rural localities in Pune, with the help of definite case
study of the ‘Magarpatta city township project, where landed upper-
caste farmers have diverted their land for building a township and IT
park. Through this case study we also comment on the ‘nature and
terms of collaboration of the said bourgeoisie with finance capital. This
collaboration is situated in the present stage of capitalism. There has
been an emphasis on the uniqueness of the case of bourgeoisie in the
area under consideration. We have made an attempt to analyse this
uniqueness in the historically over determined context of the region’s
history and political economy.

Overview of the Magarpatta City Project and Process of

Change in Land Use

Magarpatta city township project is situated in 400 acres of land

which is owned by 122 farmers belonging to five major kunabi Maratha
families magar, tupe, bhosale, more, mane. Before the township was
conceived these families were owner-cultivators of this land and major
crop they produced was sugarcane. The magar family had been a
dominant political entity in the region as Mr.Annasaheb Magar (uncle
of Mr.Satish Magar,M.D.Magarpatta Township Development and
construction company) was MLA for 25 years and later a member of
parliament and was involved in the Town-planning of Pimpri-
Chinchwad municipal corporation area.

It is necessary to have a look at ‘case-specific causes in the case of

magarpatta, leading to the shift from agriculture to real estate
business. These causes can be enlisted as follows-
1. Since 1980s there has been an increase in real estate
development in pune which can be accounted for the
‘liberalization of urban development policies and growth of IT
driven service sector2
 2. Process of conversion of agricultural land into non-agricultural
had already begun in the areas surrounding magarpatta thus the
‘isolated agriculture-(because of the shortage of labour supply)
was getting economically unviable
3. There was threat of illegal encroachment on agricultural land or
the threat of farmers turning to illegal means of conversion of
agricultural land to non-agricultural land. There were several
cases of outright sale of the land by farmers, illegal
encroachment on agricultural land and gunthewari system3.
These are definitely the pressures of ‘expanding urban set up on
peri-urban areas and it can be said that magarpatta case is an
example of how the local bourgeoisie has come to terms with
these forces of urbanization which are reminiscent of the present
stage of capitalism.
4. As magarpatta area has been included in Pune Municipal
Corporation since 1961. . (Although, according the development
plan of 1987 the magarpatta region was designated as an
agricultural zone ) considering the expanding limits of pune city
it was most likely that this land could be acquired by PMC under
Urban Land ceiling act for urban development

Unviability of ‘isolated agriculture in urban surrounding, and prospect

of much higher income from non-agricultural use of land’ is the basic
reason for this shift. But for this comprehension of this ‘economic fact
the precondition is that of; integration and knowledge of market’.

In this scenario the land owning 122 farmers pooled in their land to
form ‘Magarpatta Township Development and Construction Company’
and decided to build a township without loosing the ownership of land.
Magarpatta City township project was completed in the year 2000 on
the 300 acres of land and later on the remaining 100 acres of land
‘Cyber City-An IT Park’ was developed.

To theorize this shift, from agriculture to non-non-agricultural use of

land, i.e. for real estate development the case of magarpatta needs to
be analyzed as a case of ‘collaboration of landed class with finance
capital. While theorizing this collaboration it is necessary to understand
certain pre-conditions for the shift from agricultural to non-agricultural
use of land to occur. We attempt to arrive at these pre-conditions and
analyze the developments in magarpatta in the framework confined by
them.
. The process of Integration with market has two basic underlying
factors which are-1 Market-Oriented agriculture in post green
revolution era and 2- Vicinity to urban centers. In the case of
magarpatta the erstwhile farmers were mainly producing sugarcane
with wage-labour being employed on the farms. So it can be said that
the process of their evolution as ‘landed-bourgeoisie ‘had started long
back with the introduction of cash crops. Along with the commercial
agriculture the vicinity of magarpatta with pune city is also a major
factors not only leading to the integration of the landed farmers with
market but also creating an economic advantage for them in terms of
‘real-estate prices’
The situation of magarpatta in terms of ‘access and integration of
market’ has another dimension that is of the ‘position of dominant-
class-caste groups in the process of economic development’. The
whole process of commercialization of agriculture in Maharashtra
received impetus through ‘Co-Operative Movement’ The Co-Operative
movement in Maharashtra has historically been dominated by ‘Maratha
caste which is the land-owning hegemonic caste in Maharashtra the
400 acres of land in magarpatta is owned by 5
families-‘magar,mane,tupe,more,bhosale’ with active involvement in
local political processes. This leads us to establishing a provisional
thesis-(which would be dealt in depth later ;) ‘Terms of collaboration
of landed class with finance capital are determined by historically over-
determined4 context involving ‘economic and non-economic factors
’leading to the control over principle means of production i.e. land and
maximum share in the benefits of capitalist development.’’

Patterns of conversion in the use of land & role of local

landed class

The interaction between finance capital and landed classes in Semi-

Urban Semi-Rural areas has taken forms of collaboration as well as
confrontation. Three Broad patterns of this collaboration-confrontation
can be sketched.
1. Acquisition of land by State for private players ( for S.E.Z.
,Industrial plants)
2. Acquisition of land by private players-directly from farmers
3. Unique model of the Magarpatta where Farmers have not lost the
ownership of land and turned private real estate developers
themselves
The third of the abovementioned scenario will be analyzed in detail
later, in the context of magarpatta. But before that a brief overview
of the 1st 2 scenarios is necessary to establish the uniqueness of
 Magarpatta Model. (Interestingly the examples of all of these three
models are available in Pune and surrounding regions)

1- An example of 1st case in the vicinity of pune is that Rajiv Gandhi

InfoTech Park which is developed by Maharashtra Industrial
Development Corporation. M.I.D.C. acquired land from farmers
and developed IT Park and property were sold to IT companies to
set up their offices. In case of acquisition of land for the
extension of this park there was opposition from farmers.
Although the demands of the farmers were centered on the
issues of ‘livelihood and life-style’ being dependent on
agriculture we opine that the basic demand was about the
‘compensation i.e. the price of land. Thus we can say that in this
case there is scope for negotiations (to certain extent, as the
‘neo-liberal state’ tries to maintain a populist face) to improve
the terms of collaboration with finance capital, which uses the
agency of State.
2- An example of 2nd case in the vicinity of pune is the ‘Maha
Mumbai S.E.Z (.in Raigad District) by Reliance Industries Ltd. This
SEZ is proposed to be situated on 30,000 hectares of fertile
agricultural land which belongs to farmers of Agari, Koli, Katkari
communities. There has been intense struggle against the land-
acquisition and recently a referendum was done by Zillah
Parishad where in 80% of affected farmers have voted against
the land acquisition. But this case also has certain complexities
arising out of ‘difference in class profiles of the affected farming
communities. Agari is an OBC community which is the dominant
caste-class in the region and the process of integration with
market has already started through ‘employment in industries
(e.g. reliance chemical plant in rasayani) and also through
‘quarry businesses and petty real state business. Thus for
majority of agaris agriculture is not the only employment option.
Again in this case it can be speculated that the Agari
involvement in the anti-SEZ struggle is to improve the terms of
compensation. But the tendency of the finance capital in third
stage towards, what David Harvey refers as ‘Accumulation by
Dispossession’ is in opposition to the prospect of collaboration.
Perhaps ‘incomplete process of commercialization of agriculture’
has resulted in the stunted possibilities of development of
capitalist relations of production.

It is necessary to see the uniqueness of the Magarpatta case in the

light of these two abovementioned cases.

Unique case of Magarpatta City

To test the provisional thesis we have stated earlier it is necessary to
analyze the pattern of collaboration between landowning farmers in
magarpatta and forces of finance capital. The unique character of
developments in magarpatta owes to the peculiar form in which the
farmers have diverted their land from agriculture to non-agricultural
use i.e. for real estate development. Following are the salient features
of this process-
• Instead of selling the land to private developer, the farmers (i.e.
landed bourgeoisie call is the region) pooled in their land and
formed MTDCC. Through this they have acquired distinct
economic advantage as- they are able to have the benefit from
appreciation in property prices as well as they have turned
entrepreneurs by treating land as a ‘raw material’.
• All farmers are share-holders in MTDCC; proportionate to their
land-holding thus they share the profit of the company.
• 30% of the sale proceeds were treated as the land cost. The
higher the selling price, the greater is the embedded value of the
sale.
• 100 acres of land is being used to develop cyber city-an InfoTech
park where major IT companies have set up their offices on rent.
(Initially the land was valued 400 crores now it is valued 4000
crores.5) Farmers get the rental dividend in accordance with the
proportion of their landholding
• Along with the MTDCC, farmers and their second generation are
being absorbed in various ‘entrepreneurial activities’ which are
mainly tertiary sector oriented and required for a township and
its residents. Of the 280 landholders who run some business or
the other, 200 are under tax audit. That means they have a
turnover of at least Rs40 lakh a year. Together they must be
paying Rs10-12 crore of taxes every year6.

Thus it can be summed up that by not loosing the ownership of the

land, i.e. the principal means of production, the bourgeoisie has
acquired a perpetual economic advantage and diversification of
occupation and income sources has resulted in the increasing
accumulation of wealth. In the light of this we can revisit our earlier
provisional thesis and attribute the ‘favourable terms of collaboration
(as against skewed terms existing in earlier 2 cases) to the historically
over determined pre-existing socio-economic condition.

Understanding the underlying logic of the transformation

So far, we have had an overview of economic setup of the said region
surrounding Pune, the specific factors leading to its integration with
market forces and the confrontation and possible collaboration of the
rural, semi-urban bourgeoisie with finance capital. However, it will be
useful to have a theoretical framework for the transformation of land
as a means of production in this stage of capitalism in place so as to
grasp the realities and specificities of this phenomenon of ‘shifts in use
of land by landed bourgeoisie’ in a better manner.

We have tried to place the said developments in a broader framework

of change in stages of capitalist mode of production. Land forms a
critical part of means of production and has undergone changes with
every historical transition in mode of production. This has happened
not merely in case of relations of production to land but rather such
change in relations is coterminous with transformation in the usage of
land as means of production as well. (In transition from feudalism to
capitalism in Europe, as well as under colonialism in India and later on
with green revolution etc.—)
Development of land as a commodity in itself under the stage of
finance capital is an interesting development. In the earlier stages of
production, land was primarily utilised for agricultural or industrial
production wherein its character as a means of production could
clearly be made out. However with development of land and real
estate market, land acquires a unique place in the whole structure of
mode of production. This is because it essentially involves a three-
stage speculation i.e. the owners of land i.e. farmers and cultivators,
the real estate developers and the retail investors as well as sheer
speculators. The whole speculation is based on assumption of
‘appreciation of land price and thereby the surplus value inherent in it’
over a period of time. We can of course observe the same thing taking
place in case of Magarpatta which has led to tremendous appreciation
in the surplus accumulation by the land-owners. This is because they
have become real estate developers. Hence they do not have to share
the overall surplus generated by speculation in land by other real
estate developers.
Also since the land is given on lease terms, appreciation in rental
income along with capital appreciation in the value of land makes this
process continuous and hence leading to more and more capitalisation
of their activities.

It is here in this context where we have drawn on the work of David

Harvey regarding the accumulation process and circuits of capital7.
Peculiarities of land as a means of production as well as commodity in
itself thereby forming part of fictional capital embodying surplus value
can be better presented in the form of diagram
Fixed capital consumption
fund
Producers’ durables consumers’
durables
Built environment Built environment

Land Capital market

(financial and state intermediaries

the above diagram is useful to understand how land forms

a part of ‘built environment’ which is integral for any production or
consumption process, thereby leading to conversion of surplus into
means of production. however such conversion doesn’t limit the ability
of land to further generate the surplus value and this generation is not
only limited to the employment of land in production process unlike
other means of production like machinery. This is because of the
specific nature of demand-supply relation that exists regarding land.
Virtually inelastic supply coupled with rising demand brings about
appreciation in land prices. The peculiar nature of land can be put in
short as ‘holding to gain profit’ whereas investment in other productive
assets means ‘investing to reap profit’. This is because other assets
require a constant investment of surplus in order to maintain their
present worth (either to replace old machines or in new technologies).
But for land, it is not the case.
It would be pertinent to note the nature of this demand for land in the
finance capital stage. In this stage, as mentioned earlier land has
become a commodity and hence the surplus realised from agriculture
as well as industry is parked in land in various forms. This is of course
indicative of over accumulation as well (wherein land is acquired not
for the purpose of built environment of direct use but as a means of
speculation wherein the rate of return is greater than the industry in
which the individual firm itself operates).
Of course, speculation definitely forms a major factor in this market.
But that does not explain the ties of finance capital with land market in
entirety. Here it is important to understand the increasing role that
land has come to play as an underlying asset as well as a derivative
one simultaneously in this stage of capitalism. The above diagram tries
to represent the ties between the
Production process in general, land and capital markets. Finance
capital is sourced to industry and for consumption for land acquisition
as well as for other purposes of production wherein the land itself at
times forms the underlying security. Hence its valuation is the key to
overall economic processes. However such valuation itself is derived
from a call on the speculated direction of economy. Thus this process
involves more and more complex interactions of accumulated surplus
value being switched to land market and vice versa. It works like a
spiral interlocking and furthering the ties of various sectors of
economy. Since it is difficult to distinguish between the surplus value
created by land as a means of production(i.e. for production proper) as
well as the surplus locked in the land arising out of speculation
deriving its value from several larger economic variables, in times of
crises it becomes particularly difficult to ascertain the ‘fair’ value of
this particular asset.
Hence though there always is potential demand for consumption
(housing) and other production activities, the pricing plays a major role
in determining the ‘effective demand’. During the period of general
economic depression, the real estate also undergoes a slump and
many a times is propellant of general depression because of
abovementioned factors. However such slump resulting in a sharp
correction in prices fails to generate demand by itself as the
depression hampers the purchasing power of people to a great extent.
Hence corrected prices by themselves cannot generate demand in
such scenario provided there is some revival of economic activity in
other sectors.
Also the very fact that magarpatta farmers through their collective
entity MTDCC chose to hold their lands through the period of slump is
very much indicative of their understanding of the logic of market i.e.
‘holding to profit’ i.e. their integration with market as much as the
several other specific socio-economic factors and ownership profile of
the region.

Now it would be worth to postulate the peculiarities of service sector as

against manufacturing industries. Both sectors differ in capital
intensivity. For service sector, the cost of land represents perhaps the
only substantial fixed cost, the other infrastructural costs amounting to
much less outflow-at times this infrastructure is provided by state.
Whereas in manufacturing industries, apart from land, the cost of
plants and machineries are significantly high. Hence as there’s
urbanisation of a particular region, the manufacturing sector is fast
replaced by service sector at least in terms of built environment of that
region.

The whole complex process of changing land use also brings about a
transformation in the pattern of income of the land-owning class. This
is a crucial consideration to understand the confrontation and the
possible collaboration of this class with finance capital as it helps to
understand the terms of collaboration better. When we consider the
case of magarpatta, we immediately observe the peculiarity of its shift
of land use as it involves pooling large tracts of land together in order
to build a mega-project. This has the obvious advantage of getting
better terms for negotiation. What is not so obvious is the fact that
such pooling enables the investors to invest the investible surplus in a
much productive manner.

Also the corporate form of continuing ownership of land by existing

owners of land and availability of various entrepreneurial opportunities
in the project itself offered by MTDCC mean that now the erstwhile
farmers-land owners have 3 sources of income generation. Further,
this corporate structure has some crucial significance in the sense that
it goes to show that the erstwhile landed bourgeois in this case is now
so well-integrated with the finance capital as it now has the ability to
accumulate more and more surplus from various sources. However it
has become entrepreneurial in the sense that it has moved on to
develop a similar area nearby wherein it doesn’t have owned land
holdings.

Conclusion

Thus far we have examined the character and trajectory of the process
of transformation in the land as a principal means of production, and
the role of Peri-Urban bourgeoisie in this process. We have also seen
that how this process is reminiscent of the ‘third stage of capitalism’8.
However the patterns of transformation are manifested in varied form,
depending upon the socio-political-economical conditions that exist.
The case of magarpatta city which we have studied is definitely a
unique case owing to the class-caste position of the landed class,
geographical location of the region, and the entrepreneurial
development within the landed class. Considering this uniqueness we
can not study this in isolation and an overview of the cases involving
similar transformation in the land is necessary. Although it can be
observed that there is an effort on part of the landed bourgeoisie in
general to collaborate with finance capital the terms of this
collaboration are determined by the larger social relations that exist.
Whatever is the pattern of the collaboration (or confrontation) with
finance capital, there has been a marked change in the character of
the peri-urban bourgeoisie, which is visible in the changes in
occupations, changes in the income patterns and control over the
principal means of production i.e. land. But pace-trajectory of these
changes is seen to be dependent upon the pattern of collaboration with
finance capital. In the case of magarpatta the landed bourgeoisie is
transforming into entrepreneurial class in the tertiary sector .The forms
of accumulation and investment of surplus in the case of magarpatta
have undergone significant changes and the ‘development of fully
grown capitalist class in the third stage of capitalism can be foreseen.
As we have seen earlier, the single most important economic
advantage in the case of magarpatta farmers is their control over the
land, which they have retained by pooling in the land to form MTDCC.
This was possible because of the peculiar socio-political conditions
existing in the region. More over the problem of ‘land less labourers’,
‘marginal farmers’ ,‘sharecroppers’, ‘tenants’ was either non-existent
on was not a severe issue. In other cases (where the conditions
existing in magarpatta do not exist) this process is not possible, unless
there exists a strong ‘co-operative movement in its entirety’. The
existence of such a movement is not consistent with the hegemonic
neo-liberal ideology of or times. Hence the general pattern of the
collaboration of the landed bourgeoisie and the finance capital is on
uneven terms. The landed farmers who have achieved a certain level
of integration with the market (and not surprisingly these farmers
belong to the dominant caste-class of the respective region) acquire
the role of ‘junior partner’ to the finance capital and the marginal-
under developed farmers belonging to backward castes or scheduled
tribes, are ‘dispossessed of their land and faced with the only option to
join the ‘reserve army of the labour’-i.e. the unorganised sector in the
economy. This process of ‘Accumulation by Dispossession’9 is
characteristic of the third stage of capitalism dominated by finance
capital.
In this light we can comment on the possibilities of replication of the
magarpatta model, i.e. the possibilities of the emergence of national
bourgeoisie through the collaboration with finance capital. In case of
magarpatta the process of the bourgeoisie-fication had started well
before the prospect of the collaboration came in the fray. Here again
we can not bypass the issue of caste which is a important determinant
of the process in the Indian context. In the particular case of
magarpatta ‘the maratha-kunabi caste’ is the dominant caste which
has historically controlled the means of production in the region and
has also been penetrated by the ‘modernising movements of social
reforms’10. Thus in this ‘historically over determined context the
collaboration with finance capital has transformed the character of the
already emerging landed-bourgeoisie.
But the replication of this model does not seem possible universally
considering the logic of uneven economic-geographical development.
Thus with the terms of collaboration being heavily skewed in favor of
globalised finance capital (as evident in the case of SEZs11), the
process of the emergence of the national bourgeoisie from the landed
bourgeoisie seems un-achievable.
Notes and References:
1
We would like to clarify the crucial term ‘rural, semi-urban bourgeoisie’. We would like to use the very word ‘bourgeoisie’
not as one which is peculiar to a particular stage of capitalism, but rather as for ‘a dominant class owning the means of
production in capitalist mode in general’. And hence one should not confuse this particular category with feudal landlords
for these two concepts relate to two distinct modes of production although while stressing the break between the two, we
can’t ignore the continuity between the two brought about by the caste system.
2
See appendix-1
3
See appendix-2
4
for the detailed discussion of the concept of ‘Over-Determination’ see ‘Contradiction and Over determination’ by Louis
Althusser, For Marx, Verso ,London
5
An Interview with Mr.Satish Magar by the authors
6
Interview of Mr.Satish Magar published in Money Life Magazine, October 2006
7
Urban Process under Capitalism-David Harvey ,in The Urban Geography Reader,Rotledge,2007
8
We owe this concept to Ernest Mandel as discussed in his book Late Capitalism, and further discussed by Fredric Jameson.
1st stage of capitalism is the stage of capitalism associated with ‘Industrial Revolution’ and National Capitalism. 2nd stage of
Capitalism is the stage of Monopoly Capitalism-Imperialism’ 3rd stage of the capitalism or Late Capitalism is the IT abetted
present stage, dominated by globalised finance capital.
9
See ‘A Brief History of Neo-Liberalism’ , ‘New Imperialism’ by David Harvey for the elaborate discussion of this concept
10
‘In the late-nineteenth and early century ‘Anti-Brahmin’ Movement,(inspired by Sayashodhak Movement although not
adhering to the sayashodhak principles in entirety) dominated by ‘Progressive Maratha Leaders’ was influential in
Maharashtra and a faction of this movement later gained ascendance in Maharashtra Congress. This dominance was
continued after Independence under the Leadership of Lt.Y.B.Chavan.The Co-Operative Movement (especially Sugar Co-
operatives) was an effective tool in realizing this dominance along with the ‘politics of the summations of interests’ led by
Y.B.Chavan. For a lucid discussion of this process see ‘ Prabodhan Yugachi Kahani ( A Tale of Renaissance Age) by
Prof.G.P.Deshpande, in ‘ Badalata Maharashtra ( Changing Maharashtra) published by Dr.Babasaheb Ambedkar Academy,
Satara
11
see-Primitive Accumulation by another name-C.P.Chandrasekar, October 31st ,Macroscan.org