India: Economy, Politics, &

Society
India’s historical share in the ‘World GDP’
India’s current GDP & ‘World GDP’
 Core question and hypotheses
Core question:

How is the post-colonial India managing modern economic influences and traditional societal structures? Is their
legitimacy in claims by Government?

Hypotheses:

1)Political institutions have facilitated new economic transformations

2) The transformations are grounded in a framework which takes into consideration the multiple societal identities
and the diverging values underpinning the Indian society

3) Resilience of the Indian political system and has made the emerging Indian market possible
 ‘Modern’ state, ‘modern’ economy and ‘traditional’ society

Tradition
agricultural society
compartmental social relations
rigid caste & hierarchical system
primordial kin networks??
Modernity
industrial society
Individualistic, consumerism
egalitarian society
high degree of social mobility

Paradox of India’s political economy

-> modern state and economy are pitted against the traditional society

Þ disorder, slow growth, corruption, caste and communal conflict

Barrington Moore (1966): Social Origins of Dictatorship and Democracy

India after Independence: The ‘mixed economy’
Mixed economy as manifestation of liberal, socialist and communitarian values
(Freedom Movement)
liberal: fundamental right to freedom of trade, occupation and ownership
socialist: national interest more compelling than individual interest
communitarian: welfare of backward classes, women and children; ban on
slaughter of milk cattle

Industrial Policy Resolution (1948)

public ownership: three industries- munitions; atomic energy and railroads
Exclusive government ownership: coal; iron and steel; aircraft; ship
manufacturing; telephone and telegraph; minerals
The mixed economy: achievements and shortcomings

achievements failures
Slow but steady growth (even for the corruption and bureaucratic inefficiency
less privileged)

Political and democratic control over
the economy; allows private
participation in production while
ensuring that society is protected
from the full swings of the market.
Transformation of the rhetoric of
development into everyday political
discourse
wrong assumptions about the availability
of resources, consumption and poverty
reduction
a means of generating support for the
political machine of the INC

“The most important gain [of the mixed economy] was possibly in legitimacy, if not in growth”
(Mitra, 2011).
Economic Liberalization: India in 1991

The scenario

Account deficit of around $ 10 billion

Inflation at an annual rate of 13 percent

Main components:

• drastic reduction of state control over the market

• lowering of tariffs
• easing of imports
• reduction of taxes on enterprises
• devaluation of the rupee
• Privatisation of state assets
• Downsizing of public sector undertakings (PSUs)
 India’s transition: attempts at an explanation
Why has India succeeded in achieving a generally peaceful and orderly transition?

-> W.H. Morris-Jones: ‘inter-penetration’ of the modern state and the traditional society

-> Rudolph and Rudolph: the multiple role of the state (‘avatars’ of Vishnu)
The idea of state having shared and multiple sovereignty, and the global and local network of
institutions and power, in their views, shows both the limits and expansion of the modern state
(State formation and the political economy of India: The Rudolphian paradigm)

Pre 1991: role of state was interventionist

Post 1991: role of state is of a regulator
Opposition to liberalization
• Socialists
• Rich farmers
• Communist parties
• Political objection to SEZs
India’s Agriculture, Industry and Service
Sectors
Challenges ahead …
Areas of concern
• Geopolitical challenges
• Diversity?
• Income parity
• Role of women
• Hunger
• Health
• Religion
• FDI
• Environment
• Education
Farmer suicides: Does progress eat its children?
Violent Resistance to market liberalization: India’s Naxalites
Far Right V/S rights of minorities
Rigid caste system: cost, inclusiveness ….

Caste: rigid social control & networks

facilitates less economic mobility
Erects barriers for social & economic
mobility.
Caste shapes the ownership pattern of land
and capital
Regulates access to political, social, and
economic capital.
Caste politics determine access to public
resources. (The role of caste in economic
transformation by Kalaiyarasan, A. The
Hindu, 2022)
True cost of caste system????
Lost opportunities?
Reservation?
Founding fathers’ of Indian constitution?
Egyptian hierarchy

How were they Impacted by it?

What was the end result?

British hierarchy

How did the British system evolve?

How were they able to transform

into modern society?

Are there lessons to be learnt?

Human development Index
 Conclusion and Outlook
1) ‘Indian model’ of development (a sense of politics combined with attention to
the requirements of economic growth and social justice)
-> growth v/s inflation in the economy
-> spread of the notion of being stakeholders within the population
ÞSense of legitimacy to modern institutions and strengthening of state-society
interactions

2) Politics has strongly shaped the economy, but the economy has also produced
new political categories – class – caste clashes

3) Many in India as well as many international observers are unsure about the
future of the Indian economy
Questions for discussion
1) Is democracy an incentive for or an obstacle to the integration
of India’s domestic economy, or both?

2) Is the ‘Indian model’ unique to the Indian context or can it

equally work in other (Asian) settings?