Over the past few decades, India’s growth trajectory and the relationship between the state and private capital has shared traits with Latin America of the 1980s and Russia of the 1990s. For one, an ad-hoc pro-business policy has allowed a few companies to monopolise asset ownership. Second, there has been rent-seeking behaviour – adding wealth without contributing to productivity – at the top with the support of the government while cutting down on competition and the entry of new firms across sectors.
Political economist Atul Kohli, in his work on the politics of economic growth in India between 1980 and 2005, had a detailed insight on the dynamics of the political economy that shaped the growth trajectory during that period. According to Kohli, India’s entry to the global economic landscape in the 1990s was a result of incremental, gradual reforms of the 1980s based on shifts in the relationship between state and private business.According to Kohli, the economic reforms of this period – undertaken more on the capital market side – allowed Indian markets to operate more flexibly in certain sectors (telecom, automobiles, aviation, information technology, construction, consumer goods, among them) with the aim of bringing in private investment opportunities.
From this period, India saw a strengthening of the “state-capital-private business” alliance, often at the cost of the social and economic protection to India’s deeply fragmented labour force.
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03/02/2023