political economy part 1: economic development gov 1255 politics of india prof prerna singh
TRANSCRIPT
Political EconomyPart 1: Economic
Development
Gov 1255Politics of India
Prof Prerna Singh
Political Economy of Economic Development
in India• 1950 to 1964
The Nehru era
• 1965 to the early 1980s
The Indira Gandhi era
• 1980s onwards
Political Economy of Economic Development
in India
• 1950 to 1964
The Nehru era
• 1965 to the early 1980s
The Indira Gandhi era
• 1980s onwards
Statist model of Development:Import Substitution-led Industrialization
Political Economy of Economic Development
in India• 1950 to 1964
The Nehru era
• 1965 to the early 1980s
The Indira Gandhi era
• 1980s onwards •Mid-1980s – 1991• 1991 onwards
Statist model of Development:Import Substitution-led Industrialization
Pro-Business turn
Neo-liberal Reforms
In this Lecture
• 1950 to 1964
The Nehru era
• 1965 to the early 1980s
The Indira Gandhi era
Statist model of Development:Import Substitution-led Industrialization
Statist model of Development
• What was this model of development?
• Why was it adopted?
• What was its impact?
• How did it vary under Nehru vs. Indira Gandhi?
The Statist Model of DevelopmentImport Substitution-led Industrialization
• The Leading Role of the State
• Emphasis on self-sufficiency
• Substituting imports to minimize foreign dependence
• Priority to heavy industry
• Neglect of agriculture
• Focus on higher education
Why was this model adopted?
• External factors• Theory of Keynesian economics• Experience of other countries
• Internal factors• Values of Indian nationalist movement• Nehru’s nationalist and socialist leanings
The Statist Model of Development
Nehru’s nationalist and socialist leanings
Suspicion of an open economy
The Statist Model of Development
Nehru’s nationalist and socialist leanings
Suspicion of an open economy• Resistance to foreign investors• Protectionism
Preference for heavy industry
The Statist Model of Development
Nehru’s nationalist and socialist leanings
• Suspicion of an open economy • Resistance to foreign investors• Protectionism
• Preference for heavy industry
Serving the interests of Nation-building
Ideological proclivities +
Interests
Ideological proclivities +
Interests
Economic elite Political elite
What was the Impact of the Statist Model of Development?
Mixed Results
On the negative side
• Overall rates of economic growth were sluggish
• Inefficient economy
• Neglect of Agriculture
• Neglect of Social Development
On the positive side
• Industrial growth was respectable
• Retained Goal of Self-Sufficiency
Indira Gandhi Years • India's democracy became more populist
and deinstitutionalised,
• economic rhetoric moved far to the left,
• the gap between the state’s developmental capacities and economic goals widened even further, to the detriment of industrial development
Indira Gandhi Years • Nehru’s statist model of economic development
essentially continued without any major changes.
• Two main changes:
• a major shift in agricultural policy that had a benign long term impact on food production
• and a variety of left-leaning changes that reflected Mrs Gandhi's political calculus that helped neither economic growth nor redistribution.
• A major shift in agricultural policy•Green Revolution
• Left-leaning changes• Symbolic = Politically Consequential• Economically Consequential
Modifications to Statist Model of Economic Development
under Indira Gandhi
Economically consequential policy developments with an adverse impact on
economic growth:
• Largess to interest groups
• Radical political rhetoric & policies
+
New level of labour activism
=
Alienation of domestic & foreign private investors
• Distancing from world economy
Indira Gandhi
Nehruvian
Statist Model of Economic
Development
Populism
State Ambitions
Deinstitutionalization
State Capacities
Indira Gandhi = Developmental State
became less developmental
Nehruvian
Statist Model of Economic
Development
Populism State Ambitions
Deinstitutionalization
State Capacities
Political Economy under Indira Gandhi
• Time of Missed Opportunities in global context
• “Politics” over Economy
