Transcript India’s Political Economy - School of Arts & Sciences

India’s Political Economy
An introduction
Outline
A Long-Term View
 2004 Elections. What do they mean?
 Globalization and Nationalism
 Trends and Questions
 Regions, Cities, and Business
 Q & A

India has been integrated into the
world economy since the 14th
century
Its world economy became global
after 1500
Specific routes and points of contact
became critical by 1800: especially the
coasts and northwest interior
In the 1800s, The British Empire produced a
new territorial domain for the evolution of
modern state power
A transition to a modern development regime consumed the
decades 1840-1880.
In 1853, Governor General Dalhousie announced a plan to build
an Indian railway with state contracts that guaranteed English
companies a minimum five percent return; and to secure that
return, government kept control of railway construction and
management.
In 1871, the Government of India obtained authority to raise
loans for productive purposes, and large irrigation projects
began, following earlier success raising revenues from smaller
projects. Development projects were all government endeavours
that employed many native contractors and their benefits also
filtered down to native owners of land receiving new irrigation
and producing commodity crops.
Between 1880 and 1914, industrial development in India took off during
decades of low prices in Europe and America when rising prices in South
Asia encouraged investments in India by firms producing for Indian markets
and for diversified world markets.
Commodity prices in India rose with export commodity production until
1929. Imported industrial machinery was domesticated in new Indian
factory towns.
In 1853, the first Indian cotton mill appeared in Bombay, and the Factory Act
(1881) imposed rules on Indian factories to reduce their comparative
advantage in virtue of low labour costs and cheap access to raw materials in
India.
In 1887, J.N.Tata's Empress Mill arose at Nagpur, in the heart of
cotton country, in 1887.
The Tatas became India's industrial dynasty. Tata Iron and Steel
Works at Jamshedpur consumed increasing supplies of ore and
coal, which by the 1920s rivalled exports from Calcutta.
In 1914, India was the world's fourth largest industrial cotton
textile producer: cotton mills numbered 271 and employed
260,000 people, 42% in Bombay city, 26% elsewhere in
Bombay Presidency (mostly Nagpur), and 32% elsewhere in
British India, at major railway junctures.
Coal, iron, steel, jute and other industries were developed at the
same time, producing specialized regional concentrations of
heavy industrial production around Bombay, Ahmedabad,
Nagpur, Kanpur, Calcutta, Jamshedpur, and Madras.
Growth rate of India's real GDP per capita
(Constant Prices: Chain series) (1857–1900).
Data Source: Penn World tables.
http://en.wikipedia.org/wiki/Economy_of_India
Percapita incomes per Capita Relative to India
Gregory Clark,“The Great Divergence – World Economic Growth since 1800.”
http://www.econ.ucdavis.edu/faculty/gclark/GlobalHistory/Global%20History-12.pdf
Indian GDP per Capita relative to Britain and the USA,
1873 to 1998
Gregory Clark,“The Great Divergence – World Economic Growth since 1800.”
http://www.econ.ucdavis.edu/faculty/gclark/GlobalHistory/Global%20History-12.pdf
Historical Share of Global GDP
www.deloitte.com/dtt/research/0,1015,sid%253D...
Growth rate of India's real GDP per capita
(Constant Prices: Chain series) (1950–2006)
Data Source: Penn World tables.
http://en.wikipedia.org/wiki/Economy_of_India
Relative GDP map of the world
http://www.lib.utexas.edu/maps/world_maps/world_mktsize96.jpg
Per capita GDP of South Asian economies &
SKorea (1950-1995)
http://en.wikipedia.org/wiki/Economy_of_India
http://www.mastercard-masterindex.com/asiapac/insights/1Q2006/images/chart_issue01_01.gif
Value of Indian rupee as per dollar & pound
(1980-2005)
http://en.wikipedia.org/wiki/Economy_of_India
www.indianembassylao.com/economy_basic.html
Private and public industry employment in India
(2003).
http://en.wikipedia.org/wiki/Economy_of_India
Composition of India’s agricultural output 2003-04
http://en.wikipedia.org/wiki/Economy_of_India
www.321gold.com/.../dorsch062006.html
Per capita Net
State Domestic
Product in India
(1997-98).
•http://en.wikipedia.org/wiki/Economy_of_India
http://news.bbc.co.uk/nol/shared/spl/hi/guides/456900/456964/img/1148297950.gif
http://www.oecd.org/dataoecd/62/30/1877912.gif
Partitioned into India and Pakistan in 1947.
East Pakistan became Bangladesh in 1971
Three decades from the start of India's first Five Year
Plan in 1952 to the end of its Sixth Plan in 1985 were
the heyday of nationally planned development in South
Asia. National planning required the institutional
enclosure of national economies. South Asia's national
plans focused on national markets. National planners
formulated priorities for allocating state resources
acquired both internally and externally. Planning
agencies organized regional and local initiatives like
cooperative societies and community development
programs. National governments set up public food
procurement and distribution systems to establish a
ceiling on food costs for the poor. National health and
education expanded. State ownership expanded to
basic industries, public utilities, banks, and insurance.
Countries >20 million population <$1,000 percapita GDP
(UNICEF data 1994)
Nigeria
Viet Nam
Indonesia
Pakistan Bangladesh
Philippines
Egypt
India
Ethiopia
Tanzania
Myanmar
Sudan
Zaire
Kenya
Other
Korea, DPR
Uzbekistan
Nepal
China
Uganda
India is the largest and richest country in the region
spanning all of southern Asia … the second largest national
economy in Asia, after China, with comparably rapid PC
growth rates today, and rather higher poverty measures …
Since the opening of the Indian economy
and liberalization of internal market
structures since 1990, economic
development has had no one guiding vision
or dominant logic and several contradictory
trends are prominent. National economies
are more global as are the cultural
communications that shape national
politics.
Since 1990, the national economy has grown more rapidly,
and economic disparities have increased …
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In Bombay, India's Wealth and
Poverty on Display
Listen
Morning Edition, February 17, 2004 ·
India's economy is booming, but the new
wealth is not shared by all. Some 400
million Indians still live on less than a
dollar a day. This disparity in wealth is
starkly evident in Bombay, which doubles
as the commercial capital of India and the
home of the largest slum in Asia. Miranda
Kennedy reports.
Sunil Mehta is Forbes’ #186 among richest men in the world
46 , self made
Source: telecom
Net Worth: $2.7 bil
Country of citizenship: India
Residence: Delhi, India
Industry: Technology
Marital Status: married , 3 children
Punjab University, Bachelor of Arts / Science
From making bicycle parts in Ludhiana, a trading town in North India, Mittal is now India's leading
telecom pioneer and the first private operator to launch cellular services in the country. His $1.1
billion (revenues) Bharti group runs country's largest GSM-based mobile phone service. Mittal has
his hands full battling arch rivals, the Ambanis of Reliance and the Tata group. Biggest asset is
family's stakein flagship Bharti Tele-Ventures, in which Singapore Telecom and Warburg Pincus
have jointly invested nearly $1 billion. The stock, first listed two years ago, soared 376% last year,
propelling Mittal into the billionaire ranks. A believer in lucky charms, Mittal travels in his ten-yearold Mercedes to important business meetings.
In the 1990s, television media owned by multinational
corporations flooded public information systems. The
growth of exports from South Asian countries measured
13.5% annually in the 1990s, almost four times the rate of
the 1970s. Foreign direct investment (FDI) grew, though it
remains a small proportion of India's GDP at 0.1 percent
before 1991 and 0.5 percent in 1992-6. In 1990-1996, FDI
increased (in millions of US dollars) from under 100 to over
5,000 in India, from under 250 to over 650 in Pakistan, from
under 60 to over 600 in Bangladesh, and from under 60 to
over 2,400 in Sri Lanka. In the first six months of 1996
alone, Korean companies made nine technical and twentyfive financial agreements in India.
Forging alliances between
national and international
business now preoccupies
national policy makers.
Linkages between FDI and
national investors are increasing
the pool of investment capital
inside the national economy.
In 1999, the Bharatiya Janata Party (BJP) became the
leading party in a National Democratic Alliance (NDA)
coalition government that held power until May 2004. By
leading India’s first major non-Congress national
government, Prime Minister Vajpayee and colleagues
opened a new political era. The BJP was in fact a new kind
of dominant party as a pivot of national coalition building.
Its Sangh brethren the Rashtriya Swayamsevak Sangh (RSS)
and Vishwa Hindu Parishad (VHP) also moved from
margins to mainstream by occupying the Prime Minister’s
office and all national ministries. Hindutva acquired official
respectability as a national party ideology.
In 2004, the incumbent NDA alliance government launched
a campaign called “India Shining” to highlight its success in
stimulating economic growth – it failed
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BBC REPORT --- 28 May 2004
BJP admits 'India Shining' error
India's Bharatiya Janata Party has admitted its
"India Shining" approach was harmful in its recent
unsuccessful election campaign.
Speaking for the first time since the BJP was ousted, former
deputy premier LK Advani said the catchphrase was "not
wrong... but not appropriate".
Congress became the biggest party in parliament after a
campaign pledging to improve the plight of India's poor.
However, Mr Advani warned the result had not given
Congress a clear mandate.
Bouncing back
Mr Advani said the two catchphrases "Feel Good" and "India
Shining" had hurt the BJP.
2004 elections established a Congress-led United
Progressive Alliance (UPA) government in New Delhi.
In aggregate national voting statistics, BJP and
Congress are evenly matched. Both depend on allies to
win. In 2004 Lok Sabha polls, each alliance received
about 35% of the total vote, and total votes for NDA
and UDA parties declined compared to 1999 (by 3.62%
and 2.36%, respectively), while non-aligned parties
increased their vote share, most notably the Bahujan
Samaj Party (BSP) in UP. The 2004 change in national
government came not from a voter shift away from the
BJP but from a few key Congress victories and many
good Congress alliances with victorious regional
parties, which together with “outside support” gave the
UDA over 320 Lok Sabha votes, more than the NDA
ever had, and drove the NDA into Lok Sabha minorities
in all but five Indian states.
What do elections mean?
National governments comprise
alliances among regional parties
 NDA gave way to UDA on the basis
of a small voter swing toward
Congress allied parties in several key
states, including Andhra Pradesh
 Economic issues were critical
 Economic policy is at issue, in the
states and at the Centre (New Delhi)

Economic disparities translated into
votes for government efforts to
spread the wealth
New Government headed by
growth oriented economists

Finance Minister P
Chidambaram

Prime Minister
Manmohan Singh,
who launched
liberalization in
1990s
The UDA government, like its NDA predecessor, depends on decisions
by voters and politicians who respond to short-term assessments of
practical self-interest. Experts attribute say effective promises of good
government are more politically important than ideology.
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Confident Manmohan Singh focuses on governance:
[India News]: New Delhi, Nov 2 : Over five months into office, Prime
Minister Manmohan Singh's first meeting with his ministers reflected his
quite confidence over the stability of his government and the importance
he attaches to good governance, analysts and ministers said Tuesday.
They said the meeting also showed that the prime minister, catapulted to
the office after Congress president Sonia Gandhi declined to take up the
prized job, has quickly learnt the art of managing a coalition government.
"He has settled in quite a bit and is clearly putting his own stamp on the
administration," said Mridula Mukherjee, a professor of political science at
the Jawaharlal Nehru University here.
"He now wants the ministers to focus on implementing the promises, to
deliver," Mukherjee told IANS.
The affluent urban classes, epitomized by
stylish folks in Bombay (Mumbai) … prosper
in the world of globalization
Middle class desires drive much of
urban economy
Bollywood
Urban building boom …
Tourism and heritage biz … nation
in the world
High class hotels … where national
and global elites meet
Public arts and expressions …
Everyday capitalism
Everyday needs …
India gate …
Southern India:
Hyderabad is Cyberabad
Although Bangalore was first out of the hi-tech gate, many
Indian cities have now joined the race for informationtechnology jobs. Hyderabad's one of them, and the results
are incredible to anyone who remembers the city 20 years
ago.
Peoples' War Group (PWG)
Since 1980 clashes between police and Naxalite Maoist revolutionaries of the
Peoples' War Group (PWG) have taken place in northwestern Andhra Pradesh.
The PWG champions the cause of the landless and targets landlords, law
enforcement personnel and other symbols of authority in the northeast, east
central and southern states of Andhra Pradesh, Bihar, Madhya Pradesh,
Maharashtra and Orissa.
Naxalite Maoist revolutionaries of the Peoples' War Group have killed dozens of
persons, declaring them "class enemies" or police informers. In June 1998,
Naxalites attacked a tribal village in Andhra Pradesh's east Godavari district,
where they killed the village chief and beat eight women and shot two men. On
22 February 1998, an Orissa policeman was killed by suspected PWG militants,
who had entered the state from neighboring Andhra Pradesh. In areas under their
control, Naxalites dispense summary justice in "People's Courts", which in some
cases condemn to death suspected police informers, village headmen, and others
deemed to be "class enemies" or "caste oppressors." Madhya Pradesh state
transport minister Likhiram Kware was hacked to death on 16 December 1999.
The Naxalites also extort money from businesses. Their victims, in addition to
police and local government officials, include suspected police informers, village
headmen, and landlords whom they accuse of oppressing scheduled caste
members. The PWG also used land mines to kill police, and insurgents used
bombs to kill government officials, police, and civilians.
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India PM pledge
over suicide
farmers
Manmohan Singh is expected to
announce
compensationIndian Prime
Minister Manmohan Singh
has promised assistance
to families of farmers who
have committed suicide in
southern India.
Mr Singh is visiting Andhra
Pradesh, where nearly 3000
farmers have taken their
lives because of crippling
debt.
The prime minister's visit is his
first since taking office in
May.
It comes a week before his
newly elected Congress
government presents its first
federal budget, which is
expected to be pro-farmer.
Correspondents say Mr Singh's
visit is aimed at showing his
government's commitment to
poor Indian farmers, who had
Gujarat killings, Feb-Apr 2002
Gujarat Violence
And unemployment
 Human rights report
 And investment and FDI
 And Gujarat BJP Government under
Narendra Modi
 And justice
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Breman, Jan, Arvind Das, and Ravi Agarwal Down and Out: Labouring Under
Global Capitalism. Distributed for the Amsterdam University Press. 164 p., richly
illustrated. 11 x 8-3/4 2000
Cloth CUSA $11.50spec 9-05356-450-0
Poverty is the dominant feature of the working lives portrayed in this book. But the
misery of these men, women, and children in India has little to do with the
underdevelopment of the past. The poverty here is caused by development and is
concentrated mainly in what is referred to as the informal sector of the economy, which
is what four-fifths of India's population depends on for its livelihood. It concerns the type
of work that requires little or no capital investment or education and is small-scale by
nature. The wages earned from these enterprises are not only low but are also
characterized by strong work fluctuations per day, month, or season. Two other factors
characterize this type of work: the absence of governmental monitoring and also, the
absence of organizations, namely unions, which traditionally represented the concerns
of the working class.
The choice for India emerges from the research of Jan Breman, performed over a 30year period in an area located on India's west coast, the site of enormous economic
growth. He has now returned to this location with photographer, Ravi Agarwal, to present
a portrait of the working classes of this particular area. Together with Arvind Das, a wellknown journalist and commentator on business matters in India, Jan Breman has written
the text which accompanies the photographs.
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Delhi, Hyderabad (Cyberabad), and
Mumbai are hotspots for business
opportunities in India
The Delhi Metro, which has become
synonymous for state-of-the-art technology,
may now sport two see-through fibre glass lifts
in the ISBT (Kashmere Gate) station.
"The underground section, which will be ready
in December, will have 11 lifts in all. Out of
these, we will have two lifts which will have
see-through glass windows", said Delhi Metro
Rail Corporation (DMRC) spokesman Anuj
Dayal.