India Political Economy

7/31/2019 India Political Economy

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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 theworld economy since the 14th

century



Its world economy became globalafter 1500



Specific routes and points of contactbecame critical by 1800: especially the

coasts and northwest interior



In the 1800s, The British Empire produced anew 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 smallerprojects. 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 duringdecades 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 inIndia.



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 SteelWorks at Jamshedpur consumed increasing supplies of ore andcoal, 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 employed260,000 people, 42% in Bombay city, 26% elsewhere inBombay Presidency (mostly Nagpur), and 32% elsewhere inBritish India, at major railway junctures.

Coal, iron, steel, jute and other industries were developed at thesame 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

http://upload.wikimedia.org/wikipedia/commons/6/6e/Precolonial_national_income_of_India%281857-1900%29.png



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

I di GDP C it l ti t B it i d th USA



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...

http://www.deloitte.com/dtt/research/0,1015,sid%253D5937%2526cid%253D119838,00.html

http://www.deloitte.com/dtt/research/0,1015,sid%253D5937%2526cid%253D119838,00.html



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/Image:Indias_growth_rate_of_real_GDP_per_capita%281950-2006%29.png



http://www.lib.utexas.edu/maps/world_maps/world_mktsize96.jpg

Relative GDP map of the world



Per capita GDP of South Asian economies &

SKorea (1950-1995)




http://www.mastercard-masterindex.com/asiapac/insights/1Q2006/images/chart_issue01_01.gif



Value of Indian rupee as per dollar & pound

(1980-2005)




www.indianembassylao.com/economy_basic.html

http://www.indianembassylao.com/economy_basic.html

http://www.indianembassylao.com/economy_basic.html



Private and public industry employment in India

(2003).




Composition of India’s agricultural output 2003-04




www.321gold.com/.../dorsch062006.html

http://www.321gold.com/.../dorsch062006.html

http://www.321gold.com/.../dorsch062006.html



Per capita Net

State DomesticProduct in India

(1997-98).

•http://en.wikipedia.org/wiki/Economy_of_India

http://upload.wikimedia.org/wikipedia/commons/1/15/Per_capita_NSDP_in_India_%281997-98%29.png



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 SouthAsia. 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 resourcesacquired 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)

China

India

Nigeria

Egypt

Ethiopia

Myanmar

Zaire

Tanzania

Sudan

Kenya

Korea, DPR

Uzbekistan

Nepal

U anda

Other

Philippines

Viet NamBangladeshPakistanIndonesia



India is the largest and richest country in the region

spanning all of southern Asia … the second largest nationaleconomy 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 marketstructures 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 …

In Bombay, India's Wealth andPoverty on Display

Listen Morning Edition , February 17, 2004 ·

India's economy is booming, but the newwealth is not shared by all. Some 400million Indians still live on less than adollar a day. This disparity in wealth is

starkly evident in Bombay, which doublesas the commercial capital of India and thehome of the largest slum in Asia. MirandaKennedy reports.

http://www.npr.org/programs/morning/

http://www.npr.org/programs/morning/



Sunil Mehta is Forbes’ #186 among richest men in the world

46 , self madeSource: telecom

Net Worth: $2.7 bil

Country of citizenship: India Residence: Delhi, IndiaIndustry: Technology Marital Status: married , 3 childrenPunjab University, Bachelor of Arts / Science

From making bicycle parts in Ludhiana, a trading town in North India, Mittal is now India's leadingtelecom pioneer and the first private operator to launch cellular services in the country. His $1.1billion (revenues) Bharti group runs country's largest GSM-based mobile phone service. Mittal hashis hands full battling arch rivals, the Ambanis of Reliance and the Tata group. Biggest asset isfamily's stakein flagship Bharti Tele-Ventures, in which Singapore Telecom and Warburg Pincushave 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-year-old Mercedes to im ortant business meetin s.



In the 1990s, television media owned by multinational

corporations flooded public information systems. The

growth of exports from South Asian countries measured13.5% 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, FDIincreased (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 twenty-

five financial agreements in India.



Forging alliances between

national and international

business now preoccupiesnational policy makers.

Linkages between FDI andnational 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 kindof 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



In 2004, the incumbent NDA alliance government launcheda campaign called “India Shining” to highlight its success in

stimulating economic growth – it failed

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 recentunsuccessful election campaign.

Speaking for the first time since the BJP was ousted, formerdeputy premier LK Advani said the catchphrase was "notwrong... 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



g

Progressive Alliance (UPA) government in New Delhi.

In aggregate national voting statistics, BJP and

Congress are evenly matched. Both depend on allies towin. 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 comprisealliances among regional parties

NDA gave way to UDA on the basis

of a small voter swing towardCongress allied parties in several keystates, 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



Economic disparities translated intovotes for government efforts to

spread the wealth



New Government headed bygrowth oriented economists

Finance Minister PChidambaram

Prime MinisterManmohan Singh,who launched

liberalization in1990s

Th UDA t lik it NDA d d d d i i

http://www.ndtv.com/topstories/showtopstory.asp?slug=PM+tells+ministers+to+keep+allies+informed&id=15580



The UDA government, like its NDA predecessor, depends on decisionsby 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. Confident Manmohan Singh focuses on governance:

[India News]: New Delhi, Nov 2 : Over five months into office, PrimeMinister Manmohan Singh's first meeting with his ministers reflected hisquite confidence over the stability of his government and the importancehe attaches to good governance, analysts and ministers said Tuesday.

They said the meeting also showed that the prime minister, catapulted tothe office after Congress president Sonia Gandhi declined to take up theprized 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 atthe Jawaharlal Nehru University here.

"He now wants the ministers to focus on implementing the promises, todeliver," Mukherjee told IANS.

The affluent urban classes epitomized by



The affluent urban classes, epitomized bystylish folks in Bombay (Mumbai) … prosper

in the world of globalization

f

http://www.pbase.com/scaudill/mumbai



Middle class desires drive much of urban economy

B ll d

http://www.pbase.com/makszem/mumbai



Bollywood

U b b ildi b

http://www.bollywoodpremiere.com/wallpaper/picpage.php?id=1359&offset=0



Urban building boom …

http://www.pbase.com/scaudill/mumbai



http://www.pbase.com/duckyork/bombay



Tourism and heritage biz nation




Tourism and heritage biz … nation

in the world

http://www.pbase.com/susie_girl/delhi_and_agra


http://www.pbase.com/scaudill/new_delhi



Hi h l h t l h ti l




High class hotels … where national

and global elites meet




Public arts and expressions …

http://www.pbase.com/cmarut/new_delhi



Everyday capitalism

http://www.pbase.com/cmarut/new_delhi

http://www.pbase.com/smisra/delhi



Everyday capitalism





Everyday needs …




India gate …




S th I di



Southern India:

Hyderabad is Cyberabad

Although Bangalore was first out of the hi-tech gate, manyIndian cities have now joined the race for information-technology jobs. Hyderabad's one of them, and the results

are incredible to anyone who remembers the city 20 yearsago.



http://www.gradcenter.marlboro.edu/~rchari/imagepages/image16.html



Peoples' War Group (PWG)

http://www.gradcenter.marlboro.edu/~rchari/imagepages/image16.html



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.

Manmo an ng s expecte toannounce

i di i



compensationIndian PrimeMinister Manmohan Singhhas promised assistanceto families of farmers who

have committed suicide insouthern India.

Mr Singh is visiting AndhraPradesh, where nearly 3000farmers have taken theirlives because of crippling

debt.The prime minister's visit is his

first since taking office inMay.

It comes a week before hisnewly elected Congress

government presents its firstfederal budget, which isexpected to be pro-farmer.

Correspondents say Mr Singh'svisit is aimed at showing hisgovernment's commitment topoor Indian farmers, who had

India PM pledgeover suicidefarmers

Gujarat killings, Feb-Apr 2002



Gujarat killings, Feb Apr 2002



Gujarat Violence

And unemployment

Human rights report

And investment and FDI

And Gujarat BJP Government underNarendra Modi

And justice

Breman, Jan, Arvind Das, and Ravi Agarwal Down and Out: Labouring Under

http://www.pucl.org/Topics/Religion-communalism/2002/gujarat-starve.htm

http://www.pucl.org/Topics/Religion-communalism/2002/gujarat-nhrc-submission.htm

http://www.blonnet.com/2002/04/25/stories/2002042500700200.htm


http://www.hrw.org/reports/2002/india/

http://www.countercurrents.org/gujarat-hrw010703.htm

http://www.countercurrents.org/gujarat-hrw010703.htm





http://www.pucl.org/Topics/Religion-communalism/2002/gujarat-nhrc-submission.htm

http://www.pucl.org/Topics/Religion-communalism/2002/gujarat-starve.htm



Breman, Jan, Arvind Das, and Ravi Agarwal Down and Out: Labouring Under Global Capitalism . Distributed for the Amsterdam University Press. 164 p., richlyillustrated. 11 x 8-3/4 2000Cloth CUSA $11.50spec 9-05356-450-0

Poverty is the dominant feature of the working lives portrayed in this book. But themisery of these men, women, and children in India has little to do with theunderdevelopment of the past. The poverty here is caused by development and isconcentrated mainly in what is referred to as the informal sector of the economy, whichis 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 bynature. The wages earned from these enterprises are not only low but are alsocharacterized by strong work fluctuations per day, month, or season. Two other factorscharacterize this type of work: the absence of governmental monitoring and also, theabsence of organizations, namely unions, which traditionally represented the concernsof the working class.

The choice for India emerges from the research of Jan Breman, performed over a 30-year period in an area located on India's west coast, the site of enormous economicgrowth. He has now returned to this location with photographer, Ravi Agarwal, to presenta portrait of the working classes of this particular area. Together with Arvind Das, a well-known journalist and commentator on business matters in India, Jan Breman has written

the text which accompanies the photographs.

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mailto:[email protected]

http://www.dailytimes.com.pk/default.asp?page=story_22-9-2003_pg7_6

http://www.cyberabad.com/

http://www.tata.com/





, y ( y ),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 liftsin 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 AnujDayal.




http://sify.com/cities/fullstory.php?id=13580862








http://www.tatahousing.com/glendale.htm


























http://www.eindiabusiness.com/tajhitech/


http://www.cio.com/archive/120100/unbound.html

India Political Economy

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