2. Rethinking and Theorizing the Indian State in the Context of New Economic Map

Our treatment of financial sustainability (a subset of economic sustainability) here is sparse. It is particularly taken up in details by Mandal and Kar (Chap.​ 3) and Sarkar, Chakrabarti and Sen (Chap.​ 4). Our take on ecological sustainability is similarly muted.

We desist from reading the evolution of Indian state as mirroring known approaches of state: classical, liberal, libertarian, Fabian, and Marxist. Nor do we attempt to read Indian state in relation to specific theories of state such as neoclassical, public choice, transaction cost, information theoretic, structuralist, postmodern, and so on. Rather, our strategy is to make sense of the practice of Indian state in relation to the context which arises from the new situations and through that encounter try to derive a theory of the Indian state. This is not to say that the known theoretical interventions played no role in influencing the rationale of the Indian state or even that they cannot be used to explain certain features of this rationale; when required we relate our analysis to them as well. However, the essential strategy is to intervene in the context of the new Order of Things in which the Indian state finds itself embedded (both as one of its producers as also being a site of their effects); our strategy will hopefully help the readers see the path-dependent nature of the transition of Indian state as well as the complexity which surrounds its particular existence. Indian state and its transformation is certainly no mirror of any theory, but must be seen/theorized from within the historical juncture and process of the evolution of Indian economy, its breaks, departures, and transformation.

We do not offer any normative judgment on the rationale and role of Indian state. This is not to ignore normative issues that find entry into the state’s evaluative space and practice, but here that never translates into a question regarding the veracity of those positions which, if it is to be undertaken, would involve a full scale critical analysis of them. Therefore, so far as normative issues are concerned, they find its presence only in the context of our analysis of the Indian state’s rationalization of its practice.

In elaborating upon neoliberalism as a historical juncture, we do not harp much on the issue of the distinction between liberalism and neoliberalism. Evidently, many features of neoliberalism are an extension of the broader liberal ideas while in some cases it adds something distinctly new. Even as the spotlight is on neoliberalism, we hope that both the similarities and differences with liberalism will be identified by the readers.

In a contrary position, Bardhan (2007) suggests that the sharpest ever reduction in absolute poverty happened in China which was due to neither industrialization nor globalization, but fundamentally a result of agricultural growth in the 1980s following de-collectivization and equitable land reform.

The problem of legislating on issues such as education (agriculture, land acquisition, and so on) highlights the difficulties in weaving through the complexities imposed by India’s federal structure that divides legislative power across one central state and many regional states; power to legislate is distributed in line with union list (pertaining to what is the domain of central government—100 items), state list (capturing the domain of regional states—61 items), and concurrent list (the intersection domain of the two—52 items). This distribution of sovereign power impacts the transition of Indian economy unevenly across regional states; this is because the latter may adopt policies in their domains that are contrary to what the central government adopts, some that may even be contrary to the precepts of neoliberalism. However, notwithstanding this complexity tension and accepting any transition in this scenario as uneven, it is also true that, with financial power distributed in its favor, the central government has been able to increase its influence over the regional states and impose its policy paradigm; moreover, competition among states for access to capital has also made it difficult for regional states to play truant. With the new Order of Things favoring a unified stance across India so far as economic policies are concerned (see Nilekani 2006), federalism is often not in great vogue. Given this clarification, we have been concentrating on the relation between this new Order of Things and the Indian state. Not surprisingly our attention is inordinately fixed on the central government (its policies, documents, practices it favors), even though as in case of agriculture, land acquisition and education, the conflict between it and regional states that appears material to the discussion also need highlighting. It is our contention that internalizing federalism in the theorization of Indian state will considerably enrich the complexity of Indian state, bringing further into sharp focus the limitations of neoliberalism (in terms of practice) as also aspects like policy gridlocks and corruption.

For a critical analysis of neoliberal education approach in India, see Bhowmick and Bhattacharyaa, (Chap.​ 23).

This facet of PPP model in infrastructure is discussed in details in Chatterjee and Banerjee (Chap.​ 9).

Problems of re-location of agriculture in a market economy under liberalization–globalization and the role of state in this transition are discussed in Deshpande (Chap.​ 7). This paper also engages with the issue of federalism.

Ruccio, Resnick and Wolff (1990), Chakrabarti, Dhar and Cullenberg (2012, Chap.​ 5).

An exemplification of the local–global market linkage in this book is the chapter by Chattopadhayay and Banerjee (Chap.​ 15).

A segment of informal sector is connected to the circuits of global capital (Chakrabarti et al. 2009) and the rest procreating outside its domain constitute the world of the third (Chakrabarti et al. 2007).

The retail sector reform allowing control of enterprises to ‘foreign’ capital is supposed to create intricate linkages (production-wholesale-retail) with the farmers and draw them into the circuits of global capital which the state argues would be beneficial for them. From contract farming to such local–global market chain, there is no doubt about the structural changes transpiring within a section of agriculture too, especially pertaining to agricultural practices and institutions. Beyond the circuits of global capital is a vast enclave of agriculture sector making up the terrain of world of the third (Chakrabarti et al. 2012, Chap.​ 8). It is another matter that despite the dispersed influence of liberalization policies on agricultural sector which in no small part is guided by the neoliberal turn given to state (with somewhat truncated state’s extant role, such as in capital formation) its performance in the last two decades leaves much to be desired (Bhaumik and Rashid, Chap.​ 6). The Indian state though sees the retail sector reform as one of the cornerstones of turning the performance of agriculture around.

Part of the home based sector too is drawn, through the local–global markets, into the circuits of global capital while the rest is outside it, procreating in world of the third (Chakrabarti et al. 2012, Chap.​ 8).

Rate of capital formation which was 22.1 % of GDP in 1991 increased to 36.5 in 2009 (Source: Economic Survey 2009–2010, 10 and A11, Economic Survey 2010–2011).

Chakrabarti and Dhar (2009).

Our analysis also highlights the sharp distinction, at the level of principle, between the origin of capitalism, its birthing (which itself is a continual process) and where it has acquired a functional form as in competitive market economy. The relatively passive existence of state pertaining to the latter (professed by neoliberalism) melts away in the face of its complicity with capital in the process of the birthing of capitalism and whose appearance resembles what Marx described as an event soaked in ‘blood and dirt’.

Similar to neoliberalism, we make no effort to examine the existing theoretical literature on inclusive development/growth. Our focus is on how the Indian state perceives inclusive development; the theoretical literature on inclusive development, notwithstanding its importance, is a somewhat unnecessary detour in the context of our intervention. For our vantage point, these ideas—neoliberalism or inclusive development/growth—are discussed and analyzed in relation to the evolving rationale and practices of Indian state.

It is another matter, one we do not pursue here, that development cannot but work by displacing the world of the third into an abnormal presence, either as dystopia or victim or unknowable; sometimes as third world, as community or as social capital, all devalued re-representation (weak, fledgling, innocent, threatening, irrational, etc.) in relation to that of modern capitalist economy (Chakrabarti and Dhar 2009, Chakrabarti et al. 2012).

Sarkhel (Chap.​ 18).

Banerjee (Chap.​ 17).

Bhattacharya (Chap.​ 19) suggests that neoliberal private institutions were created by the new rich (call these clubs) to self-generate services for themselves from the market, services that were hitherto public goods. Such institutions are by construction personification of social exclusion since they constitutionally leave out the poor; they are part and parcel of the production of the camp of global capital. This highlights the point that global capitalism may not only reinforce existing social exclusions, but may even be vehicles for creating new ones.

See the chapter by Ghosh (Chap.​ 8).

This global economic crisis has led many to question the neoliberal belief that the framework of modern macroeconomics has found the key to overcome economic depression and hence systemic collapse (see the articulation of this belief in Lucas [2003]). However, individuals (parts) being free decision makers, competitive markets self-regulating, and sufficient for the system evidently rules out any autonomy to the economic structure which is specified in neoclassical economics by general equilibrium economy (whole); the underlying assumption being that the whole is an addition of the parts. If autonomy of structure is granted then that could carry the possibility of effects and outcomes that cannot be reduced exclusively to the optimizing behavior of the agents interacting through market. But then, unless we agree that this autonomy exists, it becomes difficult to locate and explain the appearance of the current economic crisis that is now global. In explaining the periodic breakdowns of capitalism, Keynes and Marx, in different ways, insisted on the relative autonomy of the structure, a relative autonomy that can be traced to the peculiarity of the structure, and at times the non-optimizing behavior of the agents. This throws up the methodological challenge that parts do not add up to the whole; that the whole exceeds the parts and that the whole also needs to be specified and analyzed in terms of its unique features and effects. This is not to say that individual decisions and market do not influence the structure, but that structure cannot be seen as mere sum total of individual decisions. This unresolved tussle between the parts and whole presents a methodological conundrum from which the field of macroeconomics has not yet found a way out in its relatively young history.