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‘This book is different from most other attempts to understand the politics of Indian economic development. Breaking down the last 65+ years of Indian development into several episodes of growth, it provides a rich set of insights into the political economy of the Indian development process and is a valuable addition to the literature.’ –Pranab Bardham, University of California, Berkeley, USA

‘Sustained economic growth in the world's largest democracy is critically important to human well-being, but the ups and downs of growth in India are not well-understood. This book provides a fresh and insightful approach to understanding what drives the starts of booms and the onset of slowdowns.’ –Lant Pritchett, Harvard University, USA

‘This is a little book with big arguments. The authors' explanation of the changing character of the deals done between political and business elites makes for the most original contribution to studies of the political economy of Indian development since Pranab Bardhan's seminal work of the early 1980s’ –John Harriss, Simon Fraser University, Vancouver, Canada

This book moves beyond the usual economic analysis of the Indian growth story and provides a fresh perspective on the determinants of growth episodes in post-independence India, based on its political economy. Using a robust and novel technique, the authors identify four such episodes during this period. The first, running from the 1950s to 1992, was mostly characterized by economic stagnation, with a nascent recovery in the eighties. The second, covering the period 1993 to 2001, witnessed the first growth acceleration in the economy. A second acceleration ran from 2002 to 2010. The fourth and final episode started with the slowdown in 2010 and continues to this day. The book provides a theoretical framework that focuses on rent-structures, institutions and the polity, and demonstrates how changes in these can explain the four growth episodes. Kar and Sen argue that the transitions from one growth episode to another can be explained by the bi-directional relationship between growth outcomes and institutional arrangements, and by the manner in which institutional arrangements and their transitions are determined by the political bargains struck between the elite groups in Indian society.

Inhaltsverzeichnis

Frontmatter

Chapter 1. A Political Economy Reading of India’s Growth Experience

Abstract
The introductory chapter starts by highlighting the principal theme of the book, that is, the relationship between political economy factors and growth episodes in India. It goes on to provide the nuts and bolts of this analysis—defining growth episodes, discussing earlier studies that have identified growth episodes in India and pointing out the weaknesses in these approaches. Presenting an alternative and more robust framework for identifying episodes, the chapter identifies three complete and one ongoing growth episode for the Indian economy. Next, it contextualizes the study by discussing influential contributions that have analysed the political economy of growth in India in the past. Finally, it traces important political economy trends over the post-independence period, providing a base for their introduction in subsequent chapters.
Sabyasachi Kar, Kunal Sen

Chapter 2. A Political Economy Theory of Growth Episodes

Abstract
The second chapter describes a conceptual framework relating political economy factors to transitions in growth episodes, particularly accelerations, maintenance or collapses. The political economy factors are classified under (i) the deals space, that is, alternative informal institutional arrangements between the political and economic elites and (ii) the rent space, that is, the rent-earning possibilities in the economy. The framework argues that a transition from disordered to ordered deals space results in growth accelerations, but growth accelerations themselves usually alter the nature of the rent space, which in turn results in the deals space becoming either more open or more closed. More open deals trigger positive feedback loops so that growth is maintained, while closed deals trigger negative feedback loops resulting in growth collapses.
Sabyasachi Kar, Kunal Sen

Chapter 3. Stagnation and a Nascent Recovery: The Growth Episode of 1950–1992

Abstract
This chapter analyses the first growth episode, running from the 1950s to 1992. It shows that in terms of various indicators, this long episode was mostly characterized by economic stagnation, with a nascent recovery in the last decade, that is, the eighties. In the political space, this long period saw an evolution from a dominant party system to minority governments and more political contestations. For most of the episode, the predominant position of the Congress party coupled with its socialist ideology resulted in disordered deals that led to low investment, productivity and stagnation. As the political space became more competitive, the political elite turned to the business class for support and this led to more ordered deals between them, resulting in a recovery in the eighties.
Sabyasachi Kar, Kunal Sen

Chapter 4. Onset of High Growth: The Growth Episode of 1993–2001

Abstract
The first episode of growth acceleration in India covers the period from 1993 to 2001 and is discussed in this chapter. The average per capita growth rate in this episode went up to 4.15 per cent compared to 1.86 per cent in the previous episode. In the political space, this period witnessed a complete transformation in the cognitive maps of the political elite that led to significant reforms in economic policies, particularly in industrial licensing and import controls. These policy changes reduced the role of the bureaucratic machinery in determining the outcome of deals, resulting in both more ordered and more open deals, energizing the magician and workhorse sectors. As a result, growth increased sharply in less rent-thick sectors like manufacturing, information technology and hotels and restaurants.
Sabyasachi Kar, Kunal Sen

Chapter 5. Rapid Growth and Limited Structural Transformation: The Growth Episode of 2002–2010

Abstract
This chapter discusses the second growth acceleration episode, running from 2002 to 2010, when average per capita growth rates rose to 6.42 per cent. The chapter provides evidence to show that the nature of growth in this episode was significantly different from the previous one, with much of the growth coming from rent-thick and natural resource-based sectors. In the political space, this period is characterized by the rise of regional political parties and increased dependence of the major parties on the former. Due to such political changes and other economic factors, closed deals that enabled illegal sharing of rents between business and political elites became pervasive in the rent-thick sectors. This resulted in high growth rates in these sectors and the aggregate economy.
Sabyasachi Kar, Kunal Sen

Chapter 6. The Post-2010 Growth Slowdown and a Debatable Partial Recovery

Abstract
The Indian economy slowed down after 2010. The sixth chapter provides data to argue that this can be considered to be a fourth growth episode for the country. Next, it analyses sectoral data to show that this slowdown has been particularly significant in rent-thick sectors that were characterized by closed deals and crony-capitalism in the third episode. Based on the theoretical framework described in Chapter 2, this chapter argues that this slowdown was due to negative feedback effects to closed deals that resulted in a disordered deal environment, and hence a fall in investment and growth rates. The new government has been partially successful in restoring an ordered deals environment and hence growth, but political and reputational issues have delayed changes necessary for rapid growth.
Sabyasachi Kar, Kunal Sen

Chapter 7. Politics, Institutions, Episodes: Concluding Observations

Abstract
This chapter provides the conclusions of the book and discusses the wider implications of the book’s main findings. It highlights the three main arguments that define the political economy approach adopted in the book which are (i) medium-term growth rates of countries are volatile and episodic, (ii) the deals environment is a critical institutional arrangement that determines the outcome in growth episodes and (iii) politics plays a significant role in determining the deals environment. The chapter shows how these three linked arguments are substantiated by the four Indian growth episodes. Finally, it provides an international perspective to these issues.
Sabyasachi Kar, Kunal Sen

Backmatter

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