Critically examine the politics of Economic growth in India. (2016, 20 Marks)
The politics of economic growth is the study of how coalitions, institutions and electoral incentives decide how fast an economy grows and who gains. Atul Kohli gave the theme its title (“Politics of Economic Growth in India, 1980-2005”, 2006). India’s growth has never been a technocratic outcome: it has been shaped by class bargains, federal competition and the vote.
Explaining growth: the main frameworks
- Pranab Bardhan (The Political Economy of Development in India, 1984): a coalition of three dominant proprietary classes — industrial capitalists, rich farmers and the professional-bureaucratic class — divided public resources as subsidies, so public investment and growth slowed after the mid-1960s.
- Lloyd I. Rudolph and Susanne Hoeber Rudolph (In Pursuit of Lakshmi, 1987): a weak-strong state, and a shift from a command polity to a demand polity in which organised groups, including “bullock capitalist” farmers, pull policy towards consumption.
- Kohli (State-Directed Development, 2004; Poverty amid Plenty in the New India, 2012): the 1980s acceleration beyond the “Hindu rate of growth” came from a pro-business rather than pro-market turn — a narrow alliance of state and big domestic capital that fuels growth but sidelines labour and the poor.
- Rob Jenkins (Democratic Politics and Economic Reform in India, 1999): democracy enabled reform “by stealth”, with federal institutions and political skill absorbing losers; Ashutosh Varshney adds that reform survived by staying in the elite arena.
Growth as a political project today
- Licence-permit raj to 1991: rents flowed to the politically connected; liberalisation widened entry and sustained higher growth — real GDP rose 7.7 per cent in 2025-26.
- Federal competition: Aseema Sinha shows states’ prior capacities decided who captured investment; investor summits and the Sixteenth Finance Commission’s new “contribution to GDP” criterion (10 per cent) now reward growth performance.
- Welfare as legitimation: Abhishek Anand, Vikas Dimble and Arvind Subramanian’s “new welfarism” (2020) describes state-provided private goods — toilets, gas, bank accounts, housing — that build labharthi loyalty, letting growth-oriented governments win votes without redistributing assets.
- Reform of factor markets: the four Labour Codes came into force in November 2025 and GST was rationalised in September 2025.
Critical examination
- Crony capitalism: the rent migrated from licences to natural resources — the 2G spectrum and coal allocations cancelled by the Supreme Court (2012, 2014). Raghuram Rajan warned in 2008 of oligarchy built on land, resources and contracts; James Crabtree’s The Billionaire Raj (2018) chronicles the era. Opaque political funding persisted until the Court struck down electoral bonds (February 2024).
- Inequality: the World Inequality Lab puts the top 1 per cent’s share at 22.6 per cent of income and 40.1 per cent of wealth (2022-23), “from British Raj to Billionaire Raj”; gaps between southern-western and northern-eastern states have also widened.
- Jobless growth: 43 per cent of workers remain in agriculture (PLFS 2025); female labour-force participation is 40 per cent.
- Short-termism: parties prefer visible transfers and “freebies” to slow reforms in land, education and health; the farm laws were repealed in 2021 and the Labour Codes met a general strike in February 2026.
- Ecological cost: resource-intensive growth displaces Adivasi communities and degrades land, water and air.
- Counter-view: Kohli’s narrow-coalition thesis understates democracy’s redistributive pull — about 24.82 crore people left multidimensional poverty between 2013-14 and 2022-23, and welfare competition has widened the growth coalition.
Conclusion
Indian growth is politically produced and politically bounded. A pro-business state has delivered speed; democracy has forced a welfare floor. What neither has yet delivered is broad-based, employment-rich growth — which requires public investment in human capability and rules that separate capital from political patronage.