ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Notes on the Political Economy of India's Tortuous Transition

Substantial socio-economic changes have taken place in India in the last quarter century. This essay refl ects on the systemic implications of these changes from the point of view of the transition to an enlarged and dominating sphere of capital in the economy. There are a number of checks and balances and road bumps that will make the progress of capital in India halting and hesitant, and the democratic processes, however imperfect, will partly tame its brutalities. The Indian transition is thus bound to be rather tortuous, though in the long run inexorable, and its narrative will be more complex than usual.

Notes on the Political Economy of India’s Tortuous Transition

Pranab Bardhan

large-scale investments in cold storage chains, transportation and marketing networks, which small farmers can hardly a fford without a major community-level organisational change (say, in the direction of cooperatives which so far have e ither failed or been captured in most

Substantial socio-economic changes have taken place in India in the last quarter century. This essay reflects on the systemic implications of these changes from the point of view of the transition to an enlarged and dominating sphere of capital in the economy. There are a number of checks and balances and road bumps that will make the progress of capital in India halting and hesitant, and the democratic processes, however imperfect, will partly tame its brutalities. The Indian transition is thus bound to be rather tortuous, though in the long run inexorable, and its narrative will be more complex than usual.

Pranab Bardhan ( is at the University of California, Berkeley, United States.

Economic & Political Weekly

December 5, 2009

n 1983, I tried to explain the sluggish investment and growth in India up to that time in terms of the diffi culty of collective action on long-term public i nvestment among India’s divided elite groups (published as Bardhan 1984). In the last quarter century a great deal of substantial socio-economic changes have t aken place, and investment and growth rates have improved considerably. In this short essay I will reflect on the systemic i mplications of these changes in a schematic and shorthand way, particularly from the point of view of the transition (much maligned in some quarters, much awaited in others) to an enlarged and dominating sphere of capital in the economy.

1 Structural Changes

Let me start with some of the obvious structural changes that have taken place in the economy in broad contours:

(a) The agricultural sector’s contribution to the gross domestic product (GDP) is now quite low (about 18%), even though about half of the labour force is still dependent on it. (Even half of rural household income now comes from non-farm work). With the average size of land steadily declining under demographic pressure, the chemical and energy inputs for agriculture getting more expensive, the resource base declining (particularly with soil erosion and water depletion), and with public investment in rural infrastructure decelerating, the agricultural sector is in bad shape. And with limited access to credit and education, there is little scope, particularly for small and marginal farmers, to utilise the opportunities from new technology, new products and wider markets. Some survey data show that more than 80% of farmers’ children do not want to r emain in agriculture.

Product diversification which is the m ajor direction for the future will require

vol xliv no 49

parts of India, except in some pockets). In the absence of a change in that direction, agri-business and contract farming will probably spread and open new avenues for capital. The existing farmers’ political organisations have remained too fragmented, faction-ridden, and short-sighted (obsessed with subsidies) to be able to give leadership in new directions either in product diversification and marketing or in management of the local ecology.

  • (b) With the current decline of agriculture there has not been a commensurate increase in manufacturing particularly in labour-intensive industries; some of the successful cases of industries both in e xports and domestic production are in capital- or skill-intensive activities (vehicles, car parts, machine tools, pharmaceuticals, etc). The real expansion has been in the service sector, not just in business processing, software, communications and fi nance, but also in traditional services (like trade and transportation). The contribution of the service sector to GDP is now more than 55% (the major part of which, contrary to popular impression, is still in the traditional service sector). Even with the widest definition of all information technology-enabled services, they employ less than one-half of 1% of the total labour force.
  • (c) By most measures, admittedly crude, the average extent or depth of poverty (in terms of a shortfall of private consumption expenditure) seems to have declined significantly over the last quarter century, but indicators of malnutrition or ill health have not improved substantially, and the access of the poor to the local commons (forestry, fishery, irrigation, grazing lands) has declined in many areas. Inequality is likely to have increased. By one measure – that from the National Council of Applied Economic Research household survey – in 2004-05 the Gini coefficient of income inequality in India was 0.535, which is much
  • higher than in China and almost in the Latin American range.


    In terms particularly of inequality of

  • o pportunity (which in a country like India largely depends on inequality of landownership, education and social status), India may be one of the most unequal countries in the world.1 Much of the rise in inequality is likely to be due to factors like (i) the increasing productivity gap between the rural and the urban sector, and to a large extent between the formal and the informal sector, (ii) the weaker bargaining power of even organised workers in the face of the increased threat of mobility of capital from one state to another and away from the country, (iii) the relative decline of the agricultural sector where income inequality is somewhat lower than in the non-agricultural sector, (iv) the relative expansion of capital- and skill-intensive industries, (v) skill-biased technical change, enhanced by global processes, which increases the rate of return to postsecondary education, in a country where the overwhelming majority of the people are illiterate or school dropouts or never going beyond secondary education, and
  • (vi) the usual agglomeration economies and clustering of non-agricultural growth, particularly with some of the populous backward states falling behind in the growth race.
  • (d) The rural better-off groups are now much more connected with the urban elite (by investment diversification within the family, benefits of urbanisation of land, remittances, and social interaction) for the old Bharat-India divide to be of much salience any more at least among the elite or the middle classes. The old rent-sharing political equilibrium (among business houses, the salariat and rich farmers), that I described in 1984, may have now shifted somewhat in favour of corporate capital. In spite of liberalisation and increased market competition the structure of industrial concentration has not changed much. While the financial press often points out that the composition of the list of the top 20 companies has changed substantially between 1980 and today, if one takes the corporate sector as a whole concentration has not changed much.
  • Corporate Oligarchy

    A recent study by Alfaro and Chari (2009) on Indian corporate data over 1988-2007 shows that in spite of a great deal of new entry, particularly in the service sector, the dominance of incumbent state-owned and business house-controlled companies in the overall industrial scene continues unabated. While many Indian middle class families are now vicariously proud to count the number of Indian billionaires in the Forbes magazine list, the corrupt grip of the corporate oligarchy in Indian political life and in state allocation of access to land, monopoly rights on n atural resources, or telecommunication spectrum, is much too evident. As fighting elections becomes more expensive, it is not uncommon to see a large number of wealthy people among the new legislators, and the generally rising role of donations, often under the table, by companies (and increasingly real estate businesses) to election funds.

    (e) India’s saving and investment rates have gone up substantially over this p eriod. (India’s household saving rate is now reportedly even higher than that of China). These high rates along with relatively cautious financial regulations and state control over banks may have insulated the Indian economy somewhat from the recent global financial crisis. Until the crisis year private corporate investment went up vigorously (though there may be some exaggeration in the reported data). A major part of the large rise in the saving rate is likely to be due to (i) the rise in inequality, (ii) the large expansion of branch banking deep into the interior of the country, (iii) the high administered rate of return to savings certificates, and (iv) the inclination of people, particularly those outside the formal sector, to save a signifi cant part of rising incomes for their precautionary and lifecycle needs, in the a bsence of pensions and adequate health and education services.

    Most of these points made above are quite consistent with the inexorable march of the “logic of capital” in the Indian economy. While it is difficult to econometrically clinch the point that the rise in economic growth and investment was “caused” by economic reform, particularly because it is difficult to disentangle the effects of r eform from other ongoing changes both

    December 5, 2009

    at the micro and the macro levels, there is a strong impression that the reforms u nleashed a great deal of hitherto pent-up entrepreneurial energies, and that particularly the private corporate sector is now much more vigorous and self-assured in facing global competition and holding its own, compared to the autarchic past.

    The state-business relationship has become tighter, not just between business associations like Confederation of Indian Industry (CII) and National Association of Software and Services Companies (NASSCOM) and the technocrats in the central government, but particularly in the state capitals where the commercially successful agricultural castes (like Patidars in Gujarat, Kammas in Andhra Pradesh, or Nadars and Gounders in Tamil Nadu) have in their new businesses forged powerful links with the regional bureaucracy.

    Even outside the business sector, among middle class, professional and even some working class families the attitude to the market and private ownership has changed considerably to a more favourable one. This has no doubt been helped by the fact that the opposition to capitalism (either from the Marxist or Gandhian angle) has largely failed to point to any credible, economically viable, incentive-compatible (i e, not entirely dependent on revolutionary or moral zeal for sustenance), long-lasting large-scale systemic alternative, beyond the esoteric confines of their wishful thinking or utopian anarcho- communitarianism. In this sense the h egemony of capital is now quite powerful and pervasive.

    2 Critique of Narrative

    In the next section, however, I am going to point to several features of Indian society and polity that tend to block or divert the progress of the logic of capital. But let me in this section point to an important c ritique of the “narrative of transition” in India provided, on the pages of EPW, by the recent writings of Partha Chatterjee (2008) and Kalyan Sanyal (Sanyal and Bhattacharyya 2009), and say where I largely disagree with them. At the risk of oversimplifying their arguments, let me first try to state them very briefl y:

    (1) In the process of capitalist development with its inevitable concomitant of “primitive accumulation” at the initial

    vol xliv no 49


    stages, peasants and other petty producers are dispossessed of their means of production, but in the current conditions of economic growth in developing countries, they are unlikely to be reabsorbed in the new growth sectors of the economy. S anyal and Bhattacharyya describe this process of dispossession without proletarianisation or exploitation as “exclusion” from the circuits of capital. (I am reminded of Joan Robinson’s famous statement that what is worse than being “exploited” is not to be exploited at all.)

  • (2) These excluded people crowd the informal self-employed sector but survive at the margin of subsistence through political negotiations and struggle in electoral democracies like India. Capitalist development as such cannot dissolve this pool of “surplus labour”.
  • (3) Chatterjee makes in this context an important distinction between “civil s ociety”, where urban middle classes u nder the hegemony of the logic of corporate capital operate their associational life within the bounds of the bourgeois legal framework, and “political society” where the e xcluded people negotiate their marginal existence through contingent and paralegal or outright illegal arrangements with the political powers, and often encroach upon and reconstitute public space.
  • First of all, is this inherent in the nature of capitalist development today in developing countries? In the last quarter century China and Vietnam (and a few other southeast Asian countries) had rapid capitalist development with massive labour-intensive industrialisation, so much so that some labour economists in China (see the recent papers of Fang Cai2 of the Chinese Academy of Social Sciences) have suggested that by 20073 the Chinese economy had almost reached the stage of exhausting all surplus labour (the so-called “Lewis turning point”), accompanied by an already rapid rise in real wage rates over the last decade or so. If it is thus not inherent in capitalist development, why is India different, with the labour absorption process so sluggish4 in spite of reasonably high rates of growth?

    Alternative Hypotheses

    There are alternative hypotheses to explain this. One hypothesis, put forward by many businessmen and some economists,

    Economic & Political Weekly

    December 5, 2009

    is that India’s stringent labour laws ( particularly Chapter V-B of the Industrial Disputes Act) make it very diffi cult to sack workers in large firms even when they are inefficient (or when the market in some line of production declines) or even to r edefine the job description of a given worker, or to employ short-term contract labour; this discourages new hires by employers, induces capital intensity in production, and inhibits entry and exit of firms. In this scheme of things jobless growth is policy-induced, rather than an inherent feature of Indian capitalist d evelopment.

    There is some evidence on the basis of detailed econometric analysis5 of Annual Survey of Industries data that the states in India with more inflexible labour market regulations have experienced slower growth particularly in labour-intensive i ndustries. Of course, the matter is complicated by the fact that in some states the government looks the other way when the labour laws are violated, and that there is a selection bias in the survey data, since labour laws may have discouraged the e ntry of potential firms that do not show up in the data. In any case, what is more important is that there is hardly any study on the labour absorption question that conclusively shows that any adverse effect of labour laws is particularly large compared to the effects of other constraints on labourintensive industrialisation like inadequate long-term finance for small firms or those of deficient infrastructural facilities (power shortage, for example, hits small fi rms which are without generators particularly hard). Also, in areas where secondary education and skill formation or vocational training have advanced more, it is easier to reabsorb labour displaced from another branch of economic activity.

    Extreme Conditions in West Bengal

    Industrialisation and labour absorption seem to have progressed more in some western or southern states than, say, in West Bengal where the labour laws are among the most stringent and the conditions of the infrastructure and rural education are poor. West Bengal is also among the worst states in terms of delay and cumbersomeness of business procedures. For

    vol xliv no 49

    example, in a labour-intensive activity like construction, to get all the required c onstruction permits and clearances (for building, say, a commercial warehouse) it takes an average of 80 days in Hyderabad but 258 days in Kolkata – the slowest among 17 major cities in India (World Bank 2009).

    With the formal sector more hamstrung, the informal sector is thus crowded more in West Bengal. In the informal manufacturing enterprises, according to NSS data for 2005-06, the annual average gross value added per worker in West Bengal was only Rs 15,300, much below the all-India average of Rs 24,000, not to speak of the Gujarat average of Rs 34,100; the average market value of fixed assets owned per informal manufacturing enterprise in West Bengal was only Rs 25,000, much below the all-India average of Rs 58,000, not to speak of the Gujarat average of Rs 1,15,000. (I have sometimes wondered if West Bengal intellectuals tend to project from the joblessness and informal sector misery they see locally to what they r egard as all-India or even global features of capitalism.)

    Second, I am not sure the traditional narrative of transition has to be necessarily discarded when there is political action and negotiation to get the State to benefi t structurally unemployed workers in a d emocracy. After all, in western Europe workers’ struggles and political negotiations brought in a major adjustment of classical capitalism towards a kind of welfare capitalism. In some western European countries there have been cases of many workers who have remained jobless for a long period and continued to receive state welfare, without fundamentally altering the basic nature of capitalist relations. The history, context and the scale of petty producers and workers in developing countries and welfare measures taken in their favour are, of course, drastically different from those for the working classes in western Europe, but the qualitative point r emains on similar lines.

    Third, it is simply not true that paralegal arrangements with politicians take place only in “political society” of the “excluded” or marginalised people. All over India the middle and upper class members of urban civil society often take part in a great deal of negotiations with politicians by which unauthorised constructions and misappropriation of public services and benefits are regularised. The patronage politics of India stretch legality for all classes of people.6 Yet in my judgment the distinction between “civil society” and “political society” is important for a different reason which Chatterjee does not e mphasise: it underlines the tension b etween the “procedural” and “participatory” aspects of democracy, which is one of the fundamental problems of democratic governance in India.7

    Fourth, there is some scope for difference in empirical judgment about what fraction of informal sector workers (particularly the self-employed) is outside the circuit of capital. The implicit assumption in the writings of Chatterjee and Sanyal is that the overwhelming majority of them are the dispossessed workers who are refugees from agrarian distress or victims of “primitive accumulation”, and could not be absorbed in (or be in any productive r elationship with) the non-farm formal sector. Unfortunately, the evidence on this is rather scanty. We do not, for example, know what proportion of the informal workers are in outsourcing or supply r elations with the formal sector (the communication revolution has made such relations quite thriving in some industries) or what proportion are in the informal sector as a result of a horizontal subdivision of a formal-sector firm just to avoid the various regulations that govern a r egistered factory.

    We have seen above that the all-India average market value of fixed assets owned per enterprise was Rs 58,000 in 2005-06 (it has more than doubled since 1994-95) in the informal manufacturing sector, so the average informal enterprise is not run by destitute people.8 From NSS data it seems that at least three-quarters of the informal non-farm self-employed workers in the country were above the (Planning Commission) poverty line in 2004-05.9

    Distribution of Self-Employed

    From NSS data on employment it also seems that self-employed rural non-farm workers are spread evenly through the r ural income distribution, featuring at least as much in the richest quintile of r ural households as in the bottom q uintiles. For example, the percentage of rural working population that was selfemployed in the non-farm sector in the poorest quintile (in terms of per capita consumption expenditure) was 9.1% in 1983 and 11% in 2004-05. But the percentage of rural working population that was self-employed in the non-farm sector in the richest quintile was higher, 12% in 1983 and 17.4% in 2004-05. It is also the case that between 1983 and 2004-05 nonfarm rural self-employment has increased more in areas where the urban sector has grown faster. On the other hand, there is evidence that it has expanded in areas where agricultural productivity is on d ecline. Thus the evidence of non-farm employment10 is somewhat mixed for the question at hand.

    3 Obstacles to March of Capital

    In the last quarter century there have been major socio-political changes which have put additional obstacles to the triumphal march of the logic of capital in India. Again, I will go over them in telegraphic (or should I say in line with current technology, text-messaging) brevity:

    (a) One big social change in the last three decades has been the rise of hitherto subordinate social groups and the associated political rise of regional and caste-based parties. The collective action problems of a heterogeneous society that I f ocused on in my 1984 book have become even more acute with the increased political fragmentation that this socio-political change has brought about. The associated increase in the pressure for short-run p atronage and subsidies to the multiplicity of mobilised groups and the steady erosion of any institutional insulation against populist hindrances to long-term policy commitments have made things more difficult for public investments in infra structure – the key bottleneck for Indian economic growth.

    Private investments in infrastructure (like in the crucial power sector) are discouraged by the problem of cost recovery that is enmeshed in the same patronage politics. At the same time, as I had suggested in 1984, fragmentation may also give the central state somewhat more autonomy,11 and the political leadership can retain some potency as an organisational

    December 5, 2009

    actor in goal formulation, agenda-setting and policy execution. This may help it, for example, in diffusing the resistance to pro-capitalist economic reform, even though reforms are in general unpopular (and at election time all ruling parties play down the economic reforms they may have carried out).

  • (b) While the metropolitan upper classes and professionals have, to some extent, bought into the logic of capital and are looking for greener pastures in the private sector (and abroad) particularly for the prospects of their children, the newly emergent groups are in no mood for a ccepting a retreat of the state. In the N ational Election Survey 2004 (Suri 2004) the majority of the socially and economically backward group respondents were opposed to any reduction in the size of the government. There is a presumption in their mind that all these years the upper classes and castes have looted the state, it is now “their turn”.
  • Even in legitimate earnings on the lower rungs of the public sector bureaucracy, the average salary is about three times what a person with similar qualifi cations would earn in the private sector, so why would anyone voluntarily give up on this rental income, not to speak of other less legitimate sources of earnings on public jobs? The main function of the left parties in I ndia has often been to act as a pressure group to preserve this rental income and other perks of public sector employees. No political party in India dares oppose public sector job reservation, i e, earmarked stakeholding in this rental income, for the (usually better-off sections of) backward caste groups.
  • (c) While the power of central government’s regulatory bureaucracy over trade, industrial, financial and foreign exchange policies affecting capital investment has been relaxed, capital is still quite dependent on the regulatory bureaucracy at the state level in matters of land, electricity and water connections for a new enterprise along with clearances for labour and environmental regulations.
  • Stumbling Block of Bureaucracy

    The cumbersomeness (and the associated corruption) of Indian bureaucracy is still a major stumbling block for the progress of

    vol xliv no 49


    capital, particularly by international standards.12 Even outside the labyrinthine bureaucracy, the Indian political system is marked, as I pointed out in 1984, by multiple veto powers which, while keeping the different bargaining partners within some moderate bounds, stifl e many attempts at innovative changes. But there are now important differences among state governments in their receptivity to such changes.

  • (d) The underpriced or subsidised public services and goods for the middle classes (like LPG and petrol, higher education, housing loans, above-market rate of interest on savings certificates, railway passenger fares cross-subsidised by very high commercial freight rates, etc), and various subsidies, loan-waivers, and u nder priced electricity, fertilisers, and i rrigation water largely to better-off farmers add up, along with salaries and interest on public debt, to a large part of the massive fi scal defi cit in India. The consequent large government borrowing pushes up the cost of capital for business (which is much higher than that in China).
  • (e) Capitalist business requires a healthy and educated (at secondary level and beyond) labour force. But with rising income as the upper classes withdraw from public schools and health clinics, the political support base for their proper functioning gets eroded and as the accountability structures for public delivery of these services are still weak (and underemphasised in the politics of the newly emergent groups), the public provision and quality of these services are appalling in India. Consequently, the human capital supply chains for capitalist business in India are largely broken and will take a long time to repair. In the history of rich countries the state played a very important role in this at the early stages of capitalist development, and the Indian state has been s eriously defi cient.
  • (f) In the last three decades one major development has been the progress of social movements, often under the leadership of voluntary groups and various kinds of “rights” (to food, education, to information, etc), and environmental activism. There is a distinct anti-market anti-capitalist streak among many in these groups. Markets, and capitalist development in general, have become identifi ed with
  • Economic & Political Weekly

    December 5, 2009

    trampling the rights of and uprooting the livelihoods of the little people and despoliation of the environment. The record of resettlement and rehabilitation of people displaced by roads or dams or mining and industrial projects is dismal in India, and the recent history of such projects is r eplete with arbitrary land acquisitions, defrauding by contractors, and reneging of promises to these poor people.

    Land Acquisition

    This is the context of widespread opposition to land acquisition for commercial purposes in different parts of India. Here also the political process has so far failed in providing a viable and generally acceptable programme of compensation, retraining, and rehabilitation in many cases of necessary change. This is more than just a failure of the state; even the well-meaning nongovernmental organisation movement has not been able to play a very constructive role here, particularly in paying enough attention to the various complex trade-offs involved and the need for diffi cult compromises that can balance the different interests. In general, the voluntary groups being single-interest pressure groups cannot serve the function of inter-group transactional negotiations and compromises which the large encompassing party organisations used to coordinate under their own umbrella in the past. B esides, many of these groups do not have clear internal accountability mechanisms in place.

  • (g) In the last three decades the media (particularly television) have become more prominent in Indian political life. While mainly catering to the consumerist aspirations of the urban classes and others who imitate them (which help capital in consumer goods sectors), the media s ometimes cannot avoid becoming a focal point for popular grievances against the egregious depredations of both the State and capital, or giving prominence to public interest litigation against abuse of power by both, even though in general the higher courts over time seem to have moved in favour of capital in important commercial disputes.
  • (h) While the logic of capital has u nfolded itself in recent years in its free mobility across state boundaries in search of more business-friendly policies and
  • vol xliv no 49

    i nfrastructure, stoking the frenzy of interstate competition for investment, a fundamental tension of fi scal federalism expresses itself when the more successful states openly resent the redistributive dispensations of the statutory fi nance commission (and the Planning Commission), and yet a central coalition government cannot afford to ignore the demands of populous backward states with a large number of Members of Parliament. However, very little of the central transfers (or direct subsidies) goes towards correcting the severe infrastructural deficiencies of the poorer states.

    As inequality across regions increases, migrants from stagnant areas have been trying to move to areas where jobs are e xpanding faster, often causing nativist unrest and inconvenient dilemmas for the interests of capital-seeking pan-Indian markets but at the same time keeping p atronage relations with the local power brokers intact. Similarly, in the extraction and movement of resources from the poor but mineral-rich areas of India (where c oercive but ineffective regional governments often meet equally violent insurgencies organising sections of the longdeprived adivasis against “internal colonialism” by the rest of the country), capital already faces a great deal of resistance.

    4 Conclusions

    In view of all the checks and balances and road bumps we have identified in this section the progress of capital will be halting and hesitant, and the democratic processes, however imperfect, will partly tame its brutalities. The Indian transition is thus bound to be rather tortuous, though in the long run inexorable, and its narrative will be more complex than usual.


    1 For a brief discussion with the relevant data see Bardhan (2009).

    2 For example, at the end of a detailed empirical p aper Cai and Wang (forthcoming) conclude: “As a result of economic reform, opening up and economic growth…urban employment has rapidly grown and thus the rural surplus labour force has been gradually absorbed. The Chinese economy is facing its era of labour shortage, which implies, the vanishing of its duality…(and) the approaching Lewisian turning point”.

    3 This is just prior to the loss of jobs due to the d ecline of exports brought about by the US fi nancial crisis.

    4 A careful analysis of NSS data by Srinivasan (2006) shows that while the rate of growth of e mployment has not declined in recent years, contrary to some claims, the trend rate of growth over the last 30 years remains low.

    5 See, for example, Ahsan and Pages (2009) and Gupta, Hasan and Kumar (2009). Bhattacharjea (2009) has, however, pointed to some flaws in the measurement of the index of labour regulations in these and earlier exercises (particularly in view of the differential judicial and legislative interventions in different states and their implementation with varying lags, and other sources of h eterogeneity). T N Srinivasan, in a comment published along with the Gupta et al paper, fi nds some fault with their estimation strategy.

    6 Coelho and Venkat (2009) from their survey and ethnographic evidence from Residents’ Welfare Associations and other neighbourhood groups among both middle and lower classes in eight l ocalities of (greater) Chennai show that there are considerable overlaps between civil and political society: the urban poor increasingly resort to civic associational forms to claim urban citizenship, and middle class associations are quite deeply e ngaged in the sphere of political activity.

    7 I have written on this fundamental tension in different places – see, for a recent example, Bardhan (2008). Kaviraj (1995) has emphasised how the unfolding of the logic of populist democracy has itself become a threat to democratic governance.

    8 In an ongoing PhD dissertation in Berkeley one of my students, Shanthi Nataraj, on the basis of a d etailed firm-level analysis of a combined dataset of ASI (formal sector) and NSS (informal sector) manufacturing enterprises, has shown that globalisation in the sense of trade liberalisation over the 1990s in India has led to a statistically signifi cant technical progress (rise in total factor productivity) in the informal manufacturing sector.

    9 The 2008 National Commission for Enterprises in the Unorganised Sector (NCEUS) Report on the Conditions of Work and Promotion of Livelihoods in the Unorganised Sector, Table A2.16 shows that the percentage of unorganised sector nonagricultural self-employed workers who are b elow the Planning Commission poverty line was 18.6% in 2004-05. The poverty estimate is likely to be somewhat higher if NCEUS were to use the “uniform recall” method of computing e xpenditure.

    10 For a detailed analysis of the NSS data on rural non-farm employment, see Lanjouw and Murgai (2009).

    11 Yadav and Palshikar (2009) have even suggested that in recent years as the complexities of competitive politics at the multiplicity of state levels rise, the aggregating coalition governments at the centre can have some policy autonomy which can operate somewhat independently of the particularities of political contestation in individual states.

    12 In the World Bank’s Doing Business Reports, India in 2009 ranks 133 out of 183 countries (China ranks 89) – the larger the rank number the more cumbersome a country’s governance is. Some examples: in enforcing a disputed commercial contract, it takes 1,420 days in India (406 days in China) and costs about 40% of the claim value (11% in China); it takes seven years to close a business in India (1.7 years in China), and so on.


    Ahsan, A and C Pages (2009): “Are All Labour Regulations Equal? Evidence from Indian Manufacturing”, Journal of Comparative Economics, 37, pp 62-75.

    Alfaro, A and A Chari (2009): “India Transformed? Insights from the Firm Level 1988-2007”, paper presented at the India Policy Forum, New Delhi, July.

    Bardhan, P (1984): The Political Economy of Development in India (Delhi: Oxford University Press), (an expanded edition with an Epilogue in 1998).

    – (2008): “Democracy and Distributive Politics in I ndia” in I Shapiro, P A Swenson and D Donno (ed.), Divide and Deal: The Politics of Distribution in Democracies (New York: New York University Press).

    – (2009): “How Unequal a Country Is India?”, Business Standard, 5 September.

    Bhattacharjea, A (2009): “The Effects of Employment Protection Legislation on Indian Manufacturing”, Economic & Political Weekly, 44, pp 55-62.

    Cai, F and M Wang (forthcoming): “Growth and Structural Change in Employment in Transition China”, Journal of Comparative Economics.

    Chatterjee, P (2008): “Democracy and the Economic Transformation in India”, Economic & Political Weekly, 43, pp 53-62.

    Coelho, K and T Venkat (2009): “The Politics of Civil Society: Neighbourhood Associationism in C hennai”, Economic & Political Weekly, 44, pp 358-67.

    Gupta, P, R Hasan and U Kumar (2009): “Big Reforms But Small Payoffs: Explaining the Weak Record of Growth and Employment in Indian Manufacturing”, India Policy Forum, 5, pp 59-108.

    Kaviraj, S (1995): “Democracy and Development in India” in A K Bagchi (ed.), Democracy and Development (New York: St Martin’s Press).

    Lanjouw, P and R Murgai (2009): “Poverty Decline, Agricultural Wages, and Non-farm Employment in India: 1983-2004”, Policy Research Working Paper No 4858, World Bank, Washington DC.

    Sanyal, K and R Bhattacharyya (2009): “Beyond the Factory: Globalisation, Informalisation of Production and the New Locations of Labour”, Economic & Political Weekly, 44, pp 35-44.

    Srinivasan, T N (2006): “Employment and Unemployment since the Early Seventies”, SCID Working Paper No 306, Stanford.

    Suri, K C (2004): “Democracy, Economic Reforms and Election Results in India”, Economic & Political Weekly, 39, pp 5404-11.

    World Bank (2009): Doing Business in India. Yadav, Y and S Palshikar (2009): “Principal State L evel Contests and Derivative National Choices: Electoral Trends in 2004-09”, Economic & Political Weekly, 44, pp 55-62.

    Books from SAGE!

    Comparative Politics

    Modern Indian Political Thought edited by Judith Bara and Mark Pennington

    Text and Context

    Bidyut Chakrabarty

    The authors edited volume successfully fills a huge

    void in the market for introductory textbooks to

    and Rajendra Kumar Pandey

    comparative politics which previously offered either

    Modern Indian Political Thought: Text and Context is

    descriptions of political processes and systems

    essential reading for students of Social Sciences seeking

    or overviews of the methodology of comparative

    to unravel the formation and text of the thoughts of great

    analysis. By applying major political science theories

    Indian political thinkers. It is an unconventional articulation

    to overviews of the core elements of political systems,

    of political thought in India that evolved during the nationalist

    the authors both enhance our understanding of

    struggle against colonialism.

    these elements and provide readers an excellent introduction to comparative explanation.

    In contrast to the existing literature on the subject, it carries a context-driven conceptualisation of the major strands of political thought that emerged in India in the past two

    Dr David Howarth

    This book provides a distinctive new introduction to the study centuries. It focuses on India’s peculiar socio-political of comparative politics at undergraduate level. Rich in case processes under colonialism that influenced the evolution of study material and global in coverage, Comparative Politics such thought. Incorporates new ideas and issues that have sets out the basic theoretical and methodological foundations been articulated, though not as extensively, in contemporary for studying different political systems as well as the key works on Indian nationalist thought and movement.

    structures and actors of which they are comprised.

    SAGE Texts SAGE South Asia

    2009 / 472 pages / Rs 350 (paper)2009 / 344 pages / Rs 395 (paper) Originally priced at £ 65.00 (cloth) and £ 23.99 (paper). Sales rights restricted to South Asia only!

    www.sagepub.inLos Angeles „ London „ New Delhi „ Singapore „Washington DC

    December 5, 2009 vol xliv no 49

    Dear Reader,

    To continue reading, become a subscriber.

    Explore our attractive subscription offers.

    Click here

    Back to Top