From The Hindu Growth Phase to The Moderate Growth Phase: The Role of the State in Economic Transition in India
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Drawing from the perspective of developmental state theory, this study sheds a light on the significance of state in explaining India’s economic growth transition in the 1980s that marked the end of the slow Hindu growth phase (1950 ~ 1980). Contrary to existing studies which attribute the acceleration in growth to liberalization, this study suggests that the emergence of strong state in the 1980s was the major factor, which paved the way for the upward economic growth trajectory in that decade. As this article shows, India witnessed the rise of strong state, with the massive landslide victories of the Congress party led by Indira Gandhi and Rajiv Gandhi in 1980 and 1984 respectively, combined with the decline of political constraints imposed by left parties on the ruling party. This rise of strong state, as our arguments goes, provided an impetus to adopt development-oriented strategy. This paper demonstrates it at three levels: First, India adopted a new type of strategy at the domestic-level to prioritize economic growth, instead of emphasizing redistribution, which was a shift away from socialism to pro-growth strategy; second, it also changed its international economic approach to accelerate economic growth, which was not seen in the previous decades; third, a significant change was also made in economic policy-making team by giving more power to western-educated economists vis-à-vis elected lawmakers. All these was possible as strong state was in place; hence the role of strong state is key in explaining economic growth in the 1980s. After showing the role of state in economic transition from the slow Hindu growth phase to moderate growth phase, the findings of this article also raise important scholarly question of re-examining the ‘evolution’ of the India’s economic growth in recent years.
Abstract
Drawing from the perspective of developmental state theory, this study sheds a light on the significance of state in explaining India’s economic growth transition in the 1980s that marked the end of the slow Hindu growth phase (1950 ~ 1980). Contrary to existing studies which attribute the acceleration in growth to liberalization, this study suggests that the emergence of strong state in the 1980s was the major factor, which paved the way for the upward economic growth trajectory in that decade. As this article shows, India witnessed the rise of strong state, with the massive landslide victories of the Congress party led by Indira Gandhi and Rajiv Gandhi in 1980 and 1984 respectively, combined with the decline of political constraints imposed by left parties on the ruling party. This rise of strong state, as our arguments goes, provided an impetus to adopt development-oriented strategy. This paper demonstrates it at three levels: First, India adopted a new type of strategy at the domestic-level to prioritize economic growth, instead of emphasizing redistribution, which was a shift away from socialism to pro-growth strategy; second, it also changed its international economic approach to accelerate economic growth, which was not seen in the previous decades; third, a significant change was also made in economic policy-making team by giving more power to western-educated economists vis-à-vis elected lawmakers. All these was possible as strong state was in place; hence the role of strong state is key in explaining economic growth in the 1980s. After showing the role of state in economic transition from the slow Hindu growth phase to moderate growth phase, the findings of this article also raise important scholarly question of re-examining the ‘evolution’ of the India’s economic growth in recent years.
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