TOPIC - DEMOCRACY AND DEVELOPMENT IN INDIA: A
STUDY OF POLITICAL ECONOMIC LINKAGES
SUBMITTED BY SUBMITTED TO
Ritika Bansal – 23195 Ms. Aditi Dubey
Section C Assistant Professor of Political Science
RAJIV GANDHI NATIONAL UNIVERSITY OF LAW
PUNJAB, PATIALA
2024
SEMESTER II PROJECT
DECLARATION
I hereby declare that the project report entitled “Democracy and Development in India: A
study of Political Economic linkages” submitted to Rajiv Gandhi National University of
Law, Punjab, Patiala is an outcome of our original work carried out under the supervision
Ms. Aditi Dubey, Assistant Professor of Political Science at RGNUL. The Project is entirely
based on our research work and has not been submitted elsewhere. All the ideas and references
have been duly acknowledged. To the best of our understanding, the project is free from
plagiarism.
Ritika Bansal
Rajiv Gandhi National University of Law, Punjab,
Patiala
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TABLE OF CONTENTS
DECLARATION .................................................................................................................. 1
TABLE OF CONTENTS ...................................................................................................... 1
ACKNOWLEDGEMENT ..................................................................................................... 2
TOPIC .................................................................................................................................. 3
REVIEW OF LITERATURE ................................................................................................ 3
STATEMENT OF PROBLEM.............................................................................................. 4
HYPOTHESIS ...................................................................................................................... 4
RESEARCH QUESTIONS ................................................................................................... 4
OBJECTIVES OF STUDY ................................................................................................... 4
METHODOLOGY................................................................................................................ 5
INTRODUCTION ................................................................................................................ 5
DEMOCRACIES AND MARKET ....................................................................................... 6
NATIONALISM AND PROGRESS ................................................................................... 10
DEMOCRACY AND DEVELOPMENT IN INDIA ........................................................... 14
CO-OPTION AND MEDIATION ....................................................................................... 15
PATRONAGE AND POPULISM ....................................................................................... 17
THE SOLUTION AS A PROBLEM ................................................................................... 19
LIBERALISM AND WOMEN'S EMPOWERMENT ......................................................... 21
CONCLUSIONS AND SUGGESTIONS ............................................................................ 24
BIBLIOGRAPHY ............................................................................................................... 25
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ACKNOWLEDGEMENT
The success and ultimate completion of my project took a great deal of direction and support
from many individuals, and we consider ourselves quite fortunate to have received this during
the execution of our project. All of our accomplishments are the result of such monitoring and
help, for which I am grateful.
I will be eternally grateful to, The Vice Chancellor of Rajiv Gandhi National University of
Law, for giving us the chance to present our project and talents at such a prestigious university.
We admire and thank Ms. Aditi Dubey for giving us the chance to undertake this particular
project work at RGNUL and for providing us with assistance and advice, which enabled us to
finish the project successfully. Despite her hectic schedule handling various issues, we are
grateful to her for offering such wonderful assistance and counsel at every required stage.
I am grateful and lucky to have had consistent encouragement, support, and advice from the
Teaching staff who assisted us in successfully finishing our project work. We extend our
gratefulness to all the staff members of the IT lab and Library, who, through their help with
database access played an integral part in the completion of this project. Lastly, I would like
to thank my classmates who constantly provided us with new personal viewpoints about the
project topic, resulting in immense enrichment of this paper and our personal intellect.
This project would not have been possible without the collective efforts, guidance, and
inspiration of those mentioned above. Their contributions have been extremely instrumental in
the successful completion of the project.
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TOPIC
“Democracy and Development in India: A study of Political economic linkages”
REVIEW OF LITERATURE
"India's Democracy: An Analysis of Changing State-Society Relations" by
Yogendra Yadav and Suhas Palshikar
This study of the development of the Indian democracy and its relation to shifting state-society
interactions is thorough and perceptive. The complex relationships between the government of
India and society are examined in the book along with how these interactions have changed
over time the character and characteristics of Indian democracy. From the time before India's
freedom to the present, the writers outline the evolution of Indian democracy within a historical
framework. They emphasize the difficulties and chances that India's democracy system has to
deal with and examine the important elements that have lead to its endurance and success. They
contend that over time, the connection among the state and society has changed and has had an
impact on how India's democracy has developed. They offer a detailed study of the different
parties, civil society groups, and social movements that are a part of this interaction.
"Development and Democracy in India" authored by Niraja Gopal Jayal and
Sudha Pai
An incisive selection of writings is presented here that examines the complicated connection
between democracy and progress in India. The book explores the possibilities and difficulties
that come from the different ways that democracy and development interact. The writers offer
a detailed comprehension of the intricate and frequently incongruous connection between
democracy and economic growth in India. They acknowledge the benefits that democracy can
bring to growth, such as encouraging responsibility and openness, while also emphasizing the
ways that political and societal variables can impede it. The book contributes significantly to
the body of knowledge on this subject and offers an abundance of information and insight from
a wide variety of viewpoints.
The Political Economy of Development in India" edited by Francesca Jensenius
and Kenneth Bo Nielsen
The articles in this extensive and perceptive compilation examine the economic and political
factors influencing India's course of growth. Economic reform, development, poverty
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alleviation, and social assistance programs are just a few of the many subjects covered in the
text. The writers offer a subtle grasp of how both economic and political factors combine to
influence India's course of growth. They acknowledge the complexity and frequently
conflicting character of these interactions and offer in-depth assessments of the main players
and organizations concerned. The writers acknowledge the role of the state in promoting
economic development and eradicating poverty, but they also acknowledge the difficulties and
constraints of state-led development plans.
STATEMENT OF PROBLEM
India's democracy and development connection is intricate and multidimensional, and it has
generated a lot of scholarly and political discussion. In India it still continues to struggle with
a number of social and political problems that threaten to weaken its democracy structures and
social solidarity, such as poverty, disparity, and corruption.
HYPOTHESIS
In India, democracy and development are positively correlated, with democratic institutions
and practices supporting growth in the economy, social well-being, and political stability while
economic growth builds up democratic institutions and advances social justice.
RESEARCH QUESTIONS
This project aims to answer the following questions:
1. What effects do democracy frameworks and processes have on India's economic
progress and growth?
2. What are the barriers and restrictions to India's freedom and growth, such as political
division, societal isolation, and corruption?
3. What impact do economic policies like trade disruption and the outsourcing process
have on India's efforts to achieve social equity and democracy government?
OBJECTIVES OF STUDY
The objectives of study for the project are:
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To evaluate the effect of democracy structures and procedures on India's economic
progress.
To investigate how India's democracy and growth are affected by social and
economic disparity, as well as how democratic structures and policies might be able
to resolve these issues.
To determine the obstacles and restrictions that democracy faces in India, such as
societal inequality, political division, and graft.
METHODOLOGY
Doctrinal research methodology was used to finish this political theory project. In order to
finish this study on the subject of “Democracy and Development in India: A study of political
economic linkages” numerous primary and secondary sources were consulted.
INTRODUCTION
The subject of economic growth in India over the past fifty years has been extensively covered
in writing. The research on the discussion of political freedom in India since liberation is
equally broad. Both have a wide variety and complexity.
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But they are separated into the fields of political science and economics, which represent two
distinct realms. Few and far in between are the junctions. This article makes a feeble effort to
consider the links. In order to examine how politics and economics interact in autonomous
India, it places the process of economic growth in the broader framework of political freedom.
In Section II, a paradigm for analysis is presented. It clarifies why economies and democratic
cannot solve all of society's problems and suggests that the conflict between market economics
and democratic politics is the true problem.
It contends that the issue is made worse by the fact that marketplaces disproportionately
exclude the impoverished. The five decades are then split into three stages in the report. Even
though any such periodization is clearly random, it has analysis value. Section III analyzes the
first period of growth, 1947–1966, which was characterized by a long-term perspective and a
legislative agreement.
Due to nationalism, there was a less need to resolve disputes, yet there was a conscious attempt
to help the impoverished, even if it was only in speech and not in deeds. Section IV examines
the second period, which spanned 1967 to 1990 and saw a qualitative shift in how politics and
economics interacted. Political democracy's requirements had a significant impact on economic
strategies and growth. Politicians asserted fiscal rights against the government. However, the
settlement and reconciliation process had over time financial and political repercussions.
Section V examines the third phase, which spanned from 1991 to 1997 and was marked by a
lack of agreement and the prevalence of short-termism. During this phase, the politics of
empowerment and the economics of liberalization appeared to be pushing the economy and the
government in opposing directions. Conflict settlement is more important than ever before. But
the job has grown more challenging. Interestingly, the work is also much lower.
DEMOCRACIES AND MARKET
The market system and democratic governance are hot topics as the 20th century comes to an
end and the new millennium approaches. This is true not only of the turbulent eastern European
nations attempting to make a switch to capitalism, but also of a wide range of developing
nations from Latin America via Africa to Asia. This is partially a result of both overly
aggressive or inappropriate state involvement in market economies and the demise of planned
economies. And it is partly due to worries about authoritarian regimes, especially in nations
where the standard of living for the general populace has not improved, but even in nations
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where economic growth has been impressive but no progress towards a democratic polity has
been made.
Therefore, the current climate is in which economies and democracy are seen as both virtues
and necessities. Some countries are looking for new models of growth during this process,
while others are making an effort to modify their previous models. The new consensus holds
that, insofar as democracy is about individual political freedom and markets are about
individual economic freedom, the two together must serve the goals of the people.
However, neither in theory nor in reality is there much support for this conclusion.
Democracies, for starters, operate on the majority rule—or a variation of it—principle. This is
undoubtedly superior to kingdoms or oligarchies that involve the control of a single person or
a small group of people. The oppression of the majority, however, can result from democracy.
Additionally, it is unclear how adult suffrage can alone bring about political equity in nations
that are characterized by pervasive social and economic inequality. We must not lose sight of
the fact that even in Europe, university voting began in the 20th century. In fact, it would be
wise for us to keep in mind that the liberal philosophy was founded on private rights rather
than equity. In addition, for a long time, ownership of land conferred the right to vote on
individuals, making participation in political democracy a luxury rather than a right for
everyone.
For another, it is crucial to recognize that the idea that markets produce equitable chances for
all is predicated on an original allocation of property rights that is equal. Therefore, any
argument for the market that bases itself on the idea that it produces positive results must also
support the way in which property rights were initially distributed. The claim that markets can
safeguard individuals' or communities' interests in ways that even governments cannot is
constrained because such parties are not guaranteed entry to the market as consumers. Another
explanation is that the idea that markets give everyone the same chances relies on the crucial
supposition that the original allocation of rights to property is equitable. Therefore, any defence
of the market based on the idea that it is beneficial to real results must also defend the way in
which property rights were initially distributed 1. The claim that markets, unlike governments,
safeguard the interests of customers or minorities is restricted because those people or
1
The Political Economy of Growth in India, by Pranab Bardhan, published by Basil Blackwell in Oxford in 1984.
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minorities do not have guaranteed access to the marketplace as either consumers if they have
no money or vendors if they have nothing to offer. Recognizing that markets are inevitably
about the oppression of minorities while democratization may be about the authoritarianism of
masses is essential.
In actuality, we know that the union of democracy and economies is neither essential nor
adequate to better the standard of living for the vast majority of people in a community.
Think about equitable growth, which promotes both tangible well-being and some economic
opportunity equity. Such egalitarian growth has been observed in planned economies without
political freedom, such as the formerly communist nations of eastern Europe. as well as in
nations with market economies but no government freedom, such as some in East and Southeast
Asia. In stark contrast, where these systems are underdeveloped and have not grown over a
long period in time, as in countries in eastern Europe, the combination of markets and
democracy has only resulted in disorder.2
The result is wealth for a select few and suffering for the majority. There are obviously no
mystical weapons. Markets and democracy are both types of organizations. The result will rely
on how they treat us.
It is important to understand the root of the conflict between market economy and democratic
politics.
People cast their market-based votes with their money in an economic democracy. But the
principle of "one person, one vote" governs democratic democracies. In contrast to the
division of income or possessions, the allocation of ballots is equitable. Despite the fact that a
wealthy person has more buying power than an impoverished person, each adult is only allowed
one vote in politics. People send their representatives to office.
The majority of the population, who are impoverished or non-wealthy, must legitimize the
state even in places where they do not exist. Contrarily, markets are motivated by desire rather
than need. For this crucial reason, among others, consecutive generations of economists and
social theorists have emphasized the state's involvement in bridging the gap between the
principles of political democratization and economic democracy. This endeavor could or may
not be successful for the state. To reconcile economic and political the rule of law, a logical
compromise must be made between the economic priorities set by a political system based on
2
Governance in India, Little, Brown, Boston, 1970 through Rajni Kothari
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the principle of one person, one vote and the economic directions determined by the market
based on purchasing power.
If a person's revenue is insufficient or non-existent relative to what they can spend, markets
will not accept them as customers or purchasers. This exclusion results from a dearth of
entitlements. These individuals are prohibited from consuming the products and services that
are offered for sale in the market.
If a person does not embrace or adhere to the ideals of a market system, then markets exclude
them from being consumers, makers, or purchasers or vendors. Tribal groups or communities
living in forests in market economies are the most apparent examples of such isolation. Perhaps
the same may be said for pre-capitalist for nations that exist in isolated areas of systems that
are fundamentally capitalism. 3 Other approaches to elimination are possible. People may be
incapable of or hesitant to sell their possessions, such as an ancestor's home that they are
unwilling or unable to put on the open market. Or, there may be those who are unwilling or
unable to sell their skills 4. For example, someone who isn't able or unwilling to ask for money
for their services as a pianist or psychic may do so out of a conviction that these skills should
not and cannot be sold. Exclusion as a notion can be used to characterize both processes and
situations. The terms "exclusion" and "poverty" are used to describe similar situations,
whether they relate to a specific moment in time or an ongoing condition. Identification of the
marginalized and the underprivileged is the goal in each case. The idea of exclusion goes
beyond simply describing a process to concentrate on the way the operation for economic and
social factors over time recreates or intensifies isolation. As the process of accumulated
causality results in market-driven virtuous cycles and evil circles, this may be attributed to the
rationale of markets, which gives to those who have it and takes from those who do not.
This may be the result of patterns of development in which economic growth is unequally
distributed among individuals and between areas, resulting in increasing wealth for some and
enduring destitution for many. This could be the result of development tactics, as the same
overall economic success could result in equitable development in one circumstance and
progress that excludes the vast majority of people in another.
Institutional structures that act as a middleman between social and economic growth are
obviously problematic. Because of the potential for fostering inclusion or amplifying
3
"Introduction: Democracy and Development: Tradition, Aspirations and Reality," in Bagchi, Amiya K.
Democracy and Development, Macmillan, Lon
4
“Terms of Exchange and Class Relations, Mitra, Ashok”, 1977 UK's Frank Cass
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exclusion, these societal processes may also restrict benefits to a wealthy group or distribute
them to the impoverished majority. The original distribution of possessions and the following
distribution of earnings play a significant role in determining whether the most disadvantaged
groups of individuals are marginalized and ignored or empowered and included.
The type of inclusion or rejection matters, it must be said. Not all inclusion is beneficial.
Market participation that is forced, whether it involves juvenile labour, indigenous
communities, or foreign laborers, can be abusive. Other instances include hiring refugees from
remote regions in the unorganized metropolitan sector at rates below those of employees in the
organized sector or hiring women as paid labour on weaker conditions to those of males. The
main argument is that forced inclusion or inclusion on unfair conditions are undesirable.
Similar explanations exist for why isolation is not always a negative thing. Any choice
exclusion from sectors, on the side of individuals or organizations, should be fully fair to those
who do not embrace the principles of the market system. 5
NATIONALISM AND PROGRESS
In the framework of broader historical development, the idea and emergence of parliamentary
democracy in sovereign India were exceptional. Because of this, democratic industrialization
and development did not come after but rather came before capitalism. Additionally,
democracy did not arrive in India as a reaction to an absolutist government or as the realization
of an individualist idea of society6. Each of these characteristics offered a striking contrast to
the experience elsewhere, especially in Europe. It wasn't even a natural result of the nation-
alist idea, to be honest. More than individual freedom, the nation's independent territory was
the focus of the independence movement. In fact, the Gandhian conception of an equitable
nation was predicated on the idea that the common good must prevail over the interests of the
individual. The impact of nationalist sentiment was such that although the end of colonization
may have given the people a feeling of dignity and optimism, independence signified freedom
and authority for the country as a whole of people instead of for the individual people who
together formed the people. However, the constitution that independent India approved swore
5
(India Invented: A Country in the Making, by Arvind N. Das, Manohar, New Delhi, 1994)
6
(Imperialism and Revolution in South Asia, compiled by K. Gough and H. Sharma, Monthly Review Press, New
York, 1997)
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to uphold justice, liberty, equity, and brotherhood for all of its people while also establishing a
democracy republic. A tone stroke was offered as a universal adult business.
The democracy of the western nations served as a possible example. In a way, India created
this. A contemporary nation state was created by an enlightened class in line with their
conception of a free democracy. It was freedom that had been granted to the populace from on
high. and not the so-called democracy from below. This viewpoint might be overly simplistic.
Obviously, the truth was more nuanced. For the nationalist movement, there was a reciprocal
relationship between the claim made from below and the promise made from above.
Nevertheless, democracy within independent India was exceptional in that it brought about
universal voting in a society that was primarily agricultural and lacked a sufficient
crystallization of class forces. The state served as the primary intermediary in this framework.
It was necessary to play a crucial part in resolving the dispute between electoral democracy
and economic democracy as well as in balancing between economic growth and social need 7.
Therefore, if the rationale of markets meant that a sizable portion of people, especially the
impoverished, were excluded, it was essential for the government to guarantee that these
individuals were included in the economic realm.
The nationalist present and the imperial history of this environment influenced the economic
growth strategy. In order to achieve a more independent, if not self-reliant development, there
was one deliberate effort to reduce the level of transparency and interaction with the global
economy. Another reason the state was given a strategic role for growth was because the market
was thought to be insufficient to satisfy the needs of a latecomer to industrialization. Both
referred back to the colonial period, which was characterized by open economies and
unrestricted marketplaces.
This policy, however, also reflected a common understanding of the best industrialization plan.
In actuality, it was the prevailing development viewpoint at the moment. The goals were
simple enough: to catch up to the industrialized world and to better the standard of life for the
populace. The alleged difficulties were similar. The lack of capital was considered to be the
primary restraint on development, but the poor capacity for saving hindered the rate of capital
formation. 8 Even if savings could be increased, there would still be structural barriers to turning
7
(Rural Poverty in India: A Study of Inter-State distinctions, Oxford University Press, Delhi, 1991, Rohini
Nayyar)
8
(The Painful Transition: Bourgeois Democracy in India), Achin Vanaik, 1990
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savings into investments. It was thought that primacy of the market system would result in
excessive spending by the wealthy and underinvestment in areas vital to growth. In contrast,
industrialization was thought to guarantee growing returns while also providing useful jobs for
excess agricultural labour.9 At the time, it was believed that farmland was prone to declining
returns. The dominant role of public investment, industrialization based on import substitution,
the focus on the capital products sector, industrial licensing to direct the allocation for
investible resources in the marketplace, or even the minor importance of agriculture were all
products of these perceptions.
Industrialization was viewed at this time in sovereign India as synonymous with progress, and
it was assumed that the interests of the country and the people were one and the same.
Regarding the economic growth strategy chosen, there was more than just agreement. Political
considerations also influenced what was tried. 10This was due in part to nationalism's heritage,
which emphasized unity in variety, and in addition to the Congress Party's makeup, which
reflected a diverse alliance of interests. It's not like there weren't any competing business
concerns.
Some actions were discussed but rejected. For instance, it was agreed not to expropriate local
landowners or international investors. Similarly, despite the fact that they were an issue. Asset
redistribution was not deemed beneficial because it would harm investments, and income
redistribution was not deemed practical because India was limited to sharing its destitution.
Other actions were made in a hesitant way. Laws relating to land reform have been adopted.
However, these either lacked implementation or were rife with flaws.
An important result was the elimination of distant landlordism. However, these changes did
not provide farmers with property. Instead, they compelled proprietors to become farmers. To
handle the exploitation of the impoverished and the excluded, some measures were developed.
The purpose of the community development initiative was to build a network of roads in rural
India.
To enable structural reform at the village level, a system of villages was established.
Affirmative action was made possible by social law that established educational institution
exemptions for the scheduled classes and scheduled tribes, as well as government jobs. There
9
Land Reforms in India, Allied Publishers, Bombay, P. C. Joshi, 1975
10
(The Politicization of the Peasantry in the north Indian State by Paul R. Brass, Journal of Peasant Studies, vol.
7, no. 4, pp. 395–426 and vol. 8, no. 1, pp. 3–3 (1980)).
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was fewer requirements for dispute settlement at the period, according to the prevailing
opinion.11
However, the state made a deliberate effort to minimize disputes in the interplay between
politics and economics by balancing economic policies with the demands of the political
process. But only within certain bounds was this feasible. Because the state was fundamentally
a coalition between the industrial business class, the landowner class, and the learned class.
There was little substance in the accommodations made for the impoverished, who were the
ones in charge. The terms "commanding heights of the economy" and "socialistic pattern of
society" are used to describe how the economic growth plan was given a state direction.
Reconciling economics and politics required the construction of industrial capitalism along
with the bold language of a political democracy. Therefore, it was not surprising that "a virus
of socialism without substance" spread throughout the ideological range of political parties,
greatly influencing the language of political speech during this period.
Nevertheless, it is important to acknowledge that this growth plan was characterized by a long-
term outlook.
There was an agenda for the future of the economy, government, and society during this era,
albeit it was not flawless. The goal of the economy was to end destitution among the populace
and start the nation on the path to industrialization. Democracy was viewed as a political
alternative to revolutionary class conflict as a means of achieving social equality. For political
democracy would, in the end, give the impoverished the power to put great weight on the
governing elites to move toward economic democracy. 12
As pressure from economic development increased on the governing elites to move toward
political democracy, it is important to note that this view inverted the order seen elsewhere. It
was anticipated in the society that strong action would cause hierarchy to disappear, freedom
would do away with religious identities, and modernization would lessen the importance of
linguistic differences.
India served as an example during the early 1950s. Additionally, the confidence went beyond
those who had dreams of moving to India.
11
(Pursuit of Lakshmi: The Political Economy of the Indian State, by L. I. and S. H. Rudolph, University of
Chicago Press, 1987, Chicago)
12
(Partha Chatterjee published The Nation and Its Fragments: Colonial and Postcolonial Histories in 1993 through
Princeton University Press.)
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Some people saw its hybrid economy as a solution to China's communism's problems. Others
saw its approach as a non-capitalist route to advancement. Others saw India as a step toward
their dream of a social government and a state of welfare, having come to recognize the flaws
in industrial capitalism. Another issue is that there was a significant shift in attitudes toward
the conclusion of this time, by the middle of the 1960s. India stopped serving as a role model
for the rest of the globe.
DEMOCRACY AND DEVELOPMENT IN INDIA
In India, the political and economic ramifications of the growth process throughout the several
decades that followed freedom also became apparent around the same period. The pledges and
hopes were not met by the fiscal reality that actually occurred. The wealthy benefited primarily
from economic progress while the impoverished were largely ignored during the process of
development.
In fact, the data that is currently accessible indicates that the prevalence of poverty increased
significantly during the 1960s, as both the number of impoverished people and the percentage
of the population that lived below the poverty level significantly increased. This was consistent
with the rationale of markets, which barred those without rights, resources, or talents. And the
mid-1960s economic catastrophe was what finally brought things to a climax. Images of a
"basket-case" were developed as a result of multiple droughts that forced large-scale food
shipments from the United States under PL-480. As the government fell under the sway of
foreign benefactors as a result of the rupee's depreciation in June 1966, economic sovereignty
suffered. A protracted slump affected the manufacturing industry.
Rates of investment and savings decreased. Planning for the economy was put on hold for a
three-year period. Two noticeable shifts can be seen in the political situation that developed.
The idea of nationalism had first started to fade. This was partially a result of time passing and
the second generation in the Congress Party rising to the fore. It was also connected to the
regionalization of politics, which emerged as a result of the diminished strength of the national
leadership after Nehru. The naxalite movement and the uprising among Dalits were two
manifestations of the first youth revolts that were taking place in Indian politics at the same
time. Second, the political agreement was gradually but steadily eroding. The legacy of
nationalism started to recede from memory, and the demands of political democracy finally
caught up with us.
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It became evident that people choose their leaders through elections, and that power was
restored after each election. But the ballots of the impoverished, who made up the
overwhelming bulk of voters, were essential to winning elections. The presidential elections of
1967 proved that it was no longer possible to assume that election results would be favourable
and that the Republican Party of India could no longer assume popular support. The emergence
of the wealthy peasantry—sometimes referred to as capitalist farmers—offers a potent example
of the economic and political transformations brought about by the method of development.
Semi-feudal landlords in the rural lost their power over society and the economy. This
authority was seized by an elite of farmers who farmed their property, put their profits in
agriculture, and employed contract labour. The beneficiaries of the land reform laws, the
community development initiative, the Panchayati raj system, and the cooperative network
were this wealthy peasants. As a newcomer, it started making claims of the governing political
alliance. Rich peasants left the Congress Party to join or found alliances of opposition parties
because they were dissatisfied with what the governing class was prepared and able to
accomplish for them. Due to this, the Congress Party lost almost all of the north Indian states
in the national elections of 1967. It must be acknowledged that 1967 marked a turning point in
a scenario that was developing and a line of progress. However, looking back, it is feasible to
see a qualitative shift in the way politics and economics interacted in sovereign India around
that period. The intricacies of India's growth process over the next 20 or so years are
challenging to comprehend, let alone analyse. Perhaps it is essential to differentiate between
two time periods in this era in order to have a better understanding: the first is from 1967 to
1980, and the second is from the year 1980 to 1990.
Although somewhat random, this periodization has a logical purpose.
CO-OPTION AND MEDIATION
At the beginning of the first era in this phase, the economic crisis and the political defeat
suffered by the Congress Party prompted a re-evaluation of both politics and economics. There
was an acknowledgment of two truths. One was the emergence of the wealthy peasantry as a
fresh force demanding its fair portion of the gains from economic policies and pursuing
political advancement. For another, in a democratic democracy, the impoverished, who hadn't
witnessed any change in their living circumstances, did utilize their right to vote.
According to how it perceived this fact, the system reacted. This response can be described as
co-optationist tactics. The reaction came in two forms in the area of finance. The focus on
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cultivation was significant and fresh to start. The need to increase the production of foodgrains
served as the driving force behind the new agrarian development plan, which resulted in the
green revolution. This desire for food safety was motivated, in particular, by a worry that the
country could not maintain its "ship-to-mouth" life and, in portion, by a worry that the
impoverished would suffer if there were to be a lack of food. The methods were molded by the
goal. In order to expand their usable excess of food, the better off farms and areas received
substantial assistance. This manifested itself in various ways, primarily as lower (subsidized)
prices for inputs like fertilizer, seeds, water, power, or credit, but it also took the form of higher
prices for output due to a system of purchasing costs for producers and an influencing of the
terms of trade between different sectors in favour of agriculture.
The wealthy peasants benefited economically from this regime of clear and covert handouts. It
had some sort of strategic intention. Independent India saw the beginnings of poverty relief
programs, albeit on a small scale.
Among the first programs introduced were the Drought-Prone Areas Program, the Small
Farmers Development Agency, and the Marginal Farming and Agricultural Labourers
Development Agency. The Employment Guarantee Scheme in Maharashtra and the Nutrition
for Work Program in other states came after these a few years later. A few of these programs
aimed to give the poor the tools they needed to work for themselves, while the majority of them
tried to give the poor employment opportunities. In order to fight their isolation, the
impoverished were given rights or possessions. Growth was helped by a rise in funds and
investment.
The impact of the oil shock on the current position of payments was greater. Regrowth of
industrial growing. In the political arena, the wealthy peasantry joined the flock, the Congress
Party won the general elections of 1971 with a clear majority, and Indira Gandhi cemented her
power over her party and the governing body by speaking directly to the populace. The political
and economic equilibrium, it turned out, did not last for very long. Economic problems
triggered political unrest.
The resistance within and outside of the Congress Party gained power as the electoral authority
weakened. In response, Indira Gandhi attempted to contain and muzzle the political opposition
in order to establish herself as an unchallengeable leader in the manner of Caesar.
Majoritarianism quickly gave way to autocracy. However, this was incompatible with the
balance of power required by a democratic system.
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And this was what caused the catastrophe rather than a recession. However, the autocratic
government did not even last two years. It resembled the Congress administration before 1975
in most ways. However, near the conclusion of its administration, the second oil shock and
poor economic management resulted in unheard-of inflation. As the alliance failed to provide
administration, the control of the state was not even operational. Inflation harmed the populace,
and the political bickering of the Janata government had grown tiresome. And the populace
returned an essentially defiant Indira Gandhi to office in 1980.
PATRONAGE AND POPULISM
In some ways, but not quite, a greater amount of the same thing was experienced during the
following era, the 1980s. Even more of a forceful influence was exerted on economic growth
and policies by the political dictates of political democracy. Politically and economically, it
proved out to have been the era of populist. This resulted in a number of significant policy
shifts in the area of finance. First, there was an increase in funding.
Some of them, like the handouts for food, fertilizer, and exports, were very clear. These
indicated paid expenses. Others were implied in the low prices of commodities created in the
public sector, like steel and coal, or in the low prices of services provided by public
infrastructure, like irrigation, electricity, and road transportation. These indicated lost income.
Everybody could find something there. Naturally, both tacit and formal support continued to
help the wealthy peasants. The industrial capitalist elite, however, wasn't far behind. They got
their supplies for inexpensive from the state sector, which also took the loses. The nationalized
institutions made loans that became non-performing assets. In fact, debt exemptions for large
corporations, or the industrial sector, were discreetly introduced before they were made public
for small farms, or the farming sector. When loan melas first appeared, they were merely a
more straightforward illustration of patronage-style guided loans. When the government
acquired failing businesses from the private sector, the benefits were privatized and the
expenses were socialized. Second, in addition to these supports, there was a marked difference
between the growth of public investment expense during the first period and the fast rise in
public consumption expenditure.
Some of it helped to boost societal spending and thereby contributed to the integration of the
underprivileged. However, a significant portion of such public spending, especially that on the
wages of those who work for the state and in the public sector, funded rises in private
expenditures. Every one of these factors increased overall demand and, to the degree that
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supply limitations did not predominate, increased production. Third, initiatives to reduce
poverty have grown significantly. In 1980, both the National Rural Employment Program and
the Rural Landless Job Guarantee Program were introduced. The goal was to boost work and
give the underprivileged access to money. In following years, these programs were expanded,
changed, or given new names, but they essentially stayed the same. Two noticeable shifts could
be seen in the political sphere. One was the competing populist politics that was unleashed by
election mandates, which demanded the people's support through their ballots. Every political
party and political leader attempted to win the public over with favours. No political voice-
bearing organization was ignored or left out of this search. Furthermore, there was little
distinction between the states, where various parties held power intermittently, and the centre,
where one party held power for the majority of the time. The number of pledges made
increased, but the quantity of promises continued decreasing. Another was that patronage
politics became more and more prevalent as a state became less and less able to serve as a
middleman between competing interests and demands. This favour, which was expanded in a
dizzying array of ways, served as a mechanism for the members of the governing class to divide
the profits.
These modifications had both overt and covert economic and political repercussions. The
economy grew at a previously unheard-of pace in the 1980s. The rate of growth in national
income was over 5% per year in actual terms, and the rate of growth in per individual income
was over 3% per year. At the same period, the prevalence of destitution significantly decreased.
From 51.3% in 1977–1978 to 38.9% in 1987–1988, fewer people lived below the poverty level
as a percentage of the population. The total number of the impoverished also decreased slightly
from 329 of them million in 1977–1978 to 307 a million in 1987–1988 despite the population's
fast increase. This was attributed to economic factors such as quick development, low inflation,
and the expansion of anti-poverty initiatives. In politics, this can be attributed to the demands
of democracy because, eventually, elections are unable to be won by campaign rhetoric alone.
But there's was also another perspective. During this time, the roots of the debt crisis and the
economic crisis were also planted.33 Except for the fact that this time period marked a
concentrated effort to reconcile the sharing of benefits from economic development with the
framework of political democracy, there were no overt political divisions. However, there was
a clear impact on the electoral process.34
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The wealthy versus the impoverished was replaced by the centre versus the regions as the area
of contention. Regional groups that later evolved into insurgency and terrorists in Punjab,
Assam, and Kashmir represented dissent against democracy. The unification of the lower
classes, who understood that their political identification made their right to vote even more
powerful, had an additional unseen political impact.
THE SOLUTION AS A PROBLEM
In retrospect, it is clear that in the second phase as a whole, from 1967 to 1990, conflicts of
interests were that much sharper and the need for resolution that much greater. This was
attributable partly to the eroding consensus and partly to the development process. It was also
inevitable given the essential tension between the economics of markets and the politics of
democracy. The exclusion of the poor by market had to be reconciled with the inclusion of the
poor by democracy. There was, indeed, a conscious attempt by the state to reconcile the process
of economic development with the compulsions of the political democracy. That the mediation
did not lead to a resolution is another matter.
The involvement was purposeful during the initial part of this phase, which lasted from 1967
to 1980. An effort was made to create new alliances of business interests and maintain them
through the consolidation of political power. A measure of political populism was added to this
process. But the economy stayed within the bounds of caution. The administration exercised
cautious macroeconomic management of the economy. The level of inflation stayed within the
parameters of political and economic toleration. The situation with the balance of funds was
kept under control.
However, the system was able to withstand disruptions, including the economy's rise in energy
prices and the polity's emergency. In other terms, both the business and the politics experienced
a change.
However, the remedies themselves merged with the issues. The way in which the legislative
process was managed during this time had long-lasting effects. Firstly, even though the
government got stronger, the structural foundation of the pyramid became weaker due to the
concentration of power at the top, making it much harder for the government to arbitrate
between divergent interests. Second, the same mindset expanded quickly to political
organizations and structures, leaving no space for disagreement or discussion within political
groups. The options in this circumstance were to remain but submit to authority without inquiry
or to reject the norm and go it alone. Third, the politics of co-option meant that some people
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were included while others were excluded. This did result in a dictatorship of the majority,
which is always a risk in a democracy. It must be noted that each and every one of these
modifications to the governmental system was intended to have a long-term effect.13
Additionally, there was a political and commercial interplay that gradually turned the issue into
a remedy. It first appeared at the start of the first phase in this phase, gained popularity
throughout the 1970s, and by the conclusion of the second stage in this phase, it had become
standard procedure. As the function of money expanded beyond the financial aspects of
markets to exert a significant influence on the electoral process of democracy, it was also to
have a long-lasting effect. Initially, ballots were bought during election time, mainly in tight
races or significant districts. The custom was adopted. Over time, those with money began to
have an edge over those without it in the contest of the vote. As a result, there are now very
high entrance hurdles into politics 14. The procedure did not end there exactly. After elections,
even lawmakers could be purchased and sold, as was quickly realized. If the cost was right, a
lawmaker would easily forget the day of his election and switch his support to a cause, political
group, or administration that was directly opposed to the goals of the people who chose him in
the first place. It didn't take long for these behaviours to propagate from lawmakers to MPs.
From the year 1967 to 1980, the first part of this phase, co-option was founded on a flawed but
nonetheless complete grasp of the relationship between politics and economy. It had a specific
goal in mind. However, the shift toward an overt dependence on favour in the 1980s merely
reflected a route of least opposition and a tactic for maintaining state authority. It served as a
time-buying strategy.
When nationalist politics and unscrupulous economics were combined, they produced soft
choices, which had the greatest severe negative effects on the economy. For a while, it was
feasible for the governing body and the nation to live above their means and on loaned money,
but it was impossible to put off the day of judgment forever. At the conclusion of this stage,
the anticipated crisis did occur.
13
Hutchinson, London's The Government and Politics of India
14
Social Exclusion: Rhetoric, G. Rodgers, C. Gore, and J. B. Figueiredo, 1995. Truth, Reactions, and International
Labour Organization
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LIBERALISM AND WOMEN'S EMPOWERMENT
Early in 1991, the external debt problem materialized, and it nearly caused Nicaragua to stop
making its foreign payments. It was almost impossible to handle the balance of funds. There
was a significant concern about the rate of inflation accelerating. There was a severe financial
catastrophe at the root. This pairing was neither accidental nor coincidental.
It was a result of the economy's sloppily managed macro-policy in the 1980s. Man-made and
caused by legislation, the imbalance of payments problem. The petroleum industry's import
replacement slowed down, export performance stayed moderate, and migrant earnings trailed
off. The liberalization of the industrial and trade regimes created incentives for industrialization
that was dependent on imports. Defence shipments also increased significantly.
This was maintained by taking out loans overseas, which resulted in a continuous increase in
foreign debt. Insufficient resource mobilization and a wasteful rise in public spending were to
blame for the fiscal crisis. Direct taxes were gradually decreased, but indirect taxes, which
already made up the majority of tax receipts, could not be increased further because doing so
might have inflationary or discriminatory effects, or even both. At the same time, government
consumer expenditures and transfer payments for handouts proliferated, propelled in part by
the shady economics of soft choices and in part by populism's competing politics. A fiscal
system like this, which relied on borrowing to support expenditures with no payback for the
exchequer, was simply untenable for an extended period of time.
It was claimed that public investment, which had previously been viewed as a driver if not a
leader, pre-empts private investment in the face of limited resources and results in ineffective
resource use that drains the economy. Third, there has been a large and fast rise in the
economy's level of transparency. Through international rivalry, the goal was to reduce the price
gap between local and global markets in addition to enforcing cost control on the supply side.
A leading position in the process was given to foreign capital and foreign technology. With the
development agreement from four decades earlier, every facet of this drive for merger with the
global economy offered a startling juxtaposition. In conclusion, India transitioned from a world
of state-led capitalism to one of market-driven capitalism.
It is obvious that abrupt and significant shifts in the growth strategy marked the beginning of
economic liberalization in India. It is critical to comprehend the political underpinnings of such
economic transformation in the setting of a democracy. There are two clear queries that come
up. First, why did decades of chronic poverty have such little effect while a comparatively
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small economic catastrophe sparked this response? Second, how did the minority government
at the time implement such extensive reforms when earlier governments with vast numbers
were unable to do so? These difficult political issues appear to have a comparatively
straightforward economic solution.
The decision to shift was driven by the urgent fiscal pressures of crisis management. The threat
of failure hovered over economies like the blade of Damocles after the foreign debt crisis that
broke out in 1991.
Governments can and do grow destitute even when nations do not declare bankruptcy, it was
suddenly realized. Around the same period, there was a shift in the global environment that
made the issue worse. While the former USSR's failure eliminated the countervailing force that
had served as an essential support for India in the past, the collapse of communists meant that
rival philosophies gave way to a prevailing ideology. derived from the global system.
It isn't as if there weren't any additional underlying variables. Through the 1980s, India's
development strategy was the subject of discussion and some reconsideration due to growing
worries about output and efficiency, even if not about poverty and disparity.
The need for economic reform was mentioned in the campaign platforms of all political parties
for the 1991 elections, regardless of their ideologies, indicating that this had diffusely pervaded
the political system. In conclusion, it was a mix of the truth in the domestic context and the
circumstance in the global context that gave rise to the sudden shift. But there's no denying that
the catastrophe influenced and even directed the reaction. It wasn't something that was
anticipated. Given the intricacy of India's experience with economic growth, pretending that
all that it did was correct would be pointless, but suggesting that all that it conducted was wrong
would be naïve. A discussion of this matter would lead to an excessive detour. Just to state the
obvious, there were both triumphs and mistakes.39 Long-term, the most significant
achievement was the steep increase in savings, investment, and development, which offered a
stark contrast to the colonial era's near-stagnation, especially during the initial half of the
twentieth century.
Along with this, a diverse industrial sector was developed, though issues like falling investment
output and a lack of global competitiveness soon surfaced, necessitating an overhaul of policies
and a reorganization of the economy. Even though it did not significantly reduce pure
destitution, there was a steady increase in farming production that guaranteed food security.
But the financial statement also has a flip aspect. The most significant failing, seen from a long-
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term viewpoint, was that this method of development did not enhance the standard of living for
the average person. For a significant part of the people, ongoing destitution and utter suffering
stayed the norm.
The history of electoral democracy in India over the first four decades of the nation is equally
complicated but overall more encouraging. The true accomplishment is that freedom has
become entrenched at the grassroots level. Voters are politically aware and evaluate political
groups and their accomplishments. Along with a growing mobilization on some topics, it is
also feasible to detect an expanding, almost quiet, involvement in the political process. In this
regard, the republic's founding fathers' hopes and aspirations have been more than met. One is
the complete institutionalization of the adult industry, which is irrevocable. Another is that the
people are now increasingly demanding democracy, which was mainly supplied from above.
When combined, these two characteristics show a rising level of popular participation in
politics. But in other ways, things didn't go as planned. Society has not been changed by
politeness. Caste did not shrivel up. In reality, race became politicized as a result of exemptions.
Religious identities persisted despite secularism. Rather, faith grew in significance as a political
influence.
Additionally, much less is done to resolve disputes between political freedom and economic
growth. Oddly enough, the state doesn't quite have the capacity or desire to arbitrate. Its
readiness to arbitrate is diminished by its reliance on financial influence or the use of the state
machinery for specific ends. In the majority of democracies, governments can behave in a
partisan manner in an effort to safeguard or advance the interests of the classes or groups they
are supposed to serve. The machinery of governments is frequently used on purpose to advance
the goals of the governing class. No one is shocked by this. However, in India, graft and
favouritism are increasingly being used by the government to advance, sometimes bluntly and
outwardly, the interests of wealthy people. In this environment, wealthy individuals actively
advocate and use their power to further their interests. In conclusion, the combination of the
politics of empowering and the economics of liberalization is unpredictable, if not chaotic.
In the end, freedom exerts more power than liberalization. However, it appears that right now,
without any organized effort toward a settlement or a truce, these factors are pushing the
economic and the government in opposing paths for the initial time in independent India.
This carries a lot of danger. And if the state is unable to fulfill this function, people and civic
society would have to mediate.
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CONCLUSIONS AND SUGGESTIONS
According to the information given, it appears that freedom and growth are positively
correlated in India. This connection is able to seen in the way that India has seen substantial
societal and economic progress since gaining democracy.
Corruption, economic disparity, and environmental pollution are just a few of the issues that
continue to hamper India's freedom and growth. It may be essential to keep advancing
democracy ideals and principles in addition to putting in place measures that give priority to
fair and sustainable economic development in order to resolve these problems.
In order to comprehend how these elements combine and have an impact on one another, it
may also be beneficial to conduct additional study and analysis on the political-economic
connections in India. This could entail investigating the effects of particular policies or efforts
on economic growth and political involvement as well as looking into the part that various
players, like civil society groups and international companies, play in influencing these results.
Overall, it is evident that India's democracy and economic growth are interwoven, and that
maintaining attempts to improve both of these domains will be crucial to attaining equitable
and lasting progress in the nation.
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BIBLIOGRAPHY
BOOKS:
"India's Democracy: An Analysis of Changing State-Society Relations" by
Yogendra Yadav and Suhas Palshikar
"Development and Democracy in India" authored by Niraja Gopal Jayal and
Sudha Pai
The Political Economy of Development in India" edited by Francesca Jensenius
and Kenneth Bo Nielsen
LAW JOURNALS:
Journals of Democracy
Harvard International law journal
Indian journal of law and economics
Websites -
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[Link]
<[Link]
[Link]
[Link]
Relationship-Bardhan/
<[Link]
science/article/abs/empirical-linkages-between-democracy-and-economic-growth>
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