Cambridge; New York: Cambridge University Press, 2012. xiii, 249 pp. (Tables, figures, graphs.) US$28.99, paper. ISBN 978-0-521-73517-9.
Poverty Amid Plenty brings together Atul Kohli’s significant contribution to the political economy of India’s growth and redistribution within a single crisp volume. It will interest specialist and non-specialist readers alike, and sharpen debate on India’s economic reforms. It is the finest class-based argument on the politics of industrialization, growth and redistribution in India.
The government’s pro-business turn in the late 1970s and consequent economic growth occurred due to the government’s perceived failure of earlier policies. The dismal “Hindu rate of growth” in the 1970s worried policy makers at a time when many Asian economies had taken off. Industrial deregulation was to be the panacea during the 1980s. This process was further accelerated after the financial crisis of 1991. Indian industry favoured domestic deregulation but opposed foreign investment and import liberalization. Consequently India’s growth is driven more by the domestic economy than China’s.
Technocrats such as the current Prime Minister Manmohan Singh, and Montek Singh Ahluwalia coordinated growth engendering government business interactions. They formed a narrow growth-oriented coalition that prioritized growth over human development. India thus emerged as a rapidly growing economy with dismal standards of human development.
Why is economic growth bereft of meaningful human development in a democratic political setting? Kohli does not dispute that India is a vibrant democracy but points to four important reasons for this apparent contradiction. First, decentralization of power helps to shift the blame for government accountability to lower levels of government and insulates the narrow growth-oriented coalition at the centre from democratic pressures. Second, Hindu nationalism was deployed to distract citizens from their miserable condition. Third, elite-oriented economic policy change by stealth which amounts to altering economic regimes in the garb of continuity is adopted to confuse the electorate.
Finally, caste politics (or discrimination by birth) has trumped class politics (or exploitation of the poor) in many Indian states. The book details the process of development in India’s most populous state, Uttar Pradesh (UP). UP is characterized as a “neo-patrimonial” state where rulers seek private profit from governance. Power alternates between a backward caste party (Samajwadi Party) and a party led by the most backward caste group (“dalit”) leader Kumari Mayawati. When in power both these parties secure benefits for their narrow constituencies rather than investing in genuine public goods for the citizenry. The oppressed class derives symbolic rather than real material gains within a “neo-patrimonial” dispensation.
While one can hardly disagree with the contention of Poverty Amid Plenty, the book is rather quiet about the significant poverty alleviation and development initiatives of the United Progressive Alliance government since 2004. There is a superficial discussion on the Mahatma Gandhi National Rural Employment Guarantee Act (2005) and none at all on the Right to Information (2005) and the Right to Education (2009). Could it be that India’s increasingly mobilized democracy is beginning to make a difference to the old developmental path?
Kohli distinguishes between three types of sub-national states: “neopatrimonial,” “developmental” and “social democratic.” Pro-business economic reform exacerbated inter-state inequalities because private capital flowed largely into states that created opportunities for private investment. “Neopatrimonial” states are losers in this story. The winners are “developmental states” like Gujarat which govern with a narrow growth-oriented coalition resembling the pro-business central government. Economic liberalization has enhanced the role of the sub-national state in development by reducing the regulatory and investment role of the central government. “Developmental states” somewhat resembling those in East Asia are surging ahead of the “neopatrimonial” states in a liberalized federal market Indian economy.
West Bengal and Kerala are ideal typical “social democratic” states with a broad governing coalition attending to the needs of the downtrodden. West Bengal is the author’s favourite state. Welfare and redistribution were driven by a strong cadre-based party with a coherent ideology: the Communist Party of India Marxist (CPIM) in West Bengal. While this explanation for land redistribution in the early stages of CPIM rule in the late 1970s till the mid- 1980s is quite persuasive, the same argument about the politics of welfare is tougher to sustain in contemporary West Bengal. Even Kohli admits that the state’s achievements in literacy, health-care and poverty alleviation are not so spectacular. Kerala, Tamil Nadu, Himachal Pradesh and many other states are ahead of West Bengal in human development.
The view that the government’s turn to a pro-business orientation in the 1980s spurred growth is more convincing than the author’s explication of economic change during the balance of payments crisis of 1991. Few would disagree that India transitioned from stringent industrial regulation and economic autarky in the 1980s to drastic deregulation and globalization after 1991. While India remains a relatively self-contained economy compared with China, its trade to GDP ratio, which was constant between 1980 and 1991, surged significantly thereafter. India quickly discovered significant comparative advantage in services and information technology. But globalization, deregulation and the promotion of competition were opposed by significant segments of Indian industry, accustomed to procuring industrial licenses in return for rents within a largely closed economy. One perhaps needs to go beyond the pro-industry orientation of the government and explain the trajectory of ideational change within the government to account for the tectonic policy shifts of 1991. After all, when technocrats and industrialists did not repose faith in globalization and deregulation in 1966 during another severe financial crisis, the World Bank’s policy goal of coercing India to increase private investment and trade came to naught.
Atul Kohli’s is a powerful scholarly voice that combines theoretical rigour with detailed empirical analysis. This book will reinvigorate the debate on India’s economic transition.
Rahul Mukherji
National University of Singapore, Singapore
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