India

1
Indias Political Economy

• An introduction

2
Outline

• A Long-Term View
• 2004 Elections. What do they mean?
• Globalization and Nationalism
• Trends and Questions
• Regions, Cities, and Business
• Q A

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India has been integrated into the world economy
since the 14th century
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Its world economy became global after 1500
5
Specific routes and points of contact became
critical by 1800 especially the coasts and
northwest interior
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In the 1800s, The British Empire produced a new
territorial domain for the evolution of modern
state power
8
A transition to a modern development regime
consumed the decades 1840-1880. In 1853,
Governor General Dalhousie announced a plan to
build an Indian railway with state contracts that
guaranteed English companies a minimum five
percent return and to secure that return,
government kept control of railway construction
and management. In 1871, the Government of
India obtained authority to raise loans for
productive purposes, and large irrigation
projects began, following earlier success raising
revenues from smaller projects. Development
projects were all government endeavours that
employed many native contractors and their
benefits also filtered down to native owners of
land receiving new irrigation and producing
commodity crops.
9
Between 1880 and 1914, industrial development in
India took off during decades of low prices in
Europe and America when rising prices in South
Asia encouraged investments in India by firms
producing for Indian markets and for diversified
world markets. Commodity prices in India rose
with export commodity production until 1929.
Imported industrial machinery was domesticated in
new Indian factory towns. In 1853, the first
Indian cotton mill appeared in Bombay, and the
Factory Act (1881) imposed rules on Indian
factories to reduce their comparative advantage
in virtue of low labour costs and cheap access to
raw materials in India.
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• In 1887, J.N.Tata's Empress Mill arose at
  Nagpur, in the heart of cotton country, in 1887.
  
• The Tatas became India's industrial dynasty. Tata
  Iron and Steel Works at Jamshedpur consumed
  increasing supplies of ore and coal, which by the
  1920s rivalled exports from Calcutta.
• In 1914, India was the world's fourth largest
  industrial cotton textile producer cotton mills
  numbered 271 and employed 260,000 people, 42 in
  Bombay city, 26 elsewhere in Bombay Presidency
  (mostly Nagpur), and 32 elsewhere in British
  India, at major railway junctures.
• Coal, iron, steel, jute and other industries were
  developed at the same time, producing specialized
  regional concentrations of heavy industrial
  production around Bombay, Ahmedabad, Nagpur,
  Kanpur, Calcutta, Jamshedpur, and Madras.

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Growth rate of India's real GDP per capita
(Constant Prices Chain series) (18571900).

• Data Source Penn World tables.
  http//en.wikipedia.org/wiki/Economy_of_India

12
Percapita incomes per Capita Relative to India

• Gregory Clark,The Great Divergence World
  Economic Growth since 1800. http//www.econ.ucdav
  is.edu/faculty/gclark/GlobalHistory/Global20Histo
  ry-12.pdf

13
Indian GDP per Capita relative to Britain and
the USA, 1873 to 1998

• Gregory Clark,The Great Divergence World
  Economic Growth since 1800. http//www.econ.ucdav
  is.edu/faculty/gclark/GlobalHistory/Global20Histo
  ry-12.pdf

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Historical Share of Global GDP
www.deloitte.com/dtt/research/0,1015,sid253D...
15
Growth rate of India's real GDP per capita
(Constant Prices Chain series) (19502006)

• Data Source Penn World tables.
  http//en.wikipedia.org/wiki/Economy_of_India

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Relative GDP map of the world
http//www.lib.utexas.edu/maps/world_maps/world_mk
tsize96.jpg
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Per capita GDP of South Asian economies SKorea
(1950-1995)
http//en.wikipedia.org/wiki/Economy_of_India
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http//www.mastercard-masterindex.com/asiapac/insi
ghts/1Q2006/images/chart_issue01_01.gif
19
Value of Indian rupee as per dollar pound
(1980-2005)
http//en.wikipedia.org/wiki/Economy_of_India
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www.indianembassylao.com/economy_basic.html
21
Private and public industry employment in India
(2003).
http//en.wikipedia.org/wiki/Economy_of_India
22
Composition of Indias agricultural output
2003-04
http//en.wikipedia.org/wiki/Economy_of_India
23
www.321gold.com/.../dorsch062006.html
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Per capita Net State Domestic Product in India
(1997-98).

• http//en.wikipedia.org/wiki/Economy_of_India

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http//news.bbc.co.uk/nol/shared/spl/hi/guides/456
900/456964/img/1148297950.gif
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http//www.oecd.org/dataoecd/62/30/1877912.gif
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Partitioned into India and Pakistan in 1947. East
Pakistan became Bangladesh in 1971
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Three decades from the start of India's first
Five Year Plan in 1952 to the end of its Sixth
Plan in 1985 were the heyday of nationally
planned development in South Asia. National
planning required the institutional enclosure of
national economies. South Asia's national plans
focused on national markets. National planners
formulated priorities for allocating state
resources acquired both internally and
externally. Planning agencies organized regional
and local initiatives like cooperative societies
and community development programs. National
governments set up public food procurement and
distribution systems to establish a ceiling on
food costs for the poor. National health and
education expanded. State ownership expanded to
basic industries, public utilities, banks, and
insurance.
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India is the largest and richest country in the
region spanning all of southern Asia the second
largest national economy in Asia, after China,
with comparably rapid PC growth rates today, and
rather higher poverty measures
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Since the opening of the Indian economy and
liberalization of internal market structures
since 1990, economic development has had no one
guiding vision or dominant logic and several
contradictory trends are prominent. National
economies are more global as are the cultural
communications that shape national politics.
32
Since 1990, the national economy has grown more
rapidly, and economic disparities have increased

• In Bombay, India's Wealth and Poverty on Display
• Listen
• Morning Edition, February 17, 2004 India's
  economy is booming, but the new wealth is not
  shared by all. Some 400 million Indians still
  live on less than a dollar a day. This disparity
  in wealth is starkly evident in Bombay, which
  doubles as the commercial capital of India and
  the home of the largest slum in Asia. Miranda
  Kennedy reports.

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Sunil Mittal 186   

          Sunil Mehta is Forbes 186 among richest men in the world                  46 , self made Source telecomNet Worth 2.7 bil   Country of citizenship IndiaResidence Delhi,  India Industry TechnologyMarital Status married , 3 children Punjab University, Bachelor of Arts / Science From making bicycle parts in Ludhiana, a trading town in North India, Mittal is now India's leading telecom pioneer and the first private operator to launch cellular services in the country. His 1.1 billion (revenues) Bharti group runs country's largest GSM-based mobile phone service. Mittal has his hands full battling arch rivals, the Ambanis of Reliance and the Tata group. Biggest asset is family's stakein flagship Bharti Tele-Ventures, in which Singapore Telecom and Warburg Pincus have jointly invested nearly 1 billion. The stock, first listed two years ago, soared 376 last year, propelling Mittal into the billionaire ranks. A believer in lucky charms, Mittal travels in his ten-year-old Mercedes to important business meetings.
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In the 1990s, television media owned by
multinational corporations flooded public
information systems. The growth of exports from
South Asian countries measured 13.5 annually in
the 1990s, almost four times the rate of the
1970s. Foreign direct investment (FDI) grew,
though it remains a small proportion of India's
GDP at 0.1 percent before 1991 and 0.5 percent in
1992-6. In 1990-1996, FDI increased (in millions
of US dollars) from under 100 to over 5,000 in
India, from under 250 to over 650 in Pakistan,
from under 60 to over 600 in Bangladesh, and from
under 60 to over 2,400 in Sri Lanka. In the
first six months of 1996 alone, Korean companies
made nine technical and twenty-five financial
agreements in India.
35
Forging alliances between national and
international business now preoccupies national
policy makers. Linkages between FDI and
national investors are increasing the pool of
investment capital inside the national economy.
36
In 1999, the Bharatiya Janata Party (BJP) became
the leading party in a National Democratic
Alliance (NDA) coalition government that held
power until May 2004. By leading Indias first
major non-Congress national government, Prime
Minister Vajpayee and colleagues opened a new
political era. The BJP was in fact a new kind of
dominant party as a pivot of national coalition
building. Its Sangh brethren the Rashtriya
Swayamsevak Sangh (RSS) and Vishwa Hindu Parishad
(VHP) also moved from margins to mainstream by
occupying the Prime Ministers office and all
national ministries. Hindutva acquired official
respectability as a national party ideology.
37
In 2004, the incumbent NDA alliance government
launched a campaign called India Shining to
highlight its success in stimulating economic
growth it failed

• BBC REPORT --- 28 May 2004
• BJP admits 'India Shining' error
• India's Bharatiya Janata Party has admitted its
  "India Shining" approach was harmful in its
  recent unsuccessful election campaign.
• Speaking for the first time since the BJP was
  ousted, former deputy premier LK Advani said the
  catchphrase was "not wrong... but not
  appropriate".
• Congress became the biggest party in parliament
  after a campaign pledging to improve the plight
  of India's poor.
• However, Mr Advani warned the result had not
  given Congress a clear mandate.
• Bouncing back
• Mr Advani said the two catchphrases "Feel Good"
  and "India Shining" had hurt the BJP.

38
2004 elections established a Congress-led United
Progressive Alliance (UPA) government in New
Delhi. In aggregate national voting statistics,
BJP and Congress are evenly matched. Both depend
on allies to win. In 2004 Lok Sabha polls, each
alliance received about 35 of the total vote,
and total votes for NDA and UDA parties declined
compared to 1999 (by 3.62 and 2.36,
respectively), while non-aligned parties
increased their vote share, most notably the
Bahujan Samaj Party (BSP) in UP. The 2004 change
in national government came not from a voter
shift away from the BJP but from a few key
Congress victories and many good Congress
alliances with victorious regional parties, which
together with outside support gave the UDA over
320 Lok Sabha votes, more than the NDA ever had,
and drove the NDA into Lok Sabha minorities in
all but five Indian states.
39
What do elections mean?

• National governments comprise alliances among
  regional parties
• NDA gave way to UDA on the basis of a small voter
  swing toward Congress allied parties in several
  key states, including Andhra Pradesh
• Economic issues were critical
• Economic policy is at issue, in the states and at
  the Centre (New Delhi)

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Economic disparities translated into votes for
government efforts to spread the wealth
42
New Government headed by growth oriented
economists

• Finance Minister P Chidambaram

• Prime Minister Manmohan Singh, who launched
  liberalization in 1990s

43
The UDA government, like its NDA predecessor,
depends on decisions by voters and politicians
who respond to short-term assessments of
practical self-interest. Experts attribute say
effective promises of good government are more
politically important than ideology.

• Confident Manmohan Singh focuses on governance
• India News New Delhi, Nov 2 Over five months
  into office, Prime Minister Manmohan Singh's
  first meeting with his ministers reflected his
  quite confidence over the stability of his
  government and the importance he attaches to good
  governance, analysts and ministers said Tuesday.
  They said the meeting also showed that the
  prime minister, catapulted to the office after
  Congress president Sonia Gandhi declined to take
  up the prized job, has quickly learnt the art of
  managing a coalition government. "He has
  settled in quite a bit and is clearly putting his
  own stamp on the administration," said Mridula
  Mukherjee, a professor of political science at
  the Jawaharlal Nehru University here. "He now
  wants the ministers to focus on implementing the
  promises, to deliver," Mukherjee told IANS.

44
The affluent urban classes, epitomized by stylish
folks in Bombay (Mumbai) prosper in the world
of globalization
45
Middle class desires drive much of urban economy
46
Bollywood
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Urban building boom
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Tourism and heritage biz nation in the world
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High class hotels where national and global
elites meet
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Public arts and expressions
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Everyday capitalism
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Everyday needs
61
India gate
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Southern India Hyderabad is Cyberabad
                                Although
Bangalore was first out of the hi-tech gate, many
Indian cities have now joined the race for
information-technology jobs.  Hyderabad's one of
them, and the results are incredible to anyone
who remembers the city 20 years ago.
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Peoples' War Group (PWG) Since 1980 clashes
between police and Naxalite Maoist
revolutionaries of the Peoples' War Group (PWG)
have taken place in northwestern Andhra Pradesh.
The PWG champions the cause of the landless and
targets landlords, law enforcement personnel and
other symbols of authority in the northeast, east
central and southern states of Andhra Pradesh,
Bihar, Madhya Pradesh, Maharashtra and Orissa.
Naxalite Maoist revolutionaries of the Peoples'
War Group have killed dozens of persons,
declaring them "class enemies" or police
informers. In June 1998, Naxalites attacked a
tribal village in Andhra Pradesh's east Godavari
district, where they killed the village chief and
beat eight women and shot two men. On 22 February
1998, an Orissa policeman was killed by suspected
PWG militants, who had entered the state from
neighboring Andhra Pradesh. In areas under their
control, Naxalites dispense summary justice in
"People's Courts", which in some cases condemn to
death suspected police informers, village
headmen, and others deemed to be "class enemies"
or "caste oppressors." Madhya Pradesh state
transport minister Likhiram Kware was hacked to
death on 16 December 1999. The Naxalites also
extort money from businesses. Their victims, in
addition to police and local government
officials, include suspected police informers,
village headmen, and landlords whom they accuse
of oppressing scheduled caste members. The PWG
also used land mines to kill police, and
insurgents used bombs to kill government
officials, police, and civilians.
67
Manmohan Singh is expected to announce compensationIndian Prime Minister Manmohan Singh has promised assistance to families of farmers who have committed suicide in southern India. Mr Singh is visiting Andhra Pradesh, where nearly 3000 farmers have taken their lives because of crippling debt. The prime minister's visit is his first since taking office in May. It comes a week before his newly elected Congress government presents its first federal budget, which is expected to be pro-farmer. Correspondents say Mr Singh's visit is aimed at showing his government's commitment to poor Indian farmers, who had felt largely excluded from the economic reforms of the previous government.

• India PM pledge over suicide farmers

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Gujarat killings, Feb-Apr 2002
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Gujarat Violence

• And unemployment
• Human rights report
• And investment and FDI
• And Gujarat BJP Government under Narendra Modi
• And justice

70
Breman, Jan, Arvind Das, and Ravi Agarwal Down
and Out Labouring Under Global Capitalism.
Distributed for the Amsterdam University Press.
164 p., richly illustrated. 11 x 8-3/4 2000 Cloth
CUSA 11.50spec 9-05356-450-0 Poverty is the
dominant feature of the working lives portrayed
in this book. But the misery of these men, women,
and children in India has little to do with the
underdevelopment of the past. The poverty here is
caused by development and is concentrated mainly
in what is referred to as the informal sector of
the economy, which is what four-fifths of India's
population depends on for its livelihood. It
concerns the type of work that requires little or
no capital investment or education and is
small-scale by nature. The wages earned from
these enterprises are not only low but are also
characterized by strong work fluctuations per
day, month, or season. Two other factors
characterize this type of work the absence of
governmental monitoring and also, the absence of
organizations, namely unions, which traditionally
represented the concerns of the working class.
The choice for India emerges from the research
of Jan Breman, performed over a 30-year period in
an area located on India's west coast, the site
of enormous economic growth. He has now returned
to this location with photographer, Ravi Agarwal,
to present a portrait of the working classes of
this particular area. Together with Arvind Das, a
well-known journalist and commentator on business
matters in India, Jan Breman has written the text
which accompanies the photographs.
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Delhi, Hyderabad (Cyberabad), and Mumbai are
hotspots for business opportunities in India






The Delhi Metro, which has become synonymous for
state-of-the-art technology, may now sport two
see-through fibre glass lifts in the ISBT
(Kashmere Gate) station. "The underground
section, which will be ready in December, will
have 11 lifts in all. Out of these, we will have
two lifts which will have see-through glass
windows", said Delhi Metro Rail Corporation
(DMRC) spokesman Anuj Dayal.