Growth and Crisis in India’s Political Economy from 1991 to 2013

Abstract

Since the pro-market reforms were launched, the Indian economy has grown from 4.7% in the 1990 to 9% in 2011 before slowing down dramatically to nearly half of that rate in recent years. From launching of reforms until 2011, it did manifest some vivid and impressive signs of India moving towards high growth and increase in living conditions of its population. The purpose of this article is to access the likely effects of reform measures on the society, because the mainstream approach suggests that the reforms can be expected to increase economic growth and incomes. However, this study finds that the mainstream economists ignore the role of domestic aggregate demand and inequality. India's growth was led by the services sector, which included real estates, IT, telecommunications and banking, and contributed nearly 50% to the GDP in 2012. Manufacturing, which experienced remarkable growth and transformation in the East Asian economies, had rather grown much slower. The agriculture sector, which still employs nearly two-third of India's workforce, remains stagnant. The study suggests that education and health have been neglected in India and this will compromise productivity and growth.

The Bolshevik Revolution and the Collapse of the Colonial System in India

“…Britain occupied Bengal following their victory at Plassey in 1757, leading to the occupation and rule of this province by the British East India Company which was owned by exclusively British merchants and politicians. Having been awarded a royal charter by Queen Elizabeth I for trade with Asia, it became one of the most powerful trading companies in the world by maintaining its monopoly of the importation of spices, cotton, silk, indigo, and saltpetre from India (Siddiqui 2014). Bengal province was the richest and most fertile region of India with highly developed handicraft industries and commerce.…”

Will the Growth of the BRICs Cause a Shift in the Global Balance of Economic Power in the 21st Century?

“…Over two decades of neoliberal economic policies in India have failed to reduce poverty and unemployment. Three-quarters of the country's population relies on the agriculture sector for their incomes and this remains stagnant; moreover, the manufacturing sector has not experienced any breakthroughs, especially in employment opportunities (Siddiqui, 2014a). As shown in Table 1, the GDP growth rates and values of exported goods differ among the BRIC economies.…”

“…This happened despite the rapid fall in oil prices in the international markets, which meant India had to pay less for oil imports. (Siddiqui, 2014a) However unlike Brazil, India still regulates its financial sector. Nevertheless, overall the role of the state was curtailed in the mobilisation of resources (Schmalz and Ebenau, 2012).…”

Foreign Capital Investment into Developing Countries: Some Economic Policy Issues

“…(UNCTAD, 2012) Capital inflows to Asian countries continued to increase; the main reason seems to be a strong growth in East Asia and South Asia. Two countries, namely India and China, witnessed capital inflows rise by 31% and 8% respectively (Siddiqui, 2014a).…”

“…India has received a smaller amount of FDI, compared to for instance, Brazil for the same period (See Chart 5), despite, India's adoption of neo-liberal economic policies for the last two decades. Smaller countries like Singapore received a much higher amount of FDI compared to India in 2010 (Siddiqui, 2014a). It is said that inward foreign investment can stimulate clustering activities and will have spill overs in the overall economy.…”