The Global South: Politics, Policy & Development
POLS 3560 – Fall/Winter 2011/2012 – Ananya Mukherjee-Reed
Lecture 8 – India’s Political Economy – Nov 8
The ‘Standard’ Storyline
- 1950 – 1980
o Low economic growth.
o Big state and state interventionism.
o State protectionism.
o No corporate growth, low corporate profitability.
o No global role.
- 1980 – present
o ‘Miracle’ rates of growth (9-7%).
o Less rate.
o High corporate growth and profitability.
o Spectacular global role.
o Foreign exchange reserves at 279 billion USD.
o Foreign companies.
- The top 40’s worth is 243 billion, up from 229 billion a year ago, but still shy of
the 351 billion records in 2007.
Indian Companies on the Forbes Global 2008
- 47 Indian companies are on Forbes Global 2000.
- Of the top 50 economic entities in the country, 30 are companies (by sales).
- The sale of Tata Steels is about the size of Kerala, and Reliance sales is about
$2 billion larger than Kerala.
- WIPRO is about 5 times the SDP of Manipur and INFOSYS about 4 times.
- Sales of Reliance and Tata Steel are each equal to the GDPs of the poorest 12
- The aggregate sales of the top 50 corporation’s amount to $8 trillion – double the
GDP of China and 8 times the GDP of India.
- Wal-Mart’s revenues were about 5 times the GDP of Bangladesh; Vodafone is
bigger than Ecuador; Exxon was almost 14 times Kenya, etc.
- The aggregate sales of the top 3 companies, Royal Dutch Shell, Exxon Mobil and
Wal-Mart exceed the GDP of the entire African continent ($1.289 trillion and
$1.281 trillion for 2008 respectively).
Poverty and Hunger
- Under $1 a day – 34.3%
- Under $2 a day – 80.4%
- Under national poverty line – 37.2% - Ranks 67 out of 88 on the Hunger Index; worse than Nepal, Pakistan, China,
- Farmer suicides – close to 200,000 suicides between 1997-2005 (one suicide
every 30 minutes).
Two Questions and Standard Answers
- Why this miracle?
o ‘Freedom’ from the state.
o Less regulation.
o High consumption.
o Globalization – free trade, more foreign investments, more active stock
- Why such inequality?
o Still a lot of regulation.
o High dependence on agriculture.
o Not enough skills.
o Bad governance.
o ‘People are not able to take advantage of globalization’.
Big Business in Independent India
- State-business collaboration.
- Cheap inputs provided by the state for development of business.
- Nationalized banking gave control over the savings of the common person to the
government which could then be channeled to big business.
- Protectionist: similar to ISI model.
Big Business 1950 – 1985
- General feature: high corporate profits but low output, low growth.
- Large oligopolies.
- No domestic competition.
- No global competition.
Since 1980: Globalization
- Rajiv Gandhi, the PM, and a number of other politicians and business leader see