Uncertain India? Deepening globalization, unanticipated consequences and the challenge of sustainability

ABSTRACT

Taken together, these essays are an eye-opener for those who still see India as a homeostatic society, trapped into caste and custom. The articles on transparency in public transactions, financial credit market reform, effect of the new, reformed economy on the leaders of business and industry and the general framework for understanding India’s “reform consolidation,” present different facets of a society on the move. They showcase how endogenous transformation interlocks with external stimuli and opportunities. This introduction is a succinct analysis of the course of India’s development in specific arenas, contradictions, and resilience of the general process of which they are a part, and, most important of all, the convergence of endogenous developments and exogenous conditions that have emerged as critical determinants of the durability of India’s globalization. However, thanks to India’s noisy but resilient democracy, the direction and pace of India’s globalization, locked into the clash of two paradigms, one drawing its legitimacy from the rhetoric of secularism and social justice and, the other, leveraging on muscular nationalism, deep cultural roots, and rapid corporate-led growth, remains uncertain.

Acknowledgments

I would like to thank Himanshu Jha, Markus Pohlmann, Jivanta Schoettli, and K.C. Suri for their comments.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. “Rahul Gandhi in the Lok Sabha,” https://www.youtube.com/watch?v=Z0uioKWABqo (accessed June 13, 2018).

2. A crisis is an opportunity for introducing a new style of government, pursuing a new model of development. However, while a crisis opens a window of opportunity, it is not enough by itself. An enabling factor, by the way of s sufficient body of influential opinion is necessary to give this the necessary political traction. Rob Jenkins explains this in, “Political Skills: Introducing Reform by Stealth,” in Democratic Politics and Economic Reform in India (Cambridge, UK: Cambridge University Press, 1999), 172–207.

3. A tame statement from Prime Minister Manmohan Singh, adroitly combining pious sentiments and catering to special interests, from that period: “At the global level we must devise instrumentalities to deal with imbalances built into the functioning of the international political and economic, order. We should aim to expand the constituency that supports the process of globalization.… To meet these challenges and constraints, we must respond in a manner worthy of the Bandung spirit. Just as that historic meeting redefined the agenda for its time, we must do so once again here today.” Manmohan Singh’s Bandung Address, commemorating the 50^th anniversary of the Non-aligned Conference, 2004, cited in Subrata Mitra, Politics in India: Structure, Process and Policy (London, UK: Routledge, 2017), 257, footnote 4.

4. Pranab Bardhan, The Political Economy of Development in India (Delhi, India: Oxford University Press, 1984) has shown how Indian policy consistently tried to combine contradictory interests, leading to a staunch defense of the status quo. A similar argument was provided by Kothari and Morris-Jones in their characterization of the “Congress System” in India, where the party always tried to locate itself at the middle of the social, economic and political cleavages of India.

5. Sinha draws on Henry Farrell and Abraham Newman, “The New Interdependence Approach: Theoretical Development and Empirical Demonstration,” Review of International Political Economy 23, no. 5 (2016) to very good effect. The reasoning runs parallel to Douglas North’s concept of “lock-in,” which he uses to explain the dynamics of incremental institutional change. A “lock-in” comes from “the symbiotic relationship between the institutions and the organizations that have evolved as a consequence of the incentive structure provided by those institutions, and the feed-back process by which human beings perceive and react to changes in the opportunity set.” Douglas North, Institutions and Institutional Change and Economic Performance (Cambridge, UK: Cambridge University Press, 1990), 7.

6. The angry crowds of democracy have been showcased by Naipaul in a different context: “…the idea of freedom has gone everywhere in India. Independence was worked for by people more or less at the top; the freedom it brought has worked its way down. People everywhere have ideas now of who they are and what they owe themselves. The process quickened with the economic development that came after independence; what was hidden in 1962, or not easy to see, what perhaps was only in a state of becoming, has become clear. The liberation of spirit that has come to India could not come as release alone. In India, with its layer below layer of distress and cruelty, it had to come as disturbance. It had to come as rage and revolt. India was now a country of million mutinies.”

in V.S. Naipaul, India: A Million Mutinies Now (London, UK: Quality Paperbacks, 1990), 517.

7. Subrata Mitra, Politics in India: Structure, Process and Policy (London, UK: Routledge, 2017), 201, calculated from the World Bank, http://data.worldbank.Org/indicator. June 1, 2016.

8. Subrata Mitra, “Four Events in Search of a Theory: Democracy and the Challenge of globalization in India,” Baden-Wuerttemberg Kolloquium, edited by Hans-Georg Bohle (Stuttgart, Germany: Hanz Steiner Verlag, 2000), 35.

9. Commenting on the findings, Suri reported: “The belief that there is a consensus on the core reform policies among the middle classes has not been supported by this survey. On the contrary, more than two-thirds of high professional felt that there should be ceilings on property; a majority of them disagreed with the policy to reduce the number of government employees, handing over or selling the public sector enterprises and business to the private sector, and the unfettered entry of foreign companies.” in K.C. Suri, “Democracy, Economic Reforms and Election Results in India,” Economic and Political Weekly 39, no. 51 (December 18–24, 2004), 47.

10. file:///C:/Users/SUBRAT~1.MIT/AppData/Local/Temp/NES%202014_All%20India%20Questionnaire.pdf.

11. I do not have the necessary access to know which social groups the naysayers to globalization come from, but it would be interesting to see how much empirical support there is to Sinha’s strong assertion of growing social support from the beneficiaries of the new economy. Whether this will translate into political support for globalization is not obvious. The same survey of 2014 reveals surprisingly strong support for holding employers responsible for employees’ welfare regardless of performance of their companies. Over 62 percent support the assertion. “Employers should be responsible for taking care of their workers even when their business is not doing well,” whereas only 11 percent oppose this statement.

12. See Note 6. The rage he dissects are reminiscent of his earlier books: V S Naipaul, India: An Area of Darkness (London: Andre Deutsch; 1964)V S Naipaul, India: A Wounded Civilisation (New York: Alfred Knopf; 1977).

13. Among the industrialists and business classes, there were important sections which feared decimation at the hands of foreign capital leading to influential industrialists like Rahul Bajaj, Nusli Wadia, Jamshed Godrej, Hari Shankar Singhania, C.K. Birla, and Lalit Thapar, among others, forming the “Bombay Club.” Even the Confederation of Indian Industry, after its first flush of enthusiastic welcome to these new policies, had its moment of unease in the mid-1990s, accusing foreign companies in India of predatory policies, providing obsolete technology and trying to muscle out their Indian partners.

14. Malcolm Gladwell defines tipping point as, “the moment of critical mass, the threshold, the boiling point,” in his The Tipping Point: How Little Things Can Make a Big Difference (New York, NY: Little, Brown, 2000), 12. For an application of the idea, see Rahul Mukherji, “Ideas, Interests, and the Tipping Point: Economic Change in India,” Review of International Political Economy 20 (2013); Rahul Mukherji, Globalization of Deregulation: Ideas, Interests, and Institutional Change in India, (New Delhi, India: Oxford University Press, 2014).

15. Stephen Cohen, India: Emerging Power (Washington, DC: Brookings Institution, 2001), 2.

16. This can be seen in terms of two connected arguments. First, in spite of its regular participation in elections, the BJP is “encapsulated” rather than “integrated” in the political system. It is still not seen as a legitimate member of India’s party family. Broad coalitions, with the sole purpose of defeating the BJP have become a regular feature of elections over the recent past. Secondly, there is a clear divide between the urban-professional-big business interests and the small-business elements within the party, with lukewarm support for globalization. See my paper, “Encapsulation without Integration? Electoral Democracy and the Ambivalent Moderation of Hindu Nationalism in India,” Studies in Indian Politics 4, no. 1 (2016): 90–101.

17. The crisis of globalization is more than merely a malaise of the Western Civilization. Sooner or later, the neo-globalism led by China (for instance in the form of Belt and Road Initiative) will be subject to the same political issues that the old globalization generated. This is because capitalism with a Chinese face, even when protected by a Communist Party, is still global capitalism, driven by the logic of profit maximization, de-localization, and environmental degradation in vulnerable societies.