Milan Vaishnav is the director of the South Asia Program at the Carnegie Endowment for International Peace. He is the author of When Crime Pays: Money and Muscle in Indian Politics (“When Crime Pays: Money and Brutality in Indian Politics”, untranslated, HarperCollins, 2017).
Historically, what have been the links between the business world and the political world in India?
We have long had the impression that there was a clear break between the pre-liberalization period and the post-liberalization period. According to this narrative, before 1991, the state was very powerful and significantly constrained the ability of the private sector to grow and create jobs. The only way to prosper was to work with the state. We tend to think that 1991 marks the end of the so-called “License Raj”. [cette troisième voix entre communisme et libéralisme qui obligeait les entreprises privées à demander l’autorisation de l’Etat pour procéder à tout investissement nouveau] and the start of liberalization.
Today, it is clear that this story, which we have told ourselves and which India has told to the world, is very simplistic. In reality, the state and bureaucrats continued to play a critical role in shaping the private sector and its functioning. Even after liberalization, the state decided which firms would enter the newly liberalized sectors, which firms would benefit from state-provided inputs, and how reregulation would take place.
What are the consequences ?
For politicians, there are many opportunities to favor a select handful of companies. Opening up to foreign competition creates winners and losers, and often the latter are the domestic players. Politicians are therefore tempted to use their power to create an unfair playing field that favors Indian companies. This also has the effect of great concentration: the five largest Indian conglomerates present in industry have grown massively in recent decades and their tentacles extend into many areas of the economy.
Did the coming to power in 2014 of Indian Prime Minister, Narendra Modi, change the situation?
There has always been a very close relationship between the Indian state and private capital. This relationship has taken new forms, but it has not been abolished. The favored industrialist has changed, the politicians have changed, the form of relations has changed, this is not a new story but a new phase of a very old story.
You have 35% of this article left to read. The rest is reserved for subscribers.