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Opinion | Niti Aayog wants to make India a development state, but it's a tall order

Development states are able to rise above powerful sectional and vested interests. Unfortunately in India, governments have, time and again, meekly surrendered to populist pressures.

December 24, 2018 / 12:52 PM IST
Niti Aayog

Niti Aayog

Niti Aayog’s ‘Strategy for New India@75’ document lists an impressive number of objectives, ranging from a GDP growth rate of 9-10 percent by 2022-23 to organizing women into professional groups/guilds in order to improve their bargaining power to breeding indigenous cattle with exotic breeds.

It adds to the avalanche of prescriptions on what needs to be done for India’s development churned out by numerous committees, think tanks, government departments, economic surveys, research papers et al. One could be excused for thinking that to anyone remotely interested in these matters, what needs to be done should by now be abundantly clear. The challenge, of course, is to do it.

Is there a common theme on which the Niti Aayog document is based? Well, one interesting theme, perhaps its central vision, is the transformation of India into a ‘development state’. It says right up front: ‘The Prime Minister has focused on putting in place a ‘development state’ in place of the ‘soft state’ that this government had inherited.’ The phrase ‘development state’ occurs three times in the preface to the policy document.

What exactly is a ‘development state’? Simply put, it is the hugely successful model of state-directed development seen in the East Asian countries, many of which went from poverty to prosperity within a generation or two. The government plays a big role in this transformation, putting in place the policies needed for rapid capital accumulation and in guiding the private sector to achieve the objectives set by the state. It is in contrast to the free-wheeling capitalism of the US or the UK.

Well, the state has always been the Big Brother in India’s economic development, with disastrous results. The objective this time is to follow the East Asian model to make India into a hard state, a state than can ensure that its policies are enforced, rather than a soft state, where governments are incapable of pursuing policies because of resistance from the people or vested interests, or simply because the state lacks the capability and resources to do so.

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India has for long been criticised as a soft state because it is unable to enforce its rules -- the massive growth of ‘black money’ is one egregious example.

The present government’s attempts to enforce discipline through the Bankruptcy law, through cleaning up the real estate sector, through the Benami properties law, through raising the tax to GDP ratio by implementing the Goods & Services tax are all examples of trying to become a hard state. The Prime Minister’s admiration for the Chinese model of development is no secret.

One crucial feature of a development state is that it is able to rise above the powerful sectional and vested interests in the nation. Unfortunately, as has been seen time and again, governments in India have meekly surrendered to populist pressures, especially when elections are near. This has been underlined most recently in the desperate competition to waive farm loans.

How were the East Asian nations able to become development states where others failed?

One, they had social cohesiveness -- the image of Koreans lining up to give their gold to the government during the Asian crisis is a particularly telling one. They did not have the differences of language or caste or creed that India has.

Secondly, they developed using a model of export-led growth. That option has become much more difficult in today’s increasingly protectionist world.

Most importantly, they all developed under authoritarian rule. As the economist Hugo Radice said, “The authoritarian character of the state ensures that competing interests based on class, class fraction or sector are subordinated to the state’s goals, which are presented as largely determined by the requirements of industrialisation and technological change.”

Authoritarian regimes are able to put down challenges with repressive measures to ensure that the all-important task of capital accumulation continues unhindered. The answer to the question of how China did it is a simple one: their model is one of authoritarian state-led capitalism.

The sociologist Immanuel Wallerstein said that “… the essential problem of development can be posed as follows: how is it possible to install and maintain in state power a regime with the will and the possibility to transform the social structure in a way that would make possible a dramatic rise in productivity and investment …”

That is the question that all democratic societies have to ask themselves. It is far from certain whether there is an answer.
Manas Chakravarty
first published: Dec 24, 2018 10:17 am

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