State, Business, and Economic Growth in India

For the past 25 years, India’s economy has grown at an average rate of nearly 6% annually. The widely embraced argument that this growth acceleration results from the Indian state’s adoption of a pro-market strategy is inadequate for two reasons: the higher growth rate began a full decade before the liberalizing 2reforms in 1991; and post-1991 industrial growth has not accelerated. Instead, India’s economy has grown briskly because the Indian state has prioritized growth since about 1980, and slowly embraced Indian capital as its main ruling ally. This pro-business growth strategy is likely to have adverse distributional and political consequences.