'Market Reforms, Democracy and Growth', paper written for the Centre for the Development of Entrepreneurship, Johannesburg.

Market reforms, democracy and economic growth:

 India after 1991

Pulapre Balakrishnan

 

Abstract: This paper addresses the interface between market liberalisation and social justice in India. Social justice itself is interpreted as “the expansion of opportunities to more and more people with respect to economic, educational and social development”. Not only is this in consonance with the idea of justice contained in the terms of reference for this study but it is also intuitive, capacious and amenable to realisation through policy. In the context of a growing economy this definition of justice anticipates the criterion of ‘inclusive growth’, i.e., how widespread are the benefits of growth in terms of the economic opportunities being made available. Evidence of the concern on the part of India’s political class that satisfaction of this criterion is important may be seen in the centrality given to inclusive growth in the agenda of the Congress Party, which currently governs India, and in the political discourse in the country more generally today. In a democracy, a political party’s tacit understanding of its mandate may be gauged by the social policy measures it promotes. The extent to which the measures pursued by the government of the day have had success will of course be investigated by us. But we would also be interested in ascertaining whether these measures are by themselves sufficient to achieve inclusive growth. As the overall stance of policy in India for close to two decades by now is mainly one of liberalisation, our investigation may therefore be expected to shed light on “the interface between market liberalisation and social justice”.[1]

            The paper is arranged as follows. First, it reviews developments in India since 1991, addressing two questions, namely, whether market liberalisation has resulted in what its proponents had claimed for it and the extent to which the objective of social justice, defined as above, has been served. Next, it considers how the nation’s political class has shaped the public’s perception of how social justice is to be addressed. Third, it discusses appropriate criteria for judging whether growth is inclusive and proposes a strategy for attaining such growth. It concludes by characterising the nature of the challenge faced by the project of advancing social inclusion in India today. 




[1] See the terms of reference for this study paper.