Political Regimes and Social Institutions: Understanding Diversity of Capitalism in India

Arumugam, Kalaiyarasan (2016). 'Political Regimes and Social Institutions: Understanding Diversity of Capitalism in India' Paper presented at the annual conference of the HDCA, Tokyo 2016.


abstract
Economic and political processes differ widely across the states in India. Some Indian states have seen rapid economic growth and development while others are facing economic stagnation. Such differences in performance are being attributed to the nature of state level political regimes and their role in shaping policies of economic growth and distribution (Harriss 1999).  Capital tends to draw upon regional and local institutions to sustain accumulation (Crouch and Streek 1997). 
Human choices are shaped and constrained by socio-economic institutions. Caste is one such institution that shapes economic outcomes in India (Deshpandey 2011). Caste as a category of social identity thus works both to facilitate as well as to limit the scope of freedom of individuals. As Sen argues that economic development lies in enhancing human freedoms or capabilities. The process development makes changes in institutional arrangements (caste).   Those who were restricted by caste norms see now an enhanced freedom in their lives. The newly attained freedom facilitates further change in social arrangements, economic opportunities and political regimes.
The paper examines the interaction of political regimes and social institutions at the sub-national level in India through a comparative study of three states, namely Gujarat, Tamil Nadu and West Bengal. Each state represents a distinct political regime, shaped by specific mobilizations of class and caste in India. According to John Harriss (1999), the political regimes of Tamil Nadu and West Bengal are dominated by lower castes and classes, albeit in different ways. In contrast, politics and the policy regime in Gujarat have for decades been dominated by caste elites. Gujarat state has aggressively pursued policies of economic reform. Such policies have generated considerable economic growth in the State (Bhagwati and Panagaria 2013). Gujarat is, therefore, hailed as a model for other states. However, the social outcomes have been far from satisfactory (Sen and Dreze 2013).
This paper addresses broadly three questions:
 
In what ways do political regimes account for the differences in economic outcomes across the states in India?
 
How do social and political mobilizations shape political regimes that account for differences in economic policy formulations?
 
How does caste-based mobilization from below enhance freedoms and choices and shape the policy regimes in India?
 
The paper stands to make two key contributions. In recent times, there has been resurgence of studies understanding the achievements of states in delivering growth and distribution. These studies do not, however, account for the variation in the trajectories of development and economic outcomes at sub-national levels. The paper addresses this gap in India, given its socio-cultural diversity. Further, in economics, the analysis of ‘caste’ has so far been confined to the study of economic discrimination and disparities at micro-level. As this paper argues, caste also functions as a vector of political mobilization and collective action, and consequently shapes the regional trajectory of development. The existing literature on economics of caste does not account for the interaction of caste and regional dynamics, which sets the path for development at sub-national level in India.
 
Methodology
This paper looks at the micro-level dynamics and assesses how local political dynamics shape the economic processes of these three states.  The paper uses the term ‘political regime,’ as Harriss (1999) does, to imply the balance of caste and class power in a particular state.  The paper uses the framework of political economy, which recognizes the interplay of political factors on economic policies and their distributional outcomes. The framework will also explore the differences in political regimes and the consequent differences in economic outcomes. The paper thus explores the political mediation in economic process. The literatures on the economics of institutions are used to explicate the role of caste in Institutional change.  Changes in Institutions enhance freedoms and choices for individuals. The layers of caste and political mediation in each state help understand the specific trajectory of economic development in these regions.
 
Data Sources
To understand economic growth across states, the study will use Gross State Domestic Product (GSDP) data provided by the Central Statistical Organisation (CSO).  Various rounds of the National Sample Surveys data are used to understand the variations in development indicators in the selected states. National Election Survey (NES) is used to understand the social base of voting behaviour, political participation of different social groups, and their attitude towards political and social institutions.
 
 

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