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A Political Economy Reading of India’s Growth Experience, 1993-2013

Boom and Bust?

India's post-reform growth experience can be separated into three distinct growth episodes. The first growth episode was from 1993 to 2002 and was characterised by a set of predictable informal relationships ("ordered deals") between political and economic elites, which were relatively open as well. The second episode was from 2002 to 2010, and deals in this period became increasingly closed, leading to negative feedback effects along with structural retrogression of the economy. The third episode, beginning in 2011, was one of an incipient growth deceleration, and was characterised by increasingly disordered deals. This paper argues that this deceleration is the outcome of two separate phenomena: (1) increasing political delegitimation of the growth process that was seen as highly predatory and corruption-intensive; and (2) the pushback from accountability institutions in the post-2010 period. For growth to return, more than economic reforms or infrastructure spending, it is necessary for a realignment of the relationships between political and economic elites and between elites and non-elites such that there is a return to "open ordered deals".

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