Rahul Mukherji

Ideas, interests, and the tipping point: Economic change in India

ABSTRACT This paper makes the case for a ‘tipping point’ model for understanding economic change in India. This gradual and largely endogenously driven path calls for the simultaneous consideration of ideas and politics. Exogenous shocks affected economic policy, but did not determine the course of economic history in India. Indias developmental model evolved out of new ideas Indian technocrats developed based on events they observed in India and other parts of the world. A historical case for the ‘tipping point’ model is made by comparing two severe balance of payments crises India faced in 1966 and 1991. In 1966, when the weight of ideas and politics in India favored state-led import substitution, Washington could not coerce New Delhi to accept deregulation and globalization. In 1991, on the other hand, when Indian technocrats’ ideas favoured deregulation and globalization, the executive–technocratic team engineered a silent revolution in the policy paradigm. New Delhi engaged constructively with Washington, making a virtue of the necessity of IMF conditions, and implemented a home-grown reform program that laid the foundations for rapid economic growth in worlds most populous and tumultuous democracy.

Managing Competition: Politics and the Building of Independent Regulatory Institutions

Why has India’s telecom regulator been more successful than its power sector regulator in managing competition and reducing tariffs? Both were infrastructure sectors that required foreign investment for development in the context of capital scarcity. The regulator was supposed to stand as a neutral umpire between private and state capital, creating a level playing field for private capital in sectors that had been dominated by the state. Private capital, both foreign and domestic, was also to contribute to developing these sectors by increasing the level of competition and efficiency, resulting in lower tariffs to the consumer. This paper argues that, while reforming power tariffs presented more political obstacles than did regulating telecom pricing, this does not fully explain the divergent outcomes in the two sectors. Instead, two other factors were important: (1) the role (and origin) of ideas in policy making, and (2) the federal institutional structure. The Telecom Regulatory Authority of India (TRAI) emerged as a result of ideational changes within the Prime Minister’s Office (PMO) that favored regulated competition. There was a consensus among key technocrats that private participation was essential in order to develop the robust telecom infrastructure required for promoting India’s competitiveness in the global market. Much less was achieved in the power sector in terms of promoting competition prior to the balance of payments crisis in 1991. The World Bank’s initiative and guidance were more important in this sector. Second, unlike telecommunications, the management of which is controlled by the central government, power is a sector for which

Interests, Wireless Technology, and Institutional Change: From Government Monopoly to Regulated Competition in Indian Telecommunications

This paper explores the causes behind the institutional change that promoted regulated private-sector competition in Indias booming telecommunications sector This change occurred incrementally by resolving conflicts of interest driven by the twin engines of fiscal crisis and technological change in cellular tel ephony. The Prime Ministers Office and the Ministry of Finance pushed for the change, whereas the Department of Telecommunications resisted it. As private participation succeeded, the relationship between the private sector and govern ment financial organizations made a significant impact on parts of the govern ment that favored change. Cellular technology offered the private sector with a first-movers advantage because it had gambled on it when government-owned corporations had ignored its commercial potential. Evolutionary change occurred through a process of institutional layering that involved establishing new institutions along the edges of old ones and allowing them to grow differen tially. The pace of institutional change accelerated in times of financial crises when the mismatch between policy intention and institutions led to a withdrawal of private investment.

Globalization and deregulation : ideas, interests, and institutional change in India

List of Tables Acknowledgements List of Abbreviations Introduction 1: Ideas, Interests, and the Tipping Point: Understanding Economic Change in India 2: Globalization Aborted-1966 3: The Path to Economic Globalization and Competitiveness, 1975-1991 4: Institutional Change and Competitiveness: The Boom in Telecommunications 5: Reforms Challenged: The Power Sector in Andhra Pradesh Conclusion Bibliography Index About the Author

The Politics of Telecommunications Regulation: State-Industry Alliance Favouring Foreign Investment in India

Abstract This paper explores the political economy of three significant policy decisions of the Congress–United Progressive Alliance government between November 2005 and February 2006. These decisions improved the regulatory incentives for the smaller and efficient firms in the Indian GSM industry, which were heavily dependent on foreign investment for their expansion. Indias telecommunications sector became more attractive to foreign investors as a result of these regulatory changes. This was a notable departure from the past when government policy had favoured large domestic investors using CDMA technology who were not dependent on foreign capital. A globalisation friendly policy change occurred after a Centre-Left United Progressive Alliance coalition came to power. The paper argues that these decisions, which promoted both competition and foreign investment, occurred due to the increased sensitivity of the Department of Telecommunications towards the needs of the relatively smaller GSM service providers, driven by considerations of efficiency. They were not driven by a crisis of private investment, foreign pressure, or stealth. The shift occurred in normal times when the Department of Telecommunications under a persistent ministerial stewardship took on a regulator, which was less interested in engineering this shift. This globalisation-friendly strategy depended to a large extent on the particular industrial sub-sector that the ruling party or coalition supported for spreading telecommunications in India.

The Political Economy of India's Economic Reforms

This paper analyzes the history of the relationship between the state and the private sector in India. It concludes that Indias economic reforms, which made development policy more dependent on international trade and private initiative, depended on the evolution of technocratic and political conviction. Reformers needed the support of financial crises for overcoming the powerful vested interests opposed to reforms. Successful reforms involved largely homegrown strategies of policy and institutional change. They have produced impressive growth rates and have benefited the rich and the middle class. The challenge for development and sustainable reforms is to make it more inclusive for poor farmers and unorganized workers.

India’s Shifting Trade Policy: South Asia and Beyond

Since 1991, India’s economy has undergone a remarkable transformation. Moving away from years of inward-looking economic policies, it has become a significant force in the global political economy. This chapter focuses on the evolution of India’s new economic policies, particularly in trade, within the context of the larger transformation of Asia’s economic and security architecture after the Cold War.

Globalization and the Politics of International Corporate Taxation: A View From India

Information and communications technology (ICT) has enabled corporations to use offshore facilities for outsourcing commercial activities. This has expanded service trade significantly but poses challenges for tax authorities. India’s service trade has benefited enormously from the information communications technology revolution. Yet, digitization-driven global economic integration raises questions about a poor country’s ability to tax this growing commerce in the context of the political economy of rules governing international taxation. There is no international organization governing international corporate taxation. To address this problem of global governance, the World Bank, the International Monetary Fund (IMF), and the Organization for Economic Cooperation and Development (OECD) have initiated an International Dialogue on Taxation to lend policy coherence at the global level. The international taxation of business profits has received some attention among economists and tax experts, but students of international political economy have shown little engagement with this issue area. A few political scientists have pointed out that digitizationdriven globalization made it tough for sovereign states to tax corporations, since commerce became increasingly transnationalized. Such transnational problems, they argued, merited transnational solutions. This article stresses the transnational nature of the problem, and suggests a typology of state interests, which will shape the political economy of rules governing international corporate taxation. These interests can be understood in terms of capital abundance and capital scarcity within different countries. It will argue that residence-based rules will favor capital-abundant countries while source-based rules

India and South Asian security

The South Asian region has witnessed a high level of insecurity ever since the region became independent from colonial rule. This condition has persisted even after the end of the cold war. Our paper looks at the Indian threat perceptions, the Indian responses to such threat perceptions, and, the effects of the Indian response. The three principal sources of Indian threat perceptions have been Pakistan, China, and domestic insurgent groups. This paper con tends that the principle problem in Indo-Pakistan relations has been the problem of security dilemma, a condition where the increase in the security of a country, arouses fear in the hearts of its adversaries, thereby leading to a reduction in its security.

State Capacity and Welfare Politics in India: Implementing the Mahatma Gandhi National Rural Employment Guarantee Scheme in Undivided Andhra Pradesh

This article argues that the Indian state can develop the capacity to deliver economic rights in a citizen-friendly way, despite serious challenges posed by patronage politics and clientelism. Clientelistic politics reveals why the Indian state fails to deliver the basic rights such as the right to work, health and education. We argue that the ability of the state to deliver owes a lot to bureaucratic puzzling and political powering over developmental ideas in a path-dependent way. We combine powering and puzzling within the state to argue the case for how these ideas tip after they have gained a fair amount of traction within the state. We test the powering and puzzling leading to a tipping point model on the implementation of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in undivided Andhra Pradesh (AP). How and why did undivided AP develop the capacity to make reach employment to the rural poor, when many other states failed to implement the right to work in India?