Special Lecture 2

The special lecture II was chaired by Navin Verma (Principal Secretary, Dept. of Industries, Govt. of Bihar). The speaker, Mritunjoy Mohanty (Indian Institute of Management Kolkata) presented his work on ‘Growth and Institutional Evolution in India: a Political Economy view’. The aim of the paper was to explore how industrial evolution in India has been both intentional (as the result of policy reform) and unintentional and unanticipated (as the result contestation, structural features and the conjuncture) and how this may shape future growth trajectories. He emphasized that the reforms of the 1990s were urban biased and that even though they were successful in integrating India into the global economy, there is hardly any R & D in the manufacturing sector. According to him, the unintended reforms included improper implementation of the Land Reforms Act and Forest Rights Act) by the state and bureaucracy. He concluded by saying that India needs to address the growing current account deficit; therefore ability to produce capital goods, the agrarian crisis for the sustainability of small farmers and class mobility before embarking on a new growth trajectory.

Navin Verma noted three key observations. Firstly, he agreed that when the land reforms were introduced in Bihar, they were only on paper and not implemented successfully. Secondly, he concurred that although that there is less focus on R & D in the manufacturing sector, India benefits from globalisation by getting access to cheap services as a result. He quoted the example of telecommunication services in India and how calling rates and data services are amongst the cheapest in the world. Finally, he clarified that in his experience, the Indian bureaucracy is not against any Act and he doesn’t believe that they have purposely hindered the implementation of the Forest Rights Act.

The Q & A session included important remarks, firstly, that to increase indigenous capacity, there should be a smaller public sector focused on doing things that the private sector cannot do. Another participant remarked that although public sector enterprises may be successful, they are a huge burden on the fiscal deficit of the country and the revenues they generate may not balance out in the long run, hence private sector participation should be encouraged in India vis-à-vis the public sector.

By Noopur Abhishek, Country Economist, IGC India-Central