The politics of business in India

The articles in the book narrate a fascinating and complex tale of the business class’ growing power

There is near unanimity among both scholars and the media that the power of the business class has grown exponentially since the 1991 reforms. But crucially the role of the state has not diminished.

The editors of this volume Christophe Jaffrelot, Atul Kohli and Kanta Murali present a set of articles written largely by academics who dissect the relationship between the business class and the state. India was endowed with a fairly well-established business class at the time of independence. Contrary to popular perceptions, the editors state that, “The socialist state of the past, say between 1950 and 1980, was never deeply anti-business”.

The nine articles in the volume discuss a range of issues including land and labour laws, urban governance, the media industry and also States’ experiences.

Both Kanta Murali and Aseema Sinha in their articles say that the legislative influence of business class has grown rapidly since 1991.

The dismantling of the licence-permit raj, Murali says, led to a bigger play by the private sector and a greater role for States as they competed with each other for attracting investments.

But despite the investors driving a hard bargain for favourable terms, she argues that “the influence of capital is not hegemonic”. The still large number of poor whose interests often diverge from that of the business class keeps a check on the power of business.

Aseema Sinha in her paper calls India a porous state that pursues “both development and patronage” and where the boundaries are “blurred”. Politicians are also increasingly becoming businessmen as that helps them fund their poll campaigns.

Sinha’s data show “a fascinating picture of subtle and invisible ways in which political and business actors are interacting together within institutions of a democratic development state”. This process has had both pluses and minuses where serious conflicts of interests impacting public welfare contrasts with better regulation as a result of greater cooperation with the business class. Sinha cites the example of SEBI which benefited from business representation. The downside is businessmen milking public sector banks thanks to their political connections.

The land-labour conundrum

Rina Agarwala and Rob Jenkins in their papers discuss two crucial issues which are vital for investments – labour and land. Agarwala discusses the tortuous journey of labour reforms have taken over the last two decades. The demand for labour reforms – which basically boils down to easier hiring and firing rules – has been vigorously pursued by the business class and vehemently opposed by the unions. There is also a growing perception that India’s “jobless growth” phenomenon is tied to its restrictive labour laws.

Agarwala argues how the government pursued labour reforms by stealth as it could ill afford to antagonise organised labour. It gave States a free hand in tinkering with labour laws. Also the Centre deftly used the vast reservoir of unorganised labour to check the power of organised labour. This led to the phenomenal growth of (informal-regular workers) contract labour in the manufacturing sector, which now forms half the workforce.

Agarwala’s conclusion is that, “the Indian state is using informal labour to organise mass consent for undermining labour’s 20th century gains and empowering large business while still retaining its democratic legitimacy”.

The many twists and turns of reforming the land acquisition Act to facilitate easier acquisition for industry and fair compensation to people is analysed by Rob Jenkins. The UPA in its last days enacted a Land Acquisition, Rehabilitation and Resettlement Act 2013 over vociferous opposition from the business class and some States. The Modi government in 2014 promised to overhaul this Act but soon ran into problems, leading to increasing rumblings from the business class. States – Rajasthan Gujarat and Tamil Nadu – passed legislation that substantially diluted the provisions of the Act. Tamil Nadu’s experience with land acquisition for industry has come in for much appreciation even from bodies such as the NITI Aayog.

Jenkins concludes that though the business class is now better poised to influence land acquisition laws there is also greater opposition movements who challenge its power.

In the next paper, Heller, Mukhopadhyay and Walton analyse the challenges of inclusive development in Indian cities and study the divergent trajectories of three cities – Delhi, Bengaluru and Mumbai. They argue that the business elite have had little interest in influencing governance of cities and despite the efforts of groups such as the Bangalore Agenda Task Force and Bombay First. They conclude that “India’s cities have been dominated by cabals of selective business interests and politicians that are partially countervailed by the need to maintain electoral support from middle- and lower-class groups”.

The media explosion

Rammanohar Reddy charts the growth of the media sector in the post-liberalisation period which has seen a virtual explosion in the number of newspapers and TV channels. The media sector vastly benefited from the 1991 reforms and the emergence of the consumer economy. The heavy reliance on advertising revenues has resulted in most sections of the media supporting policies that support more growth.

But Reddy argues that despite the “commoditification” of news and greater “tabloidisation”, the Indian media has been “far from consistently frivolous or deferential to the state”. The changes taken place in the media sector over the last three decades broadly mirror the changes take place in politics and society.

The last the section of the book contains three papers where its authors have dissected the ties between the business and political class in three States – Gujarat, Tamil Nadu and Odisha. In Gujarat, Christophe Jaffrelot traces the State’s path when it had a sizeable small and medium scale industries in the 1970s and 80s to its tilt towards big business especially during the Modi regime.

Gujarat under Modi earned the enviable tag of being the most industry-friendly State in India.

But the flip side to this was loss of revenues due to the various tax breaks and the growing indebtedness of Gujarat, which also impacted spending on social sector.

John Harriss and Andrew Wyatt in their paper wonder whether instead of the much storied Gujarat model there should be a Tamil Nadu model – for having successfully combined high economic growth and social development. They argue that the States Dravidian politics resembles “Bonapartism”. From the 1990s both the Dravidian parties successfully attracted investments from global and domestic companies. But the growing opinion is that the State has been losing ground to neighbours such as Andhra Pradesh and Telangana in recent years. But the State’s combining of pro-poor policies (rather derisively dismissed as freebies) and industrial development makes it a unique model.

Sunila Kale argues that though Odisha relied on its huge mineral reserves to foster industrial growth, the growth delivered was not translated into overall welfare and development.

The editors conclude that though the power of the business class has risen phenomenally since 1991, the state also is not a “hand maiden” of the business class.

Though all political parties today are business-friendly and swear by growth, there is also a growing realisation that growth by itself cannot solve everything and PM-Kisan and NYAY schemes are proof of the fact.

This interesting collection of papers lays bare the fascinating and complex web of relations between business and politics.