STATE POLTICS IN INDIA SEM 3 ENG BA HONS

STATE
POLITICS
IN INDIA
B.A. (HONS.) POLITICAL SCIENCE
SEMESTER-III
DISCIPLINE SPECIFIC ELECTIVE (DSE)
DEPARTMENT OF DISTANCE AND CONTINUING EDUCATION

UNIVERSITY OF DELHI
State Politics in India
Editorial Board
Dr. Shakti Pradayani Rout
Dr. Shambhu Nath Dubey
Dr. Mangal Deo
Content Writers
Dr. Garima Sharma, Dr. Mangal Deo
Anirudh Yadav, Dr. Rajesh Kumar,
Dr. Ram Bilash Yadav
Content Reviewer from the DDCE/COL/SOL

Dr. Mangal Deo, Rupal
Academic Coordinator
Deekshant Awasthi
© Department of Distance and Continuing Education

ISBN: 978-81-19417-90-2
1st edition: 2023
E-mail: [email protected]
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Published by:
Department of Distance and Continuing Education
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Printed by:
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© Department of Distance & Continuing Education, Campus of Open Learning,

This Study Material is duly recommended and approved in Academic Council

meeting held on 11/08/2023 Vide item no. 1015 and subsequently Executive
Council Meeting held on 25/08/2023 vide item no. 1267.
 All the lessons are written fresh according to NEP.

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SYLLABUS
Syllabus Mapping
Unit I: State Politics in India

Relevance and Frameworks of Analysis Lesson 1: Relevance and Frameworks of
Analysis
( Pages 3-18)
Unit II: States Reorganisation and Formation of States Lesson 2: State Reorganization and
Formation of States
( Pages 21-37)
Unit III: Agrarian Politics

Rise of an Agrarian Capitalist Class, Rural Markets, Land Lesson 3: Rise of an Agrarian Capitalist
Acquisition and Farmers’ Movements Class, Rural Markets, Land Acquisition and
Farmers’ Movements
(Pages 41-59)
Unit IV: Political Economy of Development and Reforms in the States

Policy, Politics, and Regional Business. Lesson 4: Political Economy of
Development and Reforms in the States
Policy, Politics, and Regional Business
(Pages 63-92)
Unit V: Electoral Politics in States

Political Parties, Leadership, and Mobilisation Lesson 5: Political Parties, Leadership and
Mobilization
(Pages 95-108)

CONTENTS
UNIT I: STATE POLITICS IN INDIA
LESSON 1 RELEVANCE AND FRAMEWORKS OF ANALYSIS 3-18
1.1 Learning Objectives

1.2 Introduction
1.3 Approaches to Studying Indian Politics
1.3.1 Institutional Approach
1.3.2 Political Economy Approach
1.3.3 Political Culture Approach
1.4 Historical Overview of State Politics in India
1.4.1 The First Phase of the Study of State Politics
1.4.2 The Second Phase of the Study of State Politics
1.4.3 The Third Phase of the Study of State Politics
1.5 Relevance of Studying State Politics in India
1.6 Concluding Observations
1.7 Summary
1.8 Self-Assessment Questions
1.9 Multiple Choice Questions
1.10 References
UNIT II: STATE REORGANIZATION AND FORMATION

OF STATES
LESSON 2 STATE REORGANIZATION AND FORMATION OF STATES 21-37
2.1 Learning Objective

2.2 Introduction
2.3 History of the Formation of the State

2.4 Merger of Princely States

2.5 Constitutional Provision for Formation and Reorganization of the State
2.6 Demand for Reorganization and Formation of New State Based on Language
2.7 How Many States Formation or Organization of New State?
2.8 Conclusion
2.10 References
UNIT III: AGRARIAN POLITICS

LESSON 3 RISE OF AN AGRARIAN CAPITALIST CLASS, RURAL MARKETS,
LAND ACQUISITION AND FARMERS’ MOVEMENTS 41-59

3.2 Introduction
3.3 Rise of an Agrarian Capitalist Class
3.4 Rural Markets
3.5 Land Acquisition
3.6 Farmers’ Movements
3.7 Conclusion
3.9 References
UNIT IV: POLITICAL ECONOMY OF DEVELOPMENT

AND REFORMS IN THE STATES
LESSON 4 POLICY, POLITICS, AND REGIONAL BUSINESS 63-92

4.2 Introduction
4.3 What is Political Economy?
4.4 The Legacy of Controls in a Self-Contained Economy: 1947-74

4.5 The Steady Development of the Liberal Momentum: 1975 -1990

4.5.1 Industry
4.5.2 Agriculture and Green Revolution
4.5.3 Human Development
4.5.4 The Experiences of a Financial Crisis
4.6 Liberal Economy: After 1991
4.6.1 Why Did Significant Reforms Occur after 1991?
4.6.2 Economic Reforms and Industrialization in India
4.6.3 Promoting Efficient Infrastructure Provision
4.7 Economic Reforms in India Under UPA-1 and UPA-2
4.8 Economic Reforms and Policy Under Modi Regimes
4.9 Conclusion
4.11 References
UNIT V: ELECTORAL POLITICS IN STATES

LESSON 5 POLITICAL PARTIES, LEADERSHIP AND MOBILIZATION 95-108

5.2 Introduction
5.3 Study of State Politics from the Perspective of Elections
5.4 First Democratic Upsurge
5.5 Second Democratic Upsurge
5.6 Third Democratic Upsurge
5.7 Conclusion
5.8 Summary
5.11 References

_JI IL
71
UNIT I: STATE POLITICS IN INDIA
LESSON 1 RELEVANCE AND FRAMEWORKS OF

ANALYSIS
Relevance and Frameworks of Analysis
LESSON 1 NOTES
RELEVANCE AND FRAMEWORKS OF ANALYSIS

Dr. Garima Sharma
(Research Scholar, Department of Political Science, DU)
Structure
1.2 Introduction
1.3 Approaches to Studying Indian Politics
1.4 Historical Overview of State Politics in India
1.4.3 The Third Phase of the Study of State Politics
1.5 Relevance of Studying State Politics in India
1.6 Concluding Observations
1.7 Summary
1.10 References
1.1 LEARNING OBJECTIVES
 This lesson will help students to introduce the sub-branch of Indian Politics.
 This lesson will try to give a comprehensive knowledge of state politics in India.
 This lesson will help students to divide centre politics and state politics.
 Students can analyze the shift in Indian politics from the lens of state politics.
 Students would be able to get to know about the classical literature on state
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politics in India. Material 3

NOTES
1.2 INTRODUCTION
Diversity makes research work on Indian democracy more engrossing among

researchers. It became necessary for researchers to study different aspects of the
political dimensions of a giant democracy like India, where national politics can be
observed along with state politics. The effect of the decentralized system can be
experienced not only at the administrative level but also at the political and economic
level, where national politics influence local politics, and the same local politics has
been observed to make remarkable changes in national politics. At the initial stage of
research work in Indian politics, state politics was analyzed only from the lens of
national politics. The main reason behind this was summarized from the dominance of
the ‘congress party’ established in national and state level politics. Over time, the
decline of the Congress system and the emergence of regional parties started the
research on state-level politics. It has been realized that the context of state-level
politics is very different from national-level politics. In the context of state politics in
India, Ashutosh Kumar (2003) believes that all the states within India present a different
picture from each other at the regional and social levels. This diversity is the main
factor for making state political research so complex for researchers. The complexity
of this diversity can be experienced only because of the heterogeneity prevailing within
a state. He presents it through the example of a large state like Uttar Pradesh. If we
want to study the regional diversity within Uttar Pradesh, then we can analyze through
its administrative units like – Rohilkhand, Purvanchal, Bundelkhand, Awadh, Upper
Doab, and Lower Doab. By studying the data, it can be found to what extent variations
exists within the state of Uttar Pradesh. In terms of customs, and conventions, these
administrative blocs of Uttar Pradesh try to influence local politics differently. Even
after this diversity prevails in state politics, we cannot isolate national politics from
state-level politics. The reason could be found in the degree of influence of each other’s
politics on every extent.
While studying state politics, two problems could be seen in front of the
researchers. The first problem is related to selecting approaches that can give a proper
orientation to the study of state politics. The second problem is to have a proper
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structure so that the politics of all the states can be analyzed by one system. The NOTES
present chapter is divided into two parts by focusing on these two problems related to
the research in state politics in India. Where in the first part, an attempt has been made
to present the justification of the institutional, economic, and cultural approaches to the
study of Indian politics, and in the second part, the changed nature of the study of state
politics at different levels has been analyzed.
1.3 APPROACHES TO STUDYING INDIAN POLITICS
Politics is generally related to ‘Power’, according to which power acts as a driving

force for all kinds of political activities. Aristotle also described in his ‘Politics’ that
‘man is by nature a political animal.’ This means that human beings can aspire to an
excellent life only in a political society. According to this statement, politics is that
moral action, whose purpose is to establish ‘just society’. Studying Indian politics
from the view of reconciling power and morality is a special and complex process.
The social, ethnic, and cultural plurality in Indian politics makes it intriguing. This plurality
can be observed at the central level as well as in the different units of India. From the
perspective of studying democracy from an inclusive point of view, it becomes necessary
to select such approaches to studying Indian politics, which can create generalized
principles within the multiplicity prevailing in the center and units.
At the initial level of research, only the study of national and village levels was
given importance in Indian politics. In such situations, the indifference towards the
politics of the state as an intermediary unit isolated the diversity of Indian politics from
the study. Therefore, while studying state politics, special attention should be given to
its nature and dynamic components and this dynamic nature of politics in India can be
analyzed through the lens of decentralization. In other words, the central and grassroots
level politics could not help us to present a holistic picture of Indian politics. This
should be seen through all three levels of politics; central, state, and grassroots levels.
Where National level politics is all about the issues concerning the nation that cover
issues from national economy to security. On the other hand, regional politics is more
about regional aspirations and grassroots-level politics is about local concerns.
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NOTES
Therefore, at the beginning, Indian politics was being studied only based on
central-level politics. It was felt over time that all three levels of politics are co-related
as well as different from each other. The new demands emerging in the states are not
only the focus of state politics but also contribute to bringing change in national-level
politics. For example, the demand for the formation of states at the linguistic level also
started to change the national level of politics at that time. However, in the first phase
of politics, due to the dominance of the congress party, state level politics was not able
to get special focus and according to the prevailing trends. It was assumed that the
public was voting only based on the party and the leadership. It was natural to observe
this assumption by looking at the popularity of the Congress party after independence
and the laxity of the opposition in the face of Nehru’s charismatic leadership, but
Yogendra Yadav believes that after party and leadership, any other factor that was
affecting the voting pattern of the voter, then it was ‘Caste.’ The impact of this becomes
visible after the period of the 1960s when the formation of caste-based parties started
to begin at the state level. Hence it was needed for time that Indian politics should be
analyzed at all levels of politics and the pattern of study of politics also see through
Self-Instructional different approaches. For a comprehensive picture of Indian politics, different
6 Material

approaches should be used by a researcher. From this point of view, three major NOTES
approaches to studying Indian politics are as below:
Institutional
Approach
Approaches
Political
to study
Economy
state
Approach
politics
Political
Culture
Approach
The institutional approach is one of the most popular approaches in the discipline of
political science. It is based on the study of Institutions. This institutional approach was
also used at the time of Aristotle when he tries to compare 158 constitutions in his
book ‘Politics’. In its initial stage, it was used to study formal rules and regulations of
an institution. This era was marked by social scientists as pre-behavioralist, where the
Institutional approach was taken as only the study of formal institutions. The common
assumption was that we cannot compare institutions with the mere example of an
organization or a group. Institutional study is all about the study of rules, law, and
proceedings. After post behavioralist, this common assumption about the Institutional
approach was shattered and a significant shift was taken place in the research of the
Institutional approach. Now it is not only about the study of formal institutions, but it
also includes informal institutions. For analyzing democratic systems, it is indeed to
study institutions that are divided into formal and informal institutions. Many scholars
try to analyze Indian politics through an Institutional approach. The study of governments
and state administrative organs at different levels are known as formal institutions like
the three main organs of the state-legislature, executive, and judiciary are common Self-Instructional
Material 7

NOTES examples of it. The study of informal institutions is all about non-governmental
organizations and groups that work separately from the mechanism of governmental
administrative organs. Although they are not a direct participant in the power-sharing
domain of the state their activities could affect the political actions of a government in
a state. Interests and pressure groups, NGOs, Social movements, and religious and
cultural institutions are some examples of informal institutions in a state. G. Hargopal in
his article ‘The Legitimacy Crisis of Indian State’ has described that democratic
governance is based on the ‘Rule of Law,’ where power is not vested in an individual
but can be seen in an Institution. Whether it is a description of the Indian state through
Liberal modernized theory by Zoya Hasan or analyzing the nature of the Indian state
from the terms like ‘soft state’ by Gunnar Myrdal, most scholars try to study through
formal institutions. There are some scholars also, who have worked on informal
institutions like Rajni Kothari’s concept of social movements as non-political
organizations.
The political economy approach is a vibrant approach to studying state politics which
analysis economic factors to understand society and politics. Since 1980, the importance
of political economy in research work has been increasing continuously. An attempt is
made to understand the relationship between politics and economy through the political
economy approach. When we study politics by relating ‘power’ and economy to
‘production,’ then we come to know that political economy is co-related to the study
of activities between ‘power and production.’ Thus, we can observe that both politics
and the economy act as driving forces for each other. On one hand, where politics
have the power to influence national production, on the other hand, national production
could change the politics of the country. Researchers have also tried to study Indian
politics from the liberal and Marxist points of view of political economy. After the
green revolution in the 1960s, an attempt was made to study the Indian economy. For
example, because of the green revolution, self-sufficiency was felt in the Indian economy,
and at the same, it divided the peasantry groups into lower-income peasantry and
capitalist peasantry. This new capitalist peasantry class within the Indian economy was
addressed by Rudolph by ‘Bullock Capitalists.’ The other change is marked by the
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entry of the Indian economy into the era of LPG- Liberalization, Privatization, and
8 Material

Globalization in 1991. Similarly, researchers studying the Indian economy from the NOTES
Marxist point of view study the process of establishing dominance over the resources
of the state by the capitalist class. In the context of the Indian Political Economy,
Devesh Kapoor presents the view that where the Indian state can be seen to conduct
tedious exercises like an election in such a vast country, on the other hand, the same
Indian state can be observed proving unable to provide the primary facilities to the
citizens. In this way, it can be observed that the political economy approach is concerned
with the study of the interaction between politics and economy. However, criticism of
the institutional approach on several grounds suggests that under its special attention is
paid only to the rules of the institutions, and in such a situation the behaviour of the
individual operating the institutions is isolated from the research.
A culture is an inclusive form of expression, thought, and belief of any society. Culture
is a comprehensive term that differs from civilization. The rise and fall of many civilizations
in the world have been continuously studied, but the culture itself has been experienced
eternally. Under the political-cultural approach, efforts are mainly made to study the
thoughts, beliefs, and attitudes of the people. In India, the political-cultural approach is
mainly used for studying the voting behaviour of voters. Understanding political-cultural
is more difficult than studying voting behaviour. It can also be used to study the political
traditions and concepts prevailing in society. For example, in 1963 Sidney Verba tried
to study the concept of ‘Civic Culture’ in five countries of the West. Similarly, many
Indian scholars have been using a political-cultural approach in the Indian context. The
concepts of nationalism, secularism, and multiculturalism are also some of examples
studying Indian politics through a cultural approach.
Approaches could be seen to look at the research problem and these above
three approaches can be used by a scholar of Indian politics to do in-depth research.
Although every approach has its limitations, but a researcher can use it according to
the need and nature of the study. For example, if the researcher is interested in analyzing
the role of the Election Commission of India, then they can opt the institutional approach,
and on the other hand, if wants to study the relationship between social class and
representation then they can opt for the political economy approach.
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NOTES
1.4 HISTORICAL OVERVIEW OF STATE POLITICS
IN INDIA
The study of electoral politics in India was started by researchers in the last phase of
the first decade of Indian politics after independence. National-level politics has always
been the focus of research, due to which it took a long time to attract the attention of
the researchers toward state-level politics. Although Mahendra Prasad (2017) believes
that even before the independence, the study of sub-units was started by the
Government of India Act of 1909 after that through the Government of India Acts of
1919 and 1935 attempts were made to study the sub-units. This act can be considered
a step toward the study of state politics only to a limited extent. After independence,
the demands for the creation of states on a linguistic basis tried to present state politics
at the center of the study of Indian politics. The process of the merger in the congress
party by the leaders related to state formation movements had worked to re-introduce
the state politics subject into national politics. The change in the position of Congress
in state-level politics 1960s and 1970s was expected to bring the study of state politics
into the mainstream, but this period was also short-lived and the Congress along with
state politics, the process of re-emergence in national politics from being established
as a dominant study. In this way, it can be observed that within the Indian research
world, it took a long period to analyze the questions related to state politics. Sudha Pai
presents in her article that the journey of study of state politics in India can be studied
by divided into three phases:
The first phase of the study of state politics by Sudha Pai is marked by the mid-1950s-
1960s. This period was a period of isolation from the point of view of the study of
state politics. In this period, the pace of research work on state politics was relatively
less than the research on national politics. The establishment of the state reorganization
commission and the demand for state formation on a linguistic basis did the work of
converting the research towards the study of state politics, but mainly efforts were
being made to analyze these activities at the level of national politics. From the point of
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10 Material

a formal-legal approach. Under this approach, only formal institutions were being NOTES
studied in the states and all those changes were separated whose efforts can be observed
in the current state politics, such as the reorganization of states, emerging leadership
within the state, merger process of regional parties into congress, etc. The main works
in the field of state politics were made by S.V. Kogekar and R. Park. For the first time,
these researchers did the task of giving a separate place to the politics of the state.
This phase marked the beginning of systematic studies on state politics in India and
according to Sudha Pai, a systematic study of state politics started after 1967 and the
credit goes to the Iqbal Narayan. However, the shifts towards the study of state politics
were started by Myron Wiener’s book on ‘state politics in India’. This book was
considered a milestone in the research area of state politics. There are mainly eight
states under this book; Uttar Pradesh, Madhya Pradesh, Maharashtra, Jammu and
Kashmir, West Bengal, Rajasthan, Andhra Pradesh, and Punjab that were studied.
This book is an attempt made by Wiener to study political stability more than political
performance. In 1976, a detailed research work was presented by Iqbal Narayan
studying the politics of twenty-two states of India to expand this series of state politics
in India. According to Sudha Pai, the main feature of this second phase was that while
it started attracting researchers towards state-centric studies, the politics of the state
came to be seen as a sub-system of Indian politics. Under these two special research
works, an attempt was made to present the changes after 1967, but in all these
discussions, national politics were being kept at the center without paying special
attention to the role and subjects of the state. An attempt has been made to present the
political changes taking place in 1967 by political scientists like Rajni Kothari in his
theorization of one-party dominance and similarly, Iqbal Narayan through his idea of
polarized pluralism but these theorizations were mainly focused on the national level
politics of India. A characteristic of this phase was that, by the 1960s, work based on
empirical research also began to take place. This was the initial phase of empirical
research, and this led to studying voting behaviour at the national level of politics.
Therefore, the nature of the research was being done mainly from the point of view of
the changes in national politics.
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Material 11

NOTES 1.4.3 The Third Phase of the Study of State Politics
Sudha Pai believes that this third phase of the study of state politics was special because
after 1970 the states got the place of a separate ‘unit of political study’. Before this
research work, states were being studied under the broad scale of national politics.
Now topics like leadership, caste, and federalism within the states were also being
given importance as part of the research that how all these factors decide the direction
of the politics of the state. According to Sudha Pai, there was no dominant method to
study state politics during this period, which she attributes to the advent of post-
behaviouralist that encouraged the scholars to use different methods instead of studying
political processes through one approach and method. After the advent of liberalism in
the 1990s, voting behaviour was studied not only to study the role of parties but also
to study the changing preferences of voters.
The study of the state politics of India is essential for analyzing the diversity of
Indian politics. Its relevance could be seen while comparing different types of institutions
and their processes. Comparison not only helps to see the similarities but also presents
the dissimilarities among them.
1.5 RELEVANCE OF STUDYING STATE POLITICS IN

INDIA
1. While studying politics at the national level research work, Indian politics is
mostly presented by researchers as an exception in the context of other
democratic political systems. Louis Tillin believes that this creates a situation of
‘false’ exceptionalism. As a researcher, we should not categorize any political
system into absolute exceptionalism. In such a situation, the study of state politics
(politics at different levels) in a country can present some dimensions that can
be present in other democratic systems and can bring out the situation of ‘false’
exceptionalism.
2. Through the study of state politics, research work can also be expanded toward
specific studies. According to Louis Tillin, the study of state politics can help to
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12 Material

other words, many times a researcher tries to create universality and isolate the NOTES
specialized study that could be necessary for the in-depth study of research. As
a researcher, we should try to avoid any absolute generalization, which can
ignore the nuances of the study.
3. The study of state politics can also enrich the area of comparative studies.
While studying national politics, we assume that it is a comprehensive study and
that the theorization from it can be appropriate to present an enlarged picture of
politics. It is a narrow study because it separates the diversity of state politics
from the study. Therefore, Louis Tillin believes that by studying each state’s
politics separately, we will be able to present a separate depiction of each state.
This will create a path for theory building properly.
4. The study of state politics can also prove to be important from the point of view
of the development of research methods. Richard Snyder believes that, through
the study of sub-national units the number of experiences and observations can
be increased. On the other hand, comparative studies can be executed at a
controlled level by a researcher.
5. According to Ashutosh Kumar, the diversity of India can be analyzed only
through intense research work on state politics. For example, the politics of the
state of Uttar Pradesh can be experienced differently from the politics of the
southern states and if try to analyze the politics within Uttar Pradesh, differences
can be seen at the administrative and linguistic levels.
6. At the practical level, the study of state politics in India can help analyze the
nature of the decentralization system in India. For example, the special provision
given to some state articles under articles 370 and 371 tries to mold the federalism
of India.
1.6 CONCLUDING OBSERVATIONS
To enrich the study of Indian politics from the point of view of research, it becomes
necessary that a proper place is given to the diversity within it. Mahendra Prasad
(2017) believes that there were four major reasons for indifference toward state politics
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in India, which are as follows: Material 13

NOTES 1. The first period after independence was known as the Nehru era, where the
influence of nationalism and independence on politics was highly prevalent. For
this reason, national politics was given importance from the point of view of
studying Indian Politics. The prevalence of nationalism and the vibrant role of
the Congress party during that time helps to establish the dominance of Congress
at national and state level politics. This leads to the study of state politics under
the umbrella of national politics.
2. The period of decline in the dominance of the Congress party in the 1960s and
1970s was not very stable. The Janta Parivar was able to hold the center only
for six months and after that India Gandhi came with more powerful sentiments
from voters. Similarly, Rajiv Gandhi also rose as a popular figure in Indian
politics. Therefore, even after having a tilt toward the non-congress party’s
formation in the states, the politics of this period were observed as centralized
by many scholars.
3. A portion of the powers and resources allocated by the Indian constitution can
also be seen mostly in the bag of the Congress party. Due to this, the resources
were being used only to strengthen the politics at the central level.
4. Even after subjects like state security was with the state but in the name of
internal security congress party often used the central security forces in the
states. This leads to reducing the autonomy of the state.
Therefore, through these reasons, it can be analyzed that the Congress party
tries to centralize the political system with the prevalence of its dominance in politics.
This directly affects the autonomy of states. After the emergency in 1975, for the first
time, a non-Congress government was formed at the center under the leadership of
Janta Parivar, but in the absence of a strong consensus among the party, it could not be
able to diminish the era of Congress dominance at that time. In the 1990s, when state-
based parties began to perform a vital role in forming coalition governments at the
center, the study of state politics at the grassroots level also attracted interest from
researchers.
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NOTES
1.7 SUMMARY
Indian politics is a vibrant and vast topic of research, and it could be studied by three
main approaches: Institutional, Political Economy, and Cultural. The lesson tries to
analyze the trajectory of state politics in India. To know the essence of Indian Politics,
we must include state politics as a separate unit of study. In the first phase of state
politics, this was taken as a part of national politics. The dominance of the Congress
party was the main reason behind the ignorance of state politics scholars. By the
second phase of the study of state politics, researchers like Myron Weiner and Iqbal
Narayan started analyzing the regional politics in the state. The third phase is known
for the separate study space of state politics in the research area. The study of state
politics not only presents a comprehensive picture of Indian politics, but it also helps to
prevent the use of the notion of ‘false exceptionalism and false universalism’.
1.8 SELF-ASSESSMENT QUESTIONS
1. Explain the various approaches through which Indian politics can be studied.
2. How can we analyze the changing discourse on the study of state politics in
India?
3. How can we present the diversity of the Indian state through a common
theorization?
4. How the study of state politics helps to enrich the study area of Indian politics?
5. How can the study of state politics be useful from the research methodology
perspective?
6. What are the reasons behind the backwardness in the research area of state
politics in India?
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NOTES
1.9 MULTIPLE CHOICE QUESTIONS
1. What was the main reason for giving importance to national politics in comparison
to state-level politics after independence?
i. Nationalism
ii. Decentralized System
iii. Dominance of the Congress Party
iv. State Re-organization Commission
2. How many states were studied under Myron Wiener’s book?
i. Five
ii. Ten
iii. Eight
iv. Six
3. Who started the study of state politics in India comprehensively?
i. Myron Weiner
ii. Iqbal Narayana
iii. Yogendra Yadav
iv. Sudha Pai
4. According to Sudha Pai, what type of research method was used by the
researcher in the first phase of the study of state politics?
i. Cultural
ii. Economic
iii. Empirical
iv. Formal and Legal
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5. According to whom can the problem of ‘false’ exceptionalism and ‘false’ NOTES
universalism be solved by studying state politics?
i. Louis Tillin
ii. Richard Snyder
iii. Ashutosh Kumar
iv. Yogendra Yadav
6. Through which approach political parties can be studied?
i. Cultural Approach
ii. Political Economy Approach
iii. Institutional Approach
iv. None of the above
7. Which of the approaches would be useful for analyzing citizens’ voting behaviour?
i. Institutional Approach
ii. Cultural Approach
iii. Political Economy Approach
iv. All the above
8. Who coined the concept of ‘Silent Voters’?
i. Yogendra Yadav
ii. Sudha Pai
iii. Sunil K Choudhary
iv. Devesh Kapoor
9. According to Sudha Pai, in which phase state politics was able to get a separate
space as a unit of study?
i. First Phase
ii. Second Phase
iii. Third Phase
iv. None of the above
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NOTES
1.10 REFERENCES
1. Kumar, Ashutosh (2003), ‘State Electoral Politics: Looking for the Larger Picture’
in Economic and Political Weekly, 38(30), pp.3145-3147.
2. ______________ (2016) ‘Introduction’ in Rethinking State Politics in India-
Regions Within Regions, Taylor, and Francis.
3. Narain, Iqbal (1965) (ed.) State Politics in India, Meenakshi Publication:
Meerut.
4. Pai, Sudha (1989) ‘Towards a Theoretical Framework for the Study of State
Politics in India: Some Observations’, The Indian Journal of Political Science,
Jan-March, Vol.50, No.1, pp. 94-109.
5. _________ (1990), ‘Regional Parties and the Emerging Pattern of Politics in
India’ in The Indian Journal of Political Science, 51(03), pp.393-415.
6. Tillin, L. (2011), ‘Reorganizing the Hindi Heartland in 2000: The Deep Regional
Politics of State Formation in Asha Sarangi and Sudha Pai (eds) Interrogating
Reorganization of States Culture, Identity, and Politics in India, Routledge:
Delhi.
7. __________ (2013) ‘National and Subnational Comparative Politics: Why,
What and How’, Studies in Indian Politics, Vol.1, No.02, pp.235-240.
8. Singh, M.P (2017) ‘Introduction’ in Himanshu Roy, M.P Singh and A.P.S
Chouhan (ed.) State Politics in India, Primus Books.
9. Synder, R. (2001) ‘Scaling Down: The Subnational Comparative Method’,
Studies in Comparative International Development, Spring 2001, Vol.36,
No.1, pp. 93-110.
10. Yadav, Yogendra (1999), ‘Electoral Politics in the Times of Change: India’s
Third Electoral System, 1989-99’ in Economic and Political Weekly, Volume-
34, pp.2393-2399.
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UNIT II: STATE REORGANIZATION AND
FORMATION OF STATES
LESSON 2 STATE REORGANIZATION AND

FORMATION OF STATES
State Reorganization and Formation of States
LESSON 2 NOTES
STATE REORGANIZATION AND FORMATION OF

STATES
Dr. Mangal Deo
(Assistant Professor, PGDAV, College, DU)
Structure
2.1 Learning Objective
2.2 Introduction
2.3 History of the Formation of the State
2.4 Merger of Princely States
2.5 Constitutional Provision for Formation and Reorganization of the State
2.6 Demand for Reorganization and Formation of New State Based on Language
2.7 How Many States Formation or Organization of New State?
2.8 Conclusion
2.10 References
2.1 LEARNING OBJECTIVE
In this lesson you will understand:

 After independence, the politics of reorganization of states and formation of
new states has been studied.
 After independence, in order of nation-building, the demand for the formation
of many new states and the process of forming new states have been studied.
 An attempt has been made to understand the politics of formation of states
related to language.
 The constitutional process of formation and reorganization of states has been
studied.
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NOTES
2.2 INTRODUCTION
Society, culture, and politics are an important part of human life. Maintaining and
preserving our culture and making it prosperous is a special quality of human beings.
This quality can be both individual and collective. Culture, whose dialect, customs,
dress-identity, history, and life values are major components, is related to the emotional
aspect of human beings and not to the logical aspect. The importance of society and
culture in human life is marked by the fact that many times a human being is ready to
sacrifice his life for the protection of his culture because culture is also the basis of
identity in any society. History has proved this. It is a witness that at the root of many
wars, the protection of culture has been the main reason, many times the main reason
for the partition of different countries like India and Pakistan and the merger of two
different countries has been the protection of culture, that is, the protection of identity.
The reason for changing the names of many states, cities or regions is also usually to
maintain their culture and identity. Many such examples are seen in the world, India is
not untouched by them. After independence, the demand for reorganization of states
and the formation of new states started in India. Initially, the basis of this was language,
which is an important component of human culture. Thus, the demand for new states
and their reorganization has a long history.
2.3 HISTORY OF THE FORMATION OF THE STATE
India is one of the few major countries of the world, where different types of diversity
are found. India, full of diversity, was divided into Bhukti, Subo i.e. provinces since
ancient times. In the ancient Buddhist text Anguttar Nikaya, where 16 Mahajanpadas
are mentioned. In the middle period, there is mention of 12 provinces during Akbar’s
reign and 21 provinces during Aurangzeb’s reign. The British government initially divided
India into four presidencies, but gradually formed provinces and reorganized some of
them according to the acquisition of princely states and administrative convenience,
which were clearly mentioned in the Act of 1919 and the Act of 1935 as provincial
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administration. Has been done the systematic beginning of provincial administration in NOTES
the modern period comes from the decline of the Mughal Empire and the advent of the
British. The present form of India in the form of a union state was the result of the
imperialist objective and administrative convenience of the British power. The division
of India into British provinces and Indian princely states during the British period was
the result of circumstances which had no logical basis.
Such areas acquired by the British Government which were directly governed
by the British were not mapped or demarcated in any rational or scientific way but
according to military, political or administrative requirements. Initially, the territories
that were included and given internal expansion were combined with one or the other
of the three major presidencies. In Madras 1801, Mumbai Presidency till 1827 and in
Bengal Presidency, new areas were added till 1865. Agra was formed as the fourth
Presidency in the Act of 1833, and in 1836 some areas to the west of Bihar were
carved out to form the North-Western Provinces, with which the Oudh region was
merged in 1856. This region was renamed the United Provinces of Agra and Oudh in
1877. Was given what is today known as Uttar Pradesh.
This proves that the formation of provinces by the British was being done keeping
in mind the issues related to administrative convenience, economy and military strategy
and security, and not based on regional aspirations. But the British policy was changed
due to the nationalist elements that emerged in the early nineteenth century, such as the
partition of Bengal in 1905, which was also cancelled in 1912. The British government
made provisions for diarchy in the provinces in the Act of 1919 and responsible
provincial government in the Act of 1935. The Act of 1935 mentions 11 British
provinces – Assam, Bengal, Bihar, Bombay, Central Provinces, Madras, Northwest
Frontier, Orissa, Punjab, Sindh, and United Provinces.
Before independence, the demand for a new state continued to arise from many
parts of the country during the British period. This issue was discussed in the annual
session of the Congress held in Calcutta in 1917. The Chelmsford Report of 1918
also recommended creation of new states on linguistic basis in India. In 1920, the
issue was reconsidered in the Nagpur session of the Congress and the All-India
Congress Committee officially accepted the demand for reorganization of states because
of language. The Congress reorganized its regional branches in 1921 based on language.
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NOTES The then Congress leadership repeated this proposal before the Simon Commission in
1927 and suggested reorganization of the states of Utkal, Andhra, Sindh, and Karnataka
on this basis.
2.4 MERGER OF PRINCELY STATES
The merger of the princely states with India was the biggest obstacle and challenge in
the process of nation building after independence. The British state developed two
types of relations with the princely states, one by complete merger of the Indian princely
states into the British Empire and the other indirect rule. Under which the British power
established supremacy over many princely states and maintained its paramountcy over
them. Thus, during the British rule in India, there were two types of provinces, the first
princely state and the second British province. At the time of partition, bringing about
600 small and big desi or tithis under one administration in India was one of the most
important tasks for the national leadership. The task was also difficult because the
Cabinet Mission Resolution and the announcement made by Prime Minister Attlee on
February 20, 1947, deferred the question of the future of the princely states. Even in
the Mountbatten Plan of June 3, 1947, there was a provision to continue the old policy
towards the Indian monarchs and to return the rights of supreme power to these
states, which gave the princely states the right to be in India or Pakistan. Join or
maintain your independence. Mohammad Ali Jinnah also supported the independence
of all the princely states after the end of British rule in his speech of 18 June, 1947.
However, during his speech on the Indian Independence Act 1947, Prime Minister
Attlee expressed the hope that all the princely states would gradually be incorporated
into one or the other of the Dominions of the British Commonwealth.
The Congress leadership and the nationalists did not agree with the proposal of
the princely states to remain independent. Some of the princely states like Bhopal,
Travancore and Hyderabad declared that they wanted to remain independent. The
merger of the princely states was possible due to Sardar Patel’s skillful leadership and
diplomacy. It could happen, but the aspirations of the three princely states of Junagadh,
Hyderabad and Jammu and Kashmir were different. In which Junagadh was included
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in India based on plebiscite on February 20, 1948 and joined India in November NOTES
1948. In this episode, on October 22, 1947, thousands of tribal Pathans crossed the
Pakistani border on Jammu and Kashmir attacked Kashmir, as a result, the king of
Kashmir sought help from India. In return on October 24, 1947, signed the agreement
to join India. In 370, it was placed in the category of special state, which was abolished
in 2019. Thus, the process of merger of the princely state was completed.
2.5 CONSTITUTIONAL PROVISION FOR

FORMATION AND REORGANIZATION OF THE
STATE
Adopting the federal and parliamentary system of India as a nation-state, the framers
of the constitution not only established residuary powers at the centre but also included
some unitary provisions for unity and integrity in view of diversity. Part One of the
Constitution of India has been described in Article-1 of the Constitution that – Bharat
is India, will be a “Union of States”. Article-2 provides that Parliament may, by law,
admit and establish new states in the Union of India on such terms and conditions as it
thinks it fits.
“According to Article-3 by the law of parliament”
 Formation of a new state by forming a new state within any state or by
joining two or more states.
 Can increase the boundary of any state.
 Can reduce the limit of any state.
 Can change the name of any state.
The Indian Union is not the result of any kind of agreement between states like
the US. For this reason, no state can secede from the union, nor can it change its
territory based on the rules laid down in the first schedule mentioned in the constitution.
On this basis it is said that India is an imperishable union of perishable states.
Parliament is the only effective force in the reorganization of the states, yet the
states have the right to keep their point regarding the change in their state area (under
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NOTES Article-3). To protect this right of theirs, a saving clause has been kept in the constitution.
On this basis, no bill can be introduced in either House of the Parliament without the
recommendation of the President. It has been clarified in Article-4 that under “Article-
2 and 3” constitution amendment under “Article 368” to the laws made for the formation
or reorganization of new states, such as for change in name, area or boundaries will
not be considered. These will not require a two-thirds majority or any special procedure,
can be passed like any ordinary law or legislation.
Parliament can change the picture of India’s states without resorting to the
complicated process of constitutional amendment. The precedent of Article 3 was
taken from section 290 of the 1935 Act, since which the British Parliament was
empowered to change the boundaries of provinces. This provision appears like Chapter
6 of the Australian Constitution. BN Rao included a provision like Section 290 related
to the Federal Constitution in the Constituent Assembly. The Federal Constitution
Committee accepted Rao’s idea with the support of a joint sub-committee of the
Federal and Provincial Constitution Committees – also known as the Linguistic
Provincial Sub-Committee. The committee included this provision in its report citing
the 1935 Act and the Constitution of Australia. But at that time, the Parliament was
required to take the consent of the legislatures of the concerned states for the formation
of a new province or change in boundaries. Finally, on the suggestion of Rao, it was
decided that the bill related to the formation of states can be presented only on the
recommendation of the President, and the opinion of only the concerned provincial
assemblies should be taken. On this basis, in the Constituent Assembly, the right to
change the formation, name, boundary of new states was given to the Central Parliament.
2.6 DEMAND FOR REORGANIZATION AND

FORMATION OF NEW STATE BASED ON
LANGUAGE
India is a country of various diversities which is also a multilingual country. According

to the data received in the 2011 census, about 600 languages were counted, in which
more than 300 languages are in common use. Language is not only linked to identity
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but also for the name of different regions language is based. For this reason, even NOTES
before independence, the demand for the determination of regions i.e. states on the
basis of languages had started and along with the freedom movement, the demand for
the formation of states on the basis of language was supported by the prominent
leaders of India. Later the same leaders were sitting on important positions in the
country’s governance. Therefore, it was only natural to raise demands related to the
formation of new states within the states based on language. After the attainment of
independence, the demand for formation of new states based on language started
arising in different parts of the country. But the partition created many serious social,
economic, political, and administrative problems before the country. Therefore, the
government gave more importance to national integration and despite being committed
to linguistic states, Nehru and other leaders put the work of drawing a new administrative
map of India on the backburner, that is, did not give priority. He realized that this work
could be put on hold for some years to come.
Before 1947, even during the British period, the demand for a new state based
on language started from different places of the country. In the context in which this
subject was discussed in the annual session of the Congress held in Kolkata in 1917.
Although Mahatma Gandhi and Bal Gangadhar Tilak were in favour of forming small
states, but the then Congress President Annie Besant opposed it. Montagu Chelmsford
Reforms 1918 also recommended formation of new states in India based on language.
In 1920, the issue was reconsidered at the Nagpur session of the Congress and the
All-India Congress Committee officially adopted the demand for creation of states
based on language. In the year 1921, the Congress restructured its regional branches
based on languages and reiterated again and again that it was determined to determine
the area of the state based on language. The then Congress leadership reiterated this
proposal before the Simon Commission in 1927 and suggested formation of Utkal,
Andhra, Sindh, and Karnataka states on this basis.
The demand for new states based on language started in India only after
independence. But the demand for new states was not expected by the national
leadership due to the challenges posed by the partition. In view of this sensitivity, the
Congress formed a three-member committee in December 1948, whose members
were “Jawaharlal Nehru, Sardar Vallabhbhai Patel, and party president Pattabhi
Sitaramayya”. This committee raised the issues of reorganization of new states on
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NOTES linguistic basis with the government as well as in the Constituent Assembly. Finally, to
solve this controversial problem by the government, the permanent chairman of the
Constituent Assembly, Dr. R. Prasad on June 17, 1948, and Justice S.K., under the
chairmanship of Dhar, a state commission was formed on the basis of language, but
this commission also expressed in its report that it made recommendations against the
reorganization of states on the basis of language.
The main responsibility of the commission was to examine and report the need
for the formation of the proposed provinces of Andhra, Karnataka, Kerala and
Maharashtra and to determine their boundaries and to assess its administrative, economic
and financial consequences in the Indian borders attached to these provinces. In
December 1948, the commission reported that it not only recommended against the
reorganization in that situation, but also rejected the demands related to the
reorganization of language-based states. The commission suggested that states should
be formed based on administrative convenience.
The Dhar Commission said emphatically that everything that strengthens
nationalism should go ahead and whatever hinders it should not be accepted. History,
geography, economy, and culture were prominent among the other elements which
were also given importance. The commission also believed that along with all these
elements, if there is linguistic harmony in the new states, it would be an added advantage.
The commission laid down certain criteria on which a linguistic area could be judged
before becoming a province. It is as follows - “Financial self-reliance, geographical
proximity, potential for future development, administrative convenience” and within
the boundaries, the consent on its formation among the people speaking the same
language means that the majority should not be imposed on the minority.
Shortly after the Dhar Commission’s report came, the Indian National Congress
in December 1948, in its session held in Jaipur, to take care of the demands of the
provinces related to the language and the context of the report of the Dhar Commission
and the problems arising after independence A committee was formed to review called
JVP, i.e., “Jawaharlal Nehru, Vallabh Bhai Patel and Pattabhi Sitaramaiya Committee”.
This was the first committee or body of the Congress in which it warned against
linguistic provinces. It said that:
 When the Congress agreed to the general principle of linguistic provinces, it
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28 Material
application of that principle.

 The first consideration should be of India’s unity; economic and security NOTES
concerns and every separatist and disruptive follower should be discouraged
to the fullest.
 Language is not only a force to unite but also a force to separate.
 The traditional policy of the Congress regarding the formation of linguistic
provinces can be implemented without deep thought and without creating
such serious administrative displacement or mutual conflicts, which can also
endanger the political and social stability of the country.
The committee believed that if the public sentiment is effective and persistent,
then the practicality of fulfilling the public demand should be examined along with their
implication and consequences. In fact, he also imposed two limits on the possible
acceptance of such demands.
 This principle should be applied, at least initially, only to specific areas on
which there is mutual agreement.
 The demands which have some strengths i.e., are effective, all such proposals
cannot be implemented at once.
The Committee suggested that the process may be initiated by the formation of
a separate Andhra. The suggestion of the committee was accepted by the Congress in
the meeting of the Congress Working Committee in April 1949 and included in the
election manifesto of 1951. It was announced that the decision regarding the creation/
reorganization of new states should ultimately be given importance to the will and
opinion of the people concerned. And along with the linguistic factor, it is also necessary
to consider other factors like economic, administrative and financial factors. The
Congress session which took place in Hyderabad in January 1953 also took the stand
that while considering the reorganization of states, all important factors should be kept
in mind, such as India’s unity, national security and defence, cultural and linguistic
affiliations, administrative facilities. Financial importance was given to the ideas and
economic progress of the states and the nation as a whole i.e. unity and national
security of the nation.
But the State Reorganisation Commission gave some suggestions regarding the
states to be reorganized. The Constituent Assembly made some efforts to implement
those suggestions and on this basis the states were divided into four categories. Self-Instructional
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NOTES Category A
There was also a provision for the formation of Legislative Assembly and Legislative
Council. Assam, Bihar, Bombay, Madhya Pradesh, Madras, Orissa, Punjab, United
Provinces and West Bengal were included in this category.
Category B
In this category, the royal princely states of the British period were included. The
Maharajas of these princely states were given the name of Raj Pramukh. In these “the
states of Central India, Cochin, Vindhya Pradesh, Rajasthan, Mysore, Saurashtra,
Hyderabad, etc. were included”.
Category C
Included the provinces governed by the Chief Commissioner and mainly included
“Ajmer, Bhopal, Bilaspur, Coorg, Delhi, Himachal Pradesh, Kutch, Manipur, Tripura,
and Cooch Behar”.
Category D
All the deep groups of Andaman-Nicobar were kept.

But the above division of states could not satisfy the public sentiment and the
demand for reorganization, which was based on language, especially in South India,
continued to arise as before. Potti Sriramulu, a noted freedom fighter, started the fast
unto death on 19 October, 1952. He died on December 16, 1952, on the 56th day of
his fast, which triggered widespread violence in the “Telugu-speaking” border of Madras
province. Riots, demonstrations, violence, and strike continued for 3 days in the entire
Andhra region. Many people also died in violence and police firing, due to which the
central government accepted the demand for the formation of Andhra Pradesh state
as a new state and finally a new state of Andhra Pradesh was formed on October 1,
1953. This was the first state based on language.
After all these developments, the public sentiment in support of the demands for
the reorganization/creation of a language-based state began to strengthen and the
spirit of agitation became more active in many areas within the country, due to which
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the government in December 1953, Fazal Ali’s “State Reorganization Commission” NOTES
was formed under the chairmanship of Fazal Ali and its other two members were K M
Panikkar and H N Kunzru. (Kunzru)
State Reorganization Commission Report – 1955
After the formation of Andhra on the basis of language, the way agitations were being
raised in different parts of India for the demands of new states and reorganization of
different states on other linguistic basis, in such a situation, the challenge before the
commission was that somehow what should be the basis of reorganization/creation,
what facts should be kept in mind and the demands for formation of which states
should be accepted. After two years of intense deliberations, in which differences
were also visible among the members regarding some states. The suggestion was
given by the commission. Based on this, the act related to state reorganization was
also passed by the Parliament.
The major recommendations of the State Reorganization Commission are as
follows:
1. The linguistic approach is a very important factor in the reorganization of
states but that is not the only factor. Along with the economic factors in
administration, proper attention should be given to other aspects as well
and issues like unity, integrity and security of the nation are also important.
2. The boundaries should be reorganized based on Telugu, Tamil, Kannada,
and Malayalam, the four major languages of South India. Reorganization
should be done based on majority of people speaking different languages
in district and taluka.
3. On this basis, the state should be reorganized in North India as well and
the 4 states (Uttar Pradesh, Bihar, Madhya Pradesh, and Rajasthan) should
be separated from the vast Hindi region. Changes should also be made in
the eastern regions.
4. Did not support the formation of a separate Sikh province, nor was it
allowed to divide Mumbai province on the basis of language, although the
commission recommended the formation of a Vidarbha province consisting
of Marathi-speaking remote districts.
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NOTES 5. The commission opposed the demand for a separate tribal state from
Assam and Bihar.
The recommendations of the commission were implemented with some
modifications. The Parliament passed the “State Reorganization Act” in November
1956, under which 6 Union Territories and 14 States were created. The main provisions
of this act were the following:
i) The Telangana region of the princely states of Hyderabad was merged
with Andhra Pradesh.
ii) A new state of Kerala was created out of the Travancore Cochin region,
consisting of the Malabar district of the old Madras Presidency.
iii) Some Kannada speaking areas of Bombay, Madras, Hyderabad and
Coorg were merged with the princely state of Mysore.
iv) Bombay State was expanded to include the princely states of Kutch and
Saurashtra as well as the Marathi speaking areas of the princely state of
Hyderabad. The Marathi-speaking Nagpur division was also included in
it.
The following state union states were formed by the “State Reorganization Act”
of 1956 –
1. Andhra
2. Assam
3. Bihar – Some areas were transferred to West Bengal.
4. By dividing Mumbai into two parts in 1960, it was divided into Maharashtra
and Gujarat.
5. Jammu and Kashmir
6. Kerala
7. Madhya Pradesh – Central India was formed by combining Vindhya
Pradesh and Bhopal state while Marathi speaking Nagpur division was
included in Mumbai province.
8. Mysore – In addition to Coorg district, the area was expanded by including
Kannada speaking areas of South Mumbai and Kannada speaking areas
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of Western Hyderabad. In 1973, the name of Mysore was changed to NOTES

Karnataka.
9. Odisha
10. Madras – The Malabar region was separated from the erstwhile Madras
princely state and included in Kerala. Kanyakumari, the southern district
from Travancore Cochin, was included in a separate Madras. In 1964,
the name of Madras was changed to Tamil Nadu.
11. Punjab-Patiala area expanded by merging East Punjab State Union.
12. Merger of Rajasthan-Ajmer, area expanded by including area from Mumbai
and Madhya Bharat state.
13. West Bengal
14. Uttar Pradesh
The commission determined the reorganization of the state by the following four
grounds, in which unity and security of the states, language and culture, ability to
implement five-year plans and financial resources and administration were prominent.
The government accepted the report with some amendments and based on this
the “State Reorganization Act 1956” was passed in the Parliament which was also
implemented on November 1, 1956. Under this, 14 states – “Andhra Pradesh, Assam,
Mumbai, Jammu and Kashmir, Kerala, Madhya Pradesh, Madras, Mysore, Orissa,
Punjab, Rajasthan, Uttar Pradesh and West Bengal,” in addition to 6 union territories
– “Andaman and Nicobar Islands, Delhi, Himachal Pradesh, Manipur, Tripura, Val
Lakshadweep” were also formed.
2.7 HOW MANY STATES FORMATION OR

ORGANIZATION OF NEW STATE?
Thus, even after the State Reorganization Act, the process of formation of states on
linguistic or regional basis did not end. Since 1956, so far 15 new states have been
formed. “Gujarat (1960), Nagaland (1963), Haryana (1966), Himachal Pradesh
(1971), Meghalaya, Manipur, Tripura (1972), Sikkim (1975), Mizoram (1986),
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NOTES Arunachal Pradesh (1987), Uttaranchal, Jharkhand, Chhattisgarh (2000) Telangana

(2014)”. Even more important is the fact that even now demands for the formation of
new states are raised from many parts of the country from time to time and such voices
become more intense after the formation of each new state. At present, the demand
for the formation of the following new states is being raised prominently.
 Harit Pradesh – The demand for creating a separate state by merging 22
districts which were mainly from western Uttar Pradesh is very old. Sometimes
in the name of Ganga Pradesh, sometimes Doab and sometimes in the name of
Harit Pradesh, this demand has been raised by various political parties mainly
Rashtriya Lok Dal. For the last 22 years, successive fasts are also going on in
these areas for the division of the High Court. A detailed analysis in this context
has been done in the fifth chapter.
 Coorg Pradesh – This region of Karnataka was till 1956 included in the
category-C of the states, which was ruled by the Chief Commissioner, Mira
kara was its capital, which was included in the Mysore State by the “State
Reorganization Act 1956”. Thus, regional political parties of Karnataka like
Takadi Party (T.P.) are demanding the formation of Coorg region in the name of
separate culture, language, and geographical conditions. The people of the
districts coming under Coorg say that they have been discriminated against for
70 years from the point of view of development. Thus, today the demand for
Coorg is not only on the basis of different languages or culture, but the aspiration
of development has become an important factor.
 Mithilanchal – In a part of Bihar, the number of people speaking Maithili
language is said to be 4 crores. To give this part a separate identity on linguistic
basis, there is a demand for the formation of a separate Mithilanchal state,
whose strongest supporter was former Bihar Chief Minister Jagannath Mishra.
Big political parties are now coming out in support of Janata Dal’s demand for
creation of Mithilanchal by separating Munger, Darbhanga, Madhubani,
Samastipur, Madhopura, Sitamarhi and Vaishali districts.
 Saurashtra – Though the demand for creation of Saurashtra by separating this
region from Gujarat has never been very vocal, now several political parties in
the state like Saurashtra Sankalp Samiti have started raising the issue. Those
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demanding Saurashtra say that this region has its own culture and traditions, NOTES
different from Gujarat, it should get the status of a separate state.
 Bundelkhand – The demand to create Bundelkhand by separating several
districts of Uttar Pradesh and Madhya Pradesh is also very old. This area is so
backward from the point of view of development that when Congress General
Secretary Rahul Gandhi visited this area, he also had to say that development of
Bundelkhand can be done only by creating a separate state. At present, the
Congress is not clarifying its stand on this demand. Movements for Bundelkhand
have been carried out only by the regional political party called Bundelkhand
Congress.
 Tulunadu – There is a demand to separate the parts of Kerala and Karnataka
where Tulu language is spoken and form a new state. People of this region say
that Tulu language is not spoken in other parts of Karnataka, hence Kerala and
this part of Karnataka are known for their distinct identity. Keeping in view of
the sentiments of the Tulu speaking people, the Government of Kerala has also
formed the Tulu Literary Academy.
 Kaushal State – There is a demand to create a skill state by carving out the
districts of the western part of Odisha. Kaushal Kranti Dal, a regional political
party, is continuously fighting for the inclusion of Sambalpur, Sandargarh, Balangir,
Sonepur, Kalahandi, Deogarh, Jharsuguda, and Angul districts in the skill state.
Kausali language is spoken in this part of Odisha.
 Greater Cooch Behar – There is also a demand in the country to make Greater
Cooch Behar by joining several parts of West Bengal. The language, culture
and customs of this region of West Bengal are different from other parts of the
state. It is also a different matter that the voice of Greater Cooch Behar never
came out from West Bengal. The government of the Left parties in the state
never gave importance to this demand.
 Purvanchal – In this part of eastern Uttar Pradesh, there is a demand to separate
35 districts to form Purvanchal state. This region, bordering Bihar and Nepal,
extends up to Vindhyachal, which also touches a part of Chhattisgarh and
Jharkhand. Political parties say that this region is very backward from the
economic point of view, which can be improved only if a new Purvanchal state
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NOTES is formed. The demand of Purvanchal is being fueled by the regional political
party Jan wadi Party through pad yatra.
 Maru Region – The light of development has not reached the nine districts of
western Rajasthan, so until the desert region is formed, this area cannot be
benefited. Jaiveer Singh Godara, who has been campaigning for Maru Pradesh
for the past 20 years, says that leaders of national parties like the BJP have also
been supporting his movement.
 Vindhya Pradesh – At the time of the formation of Chhattisgarh, the demand
for a separate Vindhya Pradesh was made in the Lok Sabha by Sunder Lal
Tiwari, MP from Rewa, and this demand was also raised in the Legislative
Assembly. In November 2017, the Baghelkhand Vindhya Adarsh Samaj
organized a Satyagraha for the demand of a separate Vindhya Pradesh and
announced a movement till the formation of Vindhya Pradesh. Vindhya region
was merged with Madhya Pradesh on November 1, 1956. Again, local people
and some organizations are active in demanding a separate state of Vindhya
Pradesh.
In this way, even after the formation of Telangana, demands are being made for
the formation or reorganization of about 18 small and big new states in various regions
of India.
2.8 CONCLUSION
Along with the making of the constitution, nation-building was a big challenge before
India. Ensuring unity and integrity in India with full of diversities was an important goal.
That’s why unitary goals were also included in the constitution along with the federal
system. Adopting a visionary policy, first the princely states were merged efficiently.
Regarding the formation and reorganization of states, keeping in mind the linguistic
diversity and demand, some new states were formed and reorganized. Even today
states are being demanded in some areas. This is the process of democratic state.
That is why the process of formation of state has been made simple in the constitution.
Its objective is nation-building by ensuring unity and integrity while accommodating
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diversity. As a strong and successful nation-state in 75 years, India is poised to provide NOTES
global leadership today.
1. Examine the policies related to the merger of princely states in India after
independence.
2. What was the basis of the demand for reorganization and formation of new
states in India? Mention it.
3. Examine the causes and consequences of the movements demanding new states
based on language in India.
4. Mention the new states formed after independence.
2.10 REFERENCES
 Ajay Kumar Singh, Union Model of Indian Federalism, Manak Publication,

New Delhi-2008.
 A.S. Narang Indian Governance and Politics, Gitanjali Publishing House, New
Delhi. 2016
 B.B. Kumar, Small States Syndrome in India, Concept Publishing Company
New Delhi-1998
 Constituent Assembly Debates, Volume-II.
 D.D. Basu, The Constitution of India, Prentice-Hall India Pvt. Ltd., New Delhi.
 Vipin Chandra, India after Independence, Hindi Madhyam Karyanvayan
Nideshalaya, University of Delhi Delhi-2010
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UNIT III: AGRARIAN POLITICS
LESSON 3 RISE OF AN AGRARIAN CAPITALIST

CLASS, RURAL MARKETS, LAND
ACQUISITION AND FARMERS’
MOVEMENTS
Rise of an Agrarian Capitalist Class, Rural Markets, Land Acquisition and Farmers’...
LESSON 3 NOTES
RISE OF AN AGRARIAN CAPITALIST CLASS,

RURAL MARKETS, LAND ACQUISITION AND
FARMERS’ MOVEMENTS
Anirudh Yadav
(Research Scholar, JNU)
Structure
3.2 Introduction
3.3 Rise of an Agrarian Capitalist Class
3.4 Rural Markets
3.5 Land Acquisition
3.6 Farmers’ Movements
3.7 Conclusion
3.9 References
 After completing this lesson, the student would understand India’s agricultural
system, the entire diversity of vegetation, climatic heterogeneity etc.
 The lesson would also give glimpses on post-independent agricultural initiatives
like green revolution, white revolution etc.
 The lesson also discusses about the “Grow More Food” campaign, which began
in 1947, was the beginning of a movement that later incorporated scientific
fervor, government policy and the diligent labor of millions of farmers which led
to the development of agriculture in India.
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NOTES
3.2 INTRODUCTION
Agriculture is the basis of the civilization, heritage, and culture of India. India’s agriculture
is a diverse mosaic of various agroecosystems that are distinguished by climatic, soil,
vegetation, and other natural characteristics. Agriculture and allied activities provide a
living for approximately half of the Indian population. One of the earliest structures in
existence, it is diverse and heterogeneous, disorganized, and under stress due to
anthropogenic and natural calamities from “seed to market”. Crop failures caused by
depleted natural resources caused by bad weather, the monsoon, and natural disasters
have historically had a major negative influence on civilization. After independence,
India’s agriculture underwent a transformation from food scarce to food surplus country
mostly because of advancements that were driven by science.
Everything can wait except agriculture, as Pandit Jawaharlal Nehru said, while
Mahatma Gandhi noted that “there are people in the world who are so hungry, that
God can not appear to them except in the form of bread”, highlighting the significance
of agriculture. The “Grow More Food” campaign, which began in 1947, was the
beginning of a movement that later incorporated scientific fervor, government policy
and the diligent labor of millions of farmers which led to the development of agriculture
in India.
3.3 RISE OF AN AGRARIAN CAPITALIST CLASS
The conceptual framework that views development as a process of structural transition

from mostly rural, agrarian, and subsistence economies to primarily urban, industrial,
and capitalist economies has served as the foundation for the development programs
of the majority of developing countries. Agriculture is likewise being industrialized in
this kind of capitalist growth process with the aid of capital-intensive technology. While
industrialized agriculture has the potential to increase agricultural output, it will also
“increase the ratio of capital stock to land,” which will have a negative impact on many
rural residents’ ability to make a living because of market demands and profitability
Self-Instructional standards that limit their ability to compete on domestic markets.
42 Material

One of the main topics of dispute or debate amongst Indian scholars has been NOTES
the subject of how capitalism has evolved in Indian agriculture. Social scientists like
Utsa Patnaik and Ashok Rudra are the authors whose publications have sparked a
discussion about whether class relations in Indian agriculture capitalist are.
According to Ashok Rudra, there are two classes in Indian agriculture: big
landowners and agricultural laborer. This contrasts with the conventional trend to divide
farmers into three categories - small, middle, and large - based on their size.
Accordingly, there are several classes of wage employees and farm laborers, as
well as large landowners who are agricultural capitalists. The governing class includes
the capitalists. In terms of agriculture, they are in charge. Ashok Rudra lists the creation
of productive capital through reinvestment of the surplus taken by the owners of the
means of production as another trait that distinguishes class relations in Indian agriculture
as capitalist. Every civilization founded on private property exhibits surplus generation
and appropriation. In various systems, the surplus is produced and used in different
ways. Usually, the feudal appropriator uses the surplus for personal consumption. His
extravagant lifestyle is supported by the surplus. In contrast, the capitalist appropriator
usually uses the surplus for reinvestment with the goal of increasing production, which
is a means to the end of continuously increasing the amount of profit. An ever-expanding
production pattern that results from the unrelenting quest for profit is the usual pattern
of capitalist production.
While separating the exploiting classes (landlords and wealthy peasants) from
the oppressed classes (laborer and poor peasants), Utsa Patnaik also identifies two
alternative divisions based on the prevalent type of exploitation, i.e., wages or rent.
She utilizes the possession of the means of production and the exploitation of workers
as her two criteria for defining these economic classes. According to her, the two
poles of agriculture, such as in India, are easily distinguishable: the landless and nearly
landless who have few or no methods of production. They are entirely or primarily
dependent on employment. The capitalists and landowners concentrate enough
productive resources. Instead of working for a living, they hire others.
India’s capitalist growth path may be unique in five ways. Prior to any significant
capitalism developing as in traditional Western capitalist nations, India embraced liberal
political democracy. Perhaps only India has a liberal democracy in its government
without a bourgeoisie revolution or sufficient capitalist development in the economy. Self-Instructional
Material 43

NOTES The state is driving India’s capitalist development by forcibly mobilizing modest savings,
which is the country’s second key characteristic. The agrarian surplus did not play a
significant part in the capitalist accumulation in the modern sector, which was more or
less primarily funded by savings from inside the sector. However, the agricultural sector
continues to be significant since it is a significant consumer of goods produced by the
modern sector and a provider of both food and non-food products to most of the
economy.
The third factor relates to the current state of technical development conditions.
India started down the path of capitalism after World War II, at a time when extremely
capital-intensive conditions of production were already the norm. Very little labor is
needed in the contemporary capitalist economy. Therefore, according to Sir Arthur
Lewis’ predictions, the surplus labor in agriculture could never be absorbed by the
contemporary economy, which includes the service sector. On top of that, the rural
sector is unable to accommodate this expanding workforce due to the demographic
shift and population rate acceleration that occurred between 1950 and 1980. There
has been an upsurge in urban migration as a result of the push and pull influences.
The fourth point is that while agricultural primitive accumulation has been
somewhat subdued, this does not imply that it has completely disappeared. Through
land acquisition regulations, the state aided the process of primitive accumulation,
displacing people for the building of dams, public sector organizations, and mining.
The primitive accumulation process, which is seen as one that would deprive the peasants
of their means of subsistence, has remained largely marginal because the scale of
acquisition had been relatively low. Politics and external pressure on public policy are
the sixth factor. Numerous social movements, including the Dalit movement, the women’s
movement, the anti-dam movement, and the anti-corruption movement, have given
public policy new political dimensions. Ignoring these social movements’ influence on
the politics of self-expression would be wrong. A second instance would be the recent
farmers’ protest that erupted in Delhi.
3.4 RURAL MARKETS
Self-Instructional Broadly speaking, rural marketing includes the selling of agricultural products, products
44 Material
from rural industries, and similar services. Rural areas have access to trade channels

like private, cooperative, processors, controlled markets, and state agencies. Marketing NOTES
and production are two sides of the same coin. Rural development activities nerve
centre is rural marketing. Rural marketing involves two-way communication. The
movement of goods and services from urban to rural areas is known as rural marketing.
Buying and selling agricultural inputs and products is known as agricultural
marketing. The market is a location where all transactions involving the purchasing and
selling of agricultural inputs and tools - such as seeds, fertilizers, pesticides, and tools
that are required for the growth of agricultural goods to take place. Agriculture marketing
also includes the actions involved in purchasing and selling food grains, vegetables,
dairy products, fish, and horticulture items. Like other markets, the agriculture market
likewise requires buyer and seller contact. Farmers start out as customers of agricultural
tools and supplies before transitioning to vendors of agricultural goods. Therefore, the
farmer’s position in the agricultural market is crucial.
a. Significance of Rural Markets
One of the biggest marketplaces in the world is India. Real India lives in villages. Rural
India is becoming a major draw for marketers for a number of reasons, including
globalization, economic liberalization, the IT revolution, and improving infrastructure.
The Indian rural market is so enormous that businesses looking to expand cannot
afford to ignore this market group. The ability to comprehend the dynamics of rural
marketplaces is crucial for the future of businesses. The agricultural industry is receiving
more attention, which has increased rural customers’ income levels. The marketers
have a lot of opportunities. Infrastructure resources are improving, which will help in
enhancing the performance of the supply chain. Rural customers’ consumption habits
are changing, as well.
b. Challenges of Rural Markets
Following are some of the difficulties firms in India encounter when it comes to rural
markets:
1. Information technology’s effects are not felt uniformly across the country. The
farmers who have large land holdings have mostly benefited from it. Farmers
with modest amounts of land are not having access to the benefit. Even now, the
markets are underdeveloped because of this imbalance. Self-Instructional
Material 45

NOTES 2. It is not equally beneficial for all regions of the country in terms of facilities
connected to physical communication. Most settlements in the country’s east
are unreachable during the rainy season. There are no all-weather roads. Physical
communication becomes quite expensive as a result.
3. Given that agriculture is the primary means of their income, demand in rural
marketplaces is heavily influenced by the state of the industry. The monsoon has
a significant impact on agriculture in parts of India’s larger states, including Uttar
Pradesh, Bihar, and Madhya Pradesh. This indicates that consumer purchasing
power varies from one year to the next and is reliant on the monsoon. As a
result, marketers find it challenging to predict demand.
4. Language and dialect differences are a difficulty for marketers as well.
5. Language and dialect variations exist not just across states but also between
regions. Because of this, developing a marketing strategy is exceedingly
challenging. Additionally, choosing how much of the market should be covered
can be very difficult.
6. Other problems that endanger rural traders include natural disasters, diseases
and pests, drought or an abundance of rain, inadequate storage facilities,
inadequate transportation, a lack of insurance, etc.
7. The infrastructure in rural areas, supply chain activities, price fluctuations for
agricultural products.
c. Strategies for Improving Marketing in Rural Areas
1. Product Strategies
 The goal of the low-price packing approach is to keep the cost low enough for
the entire rural population. Due to their low prices, consumers in rural regions
prefer to purchase small-sized products like pickles, shampoo, vicks, biscuits,
and surf. These goods are consumables.
 A detailed examination of things used in rural households reveals the necessity
of revamping or changing the products. The manufacturing and advertising
professionals can consider brand-new product designs intended specifically for
Self-Instructional rural communities to maintain their way of life.
46 Material

 People who live in rural areas need brand names to identify products as they NOTES
can more easily recall products with the aid of a logo or brand name.
2. Pricing Strategies
 The price should reflect the value of the product. Making the product affordable
should be the manufacturer’s goal. Small item packaging should be reasonable.
 Simple product packaging should be used because it lowers the cost of the
goods. For rural markets, some packaging technology innovation is absolutely
important.
3. Distribution Strategies
Distribution plans without marketing are lacking. Marketing professionals must develop
specific distribution plans for rural locations, keeping in mind the product’s features,
shelf life and other elements. To improve the marketing services in the regulated
marketplaces, cooperatives are essential. These societies often do not pose a threat to
private trade and only control a small portion of the global markets. A notable illustration
of vertically integrated marketplaces is provided by the Gujarat cotton cooperative
marketing organizations. The non-governmental organizations can play a crucial part
in encouraging rural residents to create cooperatives by emphasizing potential benefits
without exploiting them.
4. Promotion Strategies
The mass media is essential to communication. Television, films, print publications like
newspapers or journals, radio, etc. are all examples of mass media. Additionally,
hoardings, wall paintings, shanties, headgear, melas, special campaigns, etc. can be
used as mass media tools. The mass media also includes brochures, posters, stickers,
handbills, banners of the schemes, etc. The government should distribute booklets to
Panchayati Raj offices or to schools where they can be documented for reference as
this is a good strategy to promote agriculture and other rural industries’ products. We
should anticipate how the forces of globalization will affect the marketing forces as we
work to enhance both the marketing system within rural areas and the selling of rural
products to other locations.
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Material 47

NOTES d. 4A’s of Rural Marketing
Many businesses from all industries are being drawn to rural regions to sustain their
growth momentum and tap into the mostly untapped market. There are numerous
ways in which consumers in rural areas differ from those in urban areas. As a result,
businesses must employ various marketing techniques while considering the needs of
rural customers.
The 4A’s of rural marketing allude to both the difficulties faced by rural markets
and the important locations where decisions are made. The 4A’s are availability,
awareness, acceptability, and affordability.
Affordability
This is a reference to the purchasing power and capacity of rural consumers to pay for
specific goods or services. Most consumers in rural areas have limited disposable
income. The marketer must therefore think about price modification. It is not always
possible to make the products cheaper. As a result, numerous businesses are developing
unique solutions to address this difficulty. To fit the budgets of consumers in rural
areas, they are selling their products in lower quantities and smaller packs. Examples
include tiny shampoo sachets, tiny cookie packs, tiny bars of soap, tiny bottles of
carbonated beverages, etc. In fact, these measures have increased their consumer
base.
Availability
The availability of services and products in the rural market is an important decision-
making area for rural marketing. The businesses must offer the required transportation
infrastructure to guarantee that goods and services are accessible to customers. The
businesses are also implementing a variety of other innovative strategies to guarantee
the delivery of their products and services. For instance, setting up temporary stalls in
local melas, utilizing corporate delivery vans, etc.
Awareness
The next issue for rural marketing is educating customers in rural areas about the
Self-Instructional products and services that businesses are providing. This includes giving rural consumers
48 Material

the knowledge they require. The media is crucial in this regard. The Companies are NOTES
also promoting their products through unorthodox media. Haats, fairs and festivals,
among other rural events, are used to spread brand awareness. For this reason, many
businesses are planning their own unique promotional events, vans, road shows, etc.
For the objective of raising awareness, many businesses are attempting to involve
Gram Panchayat.
Acceptability
Acceptability of the items by rural consumers is the fourth “A” in rural marketing. It is
crucial that the items meet rural customers’ needs. Businesses must customize their
products for customers in rural areas. For the offerings to appeal to rural people and
win their acceptance for their products, they need to give value additions. The best
instances of this are the “Sampoorna TV” by LG Electronics and the “Chhota Kool
refrigerator” by Godrej.
3.5 LAND ACQUISITION
The process by which a government buys land from landowners for any reason is
referred to as land acquisition. The goal typically has to do with development initiatives
carried out by PSUs or the business sector. The 1894’s Land Acquisition Act, which
has been in place in India since the British era, allows the government to purchase any
land for a “public purpose” at its discretion. In practice as well as in theory, a government
may purchase land for any reason and claim that the acquisition was for a “public
purpose” because the British did not provide a clear definition of the phrase.
The Bengal Regulation Act (1) of 1824, which was passed to advance the
economic objectives of the British rulers in the nation, was the first piece of land
acquisition legislation in India and was created by the British government in the year
1824. Later, the Act (1) of 1850 replaced it, extending the provision of land acquisition
to the town of Calcutta. As a result, the necessary land could be acquired for public
use without encountering any legal issues. The Land Acquisition Act, which repealed
all earlier legislation pertaining to land acquisition, was passed in March 1894. In its
Self-Instructional
Material 49

NOTES provisions, the LAAct of 1894 clearly stated that land would be bought for public use,
with the state acting as the agent to purchase it from governmental entities or private
landowners, with government setting the purchase price.
Following independence, this practice persisted in which the central and state
governments of India purchased sizable tracts of land for a variety of infrastructure
and development projects, including roads, highways, ports, power projects, etc.
Most of these acquisitions were made by public sector organizations or units between
1947 and 1991. The majority of land acquisition after 1991, when liberalization had
begun, was carried out by the government to give land for private sector projects
(infrastructure projects like power, highways, etc.), as well as for housing developments.
Several bills were introduced to alter the Land Acquisition Act of 1894. The
2013 Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation
and Resettlement Act replaced the Land Acquisition Act. The new Act includes
provisions to ensure rehabilitation for persons who have had their land taken away,
introduce transparency to the land acquisition process, set up enterprises or buildings
and undertake infrastructure projects.
As the Land Acquisition Act of 1894 evolved into the Land Acquisition
Rehabilitation and Resettlement Act (LARR) of 2013, numerous facets of the land
acquisition process were taken into consideration. The law does contain several aspects,
nonetheless, that are still unsatisfactory and unbalanced relative to the nation’s
development paradigm. The National Democratic Alliance (NDA), led by the Bhartiya
Janata Party (BJP), took office in May 2014 with a development focused platform
and a determination to implement quick reforms in the land acquisition process. They
claimed that without land purchase, the government would find it difficult to carry out
its projects. In its absence, the “Make in India” project, which promised to resuscitate
and grow domestic manufacturing, could run into trouble. The government’s interest in
infrastructure development was centered on land acquisition. Therefore, in December
2014, the government published the land purchase amendment ordinance in accordance
with its economic goal.
Five categories would be excluded from several of the previous act’s
requirements, including the consent clause, under the proposed 2015 bill. The five
areas include industrial corridors, PPP projects, affordable housing for the
Self-Instructional underprivileged, rural infrastructure including electrification, and national security and
50 Material

defense production. Private firms were permitted to acquire land under the 2013 NOTES
LARR Act, which was changed to “private entities” by the 2015 ordinance. Private
entities include sole proprietorships, partnerships, companies, corporations, non-profit
organizations and any other entity recognized by law that is not a government entity.
Additionally, it eliminated limitations on buying land for private hospitals and educational
institutions.
The 2013 LARR Act is seen as a more capable, consultative, and participatory
rights-based law and has been dubbed pro-people. The statute addressed the main
shortcomings of the 1894 statute, which were the main causes of discontent among
the displaced populations. It took around 200 years to create a new law that combined
measures for land acquisition, rehabilitation, and resettlement, replacing the harsh,
colonial land acquisition legislation of 1894. The latter served as a barrier of defense
for the general public who are both directly and indirectly impacted by land acquisition.
However, the decision to change the LARR Act’s provisions within nine months of
their entry into force calls for a deeper look at the paradigm of development that
involves the purchase of property and the establishment of development projects.
a. Implications of Land Acquisitions
Tens of thousands of people facing the wrath of land acquisition were addressed by
Jawaharlal Nehru, the first prime minister of Independent India, as he laid the foundation
stone for the Hirakud Dam in Orissa in 1948, India’s first significant river valley project.
Nehru said: “If you have to suffer, you should do so in the interest of the country.” In a
letter to Baba Amte, one of India’s most renowned social workers, former Prime
Minister Indira Gandhi expressed the same worry 35 years later. She stated: “I am
unhappy that development projects displace tribal people from their habitat, especially
because project authorities do not take adequate care to properly rehabilitate the
affected population. But sometimes there is no alternative and we must go ahead in the
larger interest.”
Millions of people are affected by development-induced displacement every
year when land in rural and urban regions is diverted from traditional usage for huge
dams, industry, mining, power projects, roads, urbanization, etc. The displaced
community loses control over their physical environment and cultural identity because
of the economic depletion process, which also disempowers the affected individuals Self-Instructional
on a social and political level. Material 51

NOTES Development projects are justified on the grounds that they are essential to the
national interest, but the communities that are uprooted from their home and way of
life must make sacrifices for the “greater good” and national interest, which would be
for the welfare of the entire nation. How is the well-being of these publics different
from the wellbeing of the nation?
The history of displacement brought on by development and ensuing movements
of protest by the project-affected masses, who are typically tribals, extends back to
the early years of independence. There were protests against the Hirakud hydroelectric
dam in the 1950s. The Rengali hydroelectricity dam project was the target of a protest
movement in 1971, and more recently, protests for the metal-mining industries in the
interior jungles of Orissa have given rise to a resistance movement led by the local
tribal and indigenous population.
The pro-business policies of the Indian government during the period following
the 1991 reforms gave rise to the extractive economy’s current phase, which has
sparked protest movements across the nation, particularly in states like Orissa, which
have rich mineral deposits. The Kashipur, Chilika, Niyamgiri, Kailnganagar, and anti-
POSCO groups have consistently resisted industrial developments, preventing billions
of dollars worth of investments from both domestic and foreign businesses.
Since the introduction of neo-liberal reforms, the government has promoted
corporate led growth by acquiring property for special economic zones (SEZs) and
then selling it to private developers. In this way, the market moves the compensation
debate from the public sphere to the private sphere, where it is intended that
compensation be negotiated. As a result, the state abdicates its duty to carry out
rehabilitation.
Chhattisgarh produces 9.2% of the total value of minerals, followed by Jharkhand
with 9%, Andhra Pradesh with 12.3%, and Odisha with 11.9%. Large tribal populations,
violent political groups, and recent increases in Maoist insurgencies can also be found
in these regions. Around 300,000 people were relocated by the Upper Krishna
irrigation project, which also resulted in a loss of their means of subsistence. Since the
1960s, displacement has become a typical occurrence for the residents of Madhya
Pradesh’s Singrauli region.
The fact that nearly two-thirds of the population in India is dependent on land,
Self-Instructional both directly and indirectly, is the key issue that has not been addressed. When the
52 Material

method of acquiring land comes into focus, are these groups being consulted? The NOTES
poor rural and tribal communities are the principal victims of this development paradox
in the nation, they lose their way of life and sense of identity to suit the wants of the
wealthy and elite class, who also happen to use the political system for their own
personal advantage.
3.6 FARMERS’ MOVEMENTS
Peasant movements are those that are carried out by peasants for agrarian purposes.
In peasant movements, the ideology of class conflict also has a significant impact.
While Lenin, Fanon, and Mao have positioned the peasantry as the core of the
revolution, Karl Marx views the peasantry as a passive class. Dipankar Gupta discussed
about the two types of agrarian movements during independence:
 First, there are those agrarian movements known as the peasant’s movement,
which are led by poor agricultural laborer and small-scale farmers.
 Second, there are those agrarian activities known as the farmers movement that
are carried out by landowners.
Political parties and farmers’ organizations like Kisan Sabha, the Communist
Party of India (CPI), the Communist Party of India-Marxist (CPI-M), the Communist
Party of India-Marxist-Leninist (CPI-ML), etc. oversee the first category of agrarian
movements. Farmer’s organizations, like Bhartiya Kisan Union, which is one of the
largest Shetkari Sanghatana, are active in Maharashtra, Punjab, and Haryana. Rajya
Ryota Sangha is active in Karnataka. The primary distinction between these two
groupings of parties is that the former represents the interests of the underprivileged
peasants, while the latter represents those of the landowners.
Important Farmers’ Movements

a. Santhal Revolt (1855)
The Santhal revolt, often referred to as the Santhal Hul and considered by many
academics to be a tribal movement, occurred in what is now Jharkhand and a small
Self-Instructional
portion of West Bengal (near the foothills of Rajmahal). It was an insurrection against Material 53

NOTES the zamindars, who the British gave ownership of land that peasants had historically
farmed and who had enforced high rents, as well as the British colonial government.
The insurrection was also aimed at authorities who were dictatorial and insensitive to
the problems of Santhals as well as moneylenders who charged exorbitant interest
rates on borrowed funds. Since they didn’t pay their obligations and taxes, the Santhals
were being forced off their land and out of their settlements. As a result, they either
became tenants on their own property or bound laborers.
When thousands of Santhals gathered in Bhogandih hamlet and declared
themselves free, the revolution started in July 1855. Sidhu and Kanhu, two brothers
who claimed to have received communications from supernatural forces, organized
and led the movement to stop the exploitation from officers and the dishonesty of
merchants. To eject them, they assaulted zamindars and moneylenders. This led to
several battles between the Santhals and the army of the English East India Company.
b. Indigo Revolt (1859-60)
Instead of planting food crops, European colonists convinced the villagers to plant
indigo. They offered loans with extremely high interest rates. Only 2.5% of the market
price was paid by the planters, which was a pitiful amount. When farmers refused to
follow the indigo planters’ orders, they were completely defenseless against them and
their threats of property destruction or mortgages. The farmers turned to rebellion
because of this extreme mistreatment.
c. Deccan Riots (1875)
The agricultural rebellion in the Poona and Ahmednagar districts in 1875 was sparked
by the typical conditions in the Ryotwari region. The East India Company placed
onerous taxes on ryots for land that were to be paid in cash and without consideration
for variations in crop yield owing to famines or any other reason to maintain a consistent
flow of huge revenue. In order to pay taxes and prevent the government from taking
their land, the farmers turned to moneylenders, who were primarily outsiders. Farmers
provided land as collateral, and the government preferred to give land to moneylenders
if farmers weren’t able to pay back their loans.
The ryots engaged in a social boycott of moneylenders in 1874 because of the
Self-Instructional mounting hostility between them and the peasants. The ryots declined to purchase
54 Material

anything from their stores. They were refused service by the shoemakers, barbers, NOTES
and washermen. Rapidly, the villages of Poona, Ahmednagar, Sholapur, and Satara
were included in this social boycott. The agrarian riots that soon followed the social
boycott included frequent attacks on the homes and businesses of moneylenders.
In order to defend the actions of moneylenders, the government resorted to
harsh measures against the uprising peasants. The harsh government repression was
too much for the peasants to bear, and they were forced to give up their active resistance.
Only three weeks were spent in the uprising’s active phase in Poona and Ahmednagar.
The Deccan Agriculturists Relief Act was passed in 1879 as a conciliation measure.
d. Champaran Satyagraha (1917)
Indigo, a plant that produces dye for bluing cotton fabrics, has been grown by Indian
cultivators long before the chemical industry began producing synthetic bluing colors.
In Great Britain’s textile industry during the late eighteenth and early nineteenth centuries,
there was a significant demand for the color indigo. This made the trade in indigo a
very successful industry. In Bihar and Bengal, numerous retired East India Company
officers and young entrepreneurs bought land from local Zamindars and expanded the
production of this crop on a big scale. Under an oppressive regime, tenant farmers
were compelled to raise indigo as a crop.
In what was known as the “Teen Kathia” system, the British planters ordered
the tenant farmers to grow indigo in three twentieths of a bigha of their land. The best
pieces of land were forced to be used for indigo cultivation and the planters offered
extremely cheap prices for the crop. The British government showed no concern for
the humiliation, physical assault, or exploitation of farmers. Early in 1917, Raj Kumar
Shukla invited Gandhi to visit Champaran. Prominent figures like J.B. Kripalani, Babu
Brajkishore Prasad, and Babu Rajendra Prasad joined and supported him in his protest
such exploitation. Gandhi’s strategy of nonviolent civil disobedience and peaceful
satyagraha was unique, successful and had a positive influence on the minds of the
underprivileged and destitute peasantry. To give in, the government contacted Gandhi
for negotiations and appointed him to the committee looking into the situation of the
indigo peasants. The committee’s report led to the elimination of the Teen Kathia
system.
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Material 55

NOTES e. Kheda Satyagraha (1918)
The Patidars, who were renowned for their agricultural prowess, made up the majority
of Kheda’s peasants. The Patidars had a good education. Kheda, which is located in
Gujarat’s centre, was a very productive area for the growth of cotton and tobacco
crops. Crop failure occurred in Kheda because of a severe famine. The government
refused to acknowledge crop failure and insisted on collecting land taxes rather than
considering the conditions of peasants. Thus, under the direction of Gandhi, Sardar
Vallabhbhai Patel, N.M. Joshi, and several others, the Kheda Satyagraha was launched.
Due to the acceptance of some of the main demands of the peasantry, the movement
came to an end.
f. Tebhaga Movement (1946-47)
Tebhaga literally translates to “three shares of harvests”. Sharecroppers wanted two

thirds for themselves and one third for the landlord as part of this campaign. In the
past, sharecroppers who were tenants gave a fifty-fifty share of the crop. These districts
experienced a second Tebhaga movement surge between 1948 and 1950. The Tebhaga
movement was orchestrated by the Bengal Provincial Krishak Sabha. The
sharecroppers organized themselves against the landowners under the sabha’s direction.
However, the movement’s inception led to the passage of the East Bengal State
Acquisition and Tenancy Act of 1950.
g. Telangana Movement (1946-52)
The Telangana Movement fought against the Andhra Pradesh authorities and local
landowners’ feudal oppression. Through its peasant branch, the Kisan Sabha, the CPI
launched it. The movement, which was concerned with the entire population, was
against the illegitimate and exorbitant extraction by the rural feudal elite. The requests
included forgiving the debt owed by the peasantry. When the peasants organized an
army and began waging guerilla wars in 1948, the movement veered towards revolution.
More than 2,000 localities established independent “People’s Committees”. These
“Committees” seized territory and kept their own armies and governments. The Nizam
was supported by the private militia known as Razakars, which quickly began brutally
putting down peasant uprisings. The movement ended in 1951. Separate Telangana
Self-Instructional State was created in 2014.
56 Material

h. New Farmers’ Movement NOTES
In many regions of India, the New Farmers’ Movement had its start in the 1980s.
Input price increases, diminishing per capita agricultural income, declining purchasing
power, unprofitable prices, conditions of trade that were detrimental to agriculture,
etc. were the causes. It all started in Maharashtra when the Shetkari Sanghathana, led
by Sharad Joshi, a former UN employee who is now a farmer, started protesting for
fair prices for agricultural products, especially onions, in the village of Chakan in Pune.
The demands of the farmers’ movement frequently included things like fair prices, loan
forgiveness, anti-government procurement policies, levy policies, liberalization, etc.
The farmers’ movement, which was mostly supported by middle-class and wealthy
farmers from several Indian states, marks a particular stage in India’s history and
culture of agrarian unrest.
i. Farmers’ Protest (2020-21)
Indian farmers protested in 2020–2021 against three farm acts that were adopted by
the Indian Parliament in September 2020. According to the farmer unions, the laws
will allow farmers to sell and promote their produce outside of mandis that have been
approved by the Agricultural Produce Market Committee (APMC). Additionally, the
regulations will permit interstate commerce and promote increased e-trading in
agricultural goods. The farmers fear that the new laws will “gradually lead to the
deterioration and ultimately end the mandi system” and “leave farmers at the mercy of
corporates” because they prohibit the state governments from charging a market fee,
cess, or levy for trade outside the APMC marketplaces. Due to huge farmers’ protests,
the Supreme Court ordered the government to withdraw the three farm laws.
3.7 CONCLUSION
The relevance of the peasant movements and revolts rests in the fact that they brought
up important concerns relating to land, life and livelihood, even though it is difficult to
determine whether they made a significant contribution to the social order restructuring.
The state responded to their protests by enacting the Land Ceiling Act, banning the
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Material 57

NOTES Zamindari system, and beginning land reforms, albeit these reforms have not yet been
fully implemented.
The existence of a significant overlap between the issues and goals of the peasant
movement and the environmental movement, as seen in the Chipko movement, or
between the interests of peasant-cultivators and landless laborer who depend on land,
or in the farmers and other groups protesting displacement in anti-SEZ movements in
the context of globalization in various parts of our country, is an important aspect that
is now being recognized. As a result, intersectionality is still a prevalent phenomenon in
all contemporary peasant movements.
1. Critically examine the challenges related to India’s land acquisition law.

2. Discuss the significance and challenges of India’s rural markets. What steps
should be taken to support rural markets?
3. Describe how the agrarian structure and peasant movements have changed in
modern India?
4. Write short notes on:
a. Agrarian capitalist class.
b. Champaran Satyagraha.
3.9 REFERENCES
 Bhaduri, Amit (1973). “A Study in Agricultural Backwardness Under Semi

Feudalism”, The Economic Journal, 83(329), 120-137.
 Rudra, Ashok (1978). “Class Relations in Indian Agriculture: I”, Economic
and Political Weekly, 13(22), 916-923.
 Rudra, Ashok (1978a). “Class Relations in Indian Agriculture: II”, Economic
Self-Instructional and Political Weekly, 13(23), 963-968.
58 Material

 Rudra, Ashok (1978b). “Class Relations in Indian Agriculture: III”, Economic NOTES
and Political Weekly, 13(24), 998-1004.
 Thomas Asha E. (2011). “Rural India: A Promising Market Place-A Case Study”,
RVIM Journal of Management Research, 3, 11-17.
 Patnaik, Utsa (1976). “Class Differentiation within the Peasantry: An Approach
to Analysis of Indian Agriculture”, Economic and Political Weekly, 11(39),
83-101.
 Thorner, Alice (1982). “Semi-Feudalism or Capitalism? Contemporary Debate
on Classes and Modes of Production in India”, Economic and Political Weekly,
17(49), 1961-1968.
 Thorner, Alice (1982a). “Semi-Feudalism or Capitalism? Contemporary Debate
on Classes and Modes of Production in India”, Economic and Political Weekly,
17(50), 1993-1999.
 Gill S. S. (2004). “Farmers’ movement: Continuity and change”, Economic
and Political Weekly, 39(27), 2964–2966.
 Brass P. R. (1980a). “The politicization of the peasantry in a North Indian state:
I”. The Journal of Peasant Studies, 7(4), 395–426.
 Brass P. R. (1980b). “The politicization of the peasantry in a North Indian state:
II”, The Journal of Peasant Studies, 8(1), 3–36.
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UNIT IV: POLITICAL ECONOMY OF
DEVELOPMENT AND REFORMS IN
THE STATES
LESSON 4 POLICY, POLITICS, AND REGIONAL

BUSINESS
LESSON 4 NOTES
POLICY, POLITICS, AND REGIONAL BUSINESS

Dr. Rajesh Kumar
(Assistant Professor, Satywati College, DU)
Dr. Ram Bilash Yadav
(Assistant Professor, Ramjas College, DU)
Structure
4.2 Introduction
4.3 What is Political Economy?
4.4 The Legacy of Controls in a Self-Contained Economy: 1947-74
4.5 The Steady Development of the Liberal Momentum: 1975-1990
4.5.1 Industry
4.6 Liberal Economy: After 1991
4.7 Economic Reforms in India Under UPA-1 and UPA-2
4.8 Economic Reforms and Policy Under Modi Regimes
4.9 Conclusion
4.11 References
 After completing this lesson students would understand about the Indian political
economy and about the governmental policies which had created changes across
India.
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Material 63

NOTES  The lesson would make the student understand about the intersections between
politics and economies of India.
 It will also discuss about economic reforms taken place during UPA 1 and
UPA 2. The changes that took place after prime minister, Narendra Modi came
to regime.
4.2 INTRODUCTION
Political economy is the amalgamation of political and economic aspects in our analysis
of modern society. Since almost everyone will agree that politics and economics are
intricately and irrevocably linked. Politics affects economics and economics affects
politics. This approach seems natural. It has an outstanding history of helping people
understand governments and societies, and it may be an effective tool for anyone who
wants to change either of these systems. In socialism and communism, resources are
preserved by the government and society, while in capitalism resources are preserved
by private individuals.
India has gone from an economic backwardness to one of the fastest growing
economies in the world. India’s slow economic growth has been described as the
“Indian growth spurt”. Industrial modernization and the Green Revolution allowed
many Asian economies to grow at an average annual rate of 3.4% between 1956 and
1974. Economic growth exceeded 5% between 1975 and 1990, and more than 6%
after 1992. It grew at 8.8% between 2003 and 2007, making India become one of
the fastest growing economies in the world after China. The 2006 annual meeting of
the World Bank and IMF in Singapore focused on the development of China and
India. After the global financial crisis, India continued to grow faster (6.1% in 2008-
09) and 6.4% in 2022-23 than all substantial Asian economies except China.
After 1975, private sector investment was increasingly deregulated in India. In
the 1980s, this problem became widespread. In spite of significant internal opposition
to trade in the 1980s, officials were influenced by East Asian stories of achievement.
Only after the crisis in the balance of payments in 1991, there was a substantial economic
deregulation possible in favor of the private sector. This was also the time when the
Self-Instructional industrial policy began to aggressively want export promotion. The monetary
64 Material

deregulation of India should be understood within the milieu of its development as one NOTES
of the maximum structured economies in 1975.
Economic reforms in India refer to the neo-liberal policies introduced by the
Narasimha-Rao government in 1991 when India faced a severe economic crisis due
to external debt. This crisis was largely caused by the incompetence of economic
management in the 1980s. The revenue that the government generated was not enough
to cover the expenditure. He, therefore, had to borrow heavily from foreign banks to
repay the debt. They are therefore stuck in debt. To overcome this crisis, India
approached the World Bank and the International Monetary Fund (IMF) for loans
and received $7 million to manage their crisis. As a result, these international
organizations expected India to open its doors to trade with other countries by removing
the hitherto stringent restrictions. Hence India adopted LPG (Liberalization,
Privatization, and Globalization) reforms under economic reforms.
The Indian story of economic development deviates from the logic of the growth
of numerous Asian economies, which were labelled as strict authoritarian regimes.
According to some, the story of fostering competition and human progress involves
overcoming strong vested interests that tend to conceal themselves behind protective
barriers. Self-restrained industrialists in authoritarian nations in Asia reorganized the
land and supported public health and literacy standards for competitiveness and
economic progress. Farmers, businesspeople, and government officials might then use
their increased ability to organize to resist trade liberalization and prevent the
empowerment of the underprivileged and lower caste groups. The state, which had
softened its stance towards commercial organizations, the underprivileged, and lower
castes, now addresses the subject of fostering competition and human growth.
4.3 WHAT IS POLITICAL ECONOMY?
Adam Smith, John Stuart Mill, and David Ricardo are widely regarded as the designers
of modern economics. But they termed themselves political economists and the
Principles of Mill’s Political Economy were the primary text of the discipline from its
publication in 1848 until the zenith of the century. These early theorists failed to conceive
the political and economic worlds as separate. Self-Instructional
Material 65

NOTES Political and economic analysis were separated by two trends. First, governments
began to reduce their control over the economy. Second, different political forms
emerged: Europe moved from almost exclusively monarchical to increasingly
representative and highly diverse forms of government. At the beginning of the 20th
century, economics and political science were established as separate disciplines. For
most of the 20th century, this division held sway. With the Great Depression and the
problems of development, purely economic questions were daunting enough to keep
economists busy. By the same token, the political problems of the era of two world
wars, and the rise of fascism and communism were so serious that they demanded
special attention.
However, in the 1970s it became clear that the separation of the economic and
political spheres was misleading. The decade saw the collapse of the Bretton Woods
monetary system, two oil shocks, and stagflation – all of which underscored the fact
that economic and political affairs are linked. Economics was now high politics, and
much of politics was about economics.
Over the past 50 years, political economy has become increasingly important in
both economics and political science in three ways:
 It analyses how political forces affect the economy. Voters and interest groups
have a strong influence on virtually every possible economic policy. Political
economists seek to identify relevant groups and their aids and how political
institutions influence their impact on policy.
 It assesses how economics affects politics. Macroeconomic trends can make
or break a holder’s chances. At the microeconomic level, features of the
economic organization or activities of firms or industries may have an impact
on the nature and direction of their political activity.
 It practices the tools of economics to educate for politics. Politicians can be
seen as similar to firms, governments as monopoly providers of services and
goods to their customers, or voters as consumers, Scholars model political-
economic relations to develop a more theoretically precise understanding of
the underlying structures that drive politics.
All three methods have profoundly influenced both scientists and policymakers.
Political economy has a lot to offer both analysts of the functioning of the society and
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66 Material those who would like to change society.

NOTES
4.4 THE LEGACY OF CONTROLS IN A SELF-
CONTAINED ECONOMY: 1947-74
India’s “mixed economy” arose as a direct result of antisemitism. Colonialism is believed

to have destroyed the Indian economy. Opposition to trade liberalization was justified
by the strong economic movement for economic reform, which served as the small
business argument. It is believed that emerging economies, especially high-tech areas,
should have financial support from the government and international trade protection
until they grow in commercial competition.
After independence, the Congress-led debate among radicals and moderates
over the best government intervention eventually led to an intervention that supported
state business management. Powerful Deputy Prime Minister Sardar Vallabhbhai Patel
thwarted Prime Minister Nehru’s more aggressive approach to state intervention until
Patel’s untimely death in 1950. The Development and Reform Act of India (1951) is
the source of business licenses which involves obtaining permission from the government
to carry out business activities in certain sectors.
Nehru was impressed by the financial planning and rapid economic growth of
the Soviet Union. He advocated the creation of strong regulatory institutions and greater
government involvement in the market. Rapid capital-intensive industrialization limited
the resources available for the development of agriculture during the Second Five-
Year Plan.
In the First Five-Year Plan (1951-56) there was 34.6% of total planned
agricultural and water-saving expenditures. This rate for agriculture expenditures was
reduced to 17.5% in Second Five-Year Plan. The Planners thought that the cooperative
agriculture and land reform, based on the voluntary participation of smallholders in
agricultural management, would provide adequate food for the population. The policy
of supporting the economy at the expense of agricultural development was challenged
by the leaders of the national conference and the Ministry of Agriculture. After the
death of Prime Minister Nehru in 1964, India faced political and economic uncertainty.
After the 1957 financial crisis, India relied on foreign capital to finance its economy.
Losing the war with China in 1962, India would necessitate higher defence expenditures.
Under US Public Law 480, the nation was largely reliant on wheat imports from the Self-Instructional
Material 67

NOTES US. In 1965, it faced another war with Pakistan. Food production was falling and
inflation was rising in 1964 and 1965. The World Bank stressed the importance of
India in global politics.
Prime Minister Shastri (1964-66) introduced changes in the Nehruvian approach
to economic development. First, the agriculture sector was given priority. India began
working closely with the US government to try out American seed technology. The
Planning Commission’s power to promote capital-intensive industrialization rather than
agricultural development was limited. In 1965, the World Bank issued a letter of
recommendation to review India’s economic policy. It decided to devalue the rupee.
Exports should be liberalized, some industries, including fertilizer production, should
be left unregulated, the state sector should be shrunk, and foreign investment should
rise. These political choices will result in an additional $400 million in aid, raising the
annual level of current financial aid to $1.6 billion. This grant is deemed necessary to
support the Fourth Five-Year Plan.
After Prime Minister Shastri passed away suddenly and unexpectedly in January
1966, Indira Gandhi became Prime Minister. She initially headed in the direction Shastri
had directed. In June 1966, the Indian Parliament overwhelmingly rejected her decision
to devalue the rupee. Most economists of the time believed that devaluation and trade
support would not serve India well. Almost all Indian industrialists, except for a few
individuals associated with export-oriented manufacturing, no one was against the
rupee’s devaluation. It was widely assumed that external pressure, rather than domestic
consensus, was the driving force behind devaluation and trade liberalization. These
policy measures were considered important to the continuation of food and industrial
aid at the levels requisite to finance the Forth Five-Year Plan.
Following the devaluation occurrence, the government adopted an agricultural
support strategy in accordance with the World Bank’s advice. She didn’t want to
have to beg for food in front of the American authorities, which would have been
embarrassing. The US provided technological and financial support that caused India’s
wheat production to double between 1965 and 1970, brought about the country’s
Green Revolution. Despite favouring wealthier and middle-class farmers, the Green
Revolution had a substantial impact on India’s food security and the reduction of
poverty.
Self-Instructional
68 Material

The onset of the Indian industrialization’s primarily state-driven and autarkic NOTES
phase, which lasted from 1969 to 1974, can be explained by two important factors.
First, there was a discrepancy in the expectations of Indians and Americans. The
Indian elite believed that, despite significant internal opposition, it had done everything
possible to appease the World Bank (WB) and the Aid India Consortium (AIC).
Sectors such as steel, copper, banking, insurance, and the wheat trade were all
nationalized.
State regulation and autarkic industrialization were made-up to contribute to
poverty alleviation and human development. These expectations were not fulfilled.
The Indian economy grew at a dismal average annual rate of 3.4% between 1956 and
1974. The poverty rate, or the total number of people below the poverty line, did not
decline between 1951 and 1974. It remained mostly in the 45% range to 50% and
exceeded 50% for several years. Slow growth and deplorable levels of absolute poverty
overlapped with a period when Mrs. Gandhi’s approach to politics turned out to be
quite authoritarian.
Efforts were made to initiate welfare programs that would allow the central
government to reach the poor directly by bypassing the governments in various states.
Political opposition in an increasingly mobilized society where there were fewer and
fewer channels for the articulation of interests led to social movements in states like
Bihar and Gujarat led by a fascinating socialist leader Jaya Prakash Narayan. An
uncertain Mrs. Gandhi installed an authoritarian government in 1975 following a
Supreme Court ruling accusing her of rigged elections. The highest level of state
intervention in the economy was accompanied by political and economic problems
that became a cause for concern.
4.5 THE STEADY DEVELOPMENT OF THE LIBERAL

MOMENTUM: 1975–1990
After 1975, the Indian economy began to rely more on private initiatives than in previous
times. Years of slow economic growth accompanied by poor human development
results have fuelled critical thinking in political circles. Asian economies such as South
Self-Instructional
Material 69

NOTES Korea, Taiwan, and Singapore have shown that private initiative and the promotion of
trade can lead to rapid economic growth and prosperity. China’s export-driven rise
since the late 1970s was an even more compelling example of how the global economy
could benefit poor developing countries. The Government of India produced a series
of important reports that were critical of the government’s industrial regulations and
suggested the need to promote exports.
4.5.1 Industry
Prime Ministers, Indira Gandhi (January 1966 – March 1977; January 1980 – October
1984), Morarji Desai (March 1977 – July 1979), Charan Singh (July 1979 – Jan
1980), Rajiv Gandhi (October 1984 – December 1989), Pratap Singh (December
1989–November 1990) and Chandra Shekhar (November 1990–March 1991)
continued the gradual and often stealthy deregulation of private sector economic activities
despite of socialist rhetoric. Among the prime ministers mentioned above, Rajiv Gandhi
was the most active in promoting the private sector. Trade promotion was less successful
than industrial deregulation during this period, and the ratio of trade to gross domestic
product (GDP) did not increase appreciably between 1980 and 1990. Liberalization
initiatives have been politically challenged by factions in the Congress party and Indian
industry.
Powerful interest groups created over years of regulation developed an interest
in maintaining a highly protected economy dominated by government control. The vast
majority of Indian industrialists got used to defeating the system of controls where
licenses and approvals were required for manufacturing, importing, and exporting.
Industrialists have become masters of the art of what Stanley Kochanek aptly called
“briefcase politics.” The industrialists maintained excellent relations with the politicians
and bureaucrats through their offices in Delhi. They wanted more privileges for doing
business in India but did not support global competitiveness.
The Federation of Indian Chambers of Commerce and Industry (FICCI) was
the most powerful trade association of the 1980s. FICCI recommends that the
government reduce the number of intermediates and seek incentives for 100% export-
oriented production. Yet they seemed to be unaware of India’s export potential in
pharmaceuticals and information technology, which were soon to emerge like the growth
Self-Instructional areas for India’s exports and a root to its involvement in the global economy.
70 Material

Technocrats understood the need for economic reforms and pushed them through NOTES
the Office of the Prime Minister (PMO). Indira Gandhi’s Statement on Industrial Policy
of 1980 illuminated a new direction, but it was slower than the reforms initiated by
Rajiv Gandhi. His most visible decision was to engage in financial negotiations with the
IMF following the second oil crisis in 1979 that were largely used to exploit India’s oil
and natural gas reserves by creating the publicly owned Petroleum and Natural Gas
Commission. The fund was secured in 1981 despite heavy criticism from left-wing
parties in India.
Telecommunications services and telephone exchanges were first deregulated
in the 1980s. The Telecommunications Department (DOT) was created within the
Communications Department to focus on the development of quality telecommunications
services. A state-owned company called Mahanagar Telecom Nigam Limited (MTNL)
was formed to provide services to major cities such as Delhi and Mumbai. The
Telematics Development Center (CDOT) is by nature a federal regulatory agency.
After competing with multinational companies like Alcatel, he developed a revolutionary
device used in telephone exchanges in rural areas.
The 1980s also saw the emergence of comparative advantage in India’s
information technology (IT) sector. This is the first time India’s service industry has
earned a good reputation as an industry. English education, good engineering faculties,
research universities and low fees have created a comparative advantage in IT services.
The Power Division (PMO) of the Prime Minister’s Office is made up of scientists and
experts rather than bureaucrats. These technocrats support engineering professionals
to do business in the IT industry and support regulatory policies. It makes it easy to
import computers and software to facilitate export.
The Green Revolution in India refers to the period when Indian agriculture was
transformed into an industrial system through the adoption of modern methods and
technologies such as the use of HYV seeds, tractors, irrigation equipment, pesticides,
and fertilizers. The area planted with high-yielding varieties of wheat and rice increased
considerably during the Green Revolution. The consequence was a grain production
of 131 million tons in 1978-79 and India turned into one of the world’s largest
agricultural producers. Self-Instructional
Material 71

NOTES Indian agriculture boomed in the 1980s. The growth rate of 3.4% in the 1980s
was higher than in other decades after India’s independence. After the Janata government
came to power in 1977, farmers managed to lobby the Ministry of Agriculture not to
impose tariffs on agriculture. Charan Singh was a senior leader in the Janata party,
which overthrew Indira Gandhi’s Congress government and was president for a brief
period between July 1970 and January 1980. From the 1950s he fought for the interests
of the average farmer. Although the government led by Janta was short-lived, the
amount of agricultural purchase and subsidy policies implemented during this period
was effective for many years. The powerful farm lobby led by Mahendra Singh Tikait,
Sharad Joshi and MD Nanjundaswamy has attacked the government for alleged neglect
of rural India by urban India.
The development of industry and agriculture in the 1980s also affected the health of
the people. First, India’s progress in higher education has been accompanied by an
alarming rate of illiteracy and poverty. The late MIT professor Myron Weiner said that
there may be some, but not all, reasons why India’s caste system and social structure
produce good universities. The government turned a blind eye and even encouraged
child labor, arguing that it was necessary for poor families’ survival. Since 1975, many
important policies have been implemented to reverse this change.
The National Education Policy and the National Literacy Mission initiated by
Rajiv Gandhi were important for influencing literacy. Second, education has attracted
more policy and attention than public health. Third, the percentage of Indians living
below the poverty line did not drop until 1973 and has been falling steadily since then.
The Indian economy was controlled within the country, but after 1975 it was cut off
from the world economy. The ratio of its economy to GDP was 16 percent in 1980
and has remained stable from 1990 onwards. The same figures are 22 percent and 35
percent for China. Indian policy makers have not been excluded from the success of
Asian economies such as Japan, South Korea, Taiwan and Singapore and the rapid
Self-Instructional
growth in the Chinese economy in the recent period. India cannot constrain capital
72 Material

and transform the economy from a transitional economy to economy-led growth. NOTES
Secondly, India has chosen not to use foreign debt directly from different companies,
which frees up resources for economic growth. In the 1980s, industrialists, farmers
and middle-class people turned to the state.
In 1990, a major financial crisis gripped India. The fiscal deficit, which measures
the difference between government spending and income, rose from 8.1 percent of
GDP in 1980-81 and 1984-85 to 10.1 percent in 1985-86 and 1989-90 due to
increases in government spending. The interest payment on business loans for
expenditure is subsidies to beneficiaries in agriculture and trade, and defense
expenditures. This spending pattern reflects the economic pressures of farmers,
businessmen, and urban middle-class families to make independent concessions. The
government must act according to these pressures. In addition, the social support of
previously backward, non-aligned activities means that the government must pay more
attention to various groups of people than in the past.
Government spending increased as India began to rely on commercial loans.
Commercial banks are not satisfied with the widening of the deficit. Political insecurity
began to worry them more when Rajiv Gandhi was succeeded by Prime Minister
Vishwanath Pratap Singh in December 1989 and then by Prime Minister Chandra
Shekhar in November 1990. During Vishwanath Pratap Singh’s tenure as Prime
Minister, he reserved 27% seats in appointments for other backward classes in colleges
and government jobs, in addition to the 22.5% reserved for schedule castes and tribes.
First ascent, the Businesses and investors are concerned that India’s demographics
and political uncertainty will remain here for a while.
The Gulf War took place at a time when the budget deficit grew due to civil
policies. The Gulf War (August 1990) and the consequent rise in oil prices increased
the Indian Treasury by 1% of India’s GDP. From June 1990 to March 1991, Moody’s
rating was downgraded from A2 (good credit) to Ba2 (speculative), and all credit
windows were closed. Moody’s rating agency downgraded India’s credit rating, citing
India’s debt-to-service ratio, over-reliance on corporate loans and high debt-issuance.
Private sector guidance and additional support for all vulnerable groups and
closed markets with key market controls were not sustainable. Given the financial
resources available for India’s development, India cannot support the growth of
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NOTES for the first time since 1966, the response of government voters who want India to be
competitive and participate in the global economy is fair. Less than two weeks until
India went into default in June 1991.
4.6 LIBERAL ECONOMY: AFTER 1991
The political economy of growth and development since 1975 has created an unstable
financial situation, resulting in dependence on foreign commercial banks since May
1991. It was this economic situation that empowered liberal politicians and technocrats
to move the Indian economy in a completely privatized direction, and from 1991
onwards, entrepreneurship and economic globalization began. The 1980s set the stage
for this shift in thinking. In this sense, 1991 is a turning point in the history of the Indian
economy. This section explains why drastic economic reforms have taken place since
1991.
Second, what were the key changes in trade and industrial policy and how did
these changes affect domestic and foreign firms? Third, why has infrastructure
development been efficient in areas such as telecom, stock markets, Indian Railways,
and aviation? Fourth, what are the key development challenges that need to be
addressed? India’s Agricultural Problems Despite having the highest number of absolute
poor in the world, India has made progress in job creation, literacy, and poverty
reduction. Malnutrition and public health are among the most serious policy concerns
in India today. India has a contradiction between impressive economic growth and
low levels of human development. This situation has been described as the result of the
“unstable” political economy of the state. While elite institutions at the national level
work well in many areas, there are still many shortcomings in governance at the local
level.
The external and internal crisis forced India to approach the IMF in June 1991. The
government used all its financial resources to fulfill its import obligations. He also sent
gold to the Union Bank of Switzerland and Bank of England for foreign exchange.
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Commercial banks have decided to stop lending to India. Non-resident Indians, who NOTES
were able to use Indian deposits to meet their foreign payment obligations, began to
withdraw their deposits.
India’s options are to default on import payments or seek financing from the
IMF. A default could affect India’s major imports of oil and intermediate goods. It is
difficult for a business to operate without the necessary imports. The difficult problem
has created a solution of experts to promote India’s competitiveness and the private
sector. Technocrats and economists contributed more to economic deregulation and
economic progress in 1991 than in 1966.
The crisis helped the reformists fight the reformists. The murder of Rajiv Gandhi
in May 1991 made the decision of the Congress party that came to power in June to
use the crisis to realize the vision of the late prime minister.
PV Prime Minister Narasimha Rao understands that the Indian economy is
facing a unique situation in its history. At the end of the Cold War, India faced a
financial crisis. India’s special economic relationship with the USSR had to be re-
established in terms of trade and imports.
It is also time for the country to shift its trade with Asia, the United States, and
some Western countries, which have benefited from the integration of the Cold War-
era world economy. While writing his doctoral thesis published by Clarendon Press at
Oxford University in 1964, Mr. Rao invited expert Dr Manmohan Singh, who
understands the importance of international trade, as finance manager. This article
presents an important argument that India should increase exports in times of poverty.
The foreign exchange (FOREX) crisis compelled India to approach the
International Monetary Fund (IMF) in June 1991 for a conditional loan. The government
used every financial source to meet its import constraints. He also transmitted gold to
the Bank of England and the Swiss bank to obtain foreign exchange. The Commercial
banks have planned to stop lending to India. Non-resident Indians (NRI) who could
use their Indian deposits to meet their foreign exchange payment obligations started
withdrawing their deposits.
India’s options were to either default on import payments or seek conditional
financing from the International Monetary Fund. A default could affect India’s significant
imports of oil and intermediate goods. It was very difficult to run an economy without
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NOTES required imports. The desperate crisis has created a firm intension in the technocracy
to boost India’s combative and private sector. There was more assistance for trade
promotion and economic deregulation among economists and technocrats in 1991
than in 1966. This contingency helped the technocratic reformers to challenge the
opponents of the reforms. In May 1991, the assassination of Rajiv Gandhi increased
the determination and commitment of the Congress Party that came to power in June
to harness the crisis to realize the late prime minister’s unfulfilled vision.
Prime Minister PV Narasimha Rao understood that India’s economy was facing
a remarkable situation in its history. India was facing a financial crisis when the cold
war ended. India’s natural economic relations with the Soviet Union had to be re-
established in terms of imports and markets. It was also a fortuity for the country to tilt
its economic interaction with Asia, the United States, and some Western countries that
benefited from the global economic interdependence of the Cold War era. Mr. Rao
invited and asked for technocrat Dr. Manmohan Singh as Finance Minister, Singh
recognized the importance of interdependence in the global economy even as he wrote
his doctoral thesis at Oxford University, which was published in 1964 by The Clarendon
Press. This paper presented an important argument to show that India should increase
its exports in times of poverty crisis.
It is worth mentioning the benefits of the reform program. The massive tariff liberalization,
especially on intermediate goods, was accompanied by a sharp devaluation of the
Indian rupee. Tariff liberalization has reduced input costs and pushed the Indian economy
to be more competitive. A devaluation of rupees increased the cost of imports and
lowered the value of Indian exports. Thus, the reduction in the quality of protection
enjoyed by the Indian economy is less than the magnitude implied by the tax cut. Due
to profit investment suddenly, Indian products became more competitive. This is a
great advantage for export-oriented industries such as informatics. India’s exports
doubled between 1991 and 1999 and doubled again between 2002-03 and 2005-
06. India’s IT and services exports recently doubled between 2004-05 and 2005-06.
The Foreign Investment Management Act (FERA), which limits foreign ownership
to a maximum of 40%, has been replaced by the government allowing 51% foreign
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than before, but less than China. Between 1992 and 2002, it received $24 billion NOTES
worth of foreign investment through foreign direct investment – a figure that China
could exceed in a year. Indian companies are mainly against foreign companies in
India. Some Indian businessmen welcome foreign investment.
The highly competitive IT industry has accepted the presence of foreign capital.
Second, small Indian companies that need foreign capital, technology, and management
skills to compete with larger Indian companies welcome foreign capital that cooperates
in joint venture. They faced opposition from big Indian businessmen. For example,
Bharati Enterprises has welcomed the rise of foreign ownership in Indian telecom
companies, where telecom companyAirtel has benefited from joint ventures with foreign
companies such as Singtel and Warburg Pincus. Airtel is India’s largest
telecommunications company. Richer rivals such as Tata Telecom and Reliance Telecom
have long resisted foreign entry into India’s telecom industry.
Capital markets helped India increase its competitiveness in many areas after
1991. Tata Group, India’s largest corporations, was transformed into an Indian
multinational corporation worth $63 billion in 2008. International sales accounted for
61% of total sales for the year ended March 2008. Thirty percent of Tata’s 350,000
employees are located outside of India. Ratan Tata, the chairman of the Tata group
after 1991, changed Tata in two important ways. First, he decided to increase Tata’s
productivity. As an example, Tata Steel implemented a retirement plan for 30,000
employees and invested $2.5 billion in capital transformation, supporting the company
from the top 50 companies to the five largest steel companies in the world with a
global perspective. The second is to actively use the concept of globalization. The
2007 acquisition of Anglo-Dutch Company Corus Steel for $12.1 billion is one of the
largest deals in the history of the steel industry. The idea is to combine low prices in
India with quality products from Corus. Other key acquisitions that will help Tata
Group expand into the global market include Tetley (2000), the second best-selling
tea brand, and automobile brands such as Jaguar and Land Rover (2008).
Globalization needs innovation. Tata Motors not only launched the successful
Indica, but also introduced a new concept in the world’s cheapest car, the Nano, for
$2,500. According to BusinessWeek, Nano makes the Tata group the sixth largest
company in the world, behind Microsoft, Google, and Apple, and ahead of Sony,
Nokia, IBM and BMW. Another example of international excellence in the Self-Instructional
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NOTES manufacturing industry is Bharat Forge. It produces machines used by the world’s top
automakers and is the second largest forging company in the world, behind Germany’s
ThyssenKrupp and ahead of Japan’s Sumitomo Steel. In the late 1980s, the company
became a leader in India as a management company. Chairman and CEO Baba Kalyani
transformed a company that relied on incompetent workers using substandard machinery
into a company using skilled workers and tech technologies. The company has made
several acquisitions abroad, which has helped it gain technology and enter the market.
In 2008, 11 production sites included 3 in India, 3 in Germany, 2 in China and 1 each
in North America, Sweden and Scotland.
Middle-class Indian entrepreneurs such as Narayan Murthy and Nandan Nilekani
of Infosys took advantage of the deregulation of software and business services and
India’s comparative advantage in the 1980s. Founded in 1981 by a group of talented
engineers with an initial investment of $250, the company reached a market capitalization
of $4 billion in 2008. Infosys is a global giant, but in the late 80s it was grappling with
software exports. When a founder left the company in 1989, sales were under
$500,000. After 1991, the devaluation of the rupee and the easing of restrictions
allowed companies like Infosys to establish themselves as world leaders. Infosys has
achieved strong corporate governance by following the standards set by the Nasdaq
and adopting US GenerallyAccepted Accounting Principles (GAAP). Excellent business
management and loyalty to customers have earned the company a great reputation.
An entrepreneur’s idea is to find jobs mostly in India at low cost and export at least
some of the services to foreign clients. Infosys Center is one of the largest human
development centers in the world, with the capacity to train 13,500 people per month.
This part explains how India has integrated structural reforms to improve performance
in several key infrastructure sectors. India’s retail industry, stock exchange,
telecommunications industry, Indian railways and private airlines have changed beyond
recognition in the post-reform era. In the worst case, the policy will support products
to properly install and better cut these jobs during the financial crisis. India’s economic
system is changing dramatically. These businesses attract foreigners and Indian savings,
which is dangerous for the growth of India’s corporate sector.
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Portfolio investment, which is the purchase of shares and bonds in a foreign NOTES
country’s stock markets, was a way of attracting foreign capital. Stock markets also
instigated to attract the savings of Indian residents – as they offered the potential of
higher returns. The financial crisis was needed but not sufficient for producing reforms
in the governance of India’s stock markets. The old regime had resisted computerization
and electronic trading and had continued with an opaque system of settlement of
transactions that favored the established brokers of the Bombay Stock Exchange.
The finance ministry of India had hoped the BSE would be restructured after
the 1991 balance of payments (BOP) crisis. When the reforms failed, it was decided
to establish the National Stock Exchange (NSE) in 1993. NSE became India’s largest
stock exchange in 1995. NSE pressed for exchange traded on BSE. In 1999, all
exchanges were computerized. The change in market policy had to wait until 2003,
when the strength of established brokerages was very good, but until after the big
stock market in 2001 they were forced to take necessary actions under pressure from
the Ministry of Finance. India’s economic transformation has benefited from the
enormous power the financial institution has engaged in establishing new business in
India. Also, companies are full of cash but not many votes. This strategy helped the
Ministry of Finance to combat BSE by establishing NSE.
The growth of the Indian radio industry is greater than any other country in the
world. India’s telephone connections rose from around 23 million in 1999 to 430
million in 2009. Of the 430 million phones in 2009, 340 million were mobile phones.
In 2009, the private sector accounted for 80% of the Indian telecommunications
industry. Even though the connectivity gap between rural and urban areas is huge,
mobile phones still serve the rural population. Connectivity is a boon for rich and poor
alike. Construction workers, vendors and taxi drivers benefit from connections such
as high productivity and service industry knowledge. India’s economic boom has been
fueled by the development of mobile phone technology, which consumes less resources
and is less regulated than traditional mobile broadband.
Changes in the 1990s telecom policy, encouraged corporate involvement in
Indian telecommunications. In the 1990s, the Department of Transportation (DOT),
subordinate to the Department of Transportation, defended joint ventures in two ways.
First, it often allows for collaboration in areas where it believes there is not much
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NOTES business potential. According to this theory, the private sector is specifically allowed
to participate in the mobile network. Second, the competition process and taxes make
the business environment unfavorable for private companies. Participation in the private
sector is supported by the Presidency, usually with the support of the Ministry of
Finance. These are the organizations that helped bring together the Regulatory Authority
of India (TRAI) and the Telecom Dispute Resolution Appeal Tribunal (TDSAT). TRAI
and TDSAT aim to create a competitive playing field for hiring public and telecom
operators.
Prime Minister Atal Bihari Vajpayee (1998-2004) succeeded in pushing the
system towards independent administration during the investment period between 1999
and 2000. As a regulator and service provider, DOT produces policies that harm the
private sector. When the state-owned company MTNL was granted unlicensed access
to the mobile phone market in 1998, a large investment for the private sector came.
State-owned financial institutions lending to the private sector will also suffer losses in
this process. Prime Minister Vajpayee’s initiative this time gave the regulator more
freedom to settle disputes between private companies and state-owned
telecommunications providers. Airtel is a private company and is the largest service
provider in India. Government companies like MTNL and BSNL are doing well and
doing important work in the rural sector.
In 1990, private airlines were declared. The Trade Act (1994) is a landmark
from the work preceding the 1953 civil aviation regulation serving civil aviation in
India. The 1994 Act allowed private airlines to operate for the first time since 1953. In
the post-independence period, airlines such as Jet, Kingfisher, Air Deccan, Indigo,
and Spice Jet operated domestically and abroad for various customer needs. An Indian
company allows up to 49% foreign investment. Rail traffic increased from about 13
million passengers in 2000 to 37 million in 2008. The airline sector still lacks an
independent regulator. Even as the sector has become more competitive, the
government-owned carrier - Air India was making significant losses and finally sailed
to Tata led private players.
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NOTES
4.7 ECONOMIC REFORMS IN INDIA UNDER UPA-1
AND UPA-2
UPA imposed government control on fuel pricing. During phase-1, the UPA government
squandered its resources on populist schemes like NREGA and NFSA. The economic
growth during the years 2005-06 and 2007-08 was tremendous, more than 9%. And
it is also the time when poverty fell drastically, and there was a high rate of growth in
manufacturing industries between 2004-05 and 2010-11. In 2012, the UPA-2
government decided to disinvest in the public shares, if successful there had been a
receipt of ¹ 20,300 crores that would have provided some relief to the fiscal deficit.
The UPA aimed to strengthen economic growth and make India an attractive destination
for foreign investment.
However in January 2013, UPA presented new economic reforms. Reforms
included price hikes in diesel, restriction of LPG cylinders, FDI in retail, and increase
in prices of fertilizers. The government introduced 51% FDI in multi-brand retail. This
was not taken kindly by other parties and there was a lot of opposition. Trinamool
Congress did not support this policy of Congress and strongly spoke against it, and
consequently withdrew its support from the party. The party argued that capping the
supply of LPG cylinders and FDI in retail was not in the favor of the common man.
A congress leader, Jagdambika Pal was in favor of the policy, and said, “If FDI
in retail came to India, only then there will be investments of huge amount, and only if
there is an investment, there is growth and only then employment can be generated”.
The economy weakened several times during the last decade, though there was
tremendous economic growth between 2005-06 and 2007-08, and around 9% growth
in 2010-11, there has not been even a 5% growth in the last couple of years. The
problem of fiscal deficit and inflation in the economy persisted more than ever. The
finance minister, P. Chidambaram claimed that there was some relief brought by the
economic reforms to the fiscal deficit, and it was only a little more than 4%.
Swaminathan Aiyar while discussing FDI in India said that now Aam Bania was
more powerful than the Aam Aadmi. This is due to the circumstance 50 million traders
on strike outnumbered the organized workers in the economy (around 30 million). If
foreign retailers are supported, it would be the same as the Aam Aadmi going against Self-Instructional
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NOTES the Aam Bania. Amartya Sen vis-à-vis this policy said that every moment of it should
be studied. There were a lot of sides to this policy, and there was no such thing as to
whether it should be allowed or protested, it cannot be thought of in those terms.
However, to sum up, the following consequences took place as a result of the economic
reforms introduced by UPA: -
1. The industrial sector was weak, and fixed capital formation continued to
slow. This is because investment proposals fell drastically, the rupee
continued to depreciate and POSCO pulled out.
2. Government policy paralysis led to delays in project implementation, fuel
shortages, and high-interest costs.
3. The years 2004-05 to 2010-2011 saw growth in manufacturing industries,
although growth stagnated and factory output declined.
4. Agriculture employs more than 50% of the people in the economy, but it
contributes only 18% to the GDP, and now things have come to a point
where agriculture is considered a threat. More than 1,46,000 farmers
committed suicide between 2004 and 2012, a high annual average of
16,264.
5. Also, there is a case of slack employment. Despite the unprecedented
and impressive growth of the economy, employment grew by only 2.2%
per year.
6. The stock market has become volatile in the last decade. The rise or fall of
these indices depends on the buying and selling decisions of foreign
institutional investors.
Indian Railways (IR) went from bankruptcy in 2001 to $6 billion in 2008. The
IR carries approximately 18 million passengers and 2 million tons of cargo every day
on its 63,327 miles of highway. The world’s largest company, with 1.4 million employees
and 1.1 million retirees, looked bad in 2001. At that time, expenditures increased by
13% and revenues increased by 8% in a year. The situation has changed dramatically
since 2004. Between 2004 and 2008, freight and passenger traffic grew by 9% annually.
The changes come as IR’s cargo and passenger operations are increasingly being
taken over by other modes of transport. In 2004, the government appeared reluctant
to bill the deficit at a time when IR was facing a financial crisis.
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Lalu Yadav, a leader known for his political influence in the Bihar economy, NOTES
stands out. He used his expertise and provided a team with the necessary technocratic
skills to work. Profit is not made through layoffs or higher prices. First, it turned losses
into gains by increasing the number of train passengers to achieve economies of scale.
Additional wagons carry more passengers and reduce freight costs. Second, the cost
of shipping commodities such as iron ore has increased significantly. In this emerging
market, IR has a competitive advantage in the door-to-door market. Cargo revenue
grew from $209 million in 2004 to over $1 billion in 2008.
Overall, the economy faced weakening growth, rising prices, a weakening
currency, and a growing deficit and the general impression was that the country was in
economic turmoil. People had conflicting views about his poor performance, with
some saying he squandered his money on popular schemes like NREGA and NFSA,
reversed liberalization, and starved development in sectors like infrastructure. Some,
on the other hand, say that the government succumbed to massive corporate influence,
and became a promoter of destructive rents rather than inclusive growth.
4.8 ECONOMIC REFORMS AND POLICY UNDER

MODI REGIMES
The Government of India has given a new dimension to reforms in the last nine years,
as they focus on creating public goods, adopting trust-based governance, partnering
with the private sector for development, and improving agricultural productivity. This
approach reflects a paradigm Shift. A shift in the government’s growth and development
strategy emphasizes building partnerships among various stakeholders in the
development process, where each contributes to and reaps the benefits of development
(sabka saath, sabka vikas).
Since coming to power in 2014, the Narendra Modi government has introduced
several economic reform measures through a mix of legislative and policy changes.
Here are the eight steps that stand out.
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NOTES PM Jan Dhan Yojana
On August 28, 2014, Prime Minister Narendra Modi launched the ambitious Pradhan
Mantri Jan Dhan Yojana (PMJDY), promising to eradicate “financial untouchability”
through the world’s largest all-banking scheme. The plan envisaged universal access
to banking facilities with at least one basic banking account for every household, financial
literacy, and access to credit, insurance, and pension facilities. The objective was to
channel all welfare entitlement pay-outs such as NREGA, payments to beneficiaries’
bank accounts through the Direct Benefits Transfer (DBT) scheme. Eight years later
the scheme has achieved far more than what was envisioned. As on May 21, 2022,
there were 454.1 million beneficiaries banked so far with a combined deposit balance
of Rs. 167,145.80 crore.
Bad Bank
The government has set up a ‘bad bank’ as part of a broader strategy to clean up
banks’ balance sheets. The National Asset Reconstruction Company Limited (NARCL)
or the government-backed bad bank as it is called, is fast emerging as a key player in
managing distressed assets. It will act as an aggregator of all stressed assets in the
system. It is set up to buy the bad loans and other illiquid holdings of another financial
institution. NITI Aayog was instituted on the premise that the government should have
a somewhat hands-off approach to substitute for the growth of private enterprises.
Instead, the state or the government should focus its energy and resources on being an
enabler by enacting the appropriate legislation and building a robust regulatory
architecture to aid development and allow private enterprises to prosper.
Insolvency and Bankruptcy Code
The government endorsed the Insolvency and Bankruptcy Code, 2016 that permits
lenders to immediately suspend the board, band promoters’ powers, and allow time-
bound recovery of loans. The Code, which has undergone several amendments, creates
time-bound processes for the insolvency resolution of companies and individuals. The
borrowers’ assets may be sold to pay creditors if insolvency cannot be settled. To
speed up the resolution of insolvency, information utilities (IUs) have been developed
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to gather, compile, and disseminate financial data. For businesses, insolvency resolutions NOTES
are decided by the National Company Law Tribunal (NCLT). The Insolvency and
Bankruptcy Board of India has also been set up to regulate the functioning of IPs,
IPAs, and IUs.
Separate Railway Budgets
Five years ago, the railway budget was merged with the Union budget, ending a
separation that dates to 1924. Indian Railways (IR) has prepared the National Railway
Plan 2030, which will take IR forward to 2050, was a reform document of 2017,
which cited problems of insufficient investment in infrastructure, insufficient customer
focus, low generation of internal resources, and organizational rigidity. It was against
the background of competition between the two road transports.
The Grand Reform Template has five elements.
1. Private entrance, offer competition and better services.
2. Accounting reforms to ensure transparency of cost and profitability figures.
3. Independent regulator.
4. Decentralization of decision-making, away from the centralized structure
at Rail Bhawan.
5. HR restructuring means not only the structure of the railway board but the
future unification of services prospectively.
Real Estate (Regulation and Development) Authority (RERA)
This Act was legislated in 2016 that surfaced the way for setting up a quasi-judicial
body, which makes it mandatory for builders to get approval from the authority before
launching or even advertising a housing scheme. Without a doubt, the construction
boom that accompanied India’s sizzling growth years created huge employment
opportunities with multiplier effects across secondary sectors such as steel and cement.
The unpleasant flip side, however, was that it also shaped business opportunities for
unprincipled builders and developers who habitually fooled consumers by not delivering
dwellings on time or of the obligatory size and quality.
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NOTES Goods and Services Tax (GST)
The GST, which was billed as independent India’s biggest reform initiative, will complete
six years of the rollout on July 1, 2023. The new indirect tax system apprehended the
promise of dismantling fiscal barriers among states and revolving India into a common
national market for goods and services by consolidating the confusion of local and
central levies into a single tax. Six years later, GST continues to remain a work in
progress. A few pain points have been ironed out along the way, but many remain. The
primary remaining issue is, of course, the multiple slabs. Multiple slabs go against the
conceptual construct of a uniform, unified, nationwide tax system.
United Payments Interface (UPI)
UPI, a system that powers multiple bank accounts into a single mobile application (of
any participating bank), merging several banking features, seamless fund routing, and
merchant payments into one hood, was launched in 2016. This has significantly eased
payment systems and integration in both online and offline spaces and has now become
the instrument of choice for millions. The default payment option, even for small
purchases like buying incense sticks, is now through India’s homegrown UPI system.
Most people now reach for the phone to pay at the store instead of cash. UPI recorded
its highest-ever number of 8.04 billion transactions in January 2023, worth Rs 12.98
lakh crore. The next target for UPI is to process one billion transactions per day in the
next 3-5 years.
Production-Linked Incentive (PLI) Scheme
The PLI scheme was launched in 2020 and aims to turn India into a preferred global
manufacturing destination. The scheme provides cash incentives for three to five years
on additional sales of Made in India goods over a specified base-year sale. In addition,
the acknowledged beneficiaries are required to obligate to a certain minimum investment
in India. Aimed at boosting manufacturing, job creation, import reduction, and export
growth, the PLI scheme covers strategically significant sectors that have seen increasing
demand, and developing manufacturing capabilities is important. The scheme has so
far provided 14 sectors like mobile manufacturing, manufacturing of medical devices,
pharmaceuticals, drugs, automobiles, white goods (ACs and LEDs), electronic
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products, telecom and networking products, food products, textile products, solar NOTES
PV modules, ACC battery and drones and drone components with about 2.5 lakh
crore has generated investment commitments. The government expects the scheme to
generate 28.15 lakh crore additional output and create 6.45 million new jobs.
4.9 CONCLUSION
India’s economic reforms are not promising for most of the economy. Energy
production, which is important for business, agriculture, and public health, is in bad
shape. Agriculture, which feeds most people, developed slowly. Despite some progress
in literacy and poverty reduction, India still lags China in many areas including these.
India’s record in food consumption is even more worrying. After 1991, the inequality
of economic growth and development between states in India widened. The poorest
areas of India with the lowest level of human development are also the most populated
areas of India.
India’s electric power system is unable to provide services comparable to the
success of telecommunications. The state electricity commission, run by the state
government, is defaulting on funding. There are two issues that affect the presentation
of quality products in the sector. First, wealthy politicians and middle-class farmers
refused to pay for electricity. The governors of states like Andhra Pradesh and Tamil
Nadu, which lack groundwater, used free electricity to win re-election. Second,
electronic theft is very common. States like Andhra Pradesh have made some progress
in energy management. They reduce losses by managing government power plants
and helping commercial customers. Commercial consumers, who need good electricity
at a higher price, are cross-subsidizing losses from theft, and farmers do not pay taxes.
Indian agriculture is in difficult position. Subsidies to agriculture have been steadily
increasing as its share of India’s GDP since 1990-91. More subsidies do not lead to
more agricultural growth. The government has announced a major investment program
for rural development called Bharat Nirman (Building India) and the money allocated
for this project will be used for activities such as irrigation, drinking water, shelter,
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NOTES electricity, and telephone in rural areas. While the economy is growing at over 6%,
agriculture is growing at an average of less than 3% annually, which has an impact on
employment for most rural Indians. Sociological studies show that land scarcity is
driving people away from rural areas.
People working in the city get money back to the village and some people go to
the city to work in agriculture. The research data reported that farmers in states like
Andhra Pradesh, Kerala, and Karnataka have committed suicide. Growing academic
evidence suggests that farmer suicides occur primarily as a result of the shift from
subsistence farming to agriculture. Commercial farming can be dangerous without social
security. Farmers are often attracted by the expectation of profit and investment without
understanding the risks associated with business ventures. Good crops can go wrong.
Pride, not poverty, guaranteed life, when farmers take commercial risks and acquire
creditors but cannot pay back because the crop is not good. In India, suicides of
farmers engaged in the agribusiness are common. This is rarely the case among marginal
farmers.
National Rural Employment Act (NREGA, 2005) has been hailed as one of the
most important measures to reduce poverty in India. The government has guaranteed
employment for 100 days, including the daily rate difference from the state government.
Although the right to work cannot be exercised in court, it is recognized by law. The
poor participate in the creation of sustainable public goods that should lead to water
conservation, wind protection, water and land development. This is a firm commitment
and unlike previous poverty reduction programmes, it cannot be revoked as it is legally
binding. Civic organizations and non-governmental organizations (NGOs) can also
use the Right to Know Act to combat corruption related to the implementation of
NREGA.
Scheduled Castes and Tribes participate in more than 60% of job creation
across India. According to reports, the caste system in Andhra Pradesh is collapsing
because of NREGA. Women are in more than 50% of the workforce. India prides
itself on its food supply but has a poor track record on food supply. By one estimate,
India may have a higher rate of child malnutrition than Ethiopia. India’s population
distribution system suffers from the infiltration of the wrong population. Many poor
people are excluded, and those who do not experience great poverty may not accept
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resources for the poor. While states like Kerala, Tamil Nadu, and Himachal Pradesh
88 Material

appreciate the necessity of food security with the success of the people, Bihar, Uttar NOTES
Pradesh, West Bengal, and Madhya Pradesh are distributing food to the poor from
the same institution. Left parties in Kerala and DMK and AIDMK parties in Tamil
Nadu played an important role in providing food to the poor.
India’s literacy rate is poor compared to China and many other developed
countries. In 2005-06 India’s literacy rate among youth aged 15 to 24 was 80%,
compared to 99% in China. The story of India’s first education campaign since
independence is tragic. Education has received regular attention on the right over time.
In 1993, the Supreme Court of India linked the right to read and write with the right to
life. Sarva Shiksha Abhiyan (Training for All Professions) was launched in 2001-02. In
August 2009, India passed the Right to Education Act, which made a significant
commitment to free education and training in India. The biggest challenge in promoting
primary education is the prevalence of poor public schools with high teacher absenteeism.
This phenomenon has led to the growth of secondary schools and affordable private
schools for the poor. Public schools are still the only option for the children of the
poorest. Its disadvantages will lead to a gap in access to education between the children
of the poor and those who can afford private schools.
Adult literacy rate in Kerala was over 90% in 2001. This achievement is the
result of a historical process that has involved intense efforts by Christian missionaries,
Travancore kings and other minorities since the early 20th century. Even before the
arrival of the British, non-Brahmin education was common in Kerala. States that had
a large illiterate population when they gained independence in 1947, such as Rajasthan,
Madhya Pradesh, and Himachal Pradesh, have succeeded in increasing the literacy
rate. Rajasthan is one of the few states where there is a school in every village. Madhya
Pradesh’s experiment in encouraging local governments to be accountable has managed
to reduce teacher absenteeism in the state to one of the lowest levels in the country.
There is evidence that the increase in literacy has a positive impact on good governance
in India. Literate citizens need to play an important role. Two large, poor and populous
states, Bihar and Uttar Pradesh, have not been successful in promoting literacy.
The proportion of India’s population living below the poverty line fell more
rapidly during the post-1991 reforms than before the reforms. Angus Deaton and Jean
Dreze tried to solve this problem by analyzing the product baskets used to measure
nutritional level in these two breeds. A reasonable measure is to estimate that the Self-Instructional
Material 89

NOTES percentage of the population, or people living below the poverty line, fell from 36% in
1993 to 26.1% in 1999-00. Despite the decline in population, India still has the largest
number of poor people in the world. The western states of Bihar, Madhya Pradesh
and Uttar Pradesh hold the majority of the poor in India. The two states that benefited
most from the green revolution, Punjab and Haryana, have India’s lowest population
densities. Kerala is not a wealthy state, but absolute poverty is alleviated by being able
to redistribute wealth to the poor.
The growth gap between the richest and poorest in India widened in the post-
reform period. After the abolition of business licenses in 1991, states directly participated
in attracting investments. State support for development in poor states also declined
after 1991. In this new system, well-governed states offer investors the best investment
opportunities, thus attracting investment and growing faster. This change in investment
helped the economy of states like Maharashtra and Gujarat to grow rapidly, while
poor states like Bihar, Uttar Pradesh and Odisha slowed down. The gap between the
richest and poorest countries has widened significantly since the 1980s. Rising inequality
may compare the rich in India to Singapore and the poor to sub-Saharan Africa.
1. How did India move from a market economy to one of the world’s largest
economies?
2. What are the challenges to sustaining economic growth and social development
in India?
4.11 REFERENCES
 Amartya Sen, “Theory and Practice of Development”, in I.J. Ahluwalia and

I.M.D. Little, eds., India’s Economic Reforms and Development (New Delhi:
Oxford University Press, 1998).
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 Amit Bhaduri and Deepak Nayyar, An intelligent Person’s Guide to Liberalisation NOTES
(New Delhi: Penguin Books, 1996).
 Arvind Pangariya, India: The Emerging Giant (New Delhi: Oxford University
Press, 2008).
 Atul Kohli, Democracy and Development in India (New Delhi: Oxform University
Press, 2009).
 Baldev R Nayar, India’s Mixed Economy (Bombay: Popular Prakashan,1989).
 Baldev R Nayar, “When did the ‘Hindu’ Rate of Growth End?” Economic and
Political Weekly 41:19(May 13, 2006).
 Baldev R Nayar, The Myth of the Shrinking State (New Delhi: Oxford University
Press, 2009).
 Dinesh C Sharma, The Long Revolution (New Delhi: Harper Collins,2009).
 Economic Survey of India, 2023.
 France R Frankel, India’s Political Economy 1947-2004(New Delhi: Oxford
University press,2005).
 Indira Gandhi, Selected Speeches and Writings-Volume 4 (New Delhi:
Publications Division of the Ministry of Information and Broadcasting, November
1985).
 Jagdish Bhagwati, India in Transition (Oxford: Clarendon Press,1993).
 Jessica S Wallach, “Structural Breaks in India Macroeconomic Data,” Economic
and Political Weekly 38:41 (October 11,2003).
 John P Lewis, India’s Political Economy (Delhi: Oxford University Press, 1997).
 Manmohan Singh, India’s Export Trends (Oxford: Clarendon Press, 1964).
 Mantek S Ahluwalia, “Economic Reform for the 1990s,” First Raj Krishna
Memorial Lecture (Jaipur: Department of Economics- University of Rajasthan,
1995).
 Nandan Nilekani, Imagining India (New Delhi: Allen Lane, 2008).
 Partha Chatterjee, ed., State and Politics in India (New Delhi: Oxford University
Press,1997).
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NOTES  Pranav Bardhan, The Political Economy of Development in India (Oxford: Basil
Blackwell,1984).
 Rahul Mukherji, “Managing Competition,” in Rahul Mukherji, ed., India’s
Economic Transition (New Delhi: Oxford University Press, 2007).
 Sudhir Kumar and Shagun Mehrotra, Bankruptcy to Billions: How the Indian
Railways was Transformed (New Delhi: Oxford University Press,2009).
 Tendulkar and Bhavani, University Reforms: Post 1991 India (New Delhi: Oxford
University Press,2007).
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UNIT V: ELECTORAL POLITICS IN STATES
LESSON 5 POLITICAL PARTIES, LEADERSHIP AND

MOBILIZATION
Political Parties, Leadership and Mobilization
LESSON 5 NOTES
POLITICAL PARTIES, LEADERSHIP AND

MOBILIZATION
Translator: Dr. Garima Sharma
Research Scholar, Department of Political Science, DU
Structure
5.2 Introduction
5.3 Study of State Politics from the Perspective of Elections
5.4 First Democratic Upsurge
5.5 Second Democratic Upsurge
5.6 Third Democratic Upsurge
5.7 Conclusion
5.8 Summary
5.11 References
 Students will be able to get knowledge about the meaning of democratic upsurges.
 Students can understand the reasons behind the three democratic upsurges in
India since Independence.
 Students will be able to understand the importance of studying state politics.
 Students will be able to analyze the role of political parties in the process of
political mobilization.
 Students will become aware of the existing literature on Indian electoral politics.
 There will be a development of studying voting behavior among students.
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NOTES
5.2 INTRODUCTION
Elections studies in democratic countries can help evaluate citizens’ expectations and
the prevailing diversity within society. Elections can be seen as resemblance to a
workable democracy. Through elections, we can analyze the rising aspiration of society
at different points in time. Electoral politics is a comprehensive sub-topic of Indian
Politics in itself. It includes the process of the electoral system to electoral behavior.
The study of electoral politics within states has been mainly studied under the changed
role of state level politics and regional parties. This changed role of regional parties
and can be observed through coalition politics, where regional parties are now playing
a special role in the Lok Sabha elections. Due to this change in Indian party system, it
becomes very necessary to study political parties. In a democratic system, the role of
political parties can be seen as mediators. Where on one hand it works to give voice
to the aspirations of the public, on the other hand it also works to convey the policies
of the state to the public after getting power. Indian party can be analyzed mainly from
one party dominant system to multi-party system. While in the first period, the effect of
one-party system could be seen at the center and state level under the dominance of
Congress, on the other hand, after the arrival of regional parties, the coalition
governments started formed at the center as well as at the state level.
Myron Wiener believes that even before 1967, the state level party system had
started a different direction from national level politics. Its impact was clearly visible in
the 1990s. During this period regional parties were not only playing a special role in
the politics of the state but also making their special place at the center. In the 1996
Lok Sabha elections, seven regional parties won 81 seats in the parliament. However,
Yogendra Yadav and Suhas Palshikar believes that the opportunities created by the
end of Congress system cannot be observed equally within each state. Even before
the collapse of the Congress system, changes were being experienced in many states.
For example, in Karnataka and Maharashtra, this change occurred after mid-term
elections to the state legislatures in 1983, when the two-party system was introduced
after congress-dominated politics. Similarly, in Assam this changed was observed after
1985, whereas in Haryana, the dominance of Congress had started to fade from the
formation of Haryana state which was completely abolished in 1987 by Devi Lal’s
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party with Jat identity. In 1989, the Congress-dominated states which included states NOTES
like Uttar Pradesh, Bihar, Madhya Pradesh, Rajasthan, Gujarat, Maharashtra, Orissa,
Himachal Pradesh, and Union territory Delhi, were also looking for new opportunities
after the end of Congress system in national-level politics. Thus, with the end of the
Congress system, the state level electoral politics was clearly visible at the state and
center level politics. However, not only the Congress system can be held responsible
for this, but caste and regional identities can also be seen as the main factors along with
it. To present this changed perspective of the electoral politics of states, an attempt has
been made in this chapter to analyze party politics as well as voting behavior. Which
has been presented through three democratic upsurges of Indian democracy.
5.3 STUDY OF STATE POLITICS FROM THE

PERSPECTIVE OF ELECTIONS
Studying electoral politics in a country as diverse as India becomes interesting. This

election can be observed to change in different periods. This transformative nature of
electoral politics can be experienced both at the central and state level. Yogendra
Yadav has tried to define Indian politics through three electoral systems. In his article,
the term electoral systems have been used by Yogendra Yadav in the context of studying
the electoral behavior and results prevalent in different periods. Under which he believes
that the first four Lok Sabha elections from 1952 to 1967 can be understood from the
first electoral system. This period was a period of one-party dominance from electoral
point of view, where the presence of the Congress party made the electoral politics
non-competitive. Although the results of voting in this period could be seen at the
national level, but the special thing is that in this period the voter was deciding his vote
not as an individual voter but as a member of ‘Caste Community’. That is, any factor
other than political party that could be seen to influence voting behavior was the caste
of the voter. The effect of this factor started to be observed after 1967, when voters
started the process of voting according to caste instead of Congress party.
Yogendra Yadav presents the period (1968-1988) of the Congress party’s
decreasing dominance in the state level elections and the emergence of regional parties
as the second electoral system. During this period, the entry of new candidates from Self-Instructional
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NOTES other backward classes could be observed in the field of electoral politics. While
Indira Gandhi’s victory in the 1971 elections was being presented as the re-establishment
of Congress dominance, Yogendra Yadav believed that it was the result of the congress
establishing a changed political role in the new electoral politics. In this period, not
only Congress was established as a party, but many political alternatives could be
seen. Along with this, the specialty of this period was that even after the presence of
various political parties, the dream of establishing a united front as a strong opposition
could not be realized. The period from 1989 to 1999 was presented by Yogendra
Yadav as the third electoral system, where the role of regional parties was no longer
limited to state level electoral politics but played a special role in national politics to
form the government. The main reasons for which he considers the entry of Three
‘M’; Mandal, Mandir, and Masjid in electoral politics, later on Choudhary added two
more M in this series as Market and Matdata, where because of the recommendation
of Mandal Commission, the subject of reservation for other backward class had become
the main caste question of that period of electoral politics. On the other hand, the
initiative of the Bhartiya Janta Party to build ‘Ram Mandir’ through rath yatra had
worked to expand the politics of Hindutva in Indian politics (Choudhary 2017). Along
with this, the Market system had entered Indian politics by adopting policy of LPG –
Liberalization, Privatization, Globalization to emerge from economic recession
and this economic change could be clearly seen under electoral politics as well. In this
period, the increasing expansion of BJP and other regional parties in different states
has also proved that the form of state politics has been not remained same as before,
but change in its nature can be experienced. According to Yogendra Yadav, the special
fact of the third electoral system was that during this period many political options
were available to the voters, which could be observed by decreasing vote percentage
of Congress. Prior to this period, under two electoral systems, the voters had only two
options, Congress, and Non-Congress opposition parties, but in this period, the voter
had many options under the opposition as well, which Yogendra Yadav described as
‘Post-Congress Polity.’
Under electoral politics, state politics can be studied from two perspectives. In
the first approach, the efforts of different parties to gauging public opinion within the
states can be analyzed during Lok Sabha elections and under second approach, the
party politics of various states can be analyzed at different levels. Both these approaches
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can be used to study state politics from electoral perspective but by studying the NOTES
politics of each state at a separate level, the researcher gets an opportunity to study
the electoral politics within the states in India in a comprehensive manner. Even after
this, there are many such points which can be observed at Lok Sabha and state
legislature elections.
 Role of Pan Parties: These are such national parties whose vote base is
prevalent in mostly all states of India, like; Congress and BJP, where in the
first phase voter’s mobilization was being done at both the central and state
level by the congress party under one-party dominance system. Similarly,
since 2014, the BJP-led National Democratic Front government can be
experienced while forming the government at the center and states.
 End of Congress System: The end of Congress system can be observed
as the main factor in changing the direction of state politics. With the end of
this system, the ability of the Congress party to make ideological adjustments
also began to decline, which had played a major role in the development of
other political parties.
 Role of Regional Parties: The most important factor which changed state
politics can be considered the emergence of regional parties. It was only
through these parties that different regional aspirations could get a voice.
Prior to this, the work of providing directions to regional aspirations was
also done by the Congress party, but after a time it was felt that these regional
aspirations faded away in the politics of center. Due to this, state level regional
parties started to emerge.
 Politics of Coalition: In the 1990s, an issue-based voting process rather
than party ideology led to the development of coalition politics. Under which,
in the event of no party getting a clear majority, parties with opposite
ideologies were also seen joining the alliance. This period played an important
role in bringing state politics to the center.
Regional Parties’ Role in State Politics
The picture of Indian politics cannot be presented without analyzing the role of regional
parties in state politics. The emergence of regional parties can be observed in various
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NOTES ways under different states, but even after this diversity, the emergence and development
of regional parties can be studied on a common pattern. For this, it is necessary to
study the regional parties through the interrelationship between the social, political,
and economic development that took place after the independence of the regional
aspirations that arose in the 19th century. Parties are divided into three categories by
the Election Commission of India - National Parties, State Parties, and Registered
Unrecognized Parties. At present, according to the notification published by the Election
Commission, there are six national parties and more than fifty state parties have existed
in the Indian electoral system. The term regional parties are mainly used by political
scientists in the context of parties related to a particular region and its identity, under
which the categories of state and registered unrecognized parties classified by the
Election Commission of India are included. The main rationale for using the term regional
parties is to indicate the regional aspirations that led to the emergence of these regional
parties. These regional parties can be present under any one state and more than one
state, which is established because of linguistic, caste-based, and other regional
identities. At the statuary level, according to the Election Commission of India, if the
related criteria of the state party are studied, then for this the party must fulfill the fixed
criteria of seat and vote, which can be observed as follows-
1. If it secures 6% of the valid votes polled in the state at a general election to
the legislative assembly of the state concerned and in addition, it wins 2
seats in the assembly of the state concerned or
2. If it secures 6% of the valid votes polled in the state at a general election to
the legislative assembly of the state concerned and in addition, it wins 1
seat in the Lok Sabha from the state concerned and in addition, it wins 1
seat in the Lok Sabha from the state concerned or
3. If it wins 3% of seats in the legislative assembly at a general election to the
legislative assembly of the state concerned or 3 seats in the assembly,
whichever is more or
4. If it wins 1 seat in the Lok Sabha for every 25 seats or any fraction allotted
to the state at a general election to the Lok Sabha from the state concerned
or
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5. If it secures 8% of the total valid votes polled in the state at a General NOTES
Election to the Lok Sabha from the state or to the legislative assembly of
the state.
The period of the emergence of regional parties in India can be understood
mainly through three democratic upsurges, which have worked to convert the party
system from one party system to a multi-party system.
Three Democratic Upsurges of Indian Politics
Under most of the studies, efforts are made to study electoral politics through the
party system only, but in fact, the study of party politics to voting behaviour is included
under electoral politics. In the Indian democratic system, this relationship between the
party and people can be studied through three democratic upsurges. These three
democratic upsurges divided into different periods are not only indicative of the
increasing participation of the people but through this, special periods can also be
marked when new means of mobilization were used by political parties under electoral
politics. Political mobilization is the process of an individual becoming politically active.
In his 1985 book on changing voting behavior in the context of Britain, Anthony Heath
studied the process of party Alignment and De-Alignment among voters. The process
of mobilization between parties and voters in Indian politics through the process of
Alignment, De-Alignment and Re-Alignment has been studied by Sunil Kumar
Choudhary in his book in 2017.
5.4 FIRST DEMOCRATIC UPSURGE
In the first decade of Indian democracy itself, the right of universal adult franchise for
all invited the first democratic upsurge in India. This period was also known for the
crisis management phase, where Indian democracy faced many problems like the
tragedy of partition, the merger of princely states, poverty, starvation and building a
platform of procedural democracy for a huge uneducated population. Despite all the
apprehensions, the enthusiasm of the Indian voters proved that India could start its
democratic journey. The increase from 45.7 percent to 60.5 in the 1951-52 Lok
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NOTES Sabha elections is an indication of the first democratic upsurge. (Choudhary, 2017) At
the political level, the credit for this enthusiasm is also given to the political parties
through which political activism was developed among the voters. The Congress party
is credited by most researchers for planting the seeds of the development of this political
activism during the period of the first democratic upsurge. The popularity of Congress
as a leading political party was mainly attributed to the significant role it played during
the freedom struggle. The popularity earned during the freedom struggle made this
party popular among the public as well. The decade from the 1950s to the 1960s was
defined by Rajani Kothari as the ‘Congress System’, while it was presented as a
‘One-party system’ by Morris Jones. However, in this period there was the presence
of other parties apart from the Congress party, such as Bhartiya Jana Sangh, Ram
Rajya Parishad, Swatantra Party, Praja Socialist Party, Samyukta Socialist Party and
Communist Party of India. The roots of all the above parties could also be traced
before independence. Even after the presence of all these parties, the dominance of
Congress could be observed at the center and in the states. If we analyze from the
point of view of vote percentage, we can see that in the four Lok Sabha elections from
1952 to 1967, Congress was able to get 45% of the total vote percentage. After the
Congress, the other largest party was the Communist Party of India, which was getting
only 3 to 9 percent votes in terms of vote percentage (ibid). Nehru’s Charismatic
leadership is also attributed to this dominance of Congress, which can be clearly seen
after Nehru’s death in 1967. On the contrary, Rajani Kothari believes that credit for
the Congress system cannot be attributed only to the charismatic leadership of Nehru,
but for this, it becomes necessary to analyze the executive system of the Congress
party. According to Rajani Kothari, the Congress system can be understood as a
consensus that was based on the inter-relationship between the high command and
grassroots politics. In other words, the congress system was working as an ideological
umbrella where efforts were made to include all the ideologies. Congress was defeated
for the first time in the state elections after 1967 and this change was being observed
in the states of both North and South regions. M.P Singh attributes this decline of the
Congress to two reasons, Firstly, in this period, the development of non-Congress
sentiment based on caste, class and region started and secondly, the executive committee
which used to build a consensus with other parties of the Congress had also collapsed
(M.P Singh, 1981). From the perspective of mobilization, this period can be called the
Self-Instructional period of alignment, where most of the voters were mobilized by the Congress party.
102 Material

NOTES
5.5 SECOND DEMOCRATIC UPSURGE
During this phase, all those classes started using their votes in a more planned way,
which was included in the category of backward class in this society. In the context of
India, Yogendra Yadav presents it as a ‘second democratic wave,’ where the backward
caste started voting at the planned level. Therefore, it was a period when voters started
participating in electoral politics in a special way. The process of de-alignment with
respect to voters was observed by Anthony Heath in the British electoral system as
voters being mobilized by factors other than class mobilization. Within Indian Politics,
it has been referred to the process of de-alignment as a change in the permanent
behavior of the voter, where it was being observed as a fixed capital of a particular
party. If we observed the level of the party system and leadership, then this period was
the period when the downfall of the Congress system started. Where in the first phase,
all sections of society could be observed being mobilized by the Congress party based
on its efficient leadership, in the same period the position of the Congress was felt to
weakening as compared to earlier. Rajani Kothari has held the institutional dysfunction
of the Congress party responsible for this weakening condition of the Congress party.
The process of this downfall of the Congress system could be observed at both the
state and central levels. While at the state level, the formation of a non-congress
government started in the states which were considered strongholds of Congress, in
the same way in 1977, the formation of the Janta government at the center ended the
system of one-party dominance of Congress. Although the Janta government failed to
establish stability in power for a long time due to a lack of internal adjustments, from
the point of view of the party system, the two-party system was started during this
period. This changed phase of Indian polity was defined by Morris Jones as ‘Market
Polity.’ He believes that in this system the participants present in the process of decision-
making are interdependent and competing. Due to these participants (Parties) must
make many compromises in this market system. Another reason is also believed to be
that regional problems were not fully identified by the Congress party until the 1980s,
under which regional parties began to separate themselves from the larger ideological
umbrella of the Congress party. For example, the emergence of parties like Telugu
Desam, Assam Gun Parishad, and Sikkim Sangram Parishad. (Pradeep Kumar, 1991)
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NOTES
5.6 THIRD DEMOCRATIC UPSURGE
This period was the period of Liberalization, Privatization and Globalization, whose
impact was felt not only on the market system but also on the electoral system. During
this period factors like ‘Mandal, Mandir and Masjid became prominent in Indian
Politics. This period was also a transformative period from the voter’s point of view in
which it was considered necessary to study the contribution of youth and women
voters. Therefore, this period can be observed as the shift from de-alignment to the
period of re-alignment. Now the voters again started correlating with the party. From
the point of view of the party system, this period is also known as the period of the
Coalition system. This period is important not only from the point of view of ‘Mandal,
Mandir and Masjid’ but also from the point of view of ‘Market and Matdata’. The
main reason for this could be seen as the strengthening of themes like Caste and Class
under electoral politics. Keeping these identities in mind, the formation of various
regional identity-based parties started at the state level and started trying to mobilize
the voters. The negative impact of coalition politics can be observed in the form of a
fragile government based on the formation of these identity-based parties. The formation
of 11 coalition governments under the Center in the 25 years from 1989-2014 was a
reflection of this instability. Another feature of this period was that after 1990, young
voters started giving their vote to different parties on the basis of issues, apart from the
ideology of the party which can be observed as the third democratic upsurge in Indian
electoral politics. Within the politics of coalition, pan parties like Congress and BJP
also participate in the election with their alliance in the form of the United Democratic
Front and National Democratic Alliance respectively. In 2014, after two decades, a
party could get a clear majority by BJP, which was presented as a ‘One party-led
coalition government’ as the BJP’s alliance got success not only in the Centre but also
in the state-level elections. Many states like Uttar Pradesh, Madhya Pradesh, Tripura,
and Meghalaya can be included.
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NOTES
5.7 CONCLUSION
Regional parties mainly remain confined to a particular region’s aspirations, so their

vote base is also limited to a particular state. Janta Dal (Secular) in Karnataka and
Tipra Motha party in Tripura are fine examples of this situation. The issues of these
parties are related to their respective state only, so they can make special contributions
to state-level electoral politics. No uniform pattern of emergence of regional parties
can be observed in different states. These groups can be observed emerging under
different regional aspirations. The changed party politics in state electoral politics through
three democratic upsurges can also be studied along with the changed voting behavior.
The period of 1990 is known for a special change in Indian politics, where
politics started to be conducted mainly based on issues rather than on the basis of
ideology.
5.8 SUMMARY
The increasing political participation of the people is studied under democratic upliftment.
On this basis, social scientists describe three democratic upsurges in India. The first
democratic upsurge can be observed from 1950 to 1970 when Indian voters
enthusiastically presented their participation in the new democratic system. The 1980s
is seen as a second democratic upsurge in the increasing participation of backward
caste voters in politics. Based on this many regional parties also started to emerge. In
the 1990s, the impact of liberalization, privatization, and globalization was also observed
in electoral politics. Due to which the formation of coalition governments started forming
at the central level. Therefore, under this third democratic upsurge, the participation of
young voters increased in importance, which worked to intensify the competition
between parties in electoral politics.
Political mobilization is the process of being politically active by an individual.
The process of alignment and de-alignment among voters was studied by Anthony
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NOTES Heath in his 1985 book on changing voting behavior in the context of Britain. The
process of mobilization between parties and voters in Indian Politics through the process
of alignment, de-alignment and re-alignment can be considered as consolidation of
party system.
Electoral politics in states needs to be studied not only from party politics but
also based on changing voting behavior.
1. Explain the role of state politics in the changing nature of the Indian Party System.
2. Discuss how political mobilization has played a role in changing Indian Politics.
3. Analyze the three democratic upsurges from the perspective of electoral politics.
4. How did the shift in 1990s electoral politics changed the electoral behavior of
Indian voters?
5.10 MULTIPLE CHOICE QUESTIONS
1. The 1968-1999 period of Indian politics is known for which democratic upsurge?
A. First Democratic Upsurge
B. Second Democratic Upsurge
C. Third Democratic Upsurge
D. None of the above
2. By whom has Indian politics been presented through three democratic upsurges?
A. Sunil Kumar Choudhary
B. Mahender Pratap Singh
C. Rekha Saxena
D. Yogendra Yadav
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3. Who described Indian politics as ‘Market Polity’? NOTES

A. Morris Johns
B. Yogendra Yadav
C. Suhas Palshikar
D. None of the above
4. What factors were responsible for the shift in Indian politics during the 1990s?
A. Mandal
B. Mandir and Masjid
C. Market and Matdata
D. All the above
5. How many coalition governments were formed from 1989 to 2004?
A. 10
B. 11
C. 09
D. 05
5.11 REFERENCES
 Choudhary, Sunil K (2017), The Changing Phase of Parties and Party

Systems: A Study of Israel and India, Palgrave Macmillan.
 Jones, Morris (1978), Politics Mainly Indian, Orient Longman: New Delhi.
 Kothari, Rajani (1964), ‘The Congress System in India’, Asian Survey, Volume
4, No. 12, pp. 1161-1173.
 Kumar, Ashutosh (2003), ‘State Electoral Politics: Looking for the Larger Picture’
in Economic and Political Weekly, 38(30), pp.3145-3147.
 Kumar, Pradeep (1991). ‘Regionalism and Regional Parties in the Context of
Self-Instructional
Material 107

NOTES State Politics’ in The Indian Journal of Political Science, Vol. 52, No.04,
pp.554-567.
 Pai, Sudha (1990), ‘Regional Parties and the Emerging Pattern of Politics in
India’ in The Indian Journal of Political Science, 51(03), pp.393-415.
 Singh, M.P (1981), Split in a Predominant Party: The Indian National
Congress in 1969, Abhinav: Delhi.
 Vaishnav, Milan and Jamie Hintson (2019). India’s Fourth Party System.
Washington, C: Carnegie Endowment for International Peace.
 Yadav, Yogendra (1999), ‘Electoral Politics in the Times of Change: India’s
Third Electoral System, 1989-99’ in Economic and Political Weekly, Volume-
34, pp.2393-2399.
Self-Instructional
108 Material

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STATE

DEPARTMENT OF DISTANCE AND CONTINUING EDUCATION

Content Reviewer from the DDCE/COL/SOL

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This Study Material is duly recommended and approved in Academic Council

 All the lessons are written fresh according to NEP.

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Unit I: State Politics in India

Unit III: Agrarian Politics

Unit IV: Political Economy of Development and Reforms in the States

Unit V: Electoral Politics in States

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1.1 Learning Objectives

UNIT II: STATE REORGANIZATION AND FORMATION

2.1 Learning Objective

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2.4 Merger of Princely States

UNIT III: AGRARIAN POLITICS

3.1 Learning Objectives

UNIT IV: POLITICAL ECONOMY OF DEVELOPMENT

4.1 Learning Objectives

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4.5 The Steady Development of the Liberal Momentum: 1975 -1990

UNIT V: ELECTORAL POLITICS IN STATES

5.1 Learning Objectives

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LESSON 1 RELEVANCE AND FRAMEWORKS OF

RELEVANCE AND FRAMEWORKS OF ANALYSIS

1.1 LEARNING OBJECTIVES

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Diversity makes research work on Indian democracy more engrossing among

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1.3 APPROACHES TO STUDYING INDIAN POLITICS

Politics is generally related to ‘Power’, according to which power acts as a driving

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1.3.1 Institutional Approach

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1.3.2 Political Economy Approach

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1.3.3 Political Culture Approach

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1.4.1 The First Phase of the Study of State Politics

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1.4.2 The Second Phase of the Study of State Politics

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NOTES 1.4.3 The Third Phase of the Study of State Politics

1.5 RELEVANCE OF STUDYING STATE POLITICS IN

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1.6 CONCLUDING OBSERVATIONS

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1.8 SELF-ASSESSMENT QUESTIONS

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LESSON 2 STATE REORGANIZATION AND

STATE REORGANIZATION AND FORMATION OF