Prácticas Clave de GQM aplicadas para desarrollar la propuesta

SUMMARY:

The political settlements framework focuses on the interdependence of institutions and the organization of political power. This is particularly interesting in the case of Gujarat. The state is industrially advanced and has often led in terms of growth rates but it has also been associated with high levels of political and communal violence.

Some of the violence also appears to have had at least the tacit approval of the ruling party in the state and its controversial but influential chief minister. These features of Gujarat are usually seen as interesting but largely unconnected.

However, we argue that aspects of Gujarat’s institutional performance, and in particular the enforceability of some types of executive decisions, were indeed connected to the organization of power in the state. The particular years of interest to us are the years that chief minister Narendra Modi was in power, 2001 to 2013 the year at the time of writing, though his terms extends till 2018. However we provide substantial historical analysis of the period since independence to establish the distribution of power already in place when Modi became chief minister. The communal violence of 2002 was used (if not orchestrated) to consolidate the

centralized authority that makes Gujarat different from other Indian states, and this in turn allowed a particular pattern of institutional interventions that had

implications for patterns of industrial growth. This analysis has significant implications for the replicability of the Gujarat model in other parts of India.

A historical analysis of Gujarat reveals how its specific configuration of caste and the regional strategies of British colonial policy helped to create a mercantile class that later dominated Gujarat’s intermediate classes. It was the political dominance of this class that eventually allowed Gujarat’s current ruling party, the Bharatiya Janata

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Party (BJP) to create conditions that fostered growth but also an atmosphere of communal tension that subsequently led to organised violence against the state’s Muslim minority. We argue that this was ‘soft violence’ because it was used by the dominant party against a section of the population that was organizationally weak and unable to react. The violence could therefore be expected to be limited and with limited direct effects on the growth process. Nevertheless, the ability of the political regime to control and direct violence at will ‘signalled’ enforcement capabilities that in turn had implications for strategies of economic development. In terms of our framework the violence had significant implications for the political strategies

followed by political organizations within and outside the ruling coalition, and helped to establish an authoritarian version of clientelism dominated by the ruling BJP.

Investors reacted positively to this and the state received high levels of investments in infrastructure. The chief minister was aided by the fact that Gujarat was already an industrially advanced state with significant oil and gas reserves. However though Gujarat has sometimes been described as a developmental state, our analysis also shows that Gujarat’s current political settlement is significantly different from the developmental states of South Korea or Taiwan, and the developmental institutions and strategies it has implemented are likewise significantly different.

Section 5.1 provides a brief history of Gujarat from the ancient period to the coming of the British and how colonisation led to the creation of an intermediate class in the state. Section 5.2 outlines the years of the Congress after independence and traces the rise of the BJP. Section 5.3 outlines how the BJP came to power and section 5.4 provides an analysis of the consequences of the new political settlement. Section 5.5 concludes.

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Introduction

Chapters Two and Three laid out why the organization of power was critical for understanding the emergence of particular institutions and the types of enforcement and modifications these would be subject to. The configuration of power in the ruling coalition is an important component of the overall distribution of organizational power in a political system with important effects on strategies of political competition, the time horizon of the ruling coalition and its ability as a principal to impose particular institutions and to enforce them. This is particularly important for understanding the enforcement of conditional rents. Weak enforcement capabilities of the state as the principal when it uses institutions and policies to create rents for capitalists can lead to rent capture by capitalist agents or the informal avoidance or modification of conditions. These in turn have an effect on the kind of technology adopted and consequently the nature of industrialization in the country.

Gujarat was created in 1960 with the bifurcation of the former state of Bombay Presidency into Maharashtra and Gujarat (Figure 5.1). While the economy of the state was ranked eighth at that time it is today one of India’s top three economic performers with per capita NSDP (Net State Domestic Product) far higher than the Indian average (Table 5.1). Its current chief minister Narendra Modi has been able to achieve significant control over the state using a combination of populist communal (religious-sectarian) politics and discretionary administrative policies. The ruling party in Gujarat is the Bharatiya Janata Party (BJP) or the ‘party of the people of India’. It is also India’s second national party along with the Congress and is a conservative right wing party mobilized around ‘Hindutva’ or an ideology of Hindu awakening.

142 Figure 5.1 International and national borders of the state of Gujarat.

Source: www.dailyherald.com/.../side_gujarat_map.gif (downloaded 27/10/2010) The key to understanding the developments in modern Gujarat is to identify how Modi was effectively able to avoid competitive clientelism by building a particular type of coalition that enabled the enforcement of a greater range of institutions and policies compared to other Indian states. He was able to do this because of the specific social and political history of Gujarat, a factor that is often overlooked by observers. Critical features of the pre-existing configuration of power in Gujarat enabled Modi and the BJP to construct a ‘dominant party’ with a long-term time horizon that allowed his administration to offer long-term rents. He decided which organizations could invest in Gujarat (with respect to the large, critical investments) and gain access to these rents on the basis of informal assessments like who would be most beneficial for party funding, their legitimacy etc. This accelerated industrial investments in particular types of technologies and sectors, but Gujarat’s political and administrative structure did not have the critical conditional rent management capabilities along the lines of South Korea and Taiwan. Modi’s role was not confined to creating an authoritarian dominant party in a democratic set up, using selective violence to create an effective coalition with significant powers of implementation in specific areas. Taking advantage of the opportunities created after liberalization he has also been responsible for creating a system of industrial subsidies that have helped Gujarat gain a lion’s share of investments in India, both foreign and domestic.

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Here too, implementation capability was the key factor, assisted by already well-organized Gujarati bureaucratic organizations. The anti-Muslim violence of 2002 played an important if indirect role in the processes of consolidating the ruling coalition in Gujarat and for signalling to other constituencies, including political organizations and businesses, that Gujarat had a ruling coalition and a leader with

Source: Various (GoI Census 2011), (MoSPI), (CSO, Respective State Governments), (ASI 2009-10), (ASI 2009-10), (CSO), (NSSO 66th round), (Planning Commission of India).

Our aim is not to provide a comprehensive analysis of growth drivers in Gujarat.

Rather, it is to examine how an analysis of political power and institutions can explain how some market failures affecting development were addressed and the outcomes that were achieved. We are also particularly interested in the growth

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outcomes in industry, specifically the manufacturing sector. We examine how Modi constructed his ruling coalition through the distribution of both formal and informal rents and how that impacted technology adoption and growth in the industrial sector in Gujarat. Under Modi the BJP’s rent management created a caste/class combination that combined ‘upper caste’s like Brahmans and traditionally ‘lower caste’s like the Patidars who since the early 20th century made the transition from being a lower agricultural caste to gaining acceptance as a higher caste (though not with the same ‘status’ as Brahmans). The Patidars have become the predominant capitalist and political class in Gujarat. The BJP’s coalition also includes the Adivasis or the indigenous population of the state who straddle both the lower class as well as the ‘lower caste’ strata of the state. As we will analyse later, the castes that made up this coalition had contradictory class interests but like most clientelist coalitions, they had a joint interest in enjoying privileged access to rents. Historically Brahmans and the ‘lower caste’s and Scheduled Castes in India (Adivasis belong to the latter) have rarely shared political agendas. Modi was also helped by the fact that for various historical reasons the BJP in Gujarat had emerged as a disciplined party that could serve to construct a ruling coalition in a variant of ‘patrimonial’ clientelism with repressive features. The successful creation of the coalition of upper Brahmans, Baniyas (the traditional trading caste), Patidars and Adivasis achieved an organizational coalition with significant holding power relative to other groups and allowed the BJP in Gujarat to implement a particular type of growth-enhancing industrial policy that did not face significant contestation for a long time.

The coalition was constructed in a manner that allowed the inclusion of a disparate and wide base of constituencies but also successfully excluded a number of other groups and castes including the state’s Muslim minority. The episode of a short and extremely sharp coordinated violence against the Muslims in 2002 served not only to signal to the Muslims the costs of any mobilization against the BJP, but perhaps even more importantly signalled to other groups and castes that the ruling coalition had the capacity to take measures against ‘disruptive’ forces. The outcome was a ruling coalition that had characteristics of a dominant party (a party that is electorally

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difficult to dislodge) without having to include all potentially powerful groups within it. It was also a dominant party that had considerable internal hierarchy because the executive had relatively high enforcement capabilities over lower party levels, which is not the typical case in a dominant party. This is because as we summarized in Chapter Three the typical dominant party achieves its dominance by including all powerful organizations within it, and this achieves a ‘constrained’ patrimonialism where the enforcement capabilities are limited by the need to include the interests of many diverse organizations within the ruling coalition (M. H. Khan 2010b). The selective use of violence in Gujarat achieved a distribution of power across organizations that created a different type of a dominant party ruling coalition, with greater enforcement capabilities for some types of institutions and policies.

The violent events of 2002 targeted the state’s Muslim community and resulted in the loss of between 1,500 to 2,000 (mostly Muslim) lives. Muslims made up just fewer than ten per cent of Gujarat’s population in 2000 but a large section of the population was concentrated in a few cities making them easier to ‘target’. The manner in which the violence was organized has implications for our analysis of the political settlement in Gujarat because it signalled a particular type of informal executive authority, and this in turn affected the strategies of organizations within and outside the ruling coalition. The effects of the 2002 events in terms of our analysis were repeatedly supported by respondents in our interviews even though these connections are typically not made in the literature on economic growth in Gujarat. Gujarat’s growth rate fell in the year immediately after the riots but then recovered from 2004 (Table 5.2). An efficient administration is always welcomed by industry and the violence allowed the consolidation of a political settlement that underpinned Modi’s ability to project an efficient, and even an authoritarian administration with respect to the enforcement of some types of executive decisions (G. Shah 2010). It needs to be noted here that economic performance is very different in another BJP-ruled state with a high proportion of Adivasis in its population, which also has a BJP government. This is the state of Chattisgarh where the political configuration is quite different from that of Gujarat. Our argument is

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that the distribution of organizational power is the critical variable for understanding institutional performance.

Even though politics in Gujarat since India’s independence always supported pro-business policies, under Modi the Gujarat state established a formal policy of promoting itself as India’s best investment destination with Modi positioning himself as the CEO of Gujarat. There are other Indian state governments who from time to time organize conferences to liaise with business but the biennial ‘Vibrant Gujarat’

summits organized by the Modi government since 2003 are yet to be replicated by other state governments in scope and scale, let alone in attracting genuine business interest. Many studies have shown that Gujarat displays one of the most favourable relationships between business and government (Sinha 2005; Massilano, et al. 2009).

Modi has been particularly successful in attracting large investments and overseeing their implementation which has earned him the label of India’s most business-friendly chief minister. The growth in per capita income in the state reflects this success (Table 5.2). The success of governments, in this case the BJP government in Gujarat, can be evaluated in terms of its particular methods of overcoming market failures affecting investments in industry, in particular the allocation of land and the financing of technology acquisition. The efficacy of particular policies and institutions in turn depends on the choice of particular solutions and their implementation in the specific political settlement.

As we will show later in the chapter Modi was able to portray himself as a CEO for reasons less to do with his own personality and more to do with the socially and historically unique factors that allowed the construction of a particular type of ruling coalition in Gujarat. The construction of the ruling coalition gave his administration and the bureaucratic organizations involved high enforcement capabilities for some types of institutions and policies. Agencies like state industrial development bodies have existed within the Gujarat government since the 1960s. But the nodal agency, the Gujarat Industrial Development Corporation (GIDC) was now able to turn around approvals for projects faster than in earlier decades. Obviously something had

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changed that allowed the GIDC to push through projects with fewer delays and less opposition, and this is what the analysis of the changes in the political settlement in Gujarat can help to elaborate.

Table 5.2 Gujarat: Growth Rates of Net State Domestic Product per capita (at constant USD year 1980-81)

Years NSDP per capita growth rates

1961-70 0.2

1970-80 2.0

1980-90 2.6

1990-2000 5.6

2000-2010 7.4

Source: Based on EPW Research Foundation Statistics, State Level Domestic Product Data, 1960/61 to 2007/08.

The overall political settlement in developing countries has (as we discussed in earlier chapters) significant features of informality and informal arrangements with powerful organizations that make it Weberian. We described these non-Weberian political settlements as ‘clientelist’ in a broad sense and then classified clientelist settlements in a number of broad categories. The authoritarian sub-variant corresponds to what we described as vulnerable patrimonialism. While there were elements of an authoritarian regime in Modi’s patrimonialism, nevertheless the Modi BJP was not a true authoritarian regime as it was able to win elections to stay in power. Nor was it a strong patrimonial regime of the East Asian variety because it did not necessarily have the capacity to impose institutional conditions on all organizations in that society. In particular, we shall see that business organizations

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could not be disciplined in the way they were in East Asian strong patrimonial regimes.

Thus, the Modi ruling coalition had interesting ‘mixed’ features: it was a dominant party that was broadly a variant of constrained patrimonialism but located in an area overlapping constrained patrimonialism and competitive clientelism. It had stronger implementation capabilities than the typical dominant party. It used violence occasionally, in the way that authoritarian regimes did in vulnerable patrimonialism but did not need to use violence to win elections. It was thus a dominant party system that we describe as ‘Authoritarian Clientelism’ (see Figure 3.2 Chapter Three).

This configuration of power cannot be defined as vulnerable patrimonialism as excluded groups like its Muslim minority were not strong enough to require frequent repression. Given the distribution of power the one time shock that the BJP inflicted on Gujarat’s Muslim community was enough to signal its authority and obtain an uneasy quiescence from the community and other excluded groups. This ensured the ruling coalition did not have to use the permanent threat of violence against excluded organizations. The enforcement capabilities of the ruling coalition were also high enough to be close to strong patrimonialism and the BJP arguably had a greater capacity to impose discipline on its lower levels compared to the Congress:

the dominant party of the 1950s and 1960s. However, despite often being called

‘developmental’ or what in our framework is strong patrimonialism; our fieldwork suggests that it was not. Modi could not discipline business organizations despite providing them with critical incentives like land at subsidized prices. The BJP’s power to discipline its own supporters was also considerably less would be the case in strong patrimonialism because the ruling coalition had to include many disparate groups within it.

Our description of the political characteristics of the settlement in Gujarat is based on our fieldwork and interviews that are summarized later. In addition, we find that the structure of bureaucratic organizations in Gujarat corresponds to a constrained bureaucracy in that the lead agency could coordinate across other agencies and

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strong implementation capabilities in some areas but not others. Implementation capabilities were strong in some areas of industrial development but weak in other areas, including social welfare. Both politics and bureaucracy reflect the distribution of power across organizations. Granting subsidies to specific industries is only likely to be resisted or blocked by well-organized interests operating at the political level of the state, and these were not strong enough to challenge these policies. On the other hand welfare policies are implemented through a chain of party and bureaucratic organizations where lower-level organizations within the ruling coalition may have interests opposed to the allocation of resources according to formal policy targets or at least do not have the similar incentives that providing subsidies to business organization provides.

Nevertheless, the authoritarian clientelist structure provided the Modi administration with enforcement capabilities to push through decisions on industrial projects favouring specific capitalists with little effective resistance and this helped to overcome some of the coordination problems in the area of infrastructure investment. Examples include the administration’s ability to provide large areas of land for land intensive projects with relative ease at a time when one of the key constraints faced by Indian industry in other parts of the country was the scarcity of land available through normal market processes for setting up new industrial or infrastructure projects. Apart from the allocation of land the administration could

Nevertheless, the authoritarian clientelist structure provided the Modi administration with enforcement capabilities to push through decisions on industrial projects favouring specific capitalists with little effective resistance and this helped to overcome some of the coordination problems in the area of infrastructure investment. Examples include the administration’s ability to provide large areas of land for land intensive projects with relative ease at a time when one of the key constraints faced by Indian industry in other parts of the country was the scarcity of land available through normal market processes for setting up new industrial or infrastructure projects. Apart from the allocation of land the administration could