Comparing State-Level Policy Responses To

Revue de la régulation
Capitalisme, institutions, pouvoirs

13 | 1er semestre / Spring 2013
Économie politique de l’Asie (1)
Comparing State-level policy responses to

economic reforms in India
A subnational political economy perspective
La confrontation des réponses politiques des États indiens aux réformes
économiques. Une perspective d’économie politique infranationale
La confrontación de las respuestas políticas de los Estados Indios a las reformas
económicas. Una perspectiva de economía política infranacional
Loraine Kennedy, Kim Robin and Diego Zamuner
Electronic version
URL: http://journals.openedition.org/regulation/10247
DOI: 10.4000/regulation.10247
ISSN: 1957-7796
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Association Recherche & Régulation
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Loraine Kennedy, Kim Robin and Diego Zamuner, « Comparing State-level policy responses to
economic reforms in India », Revue de la régulation [Online], 13 | 1er semestre / Spring 2013, Online
since 24 June 2013, connection on 28 April 2019. URL : http://journals.openedition.org/
regulation/10247 ; DOI : 10.4000/regulation.10247
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Comparing State-level policy responses to economic reforms in India 1
Comparing State-level policy

responses to economic reforms in
India
A subnational political economy perspective
La confrontation des réponses politiques des États indiens aux réformes
économiques. Une perspective d’économie politique infranationale
La confrontación de las respuestas políticas de los Estados Indios a las reformas
económicas. Una perspectiva de economía política infranacional
Loraine Kennedy, Kim Robin and Diego Zamuner
This study was conducted at the Centre de Sciences Humaines (CNRS-MAEE) in New Delhi and
financial support is gratefully acknowledged. The authors thank the anonymous reviewers and the
editorial board of Revue de la Régulation for constructive remarks on an earlier draft.
Introduction
1 Economic reforms adopted in the 1990s deeply modified India’s macro-economic
environment, as well as the trade and investment regimes. By rewriting the rules of
economic governance in India’s federal democracy, reforms have had far-reaching
consequences on the relations between the Union (or central state) and the States1. First,
the dismantling of controls exercised by the central state have created greater scope for
State governments to elaborate their own policies, for instance with regard to economic
development initiatives. Second, the reforms themselves require cooperation from State
governments to succeed, especially the so-called “second generation reforms”, and hence
State-level politics and governance take on greater importance for India’s overall
development trajectory. For these reasons, there is now considerably more interest for
State-level studies than in the recent past. Another reason is that regional inequalities
have deepened in India since the 1990s; inter-State comparisons of economic growth
show increasing divergence in economic performance. This has become a major issue for
Revue de la régulation, 13 | 1er semestre / Spring 2013

India’s political establishment, all the more since national governing coalitions are
increasingly formed with the help of regional political parties.2
2 On the basis of fieldwork-based research, this article proposes to discuss policy
frameworks in four States: Andhra Pradesh, Haryana, Kerala and Orissa.3 We compare and
contrast promotional policies, aimed at attracting investments to their respective
territories, as well as their approaches to more structural reforms. For each case we seek
to explain political actions and discourse using a qualitative political economy approach.
In this way, the article aims to address gaps in the existing literature, which tends to
focus on inter-State comparisons of economic performance and outcomes. There has been
relatively little academic attention to the comparative study of State-level policy
response to the national economic reform agenda. Notable exceptions are Sinha (2004,
2005), who compares three States (Gujarat, West Bengal, Tamil Nadu) in the pre- and
post-reform periods, Bajpai and Sachs (1999) and Kennedy (2004). This paper will add to
that corpus and contribute to shaping further research in the field.
3 This kind of qualitative political economic study is necessary for two reasons: (1) to
understand how States have responded to economic reforms and to explain this response.
Indeed, the sparse literature on this topic suggests there is considerable variation across
States, if not in policy rhetoric and design, then in implementation, as a result of
subnational politics and institutional capacity; (2) to understand how State-level political
elites, who now have more ‘policy space’ (even if not necessarily more fiscal space),
elaborate their economic development strategies in relation to the central state, on one
hand, and to social forces in their political jurisdictions, on the other. We examine the
social compromises that are expressed by these State-level policies, which provide
evidence of the distinct political economies prevailing at the subnational level.
4 Part 1 of the article provides contextual background on India’s reform process and
describes the changes brought about, with special attention to the implications for
economic governance in the federal system (1. 1.). It briefly reviews the major debates
regarding the onset of economic growth and the patterns of economic performance of the
States (1. 2.). Much of this scholarship focuses on comparing growth rates across States to
test whether or not they are converging. A brief review of the literature on the
determinants of growth (1. 3.) sets the scene for the discussion of State-level policies in
Part 2 of the paper. An overview of the few studies dealing directly with subnational
response to economic reforms is then presented, followed by a discussion of State-level
“promotional policies”, analysed as a response to inter-State competition brought about
as a result of reforms (2. 1.). The following sections compare and contrast these policies
that aim to attract investments in four States (2. 2. – 2. 6.). Part 3 deals with State-level
approaches to structural or second-generation reforms, such as public finance reform,
which are politically sensitive (3. 1.). For each of the four States studied, policies are
viewed as an emanation of distinct regional political systems and discussed in terms of
compromises between social groups (3. 2. – 3. 5.).
5 Case study narratives are used to present our fieldwork-based research in Parts 2 and 3.
The analyses combine material from published and unpublished secondary sources with
primary data collected through fieldwork consisting primarily of interviews with key
informants e.g., elected officials, government servants, representatives of industry and
trade unions, as well as village-level surveys (Orissa). In the case of Andhra Pradesh and
Haryana, extended stays in India between 2005-2009 allowed for several rounds of
research. For Kerala, research was conducted from August 2008 until February 2009 and

for Orissa, from August to December 2009.4 The four States were not chosen to be
representative of any particular type of State; nonetheless the aim was to choose cases
with differing regional economies e.g., in terms of distribution of income across sectors.
The States are located in three different regions of the country: Kerala and Andhra
Pradesh in the South, Orissa in the East and Haryana in the North (see location map).
Their distinct economic and social situations have given rise to unique subnational
political economies, which serve to illustrate the great diversity comprised within India’s
political economy.
1. Economic reforms, shifting policy prerogatives in

India’s federal democracy and outcomes
1. 1. Liberalization and its impacts on policy-making in India
6 In the early 1990s, facing a severe balance of payments crisis, India adopted a structural
adjustment programme putting the country on a path of gradual economic reform. In July
1991 a series of decisions were taken to implement major changes in monetary, trade and
industrial policies. The rupee was devalued, steps were taken to make India’s currency
convertible on the current account and the exchange rate more reflective of market
conditions. With regard to trade, customs duties, among the highest in the world, were
drastically reduced and procedures for importing and exporting were simplified,
including for foreign capital investment. With regard to the investment climate in the
country, industrial investment and production, which had been tightly controlled, were
delicensed and broadly deregulated (Sachs, Varshney, Bajpai 1999; Basu, 2004).
7 In addition to modifying the macro-economic climate and the trade and investment
regimes, economic reforms brought about deep changes in India’s federal democracy.
They translated into both greater policy-making space for State governments and greater
responsibility for their own finances (Ahluwalia, 2000; Bagchi, 2003).
8 Prior to 1991, as part of a planned approach to development, private firms were required
to obtain approval for new industrial units (and expansion of existing units) from central
government ministries in New Delhi, including for the proposed geographical location of
the investment. This centralized management of the economy was designed to ensure
that scarce capital was directed to priority sectors and not overly concentrated in a few
regions. Indeed, economic integration and balanced regional development were major
political goals and one of the justifications for centralized economic planning.
Independent India had inherited a highly fragmented territory, and still today factor
prices vary widely5, as do the cost of goods and services (Virmani, Mittal, 2006; Melchior,
2010). In this institutional arrangement, State governments could not directly influence
national industrial policy, although they could use their skills and resources to try and
bargain for a better deal through administrative channels, or pressure national
policymakers through informal channels, such as political parties. With their limited
financial resources, they could elaborate policies to reflect their priorities.
9 In 1991, the dismantling of controls exercised by the central state on industrial
investments meant private firms could locate where they chose, and this created
incentives for States to improve their investment climate. Very quickly, some State
governments began to elaborate and put forward their own industrial development

initiatives. These include land-use changes (zoning), tax exemptions and infrastructure
improvement, all of which contribute to influencing the investment climate (see Part 2
below).
10 By reducing the direct involvement of the state in the economy and reducing many
sources of income, both legal (e.g., customs duties) and illicit (e.g., rents linked to the
system of permits called license-permit raj), the reforms have had a significant impact on
financial relations between the Union and the States. State governments can no longer
depend on New Delhi in the same way as before, for example for capital investments and
budgetary support, and are under pressure to become more involved in raising resources
and practicing fiscal responsibility (Sachs, Varshney, Bajpai, 1999; Bagchi, 2003).
11 Taken together, these transformations have resulted in a certain re-ordering of economic
governance – a redefinition of the respective roles of the Central State and State
governments. Liberalization of controls on the location of investment has resulted in a
more direct competition between subnational territories with regional governments
vying to overtake each other. Despite some mimicry in policies aimed at improving the
business environment and increasing the attractiveness, a closer analysis reveals
significant differences in the attitudes of political elites as well as regional diversity of
instruments deployed. Many of these characteristics are historically embedded, so were
present well before the 1990s, but the reforms have served to make them more visible
(Sinha, 2005).
12 Beyond opening up policy space for States, it soon became evident that moving ahead
with the economic reform agenda would require increasing cooperation from State
governments. Already from the beginning the central government delegated to States
part of the responsibility for implementing reforms (Jenkins 1999). This was especially
the case with the so-called “second generation reforms”, which involve public finance
reform and restructuring public agencies (e.g., State electricity boards), dismantling
public subsidies and building up market-enabling institutions (see Part 3 below).
13 Lastly, it is important for contextual reasons to mention the evolution of India’s polity
characterised by the intensification of political competition at all levels. This has resulted
in the decline of the dominant Congress party and the rise of a multiparty system. State-
level politics have become more autonomous from the logic of national politics (Yadav,
Palshikar 2008) and regional-based political parties have become crucial partners in
national government coalitions. In addition to new leveraging power this gives
subnational political elites more policy space.
14 For all of these reasons State-level politics and governance have taken on greater
importance for India’s overall development trajectory. The next section explores some of
the scholarship on these topics.
1. 2. Economic growth and regional inequalities
15 As a prelude to our discussion, it is useful to recall key elements of India’s recent growth
story and to flag two important ongoing debates. From 1950 to 1980, India grew at
roughly 3.5% per year, which was very slow in relation to its population growth (roughly
2.2% per year). In the 1980s onwards, India’s growth rates registered a gradual
acceleration (5.5% per year) climbing in the 1990s to peaks of 7-8%. In the 2000s, even
higher rates were achieved and maintained for several years at around 8% or more,

before decelerating after 2009 (6.8%), a slowdown attributed in part to the global financial
crisis (Government of India, 2013).
16 The first vigorously debated issue revolves around explaining the onset of higher growth
in the 1990s and 2000s. Although some economists see a direct causal link between
economic reforms and growth performance (Ahluwalia, 2004), others emphasize the
importance of public institutions and policy decisions taken prior to reforms. 6 Indeed, an
entire body of work has been devoted to the study of the sequencing of growth in India,
with some prominent voices, like Dani Rodrik and Arvind Subramanian (2004) arguing
that the turning point took place in the 1980s, i.e. before the implementation of a
structural adjustment program in 1991. Discreet reforms undertaken by Indira Gandhi in
the early 1980s followed by Rajiv Gandhi’s bolder agenda from the mid-1980s aimed to
deregulate the domestic economy and ease investment procedures (Kohli, 1989). These
“pro-business” reforms were primarily designed to improve the environment for existing
businesses and increase their profits; they were not market reforms per se (Rodrik and
Subramanian, 2004). In contrast, the reforms of the 1990s were intended to improve the
functioning of markets and extend the reach of markets in the provision of goods and
services. They have effectively dismantled the apparatus of centralized management of
the economy by removing most controls on business and investment and although
external liberalization has been very gradual (and controversial), most sectors of the Indian
economy are now open to international competition.7
17 The second debate relates to regional variations in economic growth and to the question
of the widening of inter-State inequalities in per capita income. In particular there has
been considerable interest among economists in examining whether growth rates in
India’s States are converging, as neoclassical theory predicts, i.e., the poorer States are
growing faster than the richer ones, or the inverse. A review of the literature highlights
some of the key findings and sets the scene for our State-level analysis in section 2.
18 Focusing on the decade following the reforms, some authors found no evidence of either
an increase or decrease in inter-State inequalities (Singh and Srinivasan, 2002; Dholakia,
2003). Ghosh and Chandrasekhar (2003) underscore that States’ ranking in terms of per
capita State Domestic Product (SPD) did not change: Punjab, Haryana and Maharashtra
remained the richest States while Bihar and Orissa remained the poorest.
19 As Ahluwalia pointed out, the implementation of economic reforms has led to substantial
growth in India with both rich and poor States experiencing an increase in SDP growth;
however, the degree of dispersion in growth rates increased very significantly in the
1990s (Ahluwalia, 2000, p. 1638). Whereas SDP varied by a factor of 2 in the 1980s (Kerala
at 3.6%/year and Rajasthan at 6.6%/year), that variation was much larger in the 1990s,
more than 3. 5., and the inter-State differences were even more marked when measured
in terms of per capita SDP (Ahluwalia, 2000, p. 1638). More recent data show that the
annual growth rate in net SDP per capita was higher during the post-reform period
(1991-2004) than during the pre-reform period (1970-1990) for 10 States out of the
15 major States; 5 States experienced a reduction in their rate of growth between the two
periods (cf. table 1).
Table 1. Average Annual Growth Rates of the Net Sate Domestic Product Per Capita for 15 Indian
States
Pre-reform Period (1970-1990) Post-reform Period (1991-2004)

Andhra Pradesh 2.22 4.08
Assam 2.38 1.31
Bihar 1.43 1.10
Gujarat 1.79 4.48
Haryana 2.72 3.07
Himachal Pradesh 2.08 4.92
Karnataka 1.83 3.69
Kerala 1.76 5.54
Madhya Pradesh 2.60 2.38
Maharashtra 3.24 3.40
Orissa 1.22 2.58
Punjab 2.24 1.78
Tamil Nadu 2.73 4.38
Uttar Pradesh 1.98 1.08
West Bengal 1.32 4.00
Full sample* 2.03 2.21
Source: Chikte 2011, using data from the Economic and Political Weekly Research
Foundation.
Notes : Numbers are percentages.
*Total of 15 States
20 Most authors agree that the reforms of the 1990s have aggravated regional inequalities.
The Gini coefficient, used to measure disparities in inter-States SDP per capita in the
14 most populated States, started increasing from 1980s and has risen more rapidly since
the 1990s. Indeed, from 0.152 in 1980-1981, this coefficient increased to 0.175 in 1989 and
then to 0.233 in 1998-1999 (Ahluwalia, 2000). Banerjee and Piketty (2005) also give
evidence of rising inequalities: the shares of the 0.01 per cent, 0.1 per cent and 1.0 per
cent in total income rose after 1980s and more sharply after 1992-1993.
21 Numerous studies have used a standard growth convergence equation to test the
neoclassical absolute or conditional convergence hypothesis. Cashin and Sahay (1996)
were the first to empirically test for this hypothesis and found strong evidence of
absolute convergence in the pre-reform period (1961-1991) for 20 States, following on the
conclusion of Dholakia (1994)8. In contrast, no study to our knowledge has demonstrated
convergence among States in the post-reform period (1991-present). Rao et al. (1999)
focused on the 14 major States and reported an increase in divergence sharper in the

initial years of liberalization (1990-1994). Dasgupta et al. (2000) found a tendency for the
Indian States to have diverged during the period 1960-1995 in terms of per capita SDP. In
a study focusing on 19 Indian States over the period 1971-1996, Aiyar (2001) found that
States are converging to different steady states, determined partly by literacy rates and
private investments. Sachs, Bajpai and Ramiah (2002) also gave evidence of inter-State
divergence during both pre and post reform periods; dividing their sample into rich and
poor States, they found that divergence was most notable within the poorer group of
States. Using the most recent data, Kumar and Subramanian (2011) show that divergence
in the growth performance across States has continued during the 2000s.
22 Recently scholars have also used other statistical and econometric methods to test for
convergence. For example, Nayyar (2008) used the Generalized Method of Moments
estimation to show the absence of absolute convergence for the period 1973-2003, and
several recent studies found evidence for polarization and convergence clubs (Kar, Jha,
Kateja, 2010; Bandyopadhyay, 2011; Ghosh et al., 2013).
23 Besides this vast literature on inter-State disparities, there has been some interest in
examining intra-State inequalities in the context of economic reforms and the ensuing
geographic reallocation of resources and investments. It has been found that some of the
“richer” States, which are usually assumed to have benefited the most from reforms,
demonstrate high levels of inequalities. For instance, in 2000 inequalities in per capita
SDP were found to be the highest in two of the richest States (Tamil Nadu and
Mahrashstra)9 (Ghosh and Chandrasekhar, 2003). 10 On the other hand, Swain et al. (2009)
showed that regional disparity in Orissa, one of India’s poorest States, declined during the
post-reform period due to special area and development programs devised for backward
areas.
1. 3. Determinants of growth in Indian States
24 Alongside the rising interest in inter and intra-State convergence or divergence, scholars
have also examined factors explaining growth. For many authors, private investments
were the major driving force for growth during the 1990s and have thus indirectly
favoured divergence across States (Rao et al., 1999; Ahluwalia, 2000; Aiyar, 2001; Singh and
Srinivasan, 2002). As Chakravorty (2000) demonstrates, more advanced States have
benefited from an increase in investment flows during the post-reform era leaving less
industrialized regions behind. However, Rao et al. (1999) also show that private
investments tended to go to States with higher public spending, suggesting a positive
correlation between per capita public expenditure and per capita SDP. Many of these
studies underscore the inequitable spread of infrastructure (Rao et al., 1999) as an
underlying cause of inter-State disparities because infrastructure is indeed often found to
be a major determinant of growth (Shand and Bhide, 2000; Ghosh, 2008; Bandyopadhyay,
2011).
25 Apart from physical infrastructure, some authors have given evidence on the role of
human capital and “social infrastructure” in explaining economic performance. Not
surprisingly, literacy and education are found to be explanatory variables for inter-State
inequalities (Ahluwalia, 2000; Aiyar, 2001; Ghosh, 2008); meanwhile, literacy rates have
converged across States during the 1990s (Chikte, 2011). Some studies have focused on the
role of social and political infrastructure in economic performance. For instance, Shand
and Bhide (2000) looked at the size of public administration and found it to be negatively

linked to SDP growth during the 1990s (as opposed to the 1970s and the 1980s). They
concluded that “in the states with larger public administration, growth rates were not
higher, i.e., large public administrations did not facilitate higher growth rates”. We can
also quote geography (Sachs et al., 2002) and even “neighboring state effects”
(Bandyopadhyay, 2011) as possible explanatory variables of Indian inter-State disparities.
26 As this discussion suggests, the differential performance across States has raised many
questions, including to what extent these variations are the result of State-level policies.
A number of authors consider that subnational policies, especially as they affect the
business climate, are important for outcomes, but few studies actually provide proof of
this correlation.11 For instance, Sachs et al. (2002) ask: “to what extent are the differences
a manifestation of global economic forces acting upon India, especially during a period of
economic liberalization, and to what extent do they reflect differences in economic
policies at the (S)tate and union level?” although their study focuses more narrowly on
marginal productivity of investments by sub-sector. And the deputy chairman of the
Planning Commission has stated that State level policies deserve much closer attention
than they receive because they influence economic outcomes more than before
(Ahluwalia, 2000, p. 1637).
2. State-level response to reforms

2. 1. Reviewing the literature
27 As mentioned above, economic liberalization resulted in an indirect expansion of the

prerogatives of State governments in certain policy areas. Before the reforms of the
1990s, the Indian States had limited influence on the location of private industrial
investments since these were channelled the licensing apparatus of the central
government. Consequently public investments were the main determinant of growth at
the State-level, and resources for these investments were primarily transferred from the
central government (World Bank, 1997, p. 19). Soon after the dismantling of licence-
permit raj, States found themselves in direct competition with each other for private
investments. Because macroeconomic policy is the prerogative of the central
government, States do not have the classic levers that would allow them to put in place
an autonomous economic policy (exchange rate, money supply, main taxes, etc.).
Nonetheless, they can influence the relative attractiveness of their territory through
promotional policies and through investments in infrastructure.
28 How have States responded to this new environment and how can these responses be
explained? Surprisingly perhaps, there has not been a systematic comparison of State-
level response to economic reforms.12 One exception is Bajpai and Sachs (1999) who
compared a broad range of State-level policy reform: investment incentives, power sector
reform, industrial policy reform, measures for infrastructure development, and reform of
the tax system. On this basis, they placed the country’s 15 major States into three
categories: reform-oriented (Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Tamil
Nadu), intermediate reformers (Haryana, Orissa, West Bengal) and lagging reformers (Assam,
Bihar, Kerala, Madhya Pradesh, Punjab, Rajasthan, Uttar Pradesh). Although extremely
useful as a first attempt at taking stock of State-level response to reforms, this study
demonstrates a widely found bias, namely the assumption that States respond to
liberalisation on the basis of their relative economic standing. In other words, ‘rich’

States are more likely to adopt reforms since it is presumed that they stand to gain from
the shift towards markets and global economic integration whereas ‘poor’ States are not
inclined to embrace reforms since they perceive themselves as likely to lose from a
greater reliance on markets.13 Bajpai and Sachs’ classification tends to make this
assumption even when there is evidence to the contrary. Orissa, a “poor” State, measured
in per capita income, is a case in point. It has been actively pursuing reforms, but its
growth has been relatively slow, and hence it was not categorised as ‘reform-oriented’. 14
Incidentally the four cases we examine in this article are classified under three different
categories.
29 Aseema Sinha takes a longer-term perspective in her comparative study of three States
(Gujarat West Bengal and Tamil Nadu) underscoring continuity rather than change. In
her view, “liberalisation in India amounted not to deregulation but to the reordering of
state-market relations mediated by subnational re-regulation strategies and processes”
(Sinha, 2004, p. 68). She maintains that “in the face of a regulation vacuum created by
central state withdrawal” States have adapted the new, more liberal policy regime to
their regional conditions and initiated new rules and policies (Sinha, 2005, p. 153-154). 15
To explain variations in the levels and composition of industrial investments, Sinha
emphasizes the importance of political and institutional factors that affect risk and also
the credibility of policies. She argues that institutional capacity in the post-reform era is
largely determined by capacities and skills acquired in the previous period. This is
consistent with Ahluwalia (2000) who considers the problem for very poor States is less
the level of investment than their ability to absorb capital and to use resources
efficiently. Apart from infrastructure conditions, key factors are the structure of State
bureaucracy, the nature of industry and the specific configuration of the political
environment.
30 Another comparative study carried out at about the same time undertook to explain why
Andhra Pradesh and Tamil Nadu, whose promotional policies are not so different on the
ground, adopted very different styles for communicating about economic reforms
(Kennedy, 2004). Whereas Andhra Pradesh openly embraced the economic reform
agenda, Tamil Nadu pursued “by stealth” (Jenkins, 1999), quietly implementing more
market-oriented practices. The explanation focused on the degree of fragmentation in
the regional party system of each State and the nature of political competition, both a
reflection of social mobilisation. In both Tamil Nadu and Andhra Pradesh, two large
parties contest power and traditionally alternate in forming the government; they
‘accommodate’ other smaller groupings, often based on caste or sub-regional identities.
However in the case of Tamil Nadu, the party system has become highly fragmented,
requiring constant re-negotiation. In this context, neither of the established parties was
willing to risk alienating highly mobilised groups, notably among middle and lower castes
that tend to oppose liberalization, and thereby destabilise their electoral coalitions
(Kennedy, 2004). This analysis emphasized the importance of the regional political system
for explaining the packaging of economic reforms, a dimension that we included in our
case studies.

2. 2. Shaping the investment climate – contrasting experiences

from four States
31 States dispose of a variety of instruments for shaping their business climate, a term that
refers to all the factors considered by investors before taking a decision to invest. These
factors include cost and availability of the means of production (average wage, natural
resources, human capital levels, etc.), the legal framework (procedures for entry and exit,
labor laws, degree of law enforcement, etc.), land availability and quality of
infrastructure, and finally the incentives to business. Factors falling under the direct
jurisdiction of regional States include most networked infrastructure (roads, electricity,
water, sanitation) and social infrastructure such as schools and medical facilities. They
can offer incentives packages comprising subsidies in cash or kind (e.g., land;
uninterrupted supply of electricity, water, telecommunications; exemption, reduction or
deferral of taxes; assistance with procedures), propose ad hoc investment conditions
related to sectorial or spatial considerations (e.g., in high tech sectors and in particular
priority zones) or financial packages including equity finance.
32 In the first decade after liberalization, most States deployed strategies to make
themselves more attractive, which often involved blatantly imitating industrial policies
and trying to out-compete each other. This race to the bottom prompted the central
government to intervene in 1999 to end the most obvious form of competition, namely
sales tax exemptions, the main fiscal lever available to the regional governments.
However, States continue to mobilize other, often less transparent instruments, which
can be negotiated with investors on a case-by-case basis, particularly with regard to the
land. The Constitution assigns to States the responsibility for land management
(registration of transactions, redistribution, etc.), which is crucial factor of production,
especially for investors seeking to establish large-scale manufacturing platforms to take
advantage of growing markets in India or as a means of accessing East and Southeast
Asian markets.
33 The following section covers the four States and presents the main steps they have taken
to shape their investment climate. This corresponds to a first phase of reforms.
2. 3. Orissa: mobilising mineral assets to attract private investors
34 The Orissa government’s main objective has been to promote its remarkable endowment
in mineral resources by attracting investors (Indian and foreign) willing to bring in
technology and know-how for extraction and processing (Government of Orissa, 2007). 16
Elaborated in the early 2000s, the key elements of the strategy are simplification of
administrative procedures, tax incentives and improvement of certain infrastructures.
This was followed in 2007 by a new industrial policy to strengthen economic development
policies and further facilitate investment in minerals especially.17
35 The establishment of “Team Orissa” symbolizes the government’s commitment to attract
entrepreneurs. Under the direct supervision of the Chief Minister18, this special agency
provides practical legal or economic advice to investors. According to the World Bank
(2008) these efforts have led to a reduction in the time needed to start a business.
36 Besides efforts in communication and administrative responsiveness, investment
promotion usually also involves direct financial incentives. The Orissa government sells

land at reduced prices for industrial projects and offers investors reduced rates for
electricity and various tax subsidies.
37 Meanwhile, the government has chosen to encourage investment in infrastructure in the
form of public-private partnerships. In 2008 there were 27 infrastructure projects of this
type, for a total of 2,855 billion USD (World Bank, 2008). Moreover, the government has
created specialized infrastructure in the form of technology centres offering businesses
quality infrastructure. For example, in the capital Bhubaneswar several large office
buildings providing high-tech infrastructure have been built. In 2005, the Indian
government adopted a law authorizing and regulating the creation of special economic
zones. In Orissa, more than ten such zones dedicated to the metallurgy industry and
information technology have already been approved.
38 These policies contrast sharply with the State’s industrial policy in the 1980s and 1990s
during which the State itself, via public sector enterprises for instance, was the main
investor. Today the State acts almost exclusively through incentives, an approach that
does not necessarily yield sufficient inflows of capital to induce the degree of
development desired by the government.19
39 However, despite the government’s efforts to attract capital, the investment climate in
Orissa is comparatively not so good. According to an indicator developed by in a recent
World Bank sponsored study, Orissa ranks in the bottom third of Indian States (Iarossi,
2009).20 Although it is rated higher than average for certain variables based on the
subjective perceptions of economic actors, corruption is perceived as a problem – a point
corroborated by people interviewed in the course of our research (academics, activists
and villagers).
40 Despite the State’s rapid growth in recent years, almost half of the population continues
to live below the poverty line. Significant geographical and social disparities exist, for
instance the incidence of poverty in the Southern region is nearly three times the poverty
rate in the coastal region (de Haan and Dubey, 2005). In addition, the State suffers from
stark social inequalities. A special feature of Orissa is the relatively high proportion of so-
called tribal groups (Scheduled Tribes, ST) as well as dalits, groups belonging to the lowest
caste strata among Hindus (Scheduled Castes, SC), representing 22% and 16% respectively
in the total population. These two groups are overrepresented among the poor; STs
represent 41% of the poor and SCs 23%. Moreover, these social inequalities have tended to
widen since the incidence of poverty is declining faster in other groups (de Haan and
Dubey, 2005). The poorest tend to be concentrated in the most remote geographical areas,
with poor connectivity, so that the social dimension of inequality is superimposed on the
spatial dimension.
41 To summarise, Orissa’s industrial policy underwent a significant shift in the 2000s from a
tradition of public sector-led development to greater reliance on the private sector.
Considerable efforts were made to improve the business climate for private investors,
with special attention to the State’s comparative advantage in mineral resources.
2. 4. Kerala: reluctance to reform a unique model of social

development
42 Kerala qualifies in many ways as an exceptional State. Its human development index is by
far the highest in the country, its literacy rate, for example, is 22 percentage points

higher than the national average (94% vs. 72%). This outstanding performance is largely
due to the high level of political consciousness and mobilization of the population, the
roots of which go back to the late 19th century. However, this State’s unique model of
social democracy, which incorporates aspects of a “welfare state”, is facing a crisis;
several decades of sluggish economic growth have been inadequate for funding the model
and large deficits have accumulated. Remittances from Kerala’s large migrant community
(mainly in West Asia) provide support to a large number of households and have helped
to keep the economy afloat.21 As central government transfers decreased in relative terms
in the 1990s, and as other States improved their economic performance, Kerala’s political
leadership has come under increasing pressure to try and stimulate growth.
43 A detailed analysis of economic development policies over a period of 25 years indicates
that the actual commitment of successive governments to the goals expressed in official
policy announcements has varied significantly (Zamuner, 2009). In 1987, for instance, the
government announced that industrial development was its top priority; a few years
later, the approach was defensive, and the policy approach was defined in negative terms,
viz., as a necessary response to fierce competition from other States.22 Moreover,
investigations in Kerala in 2009 revealed a gap between the attitudes of senior politicians
and public servants in charge of implementing economic development policies. The
Kerala State Industrial Development Corporation (hereafter KSIDC) is a case in point: this
agency’s mission is to support private and mixed capital investment projects for
infrastructure development. Without the effective support of their political bosses, KSIDC
officials could not succeed in their initiatives. At the same time, the private sector seems
generally uninformed about the support programs offered by the KSIDC. A study
examining the actual conversion rate of investment projects (Industrial Entrepreneurs
Memorandum) into concrete projects corroborates Kerala’s difficulty in completing
negotiations with potential investors since its success rate was only 16% versus 60% for
Maharashtra (Blaudin de Thé, 2008).
44 As this discussion suggests, there is more variation in political commitment of successive
governments rather than in policy content per se. Such variations between
administrations can be explained largely by the regional political system characterized by
the almost systematic alternation between two main political coalitions: the Left
Democratic Front, led by the main Communist party (CPI-M), and the United Democratic
Front, led by the regional branch of the Congress party, which generally supports more
liberal economic policies. It can be recalled in this context that it was the Congress Party,
in power in New Delhi, which first introduced economic reforms in 1991. The Left Front
coalition is traditionally characterized by a militant (and democratic) communist
ideology, but in reality its position varies with the faction that dominates at a given point
in time. The reformist faction, who supports private sector development, has not always
been able to impose its line.
45 To summarise, the economic reform agenda promoted by New Delhi has not critically
influenced policies pursued in Kerala, although successive governments can implement
incremental changes. A very high level of political competition has kept the pressure on
governments to maintain existing high levels of social services.

2. 5. Haryana: policy consensus for promoting industrialisation
46 In contrast to Kerala, the State of Haryana demonstrates more policy stability both in the
general policy line it follows and in the practical commitment towards its goals. Although
Haryana experiences an alternation between the Congress party and regional-based
political parties, there is nevertheless a broad consensus among the major political actors
in favour of a “modernization” approach to economic development with regard to
industry and services as well as urbanization, an observation confirmed by all the
respondents in our study.
47 It should be noted at the outset that the State’s regional economy is among the strongest
of India in terms of per capita income (see Appendix), and it enjoys sustained
development in all the main sectors of its economy. The Green Revolution in the 1960s
increased very significantly the yields in this region, known as the breadbasket (and rice
basket) of the country, along with Punjab.23 Since the 1980s, its industrial development
has been quite spectacular, especially near Delhi. A peculiarity of its manufacturing
sector is that over 75% of production takes place in the formal sector, indicating the
presence of large-scale units, in striking contrast with the national economy
characterized by the predominance of the informal sector. As an indicator of its vitality:
980 new factories were established between 2002 and 2007, and in the same period,
industrial employment increased by 140,000 in the formal sector alone. 24 Similarly, the
service sector (finance, real estate, computer services companies) is growing very fast,
especially in Gurgaon, a satellite city of Delhi.
48 An analysis of the industrial policies carried out in the last twenty years indicates a
change in the mid-1990s. Until then, the strategy had relied on generous tax benefits to
attract new investments, but after 1997 the focus shifted to infrastructure development
through partnerships with the private sector. In general, successive governments have
been very accommodating to investors, simplifying procedures through a single window
mechanism, more “flexible” plant inspections allowing companies to certify compliance
with labour laws on the basis of an “honour system”. Since the mid-1990s, the
government has instructed a specialized public agency (HSIIDC) to buy and develop a
stock of property, a “land bank”, to facilitate industrial projects that require large plots
near transport hubs (Kennedy, 2009). Again, these concern primarily metropolitan Delhi
and emerging industrial corridors along the National Highway 8.
49 Haryana has the non-trivial advantage of surrounding metropolitan Delhi on three sides.
Indeed, a significant proportion of its territory is located in the National Capital Region.
This agglomeration of 24 million people is experiencing remarkable growth in recent
years and has surpassed metropolitan Mumbai’s population. Policymakers in Haryana are
fully aware of this advantage and have been multiplying their interventions in this area,
notably public investments in both conventional (roads) and specialized (production
platforms) infrastructure. To facilitate interaction with industry locally and with
potential investors, the regional government decentralized certain services and opened
branches of some departments in Gurgaon. It fixed floor prices for land acquired by the
government, in order to ensure a better deal for landowners than what is provided for in
the colonial-era law on land acquisition.
50 To sum up, Haryana pursued a strategy of infrastructure-led development from the
mid-1990s, building up its existing industrial base. The degree of political will mobilised

to support each industrial policy has remained fairly stable across successive
governments.
2. 6. Andhra Pradesh: claiming policy space as part of a popular

regionalist agenda
51 The State government of Andhra Pradesh began to demonstrate strong will to improve
the investment climate in 1995 when Chandrababu Naidu became Chief Minister of the
government led by the regional Telugu Desam Party (TDP). 25 These efforts were especially
focused on the metropolitan region of Hyderabad.26 Actions were undertaken to beautify
the city, improve road traffic, digitalize many government services (including utilities),
and reform municipal finance. A strategic plan for this State of 70 million people, Andhra
Pradesh: Vision 2020 (GoAP, 1999), was designed in collaboration with the international
consulting firm McKinsey. It promised to put the State on a strong growth path that
would allow it to achieve spectacular social objectives within two decades. Relying on
private capital and international “best practices”, the strategy involved realizing
specialized infrastructure and direct investment towards the most dynamic sectors of the
global economy (information technology, pharmaceuticals, logistics, biotechnology).
52 During the decade that Chandrababu Naidu was leading the government (1995-2004),
Andhra Pradesh was a rare example of an Indian State that openly embraced a
liberalization agenda. This was done by linking market reforms to the TDP’s broader
political project of wresting greater political autonomy from New Delhi. Thus,
globalization was presented by political leaders as an opportunity for the State to
extricate itself from under New Delhi’s yoke. The government deployed intense media
campaigns to garner public support and attract the attention of investors, including FDI.
This strategy of hyperbole, referred to as “trumpeting” in the literature on economic
policy reform (Rodrik 1998), was intended to compensate for objective weaknesses of the
regional economy (regional GDP has been relatively dependent on agriculture and the
State’s social indicators tend to be below national averages). It was their way of signalling
their commitment to investors, in an attempt to improve a rather mediocre image
(Kennedy, 2004). In some sectors, the strategy appears to have been successful, especially
in information technology (IT), where the State has built up virtually from scratch a fairly
solid industrial base.
53 This was done through extensive investments in infrastructure specially designed for the
information technology industry, most notably HITEC City in metropolitan Hyderabad, an
extensive area offering both fully equipped office space and serviced plots for companies
choosing to build their own facilities. A special IT policy, first implemented in 1999 and
revised in 2002, offered numerous incentives such as 24-hour electricity connection,
exemption from inspections under most labour laws in exchange for self-certification,
exemption from zoning regulations and a rebate on the cost of land (Kennedy, 2007).
54 The TDP government’s pro-reform discourse also drew the attention of international
agencies of development cooperation, such as Britain’s DFID and the World Bank, eager to
find a “model” among India’s States, who could be held up as a poster child. In fact,
Andhra Pradesh became the first sub-national State in the world to directly negotiate a
loan from the World Bank (Kirk, 2005).

55 To recapitulate, Andhra Pradesh adopted a discourse favourable to economic reforms

from the mid-1990s and aggressively marketed the State as ‘pro-business’. Promoting
high-tech sectors in particular, the political leadership sought to reverse the image of an
industrially backward State.
3. State-level structural reforms and social

compromises
3. 1. Implementing second-generation reforms
56 Whereas the first phase of macroeconomic reforms initiated in India was implemented
relatively rapidly, the second phase has proven more difficult and uneven. This is in part
because it depends on the will and the capacity of State governments. In India the term
“second-generation reforms” generally refers to the reforms that were not included in
the first phase, but it is also a way of designating the reforms considered politically
sensitive and likely to face opposition (Jenkins, Khilnani, 2004). Examples include public
finance reforms, restructuring of public utilities (electricity, water), privatization of
public enterprises, reform of labor laws and the establishment of institutions to regulate
a market economy. It sometimes includes the reform of governance institutions with the
aim of making decision-making processes more transparent and government more
accountable.
57 Whereas the first generation of reforms could be carried out relatively smoothly, the
current process is more complicated in part because it depends more heavily on the
cooperation of State governments. The politics of each State follows the rules and logics
of it distinct political economy. Nonetheless, there are limitations on the manoeuvring
space of State governments, in particular with regard to fiscal powers. In fact, fiscal
relations are one of the most sensitive areas in federal relations in India. The national
Finance Commission helps States by filling the gaps between spending and revenue
generation, but such “grants-in-aid” as they are called, have not created incentives for
States to maintain fiscal discipline. In the early 2000s, the Indian government decided to
address the issue. After three years of discussion, the Parliament adopted the Fiscal
Responsibility and Budget Management Law, which came into force in 2004. It required
the government to eliminate its current account deficit and reduce its overall budget
deficit within 3% of GDP before 2008.27 This Act is binding, however, only on the central
government whereas the States’ combined budget deficits contribute to nearly half of the
total deficit. The fact remains that these reforms had an effect on the public finances of
the States – indeed, the first phase of fiscal consolidation resulted in a decline in transfers
to the States, expressed as a percentage of GDP, from 4,9% in 1990 to 3.8% in 1999, before
rising again to 4.3% in 2003 (Chakraborty et al., 2009).
58 Again, the effects were uneven; States with low per capita income and heavy debt like
Orissa were hardest hit. Similarly, the severity of the public finance crisis –with regard to
fiscal deficit, debt service, debt stock– varies widely among States. The deficit /State GDP
ratio is particularly high in seven States: Orissa, West Bengal, Punjab, Rajasthan, Gujarat,
Kerala and Uttar Pradesh. With the exception of Gujarat, these States are paying high
interest on their debt as a proportion of their income. In our study, Andhra Pradesh is
considered to have an average deficit while Haryana is characterized by a relatively low
deficit. The situation in Kerala is considered particularly serious because current

expenditure is funded with deficit financing. Recent studies have shown that the level of
debt service has a direct impact on State spending, and therefore indebted States face a
significant reduction in their “fiscal space” (Chakraborty et al., 2009). Orissa is an example
of a State under strong pressure to reform its public finances.
3. 2. Orissa: structural reform under duress
59 In Orissa, the budget deficit in the late 1990s was critical, around 30% of net output
(Meher 2002). In 2003, the ratio of interest payments to current income was 32%, higher
than the Indian average of 29% and well above the 15% limit recommended by the 12th
Finance Commission. The situation was so critical that the government was in difficulty
to pay its own employees. According to State government officials, the decision to
perform a far-reaching reform of public finances was taken by a small group of senior
bureaucrats from the Department of Finance and Planning, not as a result of particular
pressure brought to bear by the national Finance Commission or the central government.
28
This decision led in 1999 to the signing of a Memorandum of Understanding between
the Orissa Government and the central government for reducing expenditures and
increasing revenues (Meher, 2002). In 2005, responding to the impetus given by New
Delhi, the Government of Orissa adopted its own Fiscal Responsibility and Budget
Management Act. In addition to restructuring its debt, the reform package aimed to
increase State revenues via for example the introduction of VAT (in 2005) and a hike in
the amount of royalties charged by the State on the mining and metallurgy industry.
Drastic measures were taken to reduce public expenditure, a freeze was put both on
salaries and new recruitment of civil servants and steps were taken to privatize public
enterprises.29
60 From the initial launching to the implementation of structural reforms in Orissa, the
World Bank was closely involved.30 The recovery plan contributed to a return to more
balanced public finances, but it also put the State on an ideologically marked
development path, which is practically irreversible. With severe cutbacks in public
spending, public action has come to rely on indirect interventions, for instance through
incentives directed towards industrial investors to exploit the natural resources of the
State. These reforms have had consequences for services levels and hence living
standards.
61 The current strategy pursued by the government does not appear to take into account the
social and spatial disparities that exist in the State. A focus on the industrial sector and to
some extent the service sector effectively ignores three quarters of the population, which
depend on agriculture and related activities. Although the State government
demonstrates a certain willingness to create jobs for people living in rural areas through
support to cottage and small industries, the core strategy targets industrial growth. The
rationale is that it will foster economic development and improve living conditions and
create jobs through a trickle down effect. It is noteworthy that actions aimed at reducing
poverty and social inequalities are primarily the result of national policies designed and
financed by the central government.31
62 If the development strategy has paradoxically ignored the majority of the population it is,
according to many observers and analysts (Mohanty, 1990; Harriss, 2000; de Haan, 2004),
due to the lack of political mobilization on the part of middle and working classes. A small
political elite, composed of high castes (Brahmins and Karnas) representing less than 8% of

the population, dominate political life. The Khandayats, the largest caste numerically
speaking and one which could be considered middle class, hence capable of enjoying
significant political clout, do not form a homogeneous group. In addition, because the
redistribution of land between the Khandayats and the affluent castes are relatively
egalitarian, there have not been the classic caste-based conflicts around land. Likewise,
although Scheduled Tribes account for 22% of the total population, the category covers a
wide range of groups, which does not facilitate their mobilization around common
interests (Kumar, 2004).
63 High turnout in elections, including among the poorest groups, indicates a strong interest
in politics, but other indicators, such as the fact informants did not know the name of the
Chief Minister although it is highly publicized, underscore the gap between these socially
marginalized groups and political elites (de Haan, 2004; Robin, 2010). This absence of
mobilization among marginalized groups has made it easier for the government to
conduct its policy of attracting industrial investors to tap mineral deposits, including on
tribal land, which often involves the displacement of villages.32 Although rehabilitation
and resettlement policies exist, they do not always allow families to regain livelihoods
and living standards similar to what they had prior to displacement (Meher 2008, quoted
by Mishra, 2010, p. 50).
64 By the early 1990s, scattered protest movements started to emerge (Meher, 2009). In 2006
during a protest against the establishment of Tata Steel on 200-acres granted by the
Government of Orissa, security forces shot and killed 12 protesters. This event has fueled
protest movements and today a dozen of the largest industrial projects are stalled. The
project sponsored by POSCO, the South Korean steel company, the largest foreign
investment in the country if it is built, was suspended because of its environmental
impacts and also because of the flagrant violations that occurred during the approval
process at the time of signing the MOU. If mobilization succeeds in taking root, the
government could be obliged to reconsider its policies, which are now heavily skewed in
favor of industrial interests.
3. 3. Andhra Pradesh: an example of chosen reforms?
65 On the surface, the Andhra Pradesh experience resembles that of Orissa, although it
started its reforms a few years earlier. Andhra Pradesh adopted a similar structural
adjustment programme in 2002, borrowing money on an even larger scale from
international donors.33 Like in Orissa, the British cooperation agency provided support
for structural reforms through financial and technical assistance. But a major difference
is the context and conditions under which reforms were undertaken in each State. In
Orissa, as we have seen, drastic decisions were taken in a context of fiscal crisis. Although
Orissa was not forced to sign loan contracts with the World Bank –and follow the
conditionalities dictated therein–its choices were certainly very limited. The context of
reforms in Andhra Pradesh seems quite different. Certainly, Chandrababu Naidu did not
inherit a good financial situation when he took over as Chief Minister in 1995; the
populist style of his predecessor, NT Rama Rao, had created huge budget deficits, mainly
because of food subsidies. So there was pressure on public finances and the TDP
government took a pragmatic, some would say cunning, decision to publicly embrace
structural reforms and appropriate them as its own. Marking a contrast with the
‘stealthy’ way in which of the central government implemented economic reforms

(Jenkins, 1999), and also with the duress experienced by Orissa, Andhra Pradesh openly
boasted about its reform program and presented it as part of an overarching plan for
social and economic development (Kennedy, 2004). As such, the reform program was
presented as a means by which Telugu society could achieve its broad objectives and
fulfill its potential.
66 In the late 1990s, even before taking out a loan from the World Bank, Naidu’s government
began its new program of economic and governance reforms. It put an end to some of the
costly policies put in place by its predecessor, for example by reducing the subsidy for
rice and discontinuing free supply of electricity to farmers. One of the main points on the
reform agenda was restructuring the government, its size and its mode of interface with
the public. The freeze on hiring in the public sector, decided a few years prior, was
maintained, many services were delegated to private companies or, in the health sector,
to NGOs, a greater share of the cost of utilities (energy, water, waste collection) was
transferred to consumers. Other politically difficult decisions, which met with opposition,
were taken such as the closure of loss-making cooperative societies and the privatization
of some public enterprises. In exchange for these sacrifices the government promised
economic growth and good governance, meaning greater transparency and
accountability.34
67 The story of these reforms, which were more “hype” than reality (Mooij, 2007) is
interesting not so much for its results, which were not up to expectations or promises, far
from it, but for what it teaches us about the policy space for regional political leaders.
Evidence suggests that political elites in Andhra Pradesh managed to maintain greater
control of the reform process, compared to Orissa, both in deciding to launch it and
during implementation. This greater maneuvering space is perhaps due in part to a less
severe financial situation, but political factors also weighed, aided by Naidu’s
considerable political skill. In 1998, the latter, who already enjoyed a certain notoriety on
the national level, seized a rare opportunity that gave his government important
influence over the central government: he pledged support to the Bharatiya Janata Party,
so that it could form a coalition government. With 29 MPs, the TDP was the largest
partner in the coalition, and although Naidu claimed no ministerial berths, preferring to
give support from the outside and retain his autonomy, he enjoyed privileged access to
the inner circles of power.
68 At the State-level, the political line followed by the TDP can be analyzed as a strategy
aimed to benefit the region’s most powerful economic actors, many of who are natives of
the State. Indeed, Andhra Pradesh has its own “regional capitalists” (Baru, 2000), which is
not the case for all States, and it can boast of a considerable number of large corporate
groups in financial services and media (Eenadu), pharmaceuticals (including Dr Reddy’s
Lab), computer services and software engineering, etc. Industrialists, as well as political
leaders from both major political parties (TDP and Congress), are largely from the
dominant landowning castes (Reddy, Kamma, Raju). These groups have undergone social
mobility starting in the colonial period, benefiting from public investments in irrigation
and later the Green Revolution; they have since migrated to the cities and have
diversified their activities. In this way, the main economic and political actors share a
common subculture, supported by a set of informal rules, which facilitates
communication and consensus building. Indeed the very close links between industrial
and political power have often been criticized, perhaps most dramatically on the occasion
of the Satyam/Maytas scandal, the tremors of which were felt all the way to Wall Street. 35

Evidently, the liberal economic policies followed under the TDP regime appealed to one
small part of the electoral base of the TDP, the one designated as “urban entrepreneurial
class” (Srinivasulu, 2003), eager for a more business friendly environment. For other
groups, unlikely to gain from such policies, the TDP put in place parallel popular policies
that targeted specific categories of the electorate (women, artisans, etc.).
69 As mentioned above, the regional political system is dominated by two large parties that
bring together various social groups, including traditionally disadvantaged groups, who
are “accommodated” in exchange for symbolic and material favors. Despite a regular
alternation between the two parties, however, governance is characterized by high
stability, which probably made it less dangerous for the TDP to adopt a new political line
as long as it could claim to promote the interests of the State against the “despotism” of
New Delhi.
3. 4. Haryana: a pragmatic approach to growth representing

dominant interests
70 Like Andhra Pradesh, Haryana too has experienced more manoeuvring space than Orissa
in the choice and pace of its reforms, related no doubt to its healthier financial situation.
Since the early 1990s, successive governments have initiated some moderate reforms, but
have not undertaken a major program like Orissa or Andhra Pradesh. Contributing more
to continuity than change, these measures aimed mainly to improve the business
environment in the State.
71 Since the start of market reforms at the national level, the ruling parties in Haryana have
mostly coincided with those in power in central government, a factor that explains why
the economic development policies followed in the State have often been in line with
those advocated by New Delhi (Kennedy, 2009). Such affinities have brought considerable
advantages to the State. For example: just before the regional elections of 2009, the Prime
Minister’s Office accelerated approvals for several large infrastructure projects, including
a power plant to serve an industrial area near Delhi.
72 Haryana’s political economy still reflects the importance of agriculture. Along with
Punjab, it underwent a modernization process through the consolidation of parcels,
public investment in irrigation, and capital-intensive cultivation. This has resulted in
high productivity and a functioning market for agricultural land, which is rare in India
where land is a source of security par excellence and is imbued with strong symbolic value.
In addition, farmers in Haryana are organized in unions and have been a powerful lobby
in the State for decades.
73 So although Haryana’s economy has industrialised and restructured over the past twenty
years, its economic elites still identify largely with farming, and maintain a stake in
agriculture. Nonetheless many landowners have diversified their activities in favour of
industry, trade and real estate. In a context of strong market pressure on land, especially
around the cities of Chandigarh, the State capital, and Delhi, many owners have sold their
land. Some have bought plots elsewhere, including in neighboring Rajasthan, and
continue to rely on agriculture, but others are moving towards new activities, including
property development, one of the fastest growing sectors of the Indian economy. Thus,
while protecting the interests of the powerful farm lobby, governments can develop
policies favorable to industrial development without turning their backs on their political

support base (Kennedy, 2009). Traditional elites act increasingly as a “growth coalition”
in the State, lending their support for a growth strategy favorable to other types of
investors.
74 Political elites in Haryana, whichever the party, mainly come from landowning castes,
especially the Jats. Present throughout the State, Jats carry important electoral weight in
about 40% of the constituencies of the State Assembly (35 of 90 seats). Their economic
weight is even heavier because they possess about half the arable land (Jodhka, 1999). At
the other end of the social scale, Dalits account for about 20% of the population, but unlike
Jats, they are not organized and do not represent a political force. Traditionally
disadvantaged because at the bottom of the Hindu social hierarchy, Dalits suffer from
deficits of all types of capital (land, financial, social). Employed as farm workers or
laborers, they have been strongly affected by changes in the regional economy. Lastly, it
should be noted that despite its economic prosperity (per capita income is among the
highest in the country), Haryana is considered socially “backward”. In addition to
sectarian violence, crimes against women, involving insufficient dowry for instance, are
not uncommon. Particularly damning is the sex ratio, the worst in the country: in the age
group 0-6 years, only 819 girls per 1,000 boys, a result of widespread selective abortion.
75 Until now, the political model of Haryana has been based on the domination of some
social groups, those who hold property rights on land, but society is changing rapidly and
it is not certain that it can continue. Surveys indicate that the electorate wants to end the
political domination of the Jat community, a position shared by 27% of Jats respondents,
because it is perceived as governing in a biased fashion in favour of the dominant caste
(Joshi and Rai, 2009).
3. 5. Kerala: shifting attitudes toward private sector development
76 As indicated above, Kerala is known for its independent policy stance and its exceptional
social indicators, far superior to any other State in India. Unlike Orissa, the critical state
of Kerala’s finances since the 1980s has not translated into a hard constraint to implement
structural reforms. The main reason is the political mobilization of the population and
the traditional autonomy of the State, relatively speaking, vis-à-vis the central
government.
77 Kerala has been much studied for its unique human development model, based on income
redistribution through social policies, as well as for the crisis that this model has
undergone starting in the 1980s. Although particularly effective in increasing social
development indicators in the region, the lack of private investment and economic
growth over several decades resulted in high unemployment and high public deficits. Yet
Kerala was able to maintain this model because of widespread influence in the State of
socialist ideologies, promoted by the communist parties. Since coming to power in 1957,
Kerala has been heavily influenced by Communist parties. Trade unions are powerful and
combative, forcing governments from both the Left and Center-Left to accept them as
partners. This is one of the reasons why in Kerala, more than any other State in India,
government policies have benefited low income groups. Because of this particular
political configuration, local politics has long been characterized by mistrust of the
private sector. But all this began to change during the 1980s when the negative
consequences of the model began to be felt provoking large-scale emigration and greater
economic dependency on remittances. Heller (1995) explains the change in the attitude of

government towards the private sector through what he calls the transition from a logic
of “class struggle” towards one of “class compromise” at the highest levels of CPI-M, the
party at the head of the Left Democratic Front. The change did not simply occur among
political leaders but was the result of the evolution of society towards a mentality
characterized as “middle class” as a result of its socio-economic development. Thus, the
change of political attitude was a reflection of the wider changes in society. Other factors
contributed to this evolution: the waning influence of Naxalites (far left revolutionary
movement), and the economic takeoff of certain regions in India as a result of pro-
business reforms introduced by Rajiv Gandhi, putting pressure on the State to promote
growth.
78 We have seen since the late 1980s that the degree of political commitment Kerala
government on improving the business climate varied according to ruling party, and to
the ruling faction within it. At the same time, many people interviewed in the course of
this study stated that there were no longer fundamental differences between the CPI-M
and the Congress with regard to their positions on economic restructuring. Both parties
tend to adopt a leftist rhetoric, based on redistributive policies, to attract the electorate,
and the two major governing coalitions (Left Democratic Front and United Democratic
Front) include parties from across the political spectrum. Policy positions depend
increasingly on electoral opportunism and rather less on ideology.
79 Among recent governments, the United Democratic Front (2001-2006) was the most
focused on implementing liberal market reforms, e.g., opening the higher education
sector to private investment. It also adopted major administrative reforms and austerity
measures, which included an attempt to reduce the number of government employees
and their benefits. But the government had to backtrack on the latter after strong
opposition, –almost 500,000 civil servants went on strike for a month– including within
the ranks of the political party leading the coalition. Thus, despite a subtle shift in favour
of economic reforms, successive governments in Kerala continue to assert an autonomous
policy stance driven by pressure from the political base. Currently, the State continues to run
large deficits, and yet its overall performance is better thanks in part to the growth of
certain sectors such as construction, which is the result of a strong inflow of remittances
from emigrants and also an improvement of the business climate.
80 Currently, Kerala’s economy is mainly based on small and medium enterprises and the
sectoral distribution of firms indicates the primacy of the service sector, which is much
more developed than in the rest of the country (see Appendix). The Government is trying
to adopt a new development model more adapted to the specific features of the State,
such as tourism, and based on environmental friendly sectors as well as traditional
industries.
81 Lastly, the private sector in Kerala does occupy a strong enough position to shape the
policy framework to its interests, which also contributes to the fluctuation of economic
policies with each political alternation. In contrast to Haryana, there is not a vocal
“growth coalition”. As long as the private sector has not attained a critical mass, it cannot
effectively influence the industrial policy.

4. Concluding remarks
82 The economic reform agenda adopted by the Indian government in the1990s contributed
to reshaping federal governance, in particular with regard to the scope for State
governments to implement economic development policies and their degree of
responsibility for managing public finances. Subnational political elites reacted
differently to this new situation, which was perceived sometimes as a constraint and
sometimes as an opportunity. Like most States in India, the four States examined here
progressively took measures to improve their business environment in a bid to attract
private investments for infrastructure development and industrialisation. However, we
saw that commitment toward private sector-led development was not always followed
from one government to the next (Kerala) and that deep-seated practices like corruption
were not effectively abolished (Orissa). It was observed that State governments tried to
put forward their ‘comparative advantage’, mineral resources in the case of Orissa and
proximity to Delhi in the case of Haryana, which concentrated investments in the
dynamic National Capital Region. In the case of Andhra Pradesh, the only State that
openly embraced economic reforms, the State government made significant efforts in
specialised infrastructure, mainly for high tech industries, to tap into the strong growth
of these sectors in the global economy.
83 In the context of India’s federal system, State governments can, in theory, decide whether
to implement structural reforms and their sequencing, but the analysis showed that
Orissa had in fact a limited degree of choice because of its budgetary deficits and debt. On
one hand, it had to bend to the requirements of the central government concerning its
deficits and on the other, to the conditionalities of international donors providing
funding for implementing the reforms. In contrast, Andhra Pradesh’s political leadership
embraced the reform agenda in the mid-1990s as a strategy for pursuing its regionalist
political agenda, and contracted loans from the World Bank in a bid to restructure the
regional economy and engage with the global economy. What transpires is a “variable
geometry” at work in India’s federal governance, not one imposed from above but
defined as a function of regional political dynamics. Although it appears that
economically developed (‘rich’) States or those with a stable financial position enjoy more
manoeuvring space, political factors are still the determining factor for explaining the
policy stance adopted. The policy preferences of regional governments, including with
respect to market reforms and openness to FDI emerge as an outcome of a political
process based in part on the capability of local groups to promote their interests. We have
seen that despite democratic institutions that would in principle favour the rural
majority, the influence of dominant castes persists in Andhra Pradesh, Orissa and
Haryana. It is only in Kerala that policies have given expression to the interests of the
majority of population and have resulted in an extraordinary level of social development.
84 In post-reform India, State governments have greater policy space and more scope for
influencing social and economic outcomes. In this context, State-level policies are
starting to receive greater attention than in the past. This aim of this article is to
contribute to this research programme and to advance the argument that State economic
policies, and their response to economic reforms more generally, are a reflection of the
existing dynamics and structures that characterize India’s many subnational political
economies.

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APPENDIXES
Appendix
Andhra
Haryana Kerala Orissa India
Pradesh
Surface (i) 275 045 44 212 38 863 155 707 3 287 240
Surface (% ) 8.4 1.3 1.2 4.7 -
Population (i)
Population (2011) 84 665 533 25 353 081 33 387 677 41 947 358 1 210 193 422
Population (% of
7,0% 2,1% 2,8% 3,5% -
total)
Ave annual
growth rate of 1,4% 2,5% 0,9% 1,5% 2%
pop 1991-2001
Ave annual
growth rate of 1,1% 1,8% 0,5% 1,3% 1,6%
pop 2001-2011
pop density /km²

308 573 859 269 368
(2011)
Development (ii)
Human
Development
0.473 0.552 0.790 0.362 0.467
Index (HDI)
(2007-8)
Ranking HDI (out

15 9 1 22 -
of 23)
Under Five
Mortality Rate, 63.2 52.3 16.3 90.6 74.3
(2005–6) (‰)
Literacy rate
63.5 74.0 93.9 68.3 72.0
(2007-8) (%)
Incidence of
poverty (% living 15.8 14.0 15.0 46.4 27.5
below) (2008)

Economy (iii)
Per capita income

2007-08 (At
25044 39796 32961 16149 24295
Constant 1999-00
Prices)
Average Annual
Growth Rates of
the Net Sate
2.22 2.72 1.76 1.22 2.03*
Domestic Product
Per Capita
(1970-1990)
Average Annual
Growth Rates of
the Net Sate
4.08 3.07 5.54 2.58 2.21*
Domestic Product
Per Capita
(1991-2004)
Contrib GDP
1993-2000 (%)
Agriculture 32 38 28 42 30
Industry 24 28 21 20 27
Services 44 34 51 38 43
Contrib GDP
2000-05 (%)
Agriculture 29 30 17 36 25
Industry 23 28 21 19 26
Services 49 42 62 45 49
Politics
Indian
National Biju Janata United
INC United Dal
Congress Progressive
Democratic
Party/coalition (INC) ( (national party Alliance, led
Front, led by (regional
national /centre-left) INC (centre-left) party / by INC (centre-
party / centrist) left)
centre-left)

Left Democratic INC

Telugu National
Indian Front, led by
Desam (centre-left), Democratic
Principal parties/ National Lok Communist
Party ( Alliance, led
coalitions in the Dal (regional Party of India- Bharatiya
regional by Bharatiya
opposition party / Marxist ( Janata
party / Janata Party (
conservative) national party / Party (right
centrist) ) right)
left)
*Sample of 15
States
Sources: (i) Census of India 1991, 2001, 2011 ; (ii) India Human Development Report 2011, Oxford
University Press ; (iii) Institut français de Pondichéry, Eric Denis 2011; Chikte 2011 and
Economic and Political Weekly database. Note: In May 2013 one euro is the equivalent of
73 rupees.
NOTES
1. To avoid confusion, we capitalize State to designate the constituent members of the Indian
Union. There are currently 28 States.
2. Defining “regional parties” or “state parties”, as they are classified by India’s Electoral
Commission, is problematic because of the tremendous variety; a working definition of regional
parties: they operate in subnational territories, as opposed to national parties, and usually can
only aspire to govern at the State-level.
3. A modified version of this study appeared in French in Piveteau A., Rougier E., Nicet-Chenaf D.
(dir.), Émergences capitalistes aux Suds, Karthala, Paris, 2013.
4. The research in Kerala and Orissa was carried out in the framework of an international
Masters in development economics at Sciences Po Paris.
5. With the exception of interest rates. However, it should be pointed out that interest rates in
informal credit markets, which play a crucial role in India’s economy, differ widely. See Guerin et
al. (2013).
6. This links up to broader debates on lessons from “emerging” economies, see Piveteau and
Rougier (2010).
7. For instance, the Indian Parliament voted to open India’s domestic market to large-scale
retailers like Walmart in late 2012, several years later than planned, because of widespread
opposition.
8. Dholakia (1994) had used another method to identify shifts in growth.
9. The Gini coefficient for Tamil Nadu is 0.398 in 1999-2000 and 0.345 in Maharastra.
10. For other studies focusing on intra-states inequalities, see Kurian (2000) and Purohit (2008).
11. This can be partly explained by data gaps, for instance, with regard to public investments
(Sachs et al., 2002, p. 12).
12. This is perhaps linked to the fact that States were not required to publicly take a stand with
regard to the reform agenda – indeed, State governments were not formally consulted about the
agenda and their approval was not required. The national Parliament voted to implement
reforms.
13. This argument is further developed in Kennedy (2004).

14. Likewise, we observe that a rich State like Maharashtra was not necessarily as enthusiastic in
its reform efforts as Bajpai and Sachs’ classification system suggests.
15. In her view, “liberalisation in India amounted not to deregulation but to the reordering of
state-market relations mediated by subnational re-regulation strategies and processes”, Sinha,
2004, p. 68).
16. The steel company POSCO of South Korea plans to invest USD 12 billion by 2016, representing
70% of State GDP. The project has met with strong local resistance. At present, the State
government has acquired about 2,000 acres for the project and requires an additional 700 acres
for the project to start. But it still faces violent protests from villagers.
17. The abolition in 1994 of the national Freight Equalization Policy has benefited the State, by
allowing it to benefit from its comparative advantage in mineral resources. Under the Freight
Equalization Policy a factory could be set up anywhere in India and the transportation of
minerals would be subsidised by the central government, a policy meant to facilitate
industrialization throughout the country.
18. The Chief Minister is the head of the government at the State-level, the equivalent of the
Prime Minister at the national level.
19. Interview with Saurabh Garg, IAS, Commissioner, Industries Department, Bhubaneswar
conducted August 20, 2009 by L. Kennedy and K. Robin.
20. This indicator is based on the investigation of the World Bank on the investment climate in
India. The survey was conducted by face-to-face interviews of 4,000 entrepreneurs in 16 States.
G. Iarossi distinguishes an objective dimension (costs) and a subjective (perceptions).
21. Kerala’s growth turned around in 1990s (4% on average) and grew even faster in the 2000s
(7.5) (Kumar, Subramanian, 2011).
22. Interviews conducted by D. Zamuner with two senior government officials, who requested
anonymity, Kerala, Trivandrum, October 2008. Political commitment can be measured for
instance by the relative size of staff dedicated to the implementation of industrial policy, and in
the amounts spent by various governments for “economic services”.
23. Haryana and Punjab were a single State until 1966 when claims for a Sikh majority State led
to a split. They now share a capital, Chandigarh.
24. Data of the Labour Commissioner, Government of Haryana, in December 2008.
25. This regional party was formed in the early 1980s in opposition to the Congress. It claims to
protect the interests of the Telugu-speaking people and defend their pride.
26. Hyderabad, the capital of the southern State, ranked second in Doing Business in India,
reflecting no doubt the very significant efforts made over the past fifteen years by successive
regional governments.
27. In 2006, the current account deficit of the central government was reduced to 2% of GDP and
its fiscal deficit to 3.7% of GDP (Herd and Leibfritz, 2008).
28. Interview conducted by L. Kennedy and K. Robin with Dr. Ramvir Singh, Special Secretary,
Planning and Coordination, Government of Orissa, Bhubaneswar August 19, 2009.
29. Nearly 80,000 jobs were eliminated between 1998 and 2005 (World Bank, 2008).
30. Two structural adjustment loans of USD 125 million and USD 225 million were granted
between 2004 and 2008.
31. One consequence is that are not always adapted to the specificities of Orissa. This is the case
of the Pradhan Mantri Gram Sadak Yojana scheme, fully funded by the Government of India,
which finances the construction of roads connecting villages of 500 inhabitants or more.
However, more than half of tribal villages have a population of less than 500 inhabitants, and
hence are not eligible.
32. For example, the district of Kalahandi concentrate three-quarters of India’s bauxite reserves.
This region is mainly inhabited by tribal people whose livelihoods depend on forest resources.
Mining projects directly threaten the lifestyles and livelihoods of these people. Since

independence, nearly 2 million families in Orissa have been displaced to make way for such
projects (Fernandes, 2006).
33. The first Andhra Pradesh Economic Reform Loan (APERL 1) was granted in March 2002 (USD
250 million), a second loan was approved in February 2004 (USD 220 million); finally APERL 3 was
finalized in January 2007 (USD 225 million).
34. This plan of action was spelled out in a document called “Andhra Pradesh: Vision 2020”
(GoAP, 1999).
35. In 2008 the giant software company Satyam Computer Services, quoted on the New York
stock exchange, was prevented by stockholders from acquiring two companies (Maytas
Properties and Maytas Infra) owned by the sons of Satyam founder Ramalinga Raju. In that
context, it was revealed that Satyam had, with the complicity of international audit firms,
committed massive fraud. See “In India, Crisis Pairs With Fraud”, New York Times, 9 Jan. 2009. The
State government was indirectly implicated because of its dealings with Maytas Properties and
Maytas Infra. See Ramachandraiah (2008).
ABSTRACTS
By rewriting the rules of economic governance in India’s federal democracy, economic reforms
adopted in the 1990s have had far-reaching consequences on the relations between the Union (or
central state) and the States. First, the dismantling of the centralised management of the
economy has created greater scope for State governments to elaborate their economic
development policies. Second, the reforms require cooperation from State governments and
hence State-level politics and governance have taken on greater importance for India’s overall
development trajectory. On the basis of fieldwork-based research, this paper discusses policy
frameworks in four States (Andhra Pradesh, Haryana, Kerala and Orissa) comparing and
contrasting their promotional policies, aimed at attracting investments, as well as their
approaches to structural reforms. For each case we explain political actions and discourse using a
qualitative political economy approach. The article addresses a gap in the existing literature,
which tends to focus on inter-State comparisons of economic performance. There has been
relatively little academic attention to the comparative study of State-level policy response to the
national economic reform agenda. One of the objectives of this study is to understand how
subnational political elites, who now have more ‘policy space’ (if not necessarily more fiscal
space), elaborate their economic development strategies in relation to the central state, on one
hand, and to social forces in their political jurisdictions, on the other. We examine the social
compromises that are expressed by these State-level policies, which provide evidence of the
distinct political economies prevailing in India at the subnational level.
Les réformes économiques adoptées en Inde dans les années 1990 ont réécrit les règles de la
gouvernance économique dans cette démocratie fédérale, entraînant des conséquences
significatives sur les relations entre État central et États fédérés. Tout d’abord, le démantèlement
de la gestion centralisée de l’économie nationale a créé une plus grande latitude pour les
gouvernements des États dans l’élaboration des politiques de développement économique.
Deuxièmement, les réformes elles-mêmes exigent la coopération des États et donc les politiques
menées par les gouvernements régionaux contribuent plus qu’avant à la trajectoire de
développement global de l’Inde. En s’appuyant sur des études de terrain, cet article se propose de

discuter des cadres politiques mis en place dans quatre États (Andhra Pradesh, Haryana, Kerala et
Orissa) en comparant les politiques de promotion territoriale et les réformes plus structurelles.
Pour chaque cas, nous expliquons les actions et le discours politique en utilisant une approche
d’économie politique qualitative. L’article vise ainsi à combler une lacune dans la littérature
existante, qui tend à se limiter à la comparaison de la performance économique des États. Un des
objectifs de cette étude est de comprendre comment les élites politiques des États, qui disposent
désormais de plus d’espace politique (mais pas nécessairement d’espace fiscal), élaborent leurs
stratégies de développement économique par rapport à l’État central, d’une part, et aux forces
sociales présentes dans leurs circonscriptions politiques, d’autre part. Les différents compromis
sociaux exprimés par ces politiques apportent la preuve des économies politiques distinctes
prévalant au niveau infranational en Inde.
Las reformas económicas adoptadas en India durante los años 1990 han reescrito las reglas de la
gobernancia económica en esta democracia federal, con consecuencias significativas sobre las
relaciones entre el Estado Federal y los Estados federados. En primer lugar, el desmantelamiento
de la gestión centralizada de la economía nacional ha creado un gran margen de maniobra para
los gobiernos de los Estados, y entonces las políticas adoptadas por los gobiernos regionales
contribuyen mas que antes al desarrollo global de India. En segundo lugar, las reformas en si
mismas exigen la cooperación de los Estados y por lo tanto las políticas desarrolladas por los
gobiernos regionales contribuyen mas que antes en la trayectoria del desarrollo global de India.
Apoyándose sobre estudios de terreno, este artículo se propone discutir los marcos políticos
implementados en cuatro Estados (Andhra Pradesh, Haryana, Kerala Orissa) comparando las
políticas de promoción territorial y las reformas ms estructurales. Para cada caso, explicaremos
las acciones y los discursos políticos utilizando un enfoque de economía política cualitativa. El
articulo trata de esa manera de llenar una laguna en la literatura existente, que tiende a limitarse
a la comparación de la performance económica de los Estados. Uno de los objetivos de este
estudio es el de comprender como la élites políticas de los Estados, que disponen desde ahora de
más espacio político (pero no necesariamente de espacio fiscal) elaboran sus estrategias de
desarrollo económico con respecto al Estado central, por una parte y a las fuerzas sociales
presentes en sus circunscripciones políticas por otra parte. Los diferentes compromisos sociales
expresados por estas políticas aportan la prueba de que las economías políticas distintas
prevalecen a nivel infranacional en India.
INDEX
Mots-clés: Inde, économie politique infranational, régulation du politique, gouvernance
économique, réformes économiques
Keywords: India, subnational political economy, political régulation, economic governance,
economic reforms
Palabras claves: India, economía política infranacional, regulación de la política, gobernancia
económica, reformas económicas
JEL Code O53 - Asia including Middle East, P52 - Comparative Studies of Particular Economies,
P48 - Political Economy; Legal Institutions; Property Rights, R11 - Regional Economic Activity:
Growth; Development; and Changes, R58 - Regional Development Policy

AUTHORS
LORAINE KENNEDY
CNRS Research Director at the Centre d’Études de l’Inde et de l’Asie du Sud (CNRS-EHESS),
kennedy@ehess.fr
KIM ROBIN
Consultant specialized in health and social policy evaluation at Eneis Conseil,
kim.robin18@gmail.com
DIEGO ZAMUNER
Project Officer at CAF / Development Bank of Latin America, diegozamuner@gmail.com

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Revue de la régulation

Capitalisme, institutions, pouvoirs

Comparing State-level policy responses to

Loraine Kennedy, Kim Robin and Diego Zamuner

This text was automatically generated on 28 April 2019.

Comparing State-level policy

Loraine Kennedy, Kim Robin and Diego Zamuner

Revue de la régulation, 13 | 1er semestre / Spring 2013

Revue de la régulation, 13 | 1er semestre / Spring 2013

1. Economic reforms, shifting policy prerogatives in

Revue de la régulation, 13 | 1er semestre / Spring 2013

1. 2. Economic growth and regional inequalities

Revue de la régulation, 13 | 1er semestre / Spring 2013

Pre-reform Period (1970-1990) Post-reform Period (1991-2004)

Revue de la régulation, 13 | 1er semestre / Spring 2013

Andhra Pradesh 2.22 4.08

Assam 2.38 1.31

Bihar 1.43 1.10

Gujarat 1.79 4.48

Haryana 2.72 3.07

Himachal Pradesh 2.08 4.92

Karnataka 1.83 3.69

Kerala 1.76 5.54

Madhya Pradesh 2.60 2.38

Maharashtra 3.24 3.40

Orissa 1.22 2.58

Punjab 2.24 1.78

Tamil Nadu 2.73 4.38

Uttar Pradesh 1.98 1.08

West Bengal 1.32 4.00

Full sample* 2.03 2.21

Revue de la régulation, 13 | 1er semestre / Spring 2013

1. 3. Determinants of growth in Indian States

Revue de la régulation, 13 | 1er semestre / Spring 2013

2. State-level response to reforms

27 As mentioned above, economic liberalization resulted in an indirect expansion of the

Revue de la régulation, 13 | 1er semestre / Spring 2013

Revue de la régulation, 13 | 1er semestre / Spring 2013

2. 2. Shaping the investment climate – contrasting experiences

2. 3. Orissa: mobilising mineral assets to attract private investors

Revue de la régulation, 13 | 1er semestre / Spring 2013

2. 4. Kerala: reluctance to reform a unique model of social

Revue de la régulation, 13 | 1er semestre / Spring 2013

Revue de la régulation, 13 | 1er semestre / Spring 2013

2. 5. Haryana: policy consensus for promoting industrialisation

Revue de la régulation, 13 | 1er semestre / Spring 2013

2. 6. Andhra Pradesh: claiming policy space as part of a popular

Revue de la régulation, 13 | 1er semestre / Spring 2013

55 To recapitulate, Andhra Pradesh adopted a discourse favourable to economic reforms

3. State-level structural reforms and social

Revue de la régulation, 13 | 1er semestre / Spring 2013

3. 2. Orissa: structural reform under duress

Revue de la régulation, 13 | 1er semestre / Spring 2013

3. 3. Andhra Pradesh: an example of chosen reforms?

Revue de la régulation, 13 | 1er semestre / Spring 2013

Revue de la régulation, 13 | 1er semestre / Spring 2013

3. 4. Haryana: a pragmatic approach to growth representing

Revue de la régulation, 13 | 1er semestre / Spring 2013

3. 5. Kerala: shifting attitudes toward private sector development

Revue de la régulation, 13 | 1er semestre / Spring 2013

Revue de la régulation, 13 | 1er semestre / Spring 2013

Revue de la régulation, 13 | 1er semestre / Spring 2013