SOAS Research Online

Abstract

This thesis examines the relationship between state and capital in post-independence India. There was a dramatic shift from the strategy of state-led capital accumulation. After the 1950s, this strategy became increasingly dirigiste. From the 1980s, economic policy in India shifted towards neoliberalism. The conventional wisdom is that this transition to neoliberalism was driven by poor economic performance in India during the period of state-led growth. The economy was characterised by inefficiencies because of government-created distortions that stifled entrepreneurship and needed to be corrected by neo-liberal 'reforms'. However, capitalists in India were beneficiaries of dirigiste policies, and did not adopt neoliberalism as their collective agenda even when their disenchantment with the state peaked in 1965-66. It was only from around 1980 that a section of capitalists in India began to support a neoliberal turn. What explains this paradigmatic shift? This is the central question of the thesis. This research examines the role of the state in the capital accumulation process in India with a focus on the period from 1965 to 1980 to shed light on how and why the change in state-capital relations occurred. Throughout the 1970s, the expansion and diversification of the capitalist class with the rise of 'new' family-controlled business houses played a critical role in shaping the changes towards neoliberalism. This thesis examines the social origins, institutional access, privileges and restrictions, forms of political organisation and modes of expansion of capital. Both 'zones of intervention' and 'zones of non-intervention' by the state facilitated the various dimensions of this expansion. These developments forged new political alignments of capitalist interests and led to significant stratification within the class. These changes had critical impacts on the access of the capitalist class to technology and finance, defined the attitude of Indian capitalists towards 'globalisation' and accelerated the informalisation of labour force.