Ever since Atul Kohli’s (2004) State-Directed Development first argued that Indian politics has taken a pro-business turn, the literature on business and politics in India has grown. Nevertheless, there remains considerable room for improving our understanding of the scope of Indian business’s increasing power and impact on public policy and of how this research should be integrated with the broader literature on comparative political economy. By collecting essays from leading experts in the field and synthesizing them into a provocative analytical framework, Business & Politics in India provides a major contribution that advances our analysis in these areas.
After an introductory overview, the volume begins with two chapters that provide a theoretical framework illuminating the mechanisms through which business has achieved its growing power. Next, it investigates the impact of business’s growing power on important issues: labor relations, land acquisition, urban development, and the changing role of the media. Then, it examines variation in business power across three states with diverse socioeconomic contexts: Gujarat, which has a relatively advanced economy and a history of probusiness policies; Tamil Nadu, a southern Indian state that like Gujarat has achieved high rates of growth but is ruled by regional parties whose Tamil nationalism and competitive populism have provided a degree of autonomy from business; and Odisha, an economically backward state whose development strategy has centered on resource-extractive industries and that is characterized by neopatrimonial state–business relations. The volume’s concluding chapter draws on the preceding analysis to consolidate theoretical insights and suggest areas for future research.
Business & Politics makes three important contributions. It draws on the comparative political economy literature to conceptualize the growing power of Indian business in terms of structural and instrumental power. Kanta Murali’s chapter shows how business’s structural power has increased after reforms in 1991, enabling greater capital mobility and replacing public investment with private investment as the primary engine of economic growth. Aseema Sinha analyzes how the instrumental power of Indian business has grown: as mounting electoral expenses have led to India’s political parties’ greater dependence on business for campaign finances, business leaders have entered parliament in increasing numbers, the rise of India’s regulatory state has created spaces for business policy influence, and resort to public-private partnerships has made the state more dependent on private business. Perhaps most importantly, the volume shows how structural and instrumental power interact in ways that affect business’s ability to veto policy, set the agenda, influence policy decisions, and subtly shape popular worldviews.
Though its theoretical analysis is focused on elaborating the mechanisms of business power, the second contribution of Business & Politics in India is to help us to better understand how business power is conditioned by political institutions. Narendra Modi failed to pass legislation to facilitate land acquisition for business shortly after his 2014 landslide parliamentary victory, less because of the protests of India’s powerful farm lobby and more because India’s electoral laws left opposition parties in control of the upper house. At the same time, India’s federalism provides business with multiple points of entry, and business exercises greater leverage at the state level where governments compete for investment. After land acquisition reform was stifled at the national level, business was more successful in securing favorable policies in various states.
Greater business power at the state level, however, does not mean that business is even more powerful at the municipal level. Even when business communities mobilize to promote urban development, Heller, Mukhopadhyay, and Walton show that their initiative is usually thwarted, because most authority over municipal development policies and revenues resides at the state level where dominant politicians have other priorities. Restricted access to development funding enables cabals of rent-extracting politicians and businesses to dominate urban politics. These cabals impede the formation of business coalitions while using patronage to secure political support and attenuate societal accountability. For all of business’s structural power, the institutional and political context of India’s municipal governance encourages businesses to use their instrumental power to pursue particularistic interests in a manner that impedes attaining their collective interests.
The third contribution of Business & Politics in India is to suggest issues for further research that advance our understanding of business politics in India and beyond. Murali speculates that the “internal heterogeneity of capital and varied preferences is an important factor that is likely to limit business’s structural power” (p. 46). We need to know more about how the structure of Indian business and the dynamics of its collective action affect the exercise of its power. To what degree do business associations serve as encompassing organizations that build coherence among diverse firms? A study cited by The Economist, “Elephants in the Room” (May 20, 2020), finds that in 2019 just 20 companies received nearly 70% of corporate India’s profits, up from 14% three decades ago. Does this concentration of wealth enhance business’s structural power, or is it a consequence of patronage and cronyism that divide business and impede collective action?
Finally, Jaffrelot, Kohli, and Murali observe, “The study of power is best framed as a dynamic process between the forces of domination and opposition” (p. 296). If power is a dynamic process, then we need to pay close attention to the strategic interaction between business and other key actors that shape it. In the elitist realms of Indian policy making, we need rigorous analysis of politicians’ strategies, as well as those of business, if we are to fully understand the consequences of rising business power. Politicians shape the nature of business power even in an era when its potency is growing. For instance, after being condemned by national business leaders when a 2002 pogrom killed more than a thousand religious minorities under his watch as Gujarat’s chief minister, Narendra Modi encouraged the formation of the “Resurgent Group of Gujarat” to build an alternative base of support within the business community. In the years before Modi became chief minister in 2001, Gujarat’s industrial policy prioritized support for small and micro businesses. During his 13-year tenure as chief minister, however, Modi reoriented the state’s industrial policy to favor megaprojects benefiting loyal big businesses. To what extent did this change represent the increasing power of big business? To what extent did it reflect Modi’s preference for crony capitalism and centralized control over illicit political finance? After becoming prime minister, Modi initiated programs to promote small and micro enterprises. Does this reversal reflect differences in the structure of business power at the national level, or does it reflect a new strategy to reward a core political constituency of his Bharatiya Janata Party? At a time when the Modi government continues to provide economic benefits to select businesses, such as the Reliance and Adani groups, is Modi’s promotion of Hindu nationalism a way to maintain popular support for an exclusive developmental model, or is Modi cultivating support from these businesses to advance the cause of Hindu nationalism?
The issues of how the composition and organization of capital affect business power and how business power is shaped by the strategies of political leaders are vital for political economy in India and beyond. Business & Politics in India provides a valuable service by advancing our understanding of business power and underscoring the importance of these issues.
