Dynamics of Governance and Development in India A Comparative Study on Andhra Pradesh and ...

262 Pages·2016·4.02 MB·English

by  Seyed Hossein Zarhani

RUPRECHT-KARLS-UNIVERSITÄT HEIDELBERG
FAKULTÄT FÜR WIRTSCHAFTS-UND SOZIALWISSENSCHAFTEN

Dynamics of Governance and Development in
India
A Comparative Study on Andhra Pradesh and
Bihar after 1990

Dissertation zur Erlangung des akademischen Grades Dr. rer. pol. an der
Fakultät für Wirtschafts- und Sozialwissenschaften der
Ruprecht-Karls-Universität Heidelberg

Erstgutachter: Professor Subrata K. Mitra, Ph.D. (Rochester)
Zweitgutachter: Professor Dr. Dietmar Rothermund
vorgelegt von: Seyedhossein Zarhani
Dezember 2015
Acknowledgement
The completion of this thesis would not have been possible without the help of many individuals.
I am grateful to all those who have provided encouragement and support during the whole
doctoral process, both learning and writing.
First and foremost, my deepest gratitude and appreciation goes to my supervisor, Professor
Subrata K. Mitra, for his guidance and continued confidence in my work throughout my doctoral
study. I could not have reached this stage without his continuous and warm-hearted support. I
would especially thank Professor Mitra for his inspiring advice and detailed comments on my
research. I have learned a lot from him.
I am also thankful to my second supervisor Professor Ditmar Rothermund, who gave me many
valuable suggestions at different stages of my research. Moreover, I would also like to thank
Professor Markus Pohlmann and Professor Reimut Zohlnhöfer for serving as my examination
commission members even at hardship. I also want to thank them for letting my defense be an
enjoyable moment, and for their brilliant comments and suggestions.
Special thanks also go to my dear friends and colleagues in the department of political science,
South Asia Institute. My research has profited much from their feedback on several occasions, and
I will always remember the inspiring intellectual exchange in this interdisciplinary environment. I
would like to express my gratitude to my wonderful friends and colleagues Dr. Jivanta Schötlli and
Dr. Markus Pauli for their comments, feedbacks, and constant supports. I would also like to thank
Markus for his remarks, critiques, and suggestions during the review meeting, which proved to be
very useful in the next stages of research. Furthermore, I would like to thank Dr. Stefan Diederich,
Dr. Michael Liebig and Mr. Bernhard M. Beitelmair-Berini for sharing their tips, knowledge and
academic perspectives with me.
Finally, my heartiest gratitude goes to my wife Samareh for her love, patience, supports, and her
imperturbable belief in my abilities. Also, I would like to thank Samareh for her critiques and
comments on my work. She has been a never-ending source of love, encouragement, and
motivation. Undoubtedly, this dissertation could not have been written without her. Thank you
Samareh!
Of course, the acknowledgments would not be complete without giving thanks to my parents.
Both have instilled many admirable qualities in me and taught me hard work, self-respect, and
persistence. They have supported my academic pursuit, and I could always rely on them. I do not
imagine a life without their love and blessings. This thesis is dedicated to them.
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Table of Content
Acknowledgement.......................................................................................................................................... i
Table of Content ............................................................................................................................................ ii
List of Figures .............................................................................................................................................. vii
List of Tables ................................................................................................................................................. ix
Acronyms and Abbreviations ......................................................................................................................... x
1 Introduction ........................................................................................................................................... 1
1.1 Casting the Context ....................................................................................................................... 1
1.2 Ongoing Debate: Role of State in Development in India ............................................................... 7
1.3 State of Problem and Significance of Study ................................................................................... 9
1.4 Gaps in Existing Literature ........................................................................................................... 17
1.5 Selection of Cases ........................................................................................................................ 20
1.6 Locating Puzzle ............................................................................................................................ 24
1.7 Objectives and Main Questions of the Study .............................................................................. 27
1.8 Arguments and Hypotheses ........................................................................................................ 28
1.9 Methodological Approaches and Their Implications ................................................................... 33
1.9.1 Analytic Narrative Approach ................................................................................................ 33
1.9.2 The Subnational Comparative Method................................................................................ 34
1.9.3 Source of Data ..................................................................................................................... 35
1.10 Structure of Current Study .......................................................................................................... 36
2 State of Art: Governance and Comparative Political Economy ............................................................. 38
2.1 An Overview ................................................................................................................................ 38
2.2 From Government to Governance: a Paradigm Shift .................................................................. 38
2.3 Defining Governance: Complexities and Diversities .................................................................... 41
2.4 Different Conceptualizations of Governance .............................................................................. 48
2.5 Neo-liberalism and Good Governance ........................................................................................ 55
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2.5.1 Roots and Context of Good Governance ............................................................................. 55
2.5.2 Defining Good Governance ................................................................................................. 61
2.5.3 Good Governance as a Theoretical Tool: Assessments and Critiques ................................. 64
2.5.3.1 Question about the Causality Assumption .................................................................. 64
2.5.3.2 Normative Roots of Good Governance........................................................................ 64
2.5.3.3 Neglecting Different Contexts ..................................................................................... 66
2.5.4 Good Governance and Study of Interrelations of Governance and development in India .. 66
2.6 Neo-Institutionalism, Governance and Comparative Political Economy ..................................... 67
2.6.1 Developmental State Theory ............................................................................................... 69
2.6.2 Neo-statism, Governance and Study of Development in India ............................................ 71
2.6.3 Subnational Analysis of Governance in India ....................................................................... 72
3 Theoretical Framework ........................................................................................................................ 73
3.1 Neo-institutional Rational Choice Model of Governance ............................................................ 74
3.2 Polycentric Hierarchy Theory ...................................................................................................... 76
3.1 Regional Elite Strategy analysis ................................................................................................... 78
4 Elite Agency and Development in Andhra Pradesh: From Tollywood Superstar to CEO of AP ............... 84
4.1 An Overview ................................................................................................................................ 84
4.2 State Profile ................................................................................................................................. 85
4.2.1 Geography ........................................................................................................................... 85
4.2.2 Population and Demography ............................................................................................... 86
4.2.3 Economy .............................................................................................................................. 86
4.3 Pre the1990s Politics in Andhra Pradesh ..................................................................................... 89
4.3.1 Historical Backgrounds: From State Formation to First Telangana Movement ................... 89
4.3.2 Caste and Politics in Andhra Pradesh .................................................................................. 93
4.3.3 From the One Dominant Party System to a Two Parties System ......................................... 97
4.3.4 Fall of the Congress, Rise of the TDP and Telugu Subnational Movement ........................ 100
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4.3.5 Charismatic Leadership of NTR .......................................................................................... 102
4.3.6 Economic Populism and Identity Politics in TDP (I) Regime: Seeking the Horizontal Rewards
105
4.3.7 The Vertical Game: TDP in the State and Congress in the Center ..................................... 107
4.4 The Coup in TDP and Rise of Chandrababu Naidu ..................................................................... 110
4.5 From Charismatic Populism to Pragmatist Technocracy: The Rational Actor and the Horizontal
Determinants ........................................................................................................................................ 113
4.5.1 Legitimacy Challenge ......................................................................................................... 115
4.5.2 Fiscal Deficit Crisis ............................................................................................................. 116
4.5.3 The Vertical Game: Coalition of Telugu Subnational Movement and BJP: The Congress as
the Enemy, both in the State and the Center .................................................................................... 121
4.6 Andhra Pradesh as Developmental (Subnational) State in the TDP Regime (II) ........................ 123
4.6.1 A Developmental Elite at the State Level: Naidu as the CEO of Andhra Pradesh .............. 125
4.6.2 The 2020 Vision ................................................................................................................. 131
4.6.3 A Subnational State and International Aid Agencies: AP and the World Bank .................. 135
4.6.4 SMART Governance and Good Governance ...................................................................... 138
4.6.5 Policy Reform in Andhra Pradesh ...................................................................................... 140
4.6.6 Competing for Private Sector Investments ........................................................................ 141
4.6.7 Hyderabad as the Hub for IT-led Development ................................................................. 143
4.7 1999 Election and Reelection of TDP: Rewards in the Horizontal Interaction ........................... 146
4.8 Y.S Reddy and Rise of New Charismatic Populism ..................................................................... 147
4.9 Y.S. Reddy and the Reforms ...................................................................................................... 150
4.10 The Reemergence of Telangana Movement ............................................................................. 153
5 Elite Agency and Development in Bihar: From ‘Jungle Raj ‘of ‘Gharibon Ka Masiha’ to ‘Sushasan Babu’
159
5.1 An Overview .............................................................................................................................. 159
5.2 State Profile ............................................................................................................................... 160
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5.2.1 Geography ......................................................................................................................... 160
5.2.2 Population and Demography ............................................................................................. 161
5.2.3 Economy ............................................................................................................................ 162
5.3 Pre the1990s Politics in Bihar .................................................................................................... 167
5.3.1 Historical Background ........................................................................................................ 167
5.3.2 Congress Party and Upper Caste Domination ................................................................... 167
5.3.2.1 The pre-1967 period .................................................................................................. 170
5.3.2.2 The Period between 1967 and 1972 ......................................................................... 172
5.3.2.3 The Period between 1972 and 1977 ......................................................................... 175
5.3.2.4 The Period between 1977 and 1979 ......................................................................... 177
5.3.2.5 The period between 1980 and 1990 ......................................................................... 177
5.4 Fall of the Congress, Rise of the JD and Lower Caste Politics .................................................... 180
5.5 Lalu Prasad Yadav as a Charismatic Leader ............................................................................... 183
5.6 The Vertical Game: JD/RJD in the State and Congress/BJP in the Center .................................. 185
5.7 Reelection as a Reward despite Poor Economic Performance: The Horizontal Game .............. 187
5.8 Economic Populism and Identity Politics in RJD Regime............................................................ 189
5.9 Bihar as a Dysfunctional State ................................................................................................... 190
5.9.1 Resistance to the Reforms ................................................................................................. 191
5.9.2 Fragmentation of Bureaucracy and Civil Services .............................................................. 192
5.9.3 Personalization and Centralization of Power ..................................................................... 195
5.10 End of ‘Jungle Raj’ and Rise of Nitish Kumar ............................................................................. 197
5.11 Nitish Kumar and New Developmental Paradigm: Change in the Horizontal Game ................. 199
5.12 Bihar as Developmental (Subnational) State in the JD (U) Rule ................................................. 200
5.13 A Developmental Elite at the State Level: Nitish Kumar as Sushasan Babu ............................... 201
5.13.1 Sushasan as the Symbol of the Change ............................................................................. 203
5.13.2 Policy Reforms and Initiatives in Bihar............................................................................... 204
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5.13.2.1 Fiscal Management and Resource Utilization ............................................................ 204
5.13.2.2 Depoliticization of the State Bureaucracy ................................................................. 206
5.13.2.3 Law and Order Management ..................................................................................... 207
5.13.2.4 Enhancing State Service Delivery System .................................................................. 208
5.13.3 A Subnational State and International Aid Agencies: Bihar and the World Bank .............. 210
5.14 Nitish Kumar and the Center: The Vertical Game ...................................................................... 210
6 Discussion and Comparison ............................................................................................................... 213
6.1 The Post-Reform Era in Bihar and Andhra Pradesh ................................................................... 213
6.2 Strategic Choice of Regional Leaders: Populist Economic Policies in Horizontal Game and
Confrontation with the Center in the Vertical Game ............................................................................ 217
6.3 Strategic Choice of Regional Leaders: Cooperation with the Center Implementation of Reform
Agenda and ........................................................................................................................................... 221
6.4 Central Transfers as a Tool for Reward and Punishment........................................................... 227
6.5 Final Remarks ............................................................................................................................ 230
Bibliography ............................................................................................................................................... 232

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List of Figures
Figure 1 Political violence in India 1955-1985 .............................................................................................. 2
Figure 2 Riots in India, 1950–98 .................................................................................................................... 3
Figure 3 India’s GDP per capita (Constant US$) 1960-2015 .......................................................................... 4
Figure 4 GDP growth of BRICS Countries, 1990-2014 ................................................................................... 4
Figure 5 Per capita NSDP at factor cost in selected States (at constant prices, base year 1980-81) from
1980-81 to 1998-9 ....................................................................................................................................... 14
Figure 6 Per capita NSDP at factor cost in selected States (at constant prices base 1993-94) from 1999-00
to 2009-2010 ............................................................................................................................................... 15
Figure 7 NSDP of Andhra Pradesh and Bihar in crore Rupees (at constant prices, base year 1980-81) ...... 24
Figure 8 Per capita NSDP of Andhra Pradesh and Bihar (at constant prices, base year 1980-81) from 1980-
81 to 1998-99 .............................................................................................................................................. 25
Figure 9 Per capita NSDP of Andhra Pradesh and Bihar (at constant prices, base year 1999-2000) from
1999-2000 to 2009-2010 ............................................................................................................................ 25
Figure 10 Real per capita GSDP of Andhra Pradesh, Bihar, and average of 15 major States ....................... 26
Figure 11 Etymology of governance ............................................................................................................ 39
Figure 12 Different uses of the governance concept .................................................................................. 51
Figure 13 Dynamic neo-institutional model of governance based on elite strategies ................................. 75
Figure 14 The Developmental Triad ........................................................................................................... 77
Figure 15 The stakeholder’s dilemma: payoff matrix for a two-person game on the rules of the game .... 79
Figure 16 Two-levels game of regional elites before the 1991 reforms ...................................................... 81
Figure 17 Hypothetical relations between strategic choices of Chief Minister in the vertical and horizontal
games .......................................................................................................................................................... 82
Figure 18 Multilevel game of regional elites after the 1991 reforms .......................................................... 83
Figure 19 Percentage of components of AP’s NSDP at factor cost by industry of origin (at constant prices)
.................................................................................................................................................................... 87
Figure 20 Components of AP’s NSDP at factor cost by industry of origin (at constant prices, base year
1993.94) in Andhra Pradesh ........................................................................................................................ 88
Figure 21 Combined index: murder and riots in Andhra Pradesh and India: (number of riots and murders
per million population) ................................................................................................................................ 92
Figure 22 Andhra Pradesh Assembly election results (1962-2014) ............................................................. 99
Figure 23 Approved Annual Outlay for 8th, 9th, 10th, 11th plans for Andhra Pradesh ................................ 123
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Figure 24 NSDP at factor cost – Andhra Pradesh, Telangana and all India (At Constant Prices) 2004-05 to
2013-14 ..................................................................................................................................................... 152
Figure 25 Per Capita NSDP in Bihar and India 1993-94 to 2003-04 ........................................................... 162
Figure 26 Per Capita NSDP in Bihar and India 2004-05 to 2013-14 ........................................................... 163
Figure 27 Real Growth Rates of States - GSDP % at Constant Prices, Bihar, Andhra Pradesh, and India ... 163
Figure 28 Percentage of components of Bihar’s NSDP at factor cost by industry of origin (at constant
prices) ........................................................................................................................................................ 164
Figure 29 Components of Bihar’s NSDP at factor cost by industry of origin (at constant prices, base year
1993.94) 1993-94 to 2004-2005 ............................................................................................................... 165
Figure 30 Components of Bihar’s NSDP at factor cost by industry of origin, 2004-05 to 2012-13 (at
constant prices, the base year 2004-05) in Bihar ...................................................................................... 166
Figure 31 Bihar Assembly election results (1952-2010) ............................................................................ 173
Figure 32 Combined index: murder and riots in Bihar and India: (number of riots and murders per million
population) ................................................................................................................................................ 180
Figure 33 Vote share of JD/RJD in the elections (1990-2009) in divided Bihar .......................................... 197
Figure 34 Bihar’s development expenditure and non-development expenditure between 2000-01 and
2013-2014, (Amount in Rs. Billion) ............................................................................................................ 205
Figure 35 Plan expenditure of the Government of Bihar, 1997-8 to 2008-9 (billions of rupees) .............. 212
Figure 36 Cooperationist two-level game model, the Congress era .......................................................... 214
Figure 37 Confrontational game model, the post-Congress era ............................................................... 218
Figure 38 Components of NSDP at factor cost by industry of origin in Andhra Pradesh and Bihar ........... 224
Figure 39 Multi-level and development enhancing model, the post reforms era ..................................... 226
Figure 40 Annual approved plan outlays of Andhra Pradesh and Bihar between 1992-93 and 2011-12 .. 229

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List of Tables
Table 1 Growth rates in SDP in the different states, averages for plan periods (% per annum) ................. 13
Table 2 Definitions of governance ............................................................................................................... 43
Table 3 Elements of the governance debate ............................................................................................... 50
Table 4 Different definitions of good governance by international organizations ...................................... 62
Table 5 Examples of eexisting literature on the relations between state and economy in India ................ 71
Table 6 Andhra Pradesh factsheet............................................................................................................... 88
Table 7 List of the Congress's Chief Ministers in AP .................................................................................... 95
Table 8 AP’s Annual plan outlays between 1983 and 1989 ....................................................................... 109
Table 9 Growth engines in the Vision 2020 ............................................................................................... 133
Table 10 World Bank Group investment and adjustment loan commitments to Andhra Pradesh between
1998 and 2009 .......................................................................................................................................... 138
Table 11 Reforms in Andhra Pradesh 1995-2004 ...................................................................................... 140
Table 12 Bihar factsheet ............................................................................................................................ 166
Table 13 Major caste groups in Bihar in 1991 ........................................................................................... 168
Table 14 List of Chief Ministers of Bihar and their caste background between 1946 and1989 ................ 174
Table 15 Plan expenditure of the Government of Bihar, 1997-08 to 2003-04(billions of rupees) ............ 196
Table 16 Characteristics of the Congress and the early post-Congress era in both States ........................ 216
Table 17 Main characteristic of anti-Center political actors in both States ............................................... 220
Table 18 Main characteristics of Naidu and Yadav regimes in term of leadership and their strategic choices
.................................................................................................................................................................. 223

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