Ahmed, Sadiq, and Ashutosh Varshney. "Battles Half Won: Political Economy of India’s Growth and Economic Policy since Independence". In The Oxford Handbook of the Indian Economy, edited by Chetan Ghate, 56-102. New York: Oxford University Press, 2012.

Ahmed, Sadiq, and Ashutosh Varshney. "Battles Half Won: Political Economy of India’s Growth and Economic Policy since Independence". In The Oxford Handbook of the Indian Economy, edited by Chetan Ghate, 56-102. New York: Oxford University Press, 2012.

• India has experienced massive and sustained economic growth since the 1980s, moving from the 50th largest economy to the 11th largest, and regularly posting growth figures of between 6% and 8% in the 21st Century. The fruits of this growth have, however, been unevenly distributed, resulting in growing rates of inequality both between persons and across regional lines (57).
• Indian growth rates can be divided into two periods: a period of low growth prior to 1980 and a period of high growth rates after 1980. During the first phase, growth rates were around 3% -- adjusted to 1% to account for population growth -- but declined to under 1% during the 1970s. Growth during the second period increased rapidly at around 5%, and further increased to between 6% and 8% per annum in the 21st Century (58-59).
• During the first period of Indian economic growth, economic policy was defined by the policies taken by Jawaharlal Nehru and Indira Gandhi. Jawaharlal Nehru distrusted markets and constructed a protectionist system based on state control of industry, a system that his daughter Indira did not fundamentally change during her own administration (82).
• Jawaharlal Nehru created the early Indian economic system from inspiration at the USSR's rapid industrialization, which he believed was necessary to industrialize a poor country, and a personal belief that market economies promoted a foreign and Western greed that had no place in India (82-83).
• Despite the failure of the Nehru government's economic system to produce growth or increase agricultural productivity, its policy of land reform and price controls was very popular. Moreover, Prime Minister Nehru's personal prestige meant that he continued to be reelected regardless of economic policy (83).
• Despite several major opportunities to introduce economic reform, especially during the Emergency, Indira Gandhi retained Jawaharlal Nehru's economic policies. This stasis was due to the fact that the three primary interest groups in contemporary India all benefited from the system. Major industrialists were protected from internal and external competition, farmers had subsidized inputs and set selling prices, and public sector employees were well-paid and allowed to wield enormous power (83).
• The author also argues that Indira Gandhi herself was the most important factor in why economic policy did not change during the 1960s and 1970s. Indira Gandhi does not seem to have had any alternative economic policies planned and concentrated entirely on other political issues (84).
• Upon his election in 1985, Rajiv Gandhi initiated a series of economic reforms as proposed by a technocratic team that favored market-oriented growth over central planning. During his administration, he regulated parts of the economy and lowered corporate tax rates. More importantly, the suggestions of his technocratic 'reform team' shaped future economic policies (85).
• In 1991, a balance of payments crisis emerged. Prime Minister Rao, in a move directed by his Minister of Finance, Manmohan Singh, took this as an opportunity to fundamentally change India from a centrally-organized economy into a market-driven economy through deregulation and privatization (85-86).
• The Indian parliament, despite Communist opposition to the nature of the reforms, passed the budgets proposed by Prime Minister Rao and Manmohan Singh because all parties that opposed the reforms saw the BJP as extremely dangerous during the period of high communal and caste tensions, as well as ongoing civil wars in Kashmir and Punjab, and were thus willing to support the Rao government to prevent the BJP from coming to power (86).
• The Indian bureaucracy and political elite were willing to accept liberalization because of a number of fundamental changes that occurred in the 1990s, namely the collapse of the Soviet Union, seen as representative of the failure of planned economies. The economic success of first South Korea and then China also provided support for liberalization in India (89-90).
• India remains a very poor country, with its GDP per capita still being only 2.4% of the USA's in 2009, and still being only 7% when adjusted for purchasing power parity (60).
• Indian growth rates declined during the 2008 financial crisis, from 9.2% in 2007 to 6.7%, but were still robust. Furthermore, economic growth quickly bounced back to 7.4% in 2009, demonstrating an economic resilience behind Indian growth (60).
• The continued regulation of the financial sectors appears to have benefited India during the 2008 financial crisis, as banks were forced to demonstrate relatively balanced portfolios and capital controls prevented capital flight in the aftermath of the crisis. The authors recommend that these regulations remain in place (73).
• Rates of growth different radically by sector. Agriculture experienced the lowest growth, at an average rate of only 2.9%, whereas the industry and service sectors both experienced growth of around 6% per annum. The service sector experienced the greatest gains after the 1980s, as industrial growth had been consistently strong and agricultural growth remained torpid (60-61).
• Agriculture's share of Indian GDP consistently declined since independence, from 58% of GDP in 1950 to only 14% in 2009. This has largely been due to sluggish growth in this sector compared to others (61).
• Employment growth has also been the greatest in the services sector, partially as that sector catches up to the level of development in similar countries. This sectoral concentration is also facilitated by the Indian government's concentration on advanced education rather than the basic or technical skills needed in manufacturing, and market pressures that discriminate against labor-intensive manufacturing (66).
• Growth rates during the first phase of slow growth were relatively evenly distributed among the Indian states, with the exceptions of high growth in Punjab, Haryana, and Orissa due to high rates of agricultural growth from the Green Revolution (62).
• During the second phase of Indian growth, regional disparities have increased, with Gujarat, Haryana, and Karnataka emerging as high-growth states, whereas many other states, like Orissa, Bihar, and Uttar Pradesh have lagged behind in economic growth (62-63).
• Growth has been particularly concentrated in the south and west because the period of economic growth has generally overlapped with a period of immense social and political turbulence in the north of India, largely due to caste politics. Southern India dealt with these issues during the 1960s and 1970s, making it more stable and able to benefit from liberalization in the 1990s (87).
• Inequalities in growth rates among states have been so high since the 1980s because of several dynamics of market-driven growth, especially the preference of businesses for states with developed infrastructure, which are the wealthier states. Considerable devolved power to states allows states to negotiate trade deals and investment themselves, which benefits the wealthier states (87).
• Recent growth trends challenge this growing state inequality, however, as Bihar and Orissa have experienced significant growth since the mid-2000s -- 10.4% and 7.7%, respectively -- that would allow these states to catch up to the national average if it was maintained (63).
• Growth tends to be concentrated in the richest states of India, meaning that poor populations in poor states tend to not have access to the economic growth that would alleviate their poverty (64).
• The slow growth rates occurring during the first phase of Indian growth resulted in inadequate reduction of poverty, the incidence of which increased between the 1950s and 1980s despite reductions in income inequality. Since the 1980s, rates of poverty have significantly declined and many human development indicators have improved. This demonstrates that growth has been positive for India, but the Indian state needs to better manage and direct this growth towards the poor (64).
• Employment rates in India have increased faster than population growth, indicating a rise in employment, and real wages have also increased. However, employment growth has not been in profitable sectors. The majority of the population, around 60%, still works in agriculture, where wages have remained stagnant. Moreover, real wage growth has been most pronounced at the top levels of employment in all sectors (67).
• This problem of low rates of wage growth in the sectors that employ the most people needs to be addressed by introducing training and educational programs that will give poor laborers the skills necessary to participate in more productive areas of the economy and removing labor market regulations that disincentive the inclusion of most workers in the formal sector (68). 
• Levels of investment and saving in India have increased consistently over time, the rate of growth increasing after the 1980s. The rise in rates of investment following the 1980s demonstrate the importance of capital investment in producing high growth rates (68-69).
• The increase in growth resulted from a strong increase in both the productivity of labor and the level of capital accumulation, which allowed for additional investment. Inflows of foreign currency and increasing levels of domestic saving both indicate that there are not major financial impediments to continued growth (69).
• Indian academics debate whether the impetus for the increase in economic growth in the 1980s was an attitude change on behalf of Indian government, which sought to promote business interests, or whether it was the result of economic liberalization (70).
• The argument that public and government attitudes towards business rather than actual policies resulted in increased economic growth is fallacious. The actual increases in economic growth were enabled by a series of liberal reforms that promoted private sector growth by deregulating the economy and allowing additional competition (71).
• Indian economic policy has been influenced by its unique political markup and historical experience. India is a democratic federation, meaning that state governments often have the power to challenge the economic and fiscal policies of the central government (74-75).
• Economics has been largely depoliticized in India during the 20th Century, taking a backseat to issues of caste, secular nationalism, and Hindu nationalism. The influence of caste and religion in Indian politics have been especially disruptive to any political organization based around economic policy (75).
• The linkage of class and caste in India meant that issues of poverty were viewed through the lens of caste politics as the worst aspects of poverty tended to be social discrimination based on caste and these symptoms remained regardless of actual economic advancement (76-77). This meant that the Indian poor were both focused on social rather than economic issues and divided among themselves along caste and religious lines (77).
• As a result, economic policies in India have been largely determined by elite politics that exclude the majority of the population. The exceptions to this being inflation, which generates mass protest and public involvement, and reform to agriculture, labor policy, or public industries, all of which directly affect large number of people or powerful trade unions (78). Which areas of the economy are politicized strongly influenced the course of Indian economic policy (79).
• Despite the fact that both labor unions and business owners have been well organized in India, they did not generally participate in politics prior to the 1990s. When these groups did exert pressure on governments, it was in reactionary opposition to a proposed policy or to lobby for a very specific and technical license or exemption. Since the 1990s, federations of businesses have become increasingly active in pressuring the Indian government for policy changes (80).
• "The greatest power undoubtedly rests with politicians and bureaucrats; and politicians are relatively risk-averse on issues that can bring large numbers of people agitating on the streets, [...] India's democracy is incapable of administering shock therapies, even if one argues that such therapies will improve the long-run welfare prospects" (81).
• Even basic knowledge of the existence of economic liberalization is minimal in most of India, with under a quarter of the population knowing that reform has taken place. This ignorance is especially shocking considering near universal knowledge of current social and religious political issues (92).
• Knowledge about reforms has increased in the 21st Century, however, partially as a result of the BJP's 2004 campaign platform. Of those who know about reforms, the poor tend to believe that these moves have only benefited the rich, whereas the rich and middle-classes tend to believe that the reforms have benefited everyone (93).
• Since the 1990s, there has been a massive reemergence of the Naxalite Maoist insurgency in central India, concentrated in areas with a large Adivasi population and were forestry and mining are major industries. While the oppression of Adivasi has existed since independence, liberalization has intensified this exploitation by making the abuse and displacement of Adivasi very profitable for politicians and corporations (87-88).
• India has been moving towards increased protection of natural resources in central India in recent years, forcing investors and developers to get central government approval on environmental issues before going forward with projects. Some legislators have also planned to give Adivasi are permanent stake in local lands, but no such initiatives have been passed thus far [by 2012] (88).
• Growing economic inequality in India poses a threat to continued stability because the Western methods of controlling for economic inequality do not apply in India. Whereas Western states are stable because they are rich, have welfare states, and their upper classes tend to vote more often than poor citizens, India has none of these traits. It is poor, lacks any robust social safety-net and its poor are the most likely group to vote. This means that economic inequality has a very real chance to have enormous political effects and destabilize the country (91).