Atul, Kohli. "Political Change: Illusions of Inclusion". In Poverty amid Plenty in the New India, by Kohli Atul, 19-78. Cambridge: Cambridge University Press, 2012.

Atul, Kohli. "Political Change: Illusions of Inclusion". In Poverty amid Plenty in the New India, by Kohli Atul, 19-78. Cambridge: Cambridge University Press, 2012.

• Britain ruled India for over 200 years, first through the East India Company and then directly from 1857 until independence. During this time, Britain developed administrative institutions that would constitute the basis of the Indian nation, including an army, an independent judiciary, and a robust civil service (19-20).
• These institutions were developed to fulfill the needs of the colonizer, but later became repurposed for Indian needs. The bureaucracy enabled the British to tax India, the judiciary allowed for the maintenance of exploitative legal relations, and the army enabled Britain to conquer much of the world (20).
• Jawaharlal Nehru ruled over India through the hegemonic Indian National Congress, which had served as a big tent movement for all of India's nationalist castes and nationalities, until his death in 1964. Prime Minister Nehru solidified Indian democracy and build a state-centered socialist economy (20-21).
• During the Nehru government, several core economic principles of Indian government were established. Two of the most significant were the decisions to adopt a state-driven command economy and the decision not to pursue comprehensive land reform, instead largely continuing the property rights that had existed during the British Raj (21).
• Both Prime Minister Nehru and Vallabhbhai Patel, the Deputy Prime Minister, believed that the army was essential to protecting against Pakistan and uniting India, a project opposed by large numbers of Indian princes and their supporters. On their initiative, the Indian army was strengthened and remain a major state institution (22).
• Prime Minister Nehru originally wanted to reform the bureaucracy, viewing it as exploitative, but Deputy Prime Minister Patel convinced him that the continuation of the bureaucracy was necessary to govern India. As a result, the institution remained largely unchanged after decolonization (22).
• Originally, Prime Minister Nehru opposed the reorganization of Indian states along linguistic lines, viewing this move as potentially encouraging secession, which would be expected to be just as bloody as Partition. Under pressure from numerous ethno-linguistic movements, the Nehru government gave in in 1958 and allowed the creation of state along linguistic lines (23).
• Although most businesses opposed Prime Minister Nehru's socialist policies, they maintained strong connections with Congress because they connections allowed them to evade some regulations and gave them leverage to prevent certain socialist policies (52).
• Politics in India shortly after independence remained deeply unequal. Lacking the logistics and support to directly campaign towards India's poor and illiterate majority, Congress instead focused on winning the support of landed upper castes in rural areas, depending on these figures to use their social and economic power to win votes through patronage (22-23).
• In 1964, Jawaharlal Nehru died, two years after the country lost a war to China. These combined events created a sense of fear in India in the mid-1960s. The pressing issues were continued demands for ethnic and linguistic recognition, a stagnant economy, high inflation, and the continued marginalization of the poor and lower castes. Congress originally chose Lal Bahadur Shastri, a mild-mannered official, to replace Jawaharlal Nehru as Prime Minister, but after Mr. Shastri's death, chose Indira Gandhi as her father's replacement (23-24).
• Indira Gandhi reformed Congress around her personal influence and used state power, including the temporary suspension of democracy. to ensure the continued dominance of Congress and her own personal rule. The policies adopted by Congress during this period were designed to retain Indira Gandhi's power, not based on any core beliefs about Indian society (24-25, 29).
• The system of relying on the patronage systems of rural elites to secure votes started to become ineffective by the 1960s, with Congress nearly losing the 1967 elections. Recognizing this, Indira Gandhi adopted explicitly pro-poor policies, which gave her an immense personal political following, expelled or marginalized party members who disagreed (25).
• Indira Gandhi's reforms to the Indian National Congress removed many of its internally popular politicians and replaced them with officials with personal loyalty towards Mrs. Gandhi. This structure emphasizing personal loyalty over competence or popular support has continued to define the internal composition of Congress (26).
• Under intensified political competition, Indira Gandhi struggled to raise funds for campaigning. After limitations on campaign financing failed to be effectively enforced, Indira Gandhi participated in the massive system of illegal campaign financing for political favors. Under her administration, businessmen linked to the opposition were punished, while those connected to Congress benefited enormously (52-53).
• In 1975, Indira Gandhi suspended democracy for 21 months and jailed thousands of political opponents. For reasons that are still unclear, Mrs. Gandhi decided to restore democracy after this period and hold elections in 1977, which the opposition Janata Party won. The Janata Party proved internally divided and incompetent and lost elections to Indira Gandhi in 1980 (26).
• Many of the trends of economic policy during the Emergency set the tone for the pro-market shifts that occured in the 1980s. The suspension of democratic and constitutional rights scared the bureaucrats into actually doing their jobs, and the use of military force to suppress strikes made the workforce more pliant. Indian businessmen approved of both these developments and wanted to see them continued after the restoration of democracy (28).
• During her second period of rule, Indira Gandhi abandoned many of her previous pro-poor policies and depended much more heavily on the advice of her son, Sanjay Gandhi -- a conservative political figure who called for opposition to Communism, the forcible clearing of slums, and the sterilization of the Indian poor (28). Recognizing that her previous socialist policies had alienated Indian businessmen, Indira Gandhi introduced a number of limited pro-market policies (26-27).
• Indira Gandhi was willing to submit to the demands of Indian businessmen, seeing their support as necessary for continuing her increasingly tenuous hold on power. Even if she had opposed such policies on principle, after the death of her son -- Sanjay -- in 1980, she lost much of the vigor that had previously defined her (29-30).
• Indira Gandhi's authoritarian approach to political and social problems during the 1980s essentially allowed the continuation of the economic policies of the Emergency. For example, peasants movements in Andhra Pradesh and textile workers strikes in Bombay in the 1980s were both forcibly suppressed. This approach towards economic demands was not unique, but represented a wider trend in Mrs. Gandhi's governance towards violence and repression, as demonstrated by her response to the insurgency in Punjab (30).
• Following Indira Gandhi's assassination in 1984, her son Rajiv Gandhi succeeded her as Prime Minister. When he took power, the policy discussions within Congress had already changed to support pro-business policies and the party had become more distant from labor movements (32). Rajiv Gandhi himself supported economic liberalization (33).
• Rajiv Gandhi struggled and failed to solve the problems inherited from his mother, particularly the civil war in Punjab. His economic policies were only partially successful, as he passed legislation liberalizing the Indian economy, but failed to end economic protectionism or open the Indian market to foreign competition due to opposition from Indian businesses, who wanted to minimize competition from foreign firms (34-35).
• Rajiv Gandhi lost the 1989 election due largely to his vacillating stance on issues of caste reservations and religious divisions, and was assassinated by the Tamil Tigers in 1991. He was replaced as Prime Minister by Vishwanath Pratap Singh, who expanded caste reservations to the other backward castes [OBCs] (35).
• By the 1990s, only one of the four major Indian political parties -- the Communists -- espoused left-wing economic policies. The BJP, Congress, and Janata all subscribed to the line that the government should promote economic growth and that the best way to do this would be to support private enterprise (35-36).
• Whereas previously corrupt connections between businessmen and politicians had been personal with the intention to exchange campaign finances for favors, political financing during the 1980s took a much more planned turn, as businesses sought to encourage pro-businesses factions in all major parties (53).
• In 1991, India experienced a balance-of-payments crisis, with the government of Pamulaparti Venkata Rao using this as an opportunity to push for more radical liberalization. The Rao government saw both the further liberalization of internal markets in India and the first attempts to open the Indian economy to global competition (36).
• Several key changes in the late 1980s created the conditions for this radical liberalization. The collapse of the USSR ended one of India's major trading relationships, making it necessary to conduct more foreign currency transactions with capitalist countries. Business communities also sought to liberalize to take advantaged of increased investment opportunities in the 1980s and the expected creation of the WTO (36-37).
• Prior to the late 1980s, most Indian businesses were opposed to opening up to external markets. The businesses that supported external liberalization were high-tech firm that would benefit from cheaper imports and more competitive exports. Although still a minority in 1991, these firms provided some support for the liberal reforms undertaken during the 1991 crisis (38).
• Most of the major reforms undertaken by the Rao government after 1991 were passed without proper democratic procedures due to widespread opposition. This includes making such decisions as executive decisions or passing these laws with a small minority while most of parliament was in recess (38-39).
• The reforms passed under the Rao government included elimination of previous licensing requirements, removal of some powers of labor unions, lowering taxes on businesses, removal of anti-monopoly laws, and budget cuts intended to reduce the deficit (39).
• The Rao government was unable to fully implement its plans to cut large numbers of social benefits and subsidies, since these reforms were opposed by large and crucial segments of the population, like farmers. Public opposition forced the government to stop accepting IMF loans in 1994 since they did not believe any further budget cuts were politically feasible (39).
• Indian businesses remained divided over the economic reforms of the Rao government, with a group of businesses that opposed globalization formed the 'Bombay Club' to protest the continuation of liberalization after the balance-of-payments crisis had ended. They supported the 'swadeshi' economic policies of the BJP, advocating for internal liberalization but a very gradual integration into the global economy (40).
• The Indian government has been unable to push through reforms that would have privatized state-owned businesses, removed tariffs and regulations protecting India from global competition, or further limited the power of the labor unions. These steps are all challenged by considerable political opposition (40).
• In the 21st Century, the BJP and Congress developed nearly identical economic policies, both supporting the gradual integration of India into the global economy, but in a way that promoted the interests of Indian capitalists. The only difference is that, under Sonia Gandhi, Congress has been more supportive of social welfare programs than the BJP (41).
• Businesses exercise political power through their greater economic power that allows them to buy votes and the loyalty of politicians. Sometimes these resources also allow businessmen themselves to run as successful candidates. Businesses also have an influence on the general nature of discourse. In all of these ways, Indian businesses have increased their influence over politics in recent years (42).
• Privatization of Indian news media has grown in recent decades. While most newspapers had always been privately owned, an increased number of television stations are now owned by private corporations. With the exception of a small number of government-owned television and radio stations and some newspaper printed by political parties, most Indian news media is now privately owned (49).
• Most publications and news media reflect the growing pro-business tilt of India's ruling class, which makes sense since consumption of television and newspapers tends to be concentrated among the upper classes (50-51).
• Indian businesses regularly buy influence or policy changes through participating in a massive system of illegal campaign financing, almost entirely off the books. This system has existed for decades, but following liberalization poses a threat for the future of Indian democracy (51-52).
• This trend has only increased in recent years, as elections have become more competitive and more expensive to organize, resulting in a greater reliance upon illicit private capital to run successful campaigns (54).
• Congress appears to be more reliant on the contributions of few major businesses, which appreciate its cautious approach to globalization, whereas the BJP accepts more donations from small and medium businesses. The only political party to be mostly independent of corporate financing is the Communists, who fund their campaigns with small donations from party members and labor unions (54).
• The weakening of the 'license-permit raj' has diminished one kind of corruption, by which businesses bribed officials to ignore or change specific regulations, and has led to the creation of a new form of professional lobbying, similar to the business lobbying practices in the USA (55-56).
• Older forms of personalistic corruption have still not disappeared in India following industrialization. The government still exercises significant authority over land ownership, meaning that businesses still need to bribe relevant officials to complete transactions involving land deals. Other areas of state control also exist, allowing for plentiful corruption (56).
• The attitudes of Indians have not moved significantly in favor of pro-business policies in recent decades; if anything, Indians are becoming more skeptical of business. Indian elites have become much more in favor of pro-business policies since the 1980s, but the general populations has become more opposed to these policies during the same period (49-50).
• The upper and middle classes in India likely support pro-business policies more than the rest of the population because they have disproportionately and overwhelmingly benefited from these policies (51).
• The Indian economy is dominated by non-agricultural private enterprise, with the major of this business concentrated in urban areas. This is a significant change in an economy previously dominated by agriculture and the public sector, and almost all of this growth occurred since the 1990s (42-43).
• Private sector savings began to increase in the 1980s under Indira and Rajiv Gandhi, translating into much greater levels of private capital investment, which exceeded public sector investment for the first time in the 1990s (44). Private capital investment had initially been high, was then replaced by state capital until the 1990s, and then became the dominant form of investment again by 1997 (44-45).
• Much of the growth that has occurred in India since the 1980s has been among small and medium technologically-advanced businesses in the service sector. The major Indian businesses -- Tata, Bajaj, Birlas, etc. -- have remained the same during this period, demonstrating that major businesses have not been displaced by liberalization (45-46).
• Economic growth in India has not been accompanied by a proportional growth in employment. Additionally, average wages have increased at rates far below that of general economic growth (46).
• Foreign investment in India has greatly increased since 1991, but does not constitute a significant element of economic growth compared to other developing countries. It appears to have grown significantly during the 21st Century, reaching as much as $35 billion in 2009 and $24 billion in 2010. These numbers are still under a quarter of foreign investment in China during the same period, however (46).
• India's decision to accept foreign capital and participate in global stock markets has had profound effects on the economic policy decisions that can be made by the government. A worry that Congress would form a coalition with the Communists in 2004 prompted a massive capital flight, forcing Sonia Gandhi to announce that economic policy would remain under the control of pro-business ministers. This demonstrates the way in which dependence on global financial markets impacts and limits the kinds of economic policies can be successfully undertaken in India (47).
• These economic incentives to further liberalization do not represent a political necessity, but only pressure politics in a particular direction. Other political factors, such as a growing public demand for economic equality or better social welfare, can prompt politicians to act against these economic pressures (47-48).
• India has three primary chambers of commerce: the Confederation of Indian Industry, the Federation of Indian Chambers of Commerce and Industry, and the Associated Chambers of Commerce. Traditionally, the Federation represented the big Indian firms that grew after independence, whereas the Associated Chambers represented older businesses founded by the British Raj. For most of India's history, the Confederation represented a small number of specialized engineering firms (57).
• During the 1980s, the distinctions between the Associated Chambers and the Federation began to disappear, so that they represented similar firms, but in different geographic areas. During this time, the Confederation also began to grow in size and influence, as it export-oriented specialist engineering firms, concentrated in the south, succeeded and caught the eye of government planners (57). 
• By the 1990s, private companies, especially those in the Confederation, were given more influence over government policy and state budgets. This was especially pronounced during the Rao government, when the head of the Confederation, Tarun Das, had a great deal of influence in drafting the national budget (57-58).
• A consensus has formed among Indian elites that growth needs to be maintained and that the best way to do this is to following the recommendations of Indian capital. Since these policies generate opposition among the lower classes, Indian elites have sought to both distract politics from economic issues by focusing on religious and caste issues, and insulate economic decision-making from politics by giving these executive powers to unelected bodies or offices (59).
• Whereas Jawaharlal Nehru and Indira Gandhi ran on platforms that prominently featured economic policies, since the 1980s economics has become separated from politics and placed under technocratic control (65). Major political parties no longer create their own economic policy prior to campaigning, but leave its construction up to unpopular and unelected technocrats, often working in conjunction with Indian businesses (66).
• The devolution of more powers to states has increased competition between states over increasingly limited resources from the central government and forced them to become increasingly dependent on private capital to accomplish development initiatives. This policy has allowed the central government to blame poor states for their own underdevelopment, prompting these states to liberalize to become more competitive and thus attract the capital needed to develop (66-67).
• Additional responsibilities were also been decentralized to panchayat governments during the 1990s, making them responsible for providing education, healthcare, and public works projects. When these local governments fail to effectively implement policies, since they are almost entire corrupt and incompetent, political parties can point to this as examples of the failure of social programs and justify further cuts to these kinds of social programs (67-68).
• Since the economic policies proposed by Indian political parties do not appeal to the majority of voters, they have sought to channel other forms of authority (60).
• Congress continues to benefit from the traditional authority attached to it as the party of the anti-colonial struggle, as represented by the fact that all of its top leaders have been descendants of Jawaharlal Nehru (60). Congress has also increasingly focused on policies for 'inclusive growth' to signal some willingness to promote the interests of the poor (61), and social justice commitments that allow it to partner with OBC and Dalit parties (61-62).
• The BJP has tried to champion its own legitimacy by appealing to religious divides, primarily targeting India's Muslim minority. Their message of national revitalization under traditional Hindu values was well received during the 1990s, after the country had been shaken by the assassinations of Indira and Rajiv Gandhi and its own underdevelopment in comparison to the booming economies of East Asia (63).
• The lower castes began to be politically mobilized in northern India during the 1960s and 1970s, as leaders like Laloo Prasad Yadav in Bihar and Mulayam Singh Yadav in Uttar Pradesh mobilized the OBCs against rampant discrimination and to obtain reservations for their children (69).
• These parties displaced Congress in northern India during the 1990s, but proved unable to create any substantial policies besides ending caste discrimination. Their policies of expanding reservation did not appeal to any except elite OBCs, and their reputation as especially corrupt led to their electoral defeat in the 21st Century (69-70).
• Many of the lower caste parties elected in India do not actually adopt pro-poor economic policies. This is demonstrated by the Bahujan Samaj Party in Uttar Pradesh, which governed in alliance with wealthy Brahmins and concentrated all of its political efforts on improving the social status of Dalits without actually improving their economic situation (70).
• In southern states, the poor have been incorporated into party politics largely by appealing to regional identities. Parties in Andhra Pradesh and Tamil Nadu have a small number of pro-poor populist initiatives, but otherwise depend on regional nationalism to deliver poor votes (70).
• The poor have been largely excluded from class-based representation in contemporary India. The exceptions to this have been the Communist parties in West Bengal and Kerala, which have successfully implemented some degree of pro-poor policies. These states are increasingly under pressure, however, as pursuing these policies have deprived them of the private investment needed to fulfill development goals (70-71).
• The political mobilization of the poor was initiated by Mahatma Gandhi during his anti-colonial protests, a political tradition reborn under Indira Gandhi, who promised to make the elimination of poverty the primary goal of Congress. Since the 1980s, however, none of India's major political parties have made the poor their primary constituency (69).
• Although initiated by Akali Dal in opposition to the centralizing initiatives of Indira Gandhi, The conflict in Punjab was driven and exacerbated by Indian electoral politics. Both Indira and Rajiv Gandhi felt too weak electorally to be soft on Sikh demands, so instead intensified the conflict in Punjab (72).
• The intensification of the conflict in Kashmir triggered by Indira Gandhi's dismissal of the government of Farooq Abdullah in 1984 was the result of electoral pressures on Mrs. Gandhi to appear strong against the demands of minorities within India (73).
• The basis of BJP authority in Gujarat was its ability to prioritize religious identities over the class and caste divisions that Indira Gandhi had capitalized on during the 1970s to win political power. As economic inequality within Gujarat intensified following liberalization, religious identity needed greater measures for reinforcement. The massive pogroms against Muslims in the state in 2002 served this purpose, unifying Hindus along religious lines and minimizing discussions of class or caste conflict in the subsequent elections (73-74).
• The Naxalite movement was born in the rural areas of Andhra Pradesh and West Bengal, mainly among marginalized tribal populations, during the 1960s. They aimed to destroy the 'bourgeois-landlord state' on the model of the Communist Revolution in China. This first movement was brutally crushed by the Indian government, but reemerged in the 1980s due to the efforts of urban revolutionaries in mobilizing disaffected and oppressed rural groups in eastern India into militant groups (74-75). 
• The new waves of Naxalite unrest has been driven by both the older factors of rampant abuse and discrimination against tribal, poor, and lower caste people throughout rural India, and by new encroachment into commonly-held lands by private companies and corrupt officials. Revolts are often in response to these attempted land grabs (75).
• The government's response to the resurgence of Naxalite violence has been the application of military force without addressing any of the political grievances underlying the revolt. India has deployed over 100,000 paramilitary troops to affected regions, but has failed to actually curb much of the violence or reconquer significant areas (75).
• Small farmers are increasingly excluded from Indian economic growth, as they face declining crop prices. This has led to an epidemic of farmer suicides, around 15,000 to 20,000 per year. These suicides are concentrated in wealthy states, but among farmers who have become heavily indebted due to the failure of cash crops on the global market (76).