By the middle of the 2010s, India's economic boom had tapered off after the global financial crisis. India did not suffer as much as the advanced economies did because of its large domestic market and relatively modest exposure to international capital flows. However, India's growing import dependence and rising share of short-term capital inflows in managing the balance of payment deficit became increasingly evident.

The widely accepted view of industrial stagnation gave rise to the clarion call for ‘Make in India’ – as coined by the then newly elected government. Such a policy goal resonated well with the public in response to growing import dependence on China for even simple consumer goods, such as kites or Ganesha idols. Modest output performance also meant a lack of manufacturing employment growth.

Around the time, I reviewed academic research status on India's industrialisation trends and patterns for the Indian Council of Social Science Research (ICSSR), analysing the reasons for India's modest industrial performance. During a discussion with Srinivasan Iyer of the Ford Foundation and P. S. Vijayshankar of Samaj Pragati Sahayog, Bagli, Dewas, an idea emerged for a research programme on the theme of manufacturing growth, employment and livelihood issues. There are many accounts of industrial performance at the aggregate level. However, our understanding of what has happened at the ground level in recent times seems acutely lacking. Likewise, though there is considerable scholarship on labour and employment, the current academic focus on manufacturing production and its implication for jobs and skills appears sparse.

The above idea, it appeared to me, offered an opportunity to bring together scholars to undertake detailed studies into how the labour-intensive industries, locations and clusters were performing. And what would it take to realising the national goals of ‘Make in India’?

Our effort was, in other words, an attempt to do in India's development discourse what the late Alice Amsden graphically described, ‘Bring Production Back In’. Why has India not performed well even in simple consumer goods? After deliberations with many concerned scholars over a year, the programme took root in 2016 at the Indira Gandhi Institute of Development Research (IGIDR), Mumbai.

The Context

In 2017–18, the manufacturing sector (industry) accounted for 18 per cent (31.2 per cent) of India's gross domestic output (GDP) at constant prices. The corresponding ratio for employment is 12.1 per cent (27 per cent), as per the periodic labour force survey (PLFS) data. As the ratios have barely inched up for over 25 years (Figure 1.1), it is a sign of industrial stagnation (Nagaraj 2017). Moreover, after initiating the liberal (free-market) economic reforms in 1991, import and technological dependence have risen (Chaudhuri 2013; Mani 2018).

However, a boom in information technology (IT) services and their exports has more than compensated for industrial stagnation, as India's output growth accelerated. After joining the World Trade Organisation (WTO) in 2001, if China came to be known as the world's factory, many believed that India was on its way to becoming the world's back office. For a while, India seemed to be on course, catching up with China, but it faltered suddenly.

The global financial crisis in 2008, the great recession after that and the rising threats of a trade war have taken the sheen out of India's performance and put paid to its global ambition. Meanwhile, China has graduated from assembling low-quality consumer goods to a technologically dominant nation – for example, Huawei's pole position in the telecom technology market – with world-beating firms and brands, both in high-tech manufacturing and IT services.

Realising the limits to the growth of the new services without the backing of a sound manufacturing base, the National Manufacturing Policy, 2011, sought to raise the sector's share in GDP to 25 per cent and to create 100 million additional manufacturing sector jobs by 2025. Though the policy failed to take off, the document helped articulate the need for industrialisation – or re-industrialisation – as an imperative for long-term national development.

In 2015, the policy was recast as the ‘Make in India’ initiative, with the following objectives:

• 1. The target of an increase in manufacturing sector

• growth rate to 12–14 per cent per annum over the medium term.

• 2. An increase in the share of manufacturing in the country's GDP from 16 per cent to 25 per cent by 2022.

Introduction

This volume brings a selection of papers which were presented at a conference on “Political Economy of Contemporary India” at Indira Gandhi Institute of Development Research, Mumbai (IGIDR) in November 2014. The conference was organised by the desire to re-focus academic attention on issues which have enormous significance for understanding the recent developments in the economy and polity of India, and that often seem to fall between the increasingly narrow disciplinary boundaries in social sciences. It also sought to revive the academic culture that looked at contemporary problems in a more holistic fashion in the classical traditions of political economy.

The papers were rich and varied, and were presented from diverse disciplinary and analytical perspectives, but clearly focused on illuminating many recent concerns. This introduction seeks to locate these papers in the context of the ongoing discourse on India's political economy. However, considering the voluminous and multi-disciplinary nature of this discourse, the introduction would necessarily have to be selective in choosing only the pieces that in our view have shaped the contours of the literature and have set the research agenda. Such an attempt would inevitably involve the authors’ professional (or other) biases, which, we believe, readers will appreciate.

India's Political Economy: An Overview

For a long time in post-independent India, economists, who occupied a pre-eminent position in the national development discourse, had agonized over the nation's modest (or mediocre) economic performance. Though it represented a distinct break from the colonial stagnation, and has accelerated in recent decades, the output growth per capita has remained modest relative to its potential (both natural and economic), and compared to the achievements of its peers in Asia. This was especially true during the first three decades after independence, when despite a variety of development plans and programmes, the economy refused to budge from the trend growth rate of about 3.5 per cent per year. Professor Raj Krishna disparagingly termed this “changelessness” in performance as “the Hindu growth rate”. Raj Krishna's somewhat lessacknowledged, short essay titled, “Stagnant Parameters” in Seminar in 1984, provided copious evidence to substantiate “his popular imagery”.