Does Democracy in India Supports the Economical Development?

Does democracy in India support the development of the economy or is it a barreer for the development of economy?

For decades India had only 2 to 3 percent annual “Hindu rate” of growth. But that has changed. Once the democratic Indian government embarked upon implementing market-oriented reforms, the country achieved “East Asian rate” of 8 to 9 percent a year.[1] Above all, India was successful in improving governance and raising the quality of its democracy. Professor Yasheng Huang, who is expert in Chinese economy but also explores India, explains:

“The growth India enjoys today sped up in the 1990s as the country privatized TV stations, introduced political decentralization, and improved governance. And contrary to the conventional wisdom, India stagnated historically not because it was a democracy, but because, in the 1970s and 1980s, it was less democratic than it appeared… The cumulative effect of [Indira] Gandhi’s actions [as prime minister during much of the period from 1966 to 1984] is that the Indian political system, though still retaining some essential features of a democracy, became unaccountable, corrupt, and unhinged from the normal bench marks voters use to assess their leaders. (…) The economic consequences of this period of illiberalism were long lasting”And he concluded that, “The emerging Indian miracle should debunk—hopefully permanently—the entirely specious notion that democracy is bad for growth.”[2]

The economic future of India depends on the policy of the country, and this is both good and bad news. When in 2009 “The United progressive Alliance” – a group of left center parties headed by the Indian national Congress came to power for a second term, it seemed that India is on the right track.[3] The economy has overcome the most severe global recession in 7 % GDP growth, and the rate continued to increase. Inflation was low, officials finally seriously took care of social problems and politics in the world’s largest democracy while had been controversial, but was quite stable.

However, after only two years, economic growth has slowed, the budget deficit began to grow, and inflation, after a decline in the period from the beginning of 2010 at the beginning of 2012 went up.[4] The provision of basic services such as health, water, sanitation, remains on the awful level. Democracy continues to weakly develop. From the category of countries, in a democracy of which very few people doubted, India, in the words of a financial analyst Ruchir Sharma, passes to the category of states that meet only 50% of the relevant requirements.[5]

Although a number of indicators decreased from 2009 the level of savings in Indian families remained above 30% (compared to less than 5% in the USA). According to the data of Central statistical Bureau of India, the level of private consumption is about 60% (in China – 48%).[6] The solid figures indicate that the UPS and downs of the economy has not led to excessive taxation and are not forced to citizens emptying their savings to survive the difficult times; in addition, not dropped the demand for goods and services.

But the problem hides in politics. Instead of having to create favorable conditions for small business , that would encourage entrepreneurship and contributed to the growth and dynamic development of the economy, Delhi involved in facilitating the life of big business, by providing access to concessional loans, specially constructed power plants and providing protection in the event of fluctuations in foreign currency exchange rates.[7]

And this is a serious problem, since the sector of big business, such as mining, construction and infrastructure, are the most corrupt. And also in social sphere because of the inefficiency and corruption most of the funds do not reach those in need. The dominant party in India is Indian National Congress.

The democratization of the Indian national Congress could help to overcome the problems of the party and the country as a whole. The majority of Indian political parties, including the INC, have an archaic system of decision-making, which is controlled by small groups of elites.[8] Their aim is the maintenance of the existing power structures, and not the protection of the interests of the voters. And still the economic future of India depends on the policy of the country, and this is both good and bad news.


[1]Does democracy help or hurt economic growth? http://www.cipe.org/blog/2008/06/30/does-democracy-help-or-hurt-economic-growth/

[2] Does democracy help or hurt economic growth? http://www.cipe.org/blog/2008/06/30/does-democracy-help-or-hurt-economic-growth/

[3] Почему Индия забуксовала. http://hvylya.org/analytics/politics/pochemu-indiya-zabuksovala.html

[4] Почему Индия забуксовала. http://hvylya.org/analytics/politics/pochemu-indiya-zabuksovala.html

[5] Почему Индия забуксовала. http://hvylya.org/analytics/politics/pochemu-indiya-zabuksovala.html

[6] Почему Индия забуксовала. http://hvylya.org/analytics/politics/pochemu-indiya-zabuksovala.html

[7] Почему Индия забуксовала. http://hvylya.org/analytics/politics/pochemu-indiya-zabuksovala.html

[8] Почему Индия забуксовала. http://hvylya.org/analytics/politics/pochemu-indiya-zabuksovala.html

[9] Why the world isn’t flat http://www.foreignpolicy.com/articles/2007/02/14/why_the_world_isnt_flat?page=0,1

[10] Why the world isn’t flat http://www.foreignpolicy.com/articles/2007/02/14/why_the_world_isnt_flat?page=0,1

[11]Why the world isn’t flat http://www.foreignpolicy.com/articles/2007/02/14/why_the_world_isnt_flat?page=0,1

[12]Why the world isn’t flat http://www.foreignpolicy.com/articles/2007/02/14/why_the_world_isnt_flat?page=0,1

[13] Logistically Speaking: It’s a round world after all http://mhlnews.com/global-supply-chain/logistically-speaking-its-round-world-after-all

[14] Logistically Speaking: It’s a round world after all http://mhlnews.com/global-supply-chain/logistically-speaking-its-round-world-after-all

[15]Logistically Speaking: It’s a round world after all http://mhlnews.com/global-supply-chain/logistically-speaking-its-round-world-after-all

[16] Geopolitics and the Flat World. In: Friedman T.L. 2002. The World is Flat. Brief History of the Globalized Worls in the Twenty-first Century. Alan Lane an imprint of Penguin books, London, page 460

[17] Geopolitics and the Flat World. In: Friedman T.L. 2002. The World is Flat. Brief History of the Globalized Worls in the Twenty-first Century. Alan Lane an imprint of Penguin books, London, page 276

[18] http://cjres.oxfordjournals.org/content/1/3/343.full

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