The defining changes in Indian politics in 30 years of reforms

The defining changes in Indian politics in 30 years of reforms

Perhaps the most symbolically powerful impact of reforms, which began in 1991, on Indian politics was the absence of the word ‘socialism’ from Congress’s 1996 manifesto.

The 30 years from 1991 have seen a dramatic transformation of Indian politics, much of it a result of forces unleashed by new economic policies.

To begin with, the number of successful political parties jumped. BJP, Shiv Sena, BSP, SP and RJD all formed their first governments in the 90s. As the number of parties in Lok Sabha went from 25 to 40 between 1991-96, the theory was also that politics would fractionalise endlessly. That proved false.

We pick here some of the defining changes of the last three decades.

Economic liberalisation enabled CMs to don industry-friendly avatars. As Table 1 shows, individual states could woo more investment during 1991-2001 than all of India the decade before.

Karnataka’s tax concessions and incentives spurred the IT industry’s growth there. Andhra Pradesh CM Chandrababu Naidu strode in reformist colours at the global arena, even founding the satellite township of Cyberabad/Hitec City.

Narendra Modi ascended to the national stage through Vibrant Gujarat summits which no CM could have facilitated with the pre-1991 curbs on investment and industrial licensing. Today’s powerful opposition CMs owe their rise in part to those changes 30 years back.

Bye GoI monopolies
Breaking erstwhile PSU-run monopolies gave states like Chhattisgarh and Jharkhand a new lease of life, equipping CMs to undertake development.

Here’s an example. In its 1990-91 budget, Odisha was hoping for a measly Rs 8 crore additional royalty from minerals extracted by GoI. By 2019-20 the state’s mining revenues grew from 2.8% to a whopping 75% of total non-tax revenues, coming to Rs 11,019 crore.


States’ ranking
In 1990-91, Maharashtra, UP, Bengal, undivided AP and TN in that order had the biggest state economies. Cut to 2018-19, the pecking order is Maharashtra, UP, TN, Karnataka and Gujarat.

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In more instructive per capita terms, Delhi, Punjab, Maharashtra, Haryana and Gujarat led in affluence among big states in 1990-91, but in 2018-19, Punjab, Maharashtra and Gujarat dropped out, while Karnataka, Telangana and Kerala made their way in. Punjab’s fate highlights the cost of not doing farm reforms.

If you factor in UP’s massive population and Delhi’s melting pot, clearly the west and the south have put the north and the east behind.

Food then, jobs now
In the 1971 post-poll Lokniti-CSDS survey (we look at this for pre-reforms attitudes as the next one only took place in 1996), when asked about the major problems facing the country, 25% respondents give top billing to ‘food and clothing’. By 2019 only 0.3% do the same for ‘hunger, starvation, lack of food’. To no one’s surprise, ‘lack of jobs, unemployment’ is now identified as the most important issue.

Another dramatic transformation: In 1971, 25% of those surveyed identified bank nationalisation as their most-liked policy. But today the Union finance secretary can comfortably say that only a bare minimum public sector banks will eventually remain – even if the wait for privatisation, plus overall reforms upgrade, feels like waiting for Godot.

Prosperity’s children
Nineties were the first decade, especially in north India, in which a significant proportion of Dalits were able to exercise their franchise, another clear case of how intimately political and economic empowerment are tied.

The turnout gap has declined not just between reserved and unreserved constituencies, but across many social groups. From a 10 percentage points chasm in 1991, women’s turnout is now almost at par with men’s. That their issues get a louder hearing is directly tied to them voting more.

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In the past half-decade the number of voters self-identifying as ‘middle class’ has grown from 24% to 56%. And ADR estimates that the share of crorepati Lok Sabha MPs and MLAs has grown to 88% and 78%, respectively. Prosperity is now creed No 1 in once Gandhian India.

Political competition: Up, Down
India’s best economic growth phase coincided with a lot of competitive politics. But as growth has slowed, so has political competition. One metric of competition is the average margin of victory in general elections (Table 2), which kept declining after 1991, until 2009. By 2019, the margin had widened to the highest level since 1984. For the first time in 30 years, the share of winning incumbents has also climbed back to the 1991 level.

Many expected a bold economic renewal following such great concentration of political power. That chapter is waiting to be written. But a 1996 Congress slogan reminds why it must be written: “Every rupee earned from reforms is a rupee gained for development.”

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