• DOI:10.1080/14736480490443085
• Corpus ID: 154543286

The Changing Political Economy of Federalism in India: A Historical Institutionalist Approach

@article{Sinha2004TheCP,
  title={The Changing Political Economy of Federalism in India: A Historical Institutionalist Approach},
  author={Aseema Sinha},
  journal={India Review},
  year={2004},
  volume={3},
  pages={25 - 63}
}

• Aseema Sinha
• Published 1 January 2004
• Economics
• India Review

In July 1991 India’s central government initiated economic policy reforms amounting to a quiet economic revolution—or, as noted by a commentator, “reform by stealth.” Policy regimes in the industrial, macroeconomic, and trade sectors were transformed slowly but surely. These policy changes have persisted in fits and starts, yet in 2002 there was talk of the onset of the “second generation of reforms.” Most notably, economic liberalization transformed central–regional relations unleashing unintended and unplanned decentralization. Since the beginning of economic liberalization and the parallel process of regional representation in national governments (that began in 1996), India’s regional states now enjoy considerable political and economic autonomy, but also face intense fiscal pressures on their fragile economies. Recent scholarship has attempted to map the radical nature of transformations in India’s policy regime and in center–state relations. Lawrence Saez has noted that economic liberalization policies in the 1990s prompted a change in federal relations from intergovernmental cooperation toward inter-jurisdictional competition among the states. I have argued that marketization after 1991 was not a simple process of displacement from the public to the private sector or from the state to the price-mediated markets, but also reordered the role of regional states vis-à-vis the center. Rob Jenkins has argued that federalism facilitated the political sustainability of India’s reform process displacing opposition to the state level. Lloyd and Susanne Rudolph have characterized the changes in the following way: “A federal market economy is fast replacing a Nehruvian centralized command