Changing Nature of State-Business Relations in India

Implications for Social and Labour Market Policies

UNRISD Conference Business, Social Policy and Corporate Political Influence Geneva, November 12-13, 2007 Atul Sood Centre for the Study of Regional Development Jawaharlal Nehru University New Delhi, India
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Why Study State Business Relations

Interest groups, institutions and policies If analyzed, functionalist perspective Presence of the state, role of interest politics more individual, patron client, particularistic rather than collective, open and pluralistic Seldom any agency to artisans, landless

Why
If analyzed, accommodation, populism Absence of studies on making of policies If analyzed, Neo liberal technocratic view, problem of implementation Politics at centre of policy making Polices wisest course of action

Key Shifts
1990s liberalisation echoes desires and ambitions of domestic capital New strategic option as a natural progress for Indian business Changes in the organisations representing business interests New governance structure with greater participation by local bodies and panchayats (institution for village self governance) Greater role for civil society institutions Changes in political federalism, and the rise of coalition politics based on issues around reforms.

Implications for Social Policy

Direction of social policy in India - relate the interests of the dominant classes and the harsh reality of inequality and deprivation Interplay between policies and interest groups is complex and multidirectional Often-suggested inherent contradiction between welfare policies and interests of the dominant groups is too simplistic for understanding the direction of social policy
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Social Policy and Business

Business view on Social policy is influenced
Macro processes Implementation of the reform process Pressures from the civil society

Social Outlook of Neo Liberalism

General recognition that economic growth does not necessarily bring improvement in quality of life Arrangements other than economic growth can be effective to attain the desired capabilities and that high degree of development in social sectors like basic education and health care - necessary conditions for sustainable economic growth.
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Social Outlook of Neo Liberalism

Essence of social outlook of neo-liberalism in India
it legitimises the promotion of differentiated production and distribution of health, housing, education etc. at the same time resisting transfer payments by the state from the rich to the poor to finance collective provision of basic goods and services.

Stark social divide along with high growth has compelled policy makers not to say outright no to planning, they have articulated their preference for somewhat less planning.
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Factors for Neo liberal View

Dynamics of electoral politics has contributed to questioning the idea that trickle down works. Rise of coalition politics and frequent changes in electoral outcomes reflect the dissatisfaction of the poor with the pure growth strategies Heterogeneous nature of Indian business, the rise of new generation of educated, less traditional businessmen and women and proactive organisation representing these interests

Social Policies in 70s and 80s

During the 1970s and 80s the state addressed the needs of the poor but never extended them as citizenship rights. Focus was on socio-economic attributes that are relevant for the administration of developmental or welfare policies

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Social Policies in 70s and 80s

The provisioning of basic services was a matter of negotiation between the state and the political society Since social needs were determined more by coalition of political forces and strategic interests of the elite, the fulfilment of social needs of the poor was always contextual and ever changing
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The 90s
From the 1990s the negotiating space between the rightless people and the state has changed in a fundamental way. Whose rights? and Which Rights? are both issues of debate now The rights of poor are pitted against the needs of foreign capital, domestic rich and the emerging but very vocal, successful and globally integrated professional class
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The 1990s
The rights of squatters, for instance, are now seen vis--vis the rights of those who are investing in urban areas, developing new townships meeting the needs of the fast going service sector and so on. Private sector as stakeholder in education and health Businesses have become an increasingly powerful force
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Outcome of the 90s

Indias poor record in providing basic public goods when it spends vast public resources Problem not of limited resources but political priorities and incentives Earlier basic needs were met for those who were able to build a moral case of their need through political negotiations (not as rights)

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Outcome of the 90s

Now the assertion of new civil society groups (often on behalf of the middle classes) is questioning the needs of the vulnerable population, as their needs are not seen as basic rights In such a situation failure to achieve outcome is often found in the delivery system, rather than identifying the root causes.
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New Paradigm
(focus on Delivery, Institutional Capacity)
PPP - from Public to private for profit Many social policy initiatives (JNNURM, NREGP, NRHM) are based on active and participatory role of civil society actors Decentralisation can lead to greater democratization of the political process, reduce bureaucratic power, and thus provide more opportunities for individuals to participate in decision-making
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Experience of New Paradigm

How the process unfolded in India? Increasing dependence on centrally sponsored schemes, with greater responsibility for delivery on local governments Social policies are increasingly funded by the central government, implemented by local government, and monitored by the middle tier of government, with serious difficulties is achieving 17 the desired outcomes

Experience of New Paradigm

Influence of organised groups decreases with decentralisation in policy making, has not happened in India. The local level institutions are unable to alter the elite bias of the social programs - nature of decentralisation. PPP requires institutional reforms since it cannot address challenges of delivery of social service which the state system had experienced.
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Direction of Social Policy

Target oriented, debating the legitimacy of needs, and restricting transfer payments Limitations of choice of instruments to deliver social policy goals

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Business orientation of Social Policy

The Case of Labour Market Organised big business is seeking deregulation of the labour market and on the other hand there is immense pressure from civil society organisations to regulate the informal sector A bill has already been proposed to protect the informal sector workers.
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The Case of Labour Market

Policy on labour is now an area of contestationdiverse business interests and the concern with legitimacy of regimes - 90 percent of workforce. Business recognises the needs of labouring population in the informal sector (income augmentation, use of micro credit schemes, cooperatives, supporting fair trade practices, etc.) But not as rights of informal sector workers?
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Job support to the disadvantaged

Policy of affirmative action in the public sector has been used for some time as a strategy to overcome discrimination and act as a compensatory exercise Now the government wants to extend this policy to the private sector.
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Job support to the disadvantaged

Confederation of Indian Industry (CII) compromise merit, curtailment of freedom of employers Business believes in the potential of the market and the ongoing development process to deliver to the socially disadvantaged Status quo reflects limited capacity of the state to negotiate with business when the latter differs with its perspectives on social issues.
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Current Situation
No specific social initiatives of business in India at the level of policy No clear government strategy for partnership in social sector Social and economic power impacts social outcomes, Rights based framework towards the social sector How to involve business to bring better outcomes not just involve them Partnership becomes even more challenging
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