INSIGHTS FROM THE LITERATURE 9
cally risky a deal” (Bardhan 2003, 282). The dominance of specific interests also means that economic policy changes succeed only where the government engages in “reform by stealth” (Jenkins 1999). Jenkins’s argument is supported by evidence that public awareness about the economic reform process was in fact rather low during the 1990s (Kumar 2004). However, in a recent con- tribution, Jenkins (2004) argued that the “reform by stealth” approach he observed in the 1990s had become insufficient to promote India’s second- generation reform agenda. He identified the need to address different ideolo- gies as the major challenge for future reforms.
Varshney (1999) argued that reforms are more feasible where only the elite pay attention to them, while the attention of the masses is occupied by other issues. These reforms impact the elite while having a limited and imper- ceptible impact on the masses, thus giving the elite the window of opportu- nity they need. Varshney’s contention is confirmed by Pedersen (2000), who emphasized the emergence of a new group of reform-minded industrialists, represented by the Confederation of Indian Industry, as influential in sustain- ing the momentum of the reform process during the 1990s. The reforms they supported lay in the arena that Varshney refers to as “elite politics.” Although interest-based arguments are intuitively convincing, in practice it is often difficult to attribute the lack of reform to the machinations of par- ticular interest groups, because empirical evidence is hard to come by. The scholar then is left with anecdotal evidence at best and conjectures at worst. Moreover, the analysis is, as this study demonstrates, complicated by the lack of differentiation between the positions espoused by major interest groups and related government departments. For example, it is relatively easy to find evidence for the fertilizer industry’s opposition to proposed reforms. However, the argument that this opposition was crucial to the failure of reforms is convincing only where it can be shown that the government was united and strongly in favor of policy change.
The Role of Institutions
A second strand of the literature focuses on the institutional bases of reform. Some scholars debate whether the Indian state is rent-seeking or developmen- tal, that is, what role its bureaucrats and policy elite play in ensuring conti- nuity and in bringing about necessary changes in the economic framework. The neoclassical rent-seeking argument categorizes the Indian state as a rent seeker. In this formulation, state officials seek to maximize their income, and a closed economy, with various controls on business and commerce, offers the perfect opportunity for these officials to seek rents (Bhagwati 1993). Others argue that although the Indian state engages in rent-seeking activities, it also demonstrates developmental traits (Mooij 1999). The state-as-rent-seeker
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