Role of interest groups, institutions and civil society in development: lessons from India’s experience

The contrasting development experiences of countries like Brazil and India on the one hand and those of East Asia and China on the other, have raised fundamental questions about the determinants of economic growth and mainly about the effectiveness of economic growth in improving the quality of life. To find plausible answers to these questions, understanding the relative roles of institutions, interest groups and civil society in policy formulation and implementation assumes critical importance.

The present paper attempts to analyze these issues by drawing upon the development experience of India. This analysis is also important for charting the future directions of development policy in India. More particularly, the author presents an analysis of:

• India’s development experience
• the interplay between interest groups, institutions and policies
• broad path ahead for India on the reforms front

The author’s analysis identifies three dominant classes on the politico-economic scenes that influence India’s development process. Despite the plurality, heterogeneity within each of these classes and their conflicting interests, they were united in agitating against state policies affecting their common interests. These three classes are:

• industrial
• agricultural
• bureaucracy

The author discusses the effects of the conflict of interests on capital investment and argues that democracy can be an instrument of conflict resolution. The author also analyzes the development process of a country in terms of economic growth, social development as well as the role of interest groups, state, markets, institutions and civil society in the development process.

The author highlights that while there is excess intervention by government in some spheres of economic activity, there is also an insufficient and ineffective governmental activity in many other fields like education, land reforms, healthcare, social security and promotion of social justice. The role of government in creating basic capabilities for a more participatory economic growth is crucial for the success of economic reforms. This will have the beneficial effect of reducing the organized interest groups’ pressure on the government, imparting it a degree of autonomy in policy making.

The role of civil society lies in creating pressure on the government for positive action through the organs of free press, judiciary and mass media, which the democratic polity of India provides. The author recommends two radical reforms on the political front which are to delink the success of a candidate in elections and his ability to raise resources from organized interest groups and to decentralise the power.