India's socially regulated economy

By revisiting some of the questions put forth by Prof. Radha Kamal Mukherjee during the first half of the last century, the author finds that the Indian economy to a large extent is regulated through social institutions. Through the power-relations within this system, macro-economic policies have been implemented. In this context, the author argues that policy is best understood as the way political resources have been deployed in the struggles for rents that take place at all stages – discursive, procedural and allocative – of the policy-making process. The author further argues that through liberalisation the struggle for these rents has been intensified.

The author considers the question whether or not the Indian economy is efficient to be inappropriate since it applies that current social structures of accumulation can be compared with some alternative structures. Given the deeply entrenched structures of social regulation in India, the author argues that this is not possible.

The author argues that relations between the formal state, the formal economy, the shadow state and the informal economy are the outcomes of political struggles. Unless there is a strong public mandate for tax compliance and against corruption these struggles will persist. In doing so, the author calls for a more robust and active culture of collective accountability, and a renegotiation of the legitimacy of the state. First however, the author calls for institutional mechanisms making capital more accountable to the state, and the state to other parts of civil society.