| Abstract: | Inclusive institutions make correct policy choices required for steady catch-up growth more likely. India started out with highly inclusive political institutions since it adopted democracy with universal suffrage at independence. But extractive economic institutions, inherited from the British, were made more so by economic controls. In addition, a heterogeneous electorate allowed politicians to cultivate vote-banks and populist schemes instead of delivering better public services and governance. India’s opening out was adequately nuanced and flexible but was sometimes used as a substitute for harder domestic reforms. It, however, added to the growing constituencies that benefit from growth, and are pushing for more inclusive productivity enabling economic institutions. Broader interest groups create better institutions and incentives. Examples from general governance, the regulation of industry, and agricultural marketing show the process, although messy and prolonged, is in the right direction. |
