The Rise of Developmental Statism in India: Focusing on the Resurgence of State-owned Enterprises in the Modi Government's Infrastructure Development Strategy

Abstract

This paper explores how the Narendra Modi administration has used state-owned enterprises (SOEs) to achieve its infrastructure development goals. After implementing global neoliberal policies in 1991, India had reduced the state's role and promoted private sector activities. However, these reforms failed to attract private sector investment, which led to a decline in growth. This decline in economic growth and slow progress in infrastructure became major political issues after the 2008 Global Financial Crisis. India witnessed a significant political shift in 2014 with the election of BJP-led Narendra Modi government, marking the first single-party majority government in three decades. The Modi administration identified infrastructure development as a critical factor in reviving India's growth story. It embraced what I term 'Developmental Statism' by extensively utilizing SOEs as 'developmental means' to implement crucial infrastructure developmental projects. India’s this developmental strategy led to the creation of new SOEs and an expansion of the existing ones. The paper also highlights that the resurgence of SOEs in the Indian economy doesn't oppose the market economy. Instead, it facilitates the market economy by promoting public-private partnerships.