ABSTRACT
Introduction Chang (2002) studied the economic history of the nineteenth century. He found, contrary to current accepted wisdom, that economic growth among today’s developed countries was not associated with free markets, free trade and limited government intervention. Rather, growth was based on regimes of trade protection, weak protection of intellectual property rights, industrial policy, and extensive state intervention. Chang’s historical analysis involves ‘searching for persistent historical patterns, constructing theories to explain them, and applying those theories to contemporary problems’. He argues that this method, being ‘concrete and inductive’, offers a strong contrast to the currently dominant neoclassical approach based on ‘abstract and deductive methods’. This orthodoxy, he argues, leads to an ahistorical contemporary discussion of development policymaking. This chapter likewise returns to a particular historical-economic period. Rather than being a broad comparative perspective in the manner of Chang, this chapter examines a single case study: the era of state-led planned industrialisation in India between 1950 and 1980. Virmani (2004a) sums up the widespread orthodox view on economic growth in post-independence India with the title of a recent paper: ‘India’s Economic Growth: From Socialist Rate to Bharitiya Rate of Growth’. As do many commentators, Virmani divides India’s recent economic history into a period of state intervention and slow growth from 1950 to 1991 and a period of liberalisation and faster economic growth from 1991 to the present.1 Other scholars go further and link the period 1950-80 to a longer history of relative economic stagnation going well back into the colonial era (Clark and Wolcott 2001).
