ABSTRACT
This chapter focuses on the historical process and institutional transformations that shaped the strategic choice of the new chief minister of Andhra Pradesh in favor of cooperation with Center in the vertical interactions and pro-liberalization polices in the horizontal interaction. The new role of Union Government provides more autonomy for the State, enabling them to be more independent in economic policymaking, and negotiate directly with international financial and aid agencies such as the World Bank. Although the pro-poor and populist policies of N. T. Rama Rao led to a decrease in the level of mass poverty in the state, it also created a severe fiscal deficit at the state level. Adrian Leftwich describes the developmental state as a "transitional form of modern state where political and bureaucratic elites have generally achieved relative independence from socio-political forces in the society". Leftwich recognizes 'determined developmental elite' as one of the most significant and necessary factors for the emergence of developmental states.
