Embourgeoisment, Internationalization, and Auto Market Evolution

Abstract

By pursuing the national capitalist project the Indian state contributed to embourgeoisment and the material basis for market demand. Regulation of the economy — through public investments, five year plans, subsidies, and infant industry protection promoted home-grown capitalism. The results were by no means a runaway success and by some accounts disastrous (Bhagwati 1993). Indian demand was constrained by low incomes, endemic poverty, and persistent inequality. By the late 1970s the Indian economy as a whole exhibited signs of exhaustion. Declining public investments and internal political turmoil fundamentally challenged the state-led national capitalist project (Bardhan 1984). Excessive regulation, prompted by political expediencies, led to bureaucratic inefficiency, corruption, criminalization of politics, and corporate technological lethargy (see Ahluwalia 1989). Inter-party rivalry, militant trade unionism, the centralization of power by the ruling party, and radical insurrectionary movements in various parts of the country severely undermined political stability. Exogenous shocks, such as the tripling of world oil prices and the associated worsening balance of payments (BOP) position, exposed the overall vulnerability of the Indian economy.