RUPRECHT-KARLS-UNIVERSITÄT HEIDELBERG
FAKULTÄT FÜR WIRTSCHAFTS-UND SOZIALWISSENSCHAFTEN

Dynamics of Governance and Development in
India

A Comparative Study on Andhra Pradesh and
Bihar after 1990

Dissertation zur Erlangung des akademischen Grades Dr. rer. pol. an der
Fakultät für Wirtschafts- und Sozialwissenschaften der
Ruprecht-Karls-Universität Heidelberg

Erstgutachter: Professor Subrata K. Mitra, Ph.D. (Rochester)
Zweitgutachter: Professor Dr. Dietmar Rothermund vorgelegt von: Seyedhossein Zarhani
Dezember 2015

Acknowledgement

The completion of this thesis would not have been possible without the help of many individuals. I am grateful to all those who have provided encouragement and support during the whole doctoral process, both learning and writing.

First and foremost, my deepest gratitude and appreciation goes to my supervisor, Professor Subrata K. Mitra, for his guidance and continued confidence in my work throughout my doctoral study. I could not have reached this stage without his continuous and warm-hearted support. I would especially thank Professor Mitra for his inspiring advice and detailed comments on my research. I have learned a lot from him.

I am also thankful to my second supervisor Professor Ditmar Rothermund, who gave me many valuable suggestions at different stages of my research. Moreover, I would also like to thank Professor Markus Pohlmann and Professor Reimut Zohlnhöfer for serving as my examination commission members even at hardship. I also want to thank them for letting my defense be an enjoyable moment, and for their brilliant comments and suggestions.

Special thanks also go to my dear friends and colleagues in the department of political science,

South Asia Institute. My research has profited much from their feedback on several occasions, and

I will always remember the inspiring intellectual exchange in this interdisciplinary environment. I would like to express my gratitude to my wonderful friends and colleagues Dr. Jivanta Schötlli and Dr. Markus Pauli for their comments, feedbacks, and constant supports. I would also like to thank Markus for his remarks, critiques, and suggestions during the review meeting, which proved to be very useful in the next stages of research. Furthermore, I would like to thank Dr. Stefan Diederich, Dr. Michael Liebig and Mr. Bernhard M. Beitelmair-Berini for sharing their tips, knowledge and academic perspectives with me.

Finally, my heartiest gratitude goes to my wife Samareh for her love, patience, supports, and her imperturbable belief in my abilities. Also, I would like to thank Samareh for her critiques and comments on my work. She has been a never-ending source of love, encouragement, and motivation. Undoubtedly, this dissertation could not have been written without her. Thank you Samareh!

Of course, the acknowledgments would not be complete without giving thanks to my parents. Both have instilled many admirable qualities in me and taught me hard work, self-respect, and persistence. They have supported my academic pursuit, and I could always rely on them. I do not imagine a life without their love and blessings. This thesis is dedicated to them.

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Table of Content

Acknowledgement.......................................................................................................................................... i Table of Content............................................................................................................................................ ii List of Figures .............................................................................................................................................. vii List of Tables................................................................................................................................................. ix Acronyms and Abbreviations......................................................................................................................... x

• 1
• Introduction........................................................................................................................................... 1

• 1.1
• Casting the Context ....................................................................................................................... 1

Ongoing Debate: Role of State in Development in India ............................................................... 7 State of Problem and Significance of Study................................................................................... 9 Gaps in Existing Literature...........................................................................................................17 Selection of Cases........................................................................................................................20 Locating Puzzle............................................................................................................................24 Objectives and Main Questions of the Study ..............................................................................27 Arguments and Hypotheses ........................................................................................................28 Methodological Approaches and Their Implications ...................................................................33
Analytic Narrative Approach................................................................................................33 The Subnational Comparative Method................................................................................34 Source of Data.....................................................................................................................35
1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9
1.9.1 1.9.2 1.9.3
1.10 Structure of Current Study ..........................................................................................................36

• State of Art: Governance and Comparative Political Economy ............................................................. 38
• 2

2.1 2.2 2.3 2.4 2.5
An Overview ................................................................................................................................38 From Government to Governance: a Paradigm Shift ..................................................................38 Defining Governance: Complexities and Diversities ....................................................................41 Different Conceptualizations of Governance ..............................................................................48 Neo-liberalism and Good Governance ........................................................................................55

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2.5.1 2.5.2 2.5.3
Roots and Context of Good Governance.............................................................................55 Defining Good Governance .................................................................................................61 Good Governance as a Theoretical Tool: Assessments and Critiques .................................64
Question about the Causality Assumption ..................................................................64 Normative Roots of Good Governance........................................................................64 Neglecting Different Contexts .....................................................................................66
Good Governance and Study of Interrelations of Governance and development in India..66
2.5.3.1 2.5.3.2 2.5.3.3
2.5.4

• 2.6
• Neo-Institutionalism, Governance and Comparative Political Economy .....................................67

Developmental State Theory...............................................................................................69 Neo-statism, Governance and Study of Development in India............................................71 Subnational Analysis of Governance in India.......................................................................72
2.6.1 2.6.2 2.6.3
3

4
Theoretical Framework........................................................................................................................ 73

• 3.1
• Neo-institutional Rational Choice Model of Governance ............................................................74

Polycentric Hierarchy Theory ......................................................................................................76 Regional Elite Strategy analysis ...................................................................................................78
3.2 3.1
Elite Agency and Development in Andhra Pradesh: From Tollywood Superstar to CEO of AP............... 84
4.1 4.2
4.2.1
An Overview ................................................................................................................................84 State Profile.................................................................................................................................85
Geography...........................................................................................................................85 Population and Demography...............................................................................................86 Economy..............................................................................................................................86
Pre the1990s Politics in Andhra Pradesh.....................................................................................89
Historical Backgrounds: From State Formation to First Telangana Movement...................89 Caste and Politics in Andhra Pradesh ..................................................................................93 From the One Dominant Party System to a Two Parties System.........................................97 Fall of the Congress, Rise of the TDP and Telugu Subnational Movement ........................100
4.2.2 4.2.3
4.3
4.3.1 4.3.2 4.3.3 4.3.4

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4.3.5 4.3.6
Charismatic Leadership of NTR..........................................................................................102 Economic Populism and Identity Politics in TDP (I) Regime: Seeking the Horizontal Rewards 105

• 4.3.7
• The Vertical Game: TDP in the State and Congress in the Center .....................................107

The Coup in TDP and Rise of Chandrababu Naidu.....................................................................110 From Charismatic Populism to Pragmatist Technocracy: The Rational Actor and the Horizontal
4.4 4.5 Determinants ........................................................................................................................................113

4.5.1 4.5.2 4.5.3
Legitimacy Challenge.........................................................................................................115 Fiscal Deficit Crisis .............................................................................................................116 The Vertical Game: Coalition of Telugu Subnational Movement and BJP: The Congress as the Enemy, both in the State and the Center....................................................................................121

• 4.6
• Andhra Pradesh as Developmental (Subnational) State in the TDP Regime (II) ........................123

A Developmental Elite at the State Level: Naidu as the CEO of Andhra Pradesh ..............125 The 2020 Vision.................................................................................................................131 A Subnational State and International Aid Agencies: AP and the World Bank ..................135 SMART Governance and Good Governance......................................................................138 Policy Reform in Andhra Pradesh ......................................................................................140 Competing for Private Sector Investments........................................................................141 Hyderabad as the Hub for IT-led Development.................................................................143
1999 Election and Reelection of TDP: Rewards in the Horizontal Interaction...........................146 Y.S Reddy and Rise of New Charismatic Populism.....................................................................147 Y.S. Reddy and the Reforms ......................................................................................................150
4.6.1 4.6.2 4.6.3 4.6.4 4.6.5 4.6.6 4.6.7
4.7 4.8 4.9 4.10 The Reemergence of Telangana Movement .............................................................................153
5

Elite Agency and Development in Bihar: From ‘Jungle Raj ‘of ‘Gharibon Ka Masiha’ to ‘Sushasan Babu’

159
5.1 5.2
An Overview ..............................................................................................................................159 State Profile...............................................................................................................................160

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5.2.1 5.2.2 5.2.3
Geography.........................................................................................................................160 Population and Demography.............................................................................................161 Economy............................................................................................................................162
Pre the1990s Politics in Bihar....................................................................................................167
Historical Background........................................................................................................167 Congress Party and Upper Caste Domination ...................................................................167
5.3
5.3.1 5.3.2
5.3.2.1 5.3.2.2
The pre-1967 period..................................................................................................170 The Period between 1967 and 1972 .........................................................................172 The Period between 1972 and 1977 .........................................................................175 The Period between 1977 and 1979 .........................................................................177 The period between 1980 and 1990 .........................................................................177
5.3.2.3 5.3.2.4 5.3.2.5
5.4 5.5 5.6 5.7 5.8 5.9
Fall of the Congress, Rise of the JD and Lower Caste Politics ....................................................180 Lalu Prasad Yadav as a Charismatic Leader ...............................................................................183 The Vertical Game: JD/RJD in the State and Congress/BJP in the Center..................................185 Reelection as a Reward despite Poor Economic Performance: The Horizontal Game ..............187 Economic Populism and Identity Politics in RJD Regime............................................................189 Bihar as a Dysfunctional State ...................................................................................................190
Resistance to the Reforms.................................................................................................191 Fragmentation of Bureaucracy and Civil Services..............................................................192 Personalization and Centralization of Power.....................................................................195
5.9.1 5.9.2 5.9.3
5.10 End of ‘Jungle Raj’ and Rise of Nitish Kumar .............................................................................197 5.11 Nitish Kumar and New Developmental Paradigm: Change in the Horizontal Game .................199 5.12 Bihar as Developmental (Subnational) State in the JD (U) Rule.................................................200 5.13 A Developmental Elite at the State Level: Nitish Kumar as Sushasan Babu...............................201
5.13.1 Sushasan as the Symbol of the Change .............................................................................203 5.13.2 Policy Reforms and Initiatives in Bihar...............................................................................204