Sovereign India's experiment with state-led economic growth has produced mixed results. Between 1950 and 1980 the Indian economy grew at a sluggish per annum rate of 3 to 3.5 percent, but accelerated to nearly 6 percent per annum thereafter (see Table 7.1). Nonetheless, this performance of the sovereign state was a considerable improvement over the nearly stagnant colonial economy, especially the pre-1930 period. At the same time, this growth compares unfavorably, especially with that of South Korea but also Brazil, suggesting the need to scrutinize the role of the state in the Indian economy. As for industrial growth, it fluctuated from over 7 percent in the first fifteen years, to below 4 percent during 1965–80 and then back again to nearly 6 percent per annum between 1980 and 2000. There was also considerable structural transformation over the five decades: Whereas agriculture contributed more than half and industry less than 10 percent of the national product at independence in 1947, toward the end of the century a diversified industrial sector contributed nearly one-quarter and the service sector nearly one-half of the whole.

This chapter focuses on the political determinants of economic performance in India, especially rates and patterns of industrialization, raising questions about the design and the capacity of India's highly interventionist state. Given the mixed outcome, the puzzles for analysis are both why the Indian economy has done as well as it has and why it has not done better.