The Logic of Directed Development in Postcolonial India

Abstract

It has been presumed that an increase in economic growth rates automatically intensifies inflation processes, which provoke sensitivity among mass layers of the population. However, manifestations of interdependence between growth and inflation are different in different economic systems. Of importance are the degree of the maturity of the economic organism, its historical experience, and the sociopolitical context. Financial instability is a fundamental qualitative characteristic of the capitalist economy with its complex branched system of institutions. The suppression of inflation implies disciplinary actions from above, regulating the economic behavior of various groups of society. Rigid control over inflationary processes is characteristic of “late start” societies and, even more so, of states of the third wave of modernization, particularly India. Inflation in its acute forms turned out to be a result of the administration’s policy intended to form a middle class. The author of this article holds that the approach of India’s authorities to inflation problems is based on three strategic principles: measures to normalize circulation, to protect the poorest layers of the population from the consequences of inflation, and to find additional resources of the effectiveness of the country’s economic mechanism.