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‘Riskless Capitalism’ in India
A study of the financial processes underlying India’s high-growth trajectory of the 2000s and its relationship with “riskless capitalism,” a term first used by Raghuram Rajan in November 2014, finds that the Indian growth story cannot be over-simplistically explained as a result of “market-oriented” reforms. Public sector bank credit-financed investments, particularly in the infrastructure sector, played a significant role in sustaining growth, most crucially after the global economic crisis. Such a growth trajectory, however, proved to be unsustainable with the expansionary phase coming to an end in 2011–12 and bad loans piling up in the banking system.
The authors would like to acknowledge the Indian Council for Social Science Research for sponsoring a Research Project (2014–16) on Financial Globalisation and India, from which this paper originated. Comments and suggestions at various stages of the work by Abhijit Sen, C P Chandrasekhar, Gerald Epstein, Jayati Ghosh, Jyotirmoy Bhattacharya, Kalpana Kannabiran, Prabhat Patnaik, Pulin Nayak, Robert Pollin, and Subhanil Chowdhury have been most helpful. The suggestions made by an anonymous referee were crucial in bringing out the paper in the present form. Authors are responsible for any errors that remain.
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