Role of the State

In this chapter, we deal with the question as to who would utilize the reverse flow of resources and how. The role of the state in Princely India is investigated, especially in somewhat progressive states. The rationale is provided not necessarily by market failure but by modernizing and imitative goals of some rulers and their ministers, who eschewed conservatism as an economic creed. Joan Robinson is known as a great advocate of an effective role of the state, socialist or other, in accelerating capital accumulation in the developing countries. We analyse the role of the state in Princely India to see whether there is a connection with this early experience. The case argued for the princely states by Joan Robinson was constructed around the need for capital and its utilization for enabling them to emerge out of industrial backwardness. The ardour for development, as noted earlier, resulted from the intensity of the contact with British India, the backwardness of the states having been the result of the slowness of this contact. Whether and by whom the consequent opportunities were to be taken up is the question addressed. The concern here is with the dramatis personae of capital accumulation. With the persistence of earlier, static economic organization, development had to be made to happen. A role was being assumed by the state. As there was no the princely state, the discussion of the role of the state in Princely India is problematic. For, there were a large number of them there, with extreme variations in size as well as the nature of the relationship with the British power.