State Character and Economic Policy
SOCIAL scientists have been increasingly concerned with the problem of identifying the class character of the Indian state.1 One way of looking at this problem is to analyse the impact of state policy on various socio-economic classes.a If the state apparatus can be viewed as a machine in the hands of a ruling class, or classes, which will use it to serve their own class interests as far as possible, subject to certain compromises which may be necessary to perpetuate their hold on state power, it follows that there will be a close correspondence between state policy (intervention in the economy) and the class character of the state. The present paper examines two aspects of this relationship. Both aspects are related to state intervention in the pattern of financing economic development.
Class Impact of Public Resource Deployment
The basic instrument of state intervention in the deployment of resources is public investment or the financial operations of the state capitalist sector.8 Before analysing the impact of these operations, however, it is necessary to remove a frequent misconception that the coming into existence of a large state sector, in itself, implies a weakening of the institution of private property or the propertied classes. It is well known that rapid industrialization and capitalist development in Meiji Japan was achieved through the leading role of the state sector.4 Similarly the state