Adaptive State Capitalism in the Indian Coal Industry

Abstract

Adaptive State Capitalism refers to a set of characteristics (bureaucratic discretion, operational capacity, resource self-sufficiency, political influence, and ability to push for rule changes) manifested in state-owned enterprises (SOEs) which remain commercially viable and continue to hold market share in their respective industries. Adaptive SOEs create operational, financial and political space for themselves in the face of evolving external environments. Given the wide range of SOE performance observed across the developing world over the last few decades, this dissertation provides a framework to think about why certain SOEs persist and succeed, while others remain in inefficient, loss-making equilibria. To illustrate this framework, this dissertation focuses on one large SOE in India: Coal India Limited and its organisational history, showing how it gradually manifested these various adaptive characteristics over its more than four decades of existence. This adaptive history of Coal India is divided into four functional areas where adaptation was most prominent: federal politics, finance, labour and local politics, and technology. Through each of these areas, the complexity of Coal India’s relationships emerges, as does the importance of bureaucratic entrepreneurs initiating changes from within. This dissertation argues, through the case of Coal India, that within state capitalist systems, SOEs themselves have considerable room for endogenous change; external conditionality and mandates are much more likely to succeed when SOEs themselves have the capacity, resources, and leverage to pursue such agendas. Gaining these characteristics is non-trivial, and the chapters of this dissertation illustrate how Coal India worked within the Indian political and economic system to gain many of the adaptive characteristics that have made it a successful commercial organisation today. At the broadest level, this narrative, which draws from a range of interviews, archival sources, and historical data, is a story about a large industrial SOE, its unique position within India’s economic and political system, and its struggle to succeed at both its core mission (coal production) and the range of other social and welfare obligations that typically accompany state-ownership. By establishing the SOE as a key developmental actor, this dissertation challenges traditional notions regarding the inefficiency or lack of productivity of SOEs.