By the mid-1980s, the initiatives towards more liberalised economy have been started at the national level in India. The emergence of Rajiv Gandhi at the centre, with his emphasis on liberalisation policies, which were expected by him to lead the 21st century along with intensive technology. These have influenced the priorities at the state level also. The urge to economic modernisation and industrial development of the national industrialist class was maintained to rest on political power in the hands of Congress Party, after an interval of National Front rule at the centre. Under the ideology of ‘globalisation’ of the West, Indian government opted for a capital-intensive technology in industry and dominant trends of mechanisation and commercialisation with poor dry land technology in agrarian sector. This has closed the options on the other hand to help the poor by giving subsidies on essential and scarce commodities.
The crisis of NTR's administrative style also stems from the expectations of the rich peasant class that brought him into power. This class resented his populism as it involved huge subsidies resulting in major deficits in the budget, as per the prevailing notion of development. The populism can sustain only either additional mobilisation of local resources and maneourebility. The welfarism in the shape of populism is highly inelastic because of the resource constraints and absence of political will to tax the rich. In this situation, NTR, “not willing to additional taxation and in the process of reducing subsidies, has lifted the midday meal scheme for school children. Further, as a part of the strategy of resource mobilisation, he encouraged arrack business extensively, and left no option than that of seeking central aid”.
Mohan traces NTR's compromising style with economic liberalisation to a different process. He observes that the roots for Telugu nationalism were struck in NTR’s desire to arrange for a marriage between Andhra capital and American based technical expertise. His idea of ‘science city’ at a cost of Rs.1,000 crores with NRI’s creation of a free zone were a part of this strategy. Mohan further argues that the upper stratum among the ranks of the Telugu bourgeoisie would prefer to form a part of the all India bourgeoisie, and rise a hue and cry for a time so that the pace of its adoption is quickened.