8/7/2019 be project.doc
1/23
The rediscovery of Jawaharlal
Nehru
The Nehru era built the basic nuts and
bolts of Indias current booming
economy.
S.Venkitaramanan
Dr Pulapre Balakrishnan, the well-known
economist, has rendered signal service
to all students of economic development,
particularly of India, through his
pioneering study The Visible Hand,
Public Policy and Economic Growth in
the Nehru era.
The title derives from the contrast
between Nehrus obvious reliance onState direction the visible hand as
distinct from the invisible hand, which
8/7/2019 be project.doc
2/23
Adam Smith had pointed to as a spur of
all economic activity. The study comes
as an occasional paper of the Centre forDevelopment Studies
(Tiruvananthapuram), an institution well-
known for its many path-breaking
contributions to economic policy
analysis.
Emphasis on industrialisation
Jawaharlal Nehrus contributions as a
statesman who laid the foundation for a
8/7/2019 be project.doc
3/23
democratic federal polity are, indeed,
well-known. But Dr Balakrishnans
emphasis is on his role as an economicpolicy-maker, in shaping the countrys
development on a State-directed basis
with accent on heavy machine building.
Dr Balakrishnan gives due weight to the
contributions of Dr Mahalanobis, whosemodel had great relevance to the Second
Five Year Plan and the policies
advocated and implemented by Nehru.
Nehrus role in building a self-reliant
Indian economy cannot be
underestimated. As Dr Balakrishnan
points out, Nehrus emphasis was on
industrialisation, particularly of
industries manufacturing heavymachinery, which was needed to help
build Indias steel, power, fertiliser and
chemical industries. These proved
8/7/2019 be project.doc
4/23
critical to the future development of
India. They were industries that were
feeders to other industries.
Dr Balakrishnan devotes considerable
space to the critique of Professors
C.N.Vakil and Brahmananda, whose
alternative model of development would
have laid more emphasis on the growth
of production of wage goods, in
contradiction to that of production of
capital goods.
In an expert analysis, he revisits thedetails of the controversy and comes out
with the obvious conclusion that the
Nehru-Mahalanobis model did prove, in
the long run, to be growth-enhancing,
both in terms of GDP and self-reliance.
He also points out that Mahalanobis had
sought to exorcise the balance of
8/7/2019 be project.doc
5/23
payments constraint, which could be
removed only by India becoming more
self-reliant in machinery, the supply ofwhich was becoming scarce in the world
as a whole.
The Mahalanobis-Nehru model was not
dependent on expectations of aid from
richer countries or of foreign direct
investment.
8/7/2019 be project.doc
6/23
Agriculture not ignored
Dr Balakrishnan dismisses criticism that
Nehruvian vision ignored agriculture. On
the contrary, he points out, through a
number of telling quotes from Nehrus
speeches to Chief Ministers
conferences, that he emphasisedagriculture no less than he did industry.
Nehru pointed out how the development
of industry was necessary for expansion
of agriculture. To grow the economy,
agricultural growth was equally neededfor supplying raw materials to industry,
such as textiles, sugar industry and so
on.
The model that Nehru and Mahalanobis
had followed had a great deal to do with
learning from the successes of the
8/7/2019 be project.doc
7/23
Soviet Unions growth story in the first
half of the twentieth century.
This success had been up till then
relatively unflawed, except for the
obvious mis-steps of the Soviet rulers in
the collapse of democracy and
introduction of collectivisation, which
later failed with disastrous results.
But Nehru avoided these errors of the
Soviet experience. He was particularly
concerned to point out that India had to
follow its own unique path rather thanany other international models. Neither
the American nor the Russian way would
suit India remarkable insight!
8/7/2019 be project.doc
8/23
8/7/2019 be project.doc
9/23
Turning point
Dr Balakrishnan points out that the
growth experience in the 17 years of
Nehrus dominance represented a truly
significant growth transition. He has
reinforced this by reference to the study
of some experts in the field. Besides, thedata he has put forward in the study
confirms the fact that the Nehru era did
witness a rise in the rate of growth of
Indias GDP (see Table). It is thus clear
that the Nehru era was a turning point inIndias economic history. This
incidentally raises the question whether
or not the eighties formed a more
significant growth transition. This is a
subject worth debating, especially in thelight of the contributions of DrArvind
Subramaniam et al on the subject. But
the fact pointed out by Dr Balakrishnan
8/7/2019 be project.doc
10/23
that the 1980s formed a turning point
confirms that there was an inflection
point in the 1950s when Nehru toweredover Indias policy-making. Dr
Balakrishnans discussions are enlivened
by his reference to the recent discussion
on the growth experience of various
countries in the light of the World Banksreport of 2005 entitled Economic growth
in the 1990s Learning from a decade
of reform. He quotes with approbation
Dan Rodericks review of this book.
I quote Roderick: It is a rather
extraordinary document insofar as it
shows how far we have come from the
Washington Consensus. There are no
confident assertions here of what worksand what does not, no blueprints for
policy-makers to adopt. The emphasis is
on the need for humility, selective and
8/7/2019 be project.doc
11/23
modest reforms and experimentation. It
affirms that there is no universal set of
rules. It is clear that the Nehru era inIndia, which preceded the Washington
Consensus, is an illustration of what
works. It establishes that it is not
necessarily true that markets alone can
guide a nations economic development.Nehrus vision enabled building up of
Indias industrial structure on the
strength of which Indias economic
reforms of the nineties based their
success.
It is necessary to have this perspective
since in our new-found enthusiasm for
market-oriented reforms, we tend to
trash the earlier vision of a structuredbuilding of the heavy industries following
a planning model. Nehru realised that
there were difficulties in public sector
8/7/2019 be project.doc
12/23
performance and outputs did not match
expectations. But Nehru emphasised the
need for improvement in production,productivity and public awareness.
8/7/2019 be project.doc
13/23
Basic nuts and bolts
The Nehru era was important in that it
built the basic nuts and bolts of Indias
current booming economy. It also laid
the foundation of Indias vast
educational and scientific infrastructure
on which the countrys current softstrengths are rising.
It is but appropriate to emphasise this,
as Dr Balakrishnan has done in another
piece, that Indias software industry
itself is based on the successful
contribution of the state in growing
Indias IITs, in particular, and scientific
temper in general.
Dr Balakrishnan latest contributionthrough his paper The Visible Hand is
truly impressive. It rediscovers Nehrus
great role in Indias economic evolution
8/7/2019 be project.doc
14/23
and growth. Every generation stands on
the shoulders of its predecessors, if
they, indeed, contributed to such growth.
Truly, we can say that the 21st century
Indias success owes a great deal to the
path-breaking contributions of Nehru and
his dedicated team.
To sum up, I quote Dr Balakrishnan: One
has to focus on the particular role of
Jawaharlal Nehru in the formulation and
implementation of the economic policy
of his times. Arguably, no Indian leaderat the helm of this country had been as
crucial to the navigation of its economy.
The economic record of his times holds
us an important indicator of the
effectiveness of his role.
Under Jawaharlal Nehru, the Indian
economy transformed from a colonial
8/7/2019 be project.doc
15/23
enclave to one with at least some of the
pre-requisites for a sustained long-term
growth while at the same timemaintaining autonomy from the super-
powers, vying for influence on a newly
independent Indian sub-continent.
8/7/2019 be project.doc
16/23
8/7/2019 be project.doc
17/23
party affairs at Allahabad. Subsequently,
Indira and Feroze grew closer to each
other while
in England, and they married, despite
initial objections from Jawaharlal due to
his religion
(Zoroastrianism).[citation needed]Rajiv was born in 1944 in Mumbai, during
a time when both his parents were in and
out of
British prisons. In August 1947,
Jawaharlal Nehru became the prime
minister of independent
India, and the family settled in
Allahabad, and then at Lucknow, where
Feroze became the editor
8/7/2019 be project.doc
18/23
of The National Herald newspaper
(founded by Motilal Nehru). However, the
marriage was
faltering and, in 1949, Indira and the two
sons moved to Delhi to live with
Jawaharlal, ostensibly
so that Indira could assist her father inhis duties, acting as official hostess, and
helping run the
huge residence. Meanwhile, Feroze
continued alone in Lucknow.
Nonetheless, in 1952, Indira
helped Feroze manage his campaign for
elections to the first Parliament of India
from Rae Bareli.
After becoming an MP, Feroze Gandhialso moved to Delhi, but "Indira
continued to stay with
8/7/2019 be project.doc
19/23
her father, thus putting the final seal on
the separation."[3] Relations were
strained further when
Feroze challenged corruption within the
Congress leadership over the Haridas
Mundhra scandal.
Jawaharlal suggested that the matter beresolved in private, but Feroze insisted
on taking the case
directly to parliament:
"The Parliament must exercise vigilance
and control over the biggest and most
powerful
financial institution it has created, the
Life Insurance Corporation of India,whose
8/7/2019 be project.doc
20/23
8/7/2019 be project.doc
21/23
ECONOMIC POLICY
He increased government support for
science and technology and associated
industries, and
reduced import quotas, taxes and tariffs
on technology-based industries,
especially computers,
airlines, defence and
telecommunications. He introduced
measures significantly reducing theLicense Raj, allowing businesses and
individuals to purchase capital,
consumer goods and
import without bureaucratic restrictions.
In 1986, he announced a National Policy
on Education
8/7/2019 be project.doc
22/23
to modernize and expand higher
education programs across India. He
founded the Jawahar
Navodaya Vidyalaya System in 1986
which is a Central government based
institution that
concentrates on the upliftment of therural section of the society providing
them free residential
education from 6th till 12 grade. His
efforts created MTNL in 1986, and his
public call offices,
better known as PCOs, helped spread
telephones in rural areas.
8/7/2019 be project.doc
23/23
Foreign policy
Gandhi began leading in a direction
significantly different from his mother's
socialism. He
improved bilateral relations with the
United States long strained owing to
Indira's socialism
and close friendship with the USSR
and expanded economic and scientificcooperation.[8]
During his state visit to the Soviet Union
he met with Premier Nikolai Tikhonov,
Andrey
Gromyko of the Ministry of Foreign
Affairs and Mikhail Gorbachev.