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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


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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


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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


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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


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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.


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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


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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!


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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


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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


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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


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performance and outputs did not match

expectations. But Nehru emphasised the

need for improvement in production,productivity and public awareness.


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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


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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


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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.


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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


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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


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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


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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


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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.


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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.

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