Nehru’s Economics

Till the end of the 1980s, the demand for abandonment of Nehru’s ideas and thinking was confined only to a few of the non-Congress parties in India. Communalists of all varieties, Lohia and his followers, sectarian Communists, Swatantra Party and Forum of Free Enterprise continuously campaigned for pushing the Congress away from Nehru’s approach to India’s problems. They quite often used abusive language and slanders and indulged in disruptive activities. The people of India, however, continued to treat them with disdain and they remained on the fringe.

With the turn of the 1990s, the situation changed. Socialism of all shades seemed to have suddenly gone out of fashion. With a unipolar world seemingly emerging after the collapse of the Soviet Union and the NAM becoming defunct frightened the developing nations. The source of ideas and inspiration appeared to have shifted to Washington, D.C. Without losing any time the US-controlled international financial institutions in collaboration with the US Department of Treasury came out with the Washington Consensus that consisted of a set of guidelines to be followed by all developing countries irrespective of differences in their situation and historical past.

One major stipulation was a drastic reduction in the role of state in the economy and the installation of market forces as the omnipotent deity, according to whose dictates production decisions as to what, how and for whom to produce were to be taken. Moreover, the spheres left to state even by Adam Smith were to be curtailed to the utmost possible through marketisation. In other words, both internal and external security, education and health services, the supply of drinking water, sanitation work, transport and communications were to be left at the disposal of market forces. As has happened elsewhere, the construction of prisons and the custody of their inmates were to be left to the private sector.

This meant jettisoning the Nehruvian approach, which had received the seal of approval of the national movement from the Karachi Congress and the National Planning Committee onwards. It was the considered view of Nehru and the Congress that, without eliminating regional disparities in economic development, a legacy of the British rule in whose praise hymns were recently sung by Dr. Manmohan Singh, India’s territorial integrity could not be guaranteed. Similarly, efforts must be made to lessen as far as possible, if not fully remove, the socio-economic inequalities. Through job reservation and other concessions in education and training, the socially and economically oppressed and downtrodden people must be encouraged to come up. Only through these measures, the unity of all Indians, irrespective of differences arising from caste, creed, religion, language, etc. could be brought about and age-old discriminations removed. As a result of this step, all sections of the society must be involved in nation-building efforts and they should be induced to contribute their utmost. For this, state’s continuing active role in the economy was a must. It must set up industrial enterprises, develop infrastructure facilities and regulate the flow of investment in order to remove regional disparities and socio-economic inequalities in order to strengthen the integrity and unity of the country and make political freedom really meaningful for the people at large.

The Washington Consensus, which has been accepted in both letter and spirit by the Government of India since the time of the Narasimha Rao government, seems to have jettisoned this key idea of Nehru. Privatisation and deregulation have led to the process of rapid dismantling of public sector and making state play a second fiddle to private capital as its facilitator for all time to come.

The present day leaders of both the Congress and the UPA government seem to have forgotten that, as early as October 12, 1933, Nehru had written in Daily Herald of London: “Essentially… our struggle for freedom is a struggle for a radical change of social structure and the ending of all exploitation of the masses. This can only be done by divesting of the great vested interests in India….”

Nehru regarded the expansion of the role of state in the economy fully justified “because, after all, state is the expression of society.” To him, the increasing skewness in the distribution of incomes and wealth in a country like India necessitated state intervention if future social turmoils were to be avoided and harmony to be maintained.

Nehru’s thinking was endorsed by the Indian National Congress by categorically stating: “The public sector has to expand rapidly…. to the fullest extent of the country’s capacity and the state should, more especially, assume larger responsibilities in regard to industries of strategic importance.” (Indian National Congress Resolutions on Economic Policy, Programme and Allied Matters (1924-1969), p. 94). As far as our knowledge goes, the Indian National Congress has not repealed this understanding. This means the Congressmen, how high their position in the Party and the Government maybe, speaking and acting contrary to it, are indulging in gross indiscipline. They are betraying the legacy of Nehru. If they have courage, let them say that this understanding is no longer valid and get it rescinded by the next session of the Indian National Congress.

Ever since economic reforms inspired by the Washington Consensus have been initiated, public sector has not only stopped expanding but is also being in the process of being dismantled. It is a debatable point whether private sector is more efficient, more honest and more responsible. Not only here where the phenomenon of non-performing assets of banks, growing industrial sickness, tax evasion and various scams from Mundhra to Hershad Mehta and reports like that of the Vivian Bose and of the Das Commissions testify to the misdeeds but also in the USA the Enron, the WorldCom, Andersen and so on, expose the claim that private sector because of its reliance on market forces are more efficient and honest.

Ever since the reforms have begun, private investment has been going largely to certain Western and Southern States; other parts of the country are falling rapidly behind them. Obviously, regional disparities have been increasing, pushing the idea of the national movement and of Nehru into the dustbin. In the new era the job reservation for SC, ST and OBCs has become redundant. The number of jobs in the state sector has been falling and the private sector is not prepared to accept any scheme of job reservation State has been washing its hands off providing basic services in the sphere of health, drinking water, elementary education, security, etc. These services are being pushed more and more into the market domain. If you have money you can buy health and medical facilities otherwise you are left to suffer and die Public hospitals and dispensaries are starved of funds and facilities. Similarly, government schools and colleges are declining in quality while privately funded and managed institutions are coming up in scores for those who can afford. Even in a city like Delhi, security in the real sense is available only to the rich and the influential. Police lacks manpower and necessary equipment besides incentive to serve the public at large. Whatever strength and capabilities it has are largely diverted to the service of the rich and the powerful who go round with red lights and security guards flaunting their might in a vulgar fashion. Other people with wealth and the influence in the society and the government have an alternative in the form of private security services and they seldom bother about improving the quality of policing. These people go to private hospitals and nursing homes and use courier services and mobile phones and toll roads and bridges and have their own means of transportation. Thus they least care about the improvement in the public sector in these spheres. Obviously, the society is getting polarized instead of being integrated and homogenized, as Nehru had wanted. Growing social disparities are getting reflected in the widely different conditions of living of the upper and the lower classes. It reminds one of Benjamin Disraeli’s Sybil.
It does not require much intelligence to state that a veritable danger to India’s territorial integrity and unity is building up. Already, growing lawlessness, nihilism and terrorist activities, kidnapping for ransom, rangdari (extortions), increasing influence of mafia on politics and the echelons of state indicate the terrible days ahead. If one reads Dostoevsky’s The Possessed or Emile Zola’s Paris, one may realize how potent the danger of anarchism from the unemployed youth without any confidence in the ruling elite and hope in the future can be.

There are, at present, people both in the Congress, the Government and some research institutions, acting shamelessly as vendors of the ideas generated by the Washington Consensus. Contrary to the understanding of Nehru and the national movement, Montek Singh Ahluwalia has been openly advocating “trickle down strategy” whereby the state should wash its hands off all talks of redistributive justice. This gentleman served the NDA government and is now serving the UPA government as if there is no basic difference in the approach of the two.

One can very easily discern some sort of synchronization in the approach and efforts of the sponsors of the Washington Consensus and their Indian stooges. To give an example, take the report of the Chicago-based consultancy firm A. T. Kearney and that of ICRIER for Ministry of Consumer Affairs on FDI in retail trade. Their aim is the same, unmindful of unemployment and misery in store for small retailers. It needs to be mentioned that Dr. Subramaniam Swamy, generally against the Sonia Gandhi-led UPA, too has written a long piece extolling the benefits of FDI in the retail sector. This alliance is bound to give rise to a suspicion that something big is afoot at the behest of an all-powerful entity. .
Lately, one may find scores of examples of growing interference in economic policies by the World Bank, be it fiscal policy of the country, pension reform or the development of Bihar. Planning Commission has been a collaborator in most of them. A section of our economists, it seems, have accepted a subservient role unmindful of its fall out for country’s sovereignty and also to their self-respect.

It did not at all surprise the close watchers of the Indian scene when Montek Singh Ahluwalia brought the economists of the sponsors and supporters of the Washington Consensus to sit in judgment while the evaluation of the tenth plan was undertaken and a former economic adviser of the government began attacking those who criticized it. This gentleman was also very harsh on those who pleaded for employment guarantee scheme.

It is high time that the Congress wakes up to this conspiracy to jettison Nehru because if they succeed all their efforts will get nullified and both the Congress and the country will be doomed. It is needless to say that the posterity will not forgive them.      

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