| Yesterday I went to a seminar conducted by a local | | | | model.i. Communism as an ideology lies in revolution. |
| club wherein the topic of discussion was Indian | | | | Here the economic reforms are preceded by a social |
| economic model. The speakers were vociferous in | | | | revolution that breaks up the social order and ushers |
| criticizing Nehruvian model of economy. This is not | | | | a new model. So basically, such a model is |
| the first time that I see somebody vomiting venom | | | | endogenous that is change from within. But an |
| against Nehru. Many times Nehru has been criticized | | | | exogenous application of communist ethos would |
| for his strategy of planning during the formative | | | | result in mere redistribution of wealth but won't usher |
| years of independence. Most importantly these | | | | a revolutionary life (: said by Che Guevara). One |
| criticisms come from highly educated people who | | | | cannot have true communist economy through policy |
| have seen interest in the economic development of | | | | making. USSR and China were successful in having a |
| the nation. Their main point of criticism is based on | | | | communist economy because they were followed by |
| the fundamental incongruence of the high growth | | | | a revolution and hence total usurpation of the |
| rate of the globalized economic model post 1991 and | | | | existing economy by the communist philosophy. In |
| the low growth rate of 1960s controlled economy. In | | | | 1950s India and for that matter Nehru could not have |
| this short essay I am not going to compare the | | | | approved of a social revolution through strict |
| benefits or short comings of the two economic | | | | communist planning or otherwise. So a strict |
| models; because comparisons as they say always | | | | communist economy was out of question.ii. Secondly, |
| tend to be odious. I will only point to some subtle | | | | Nehru also wanted a balanced growth of market. |
| points which might have influenced the planning | | | | State intervention in the heavy projects were |
| process during the post independence period. | | | | necessary because of lack of capital but agriculture |
| When India gained freedom the immediate | | | | and service sectors did not need heavy gestation so |
| consideration of our leaders was to restructure a | | | | private investment was possible. Hence these sectors |
| broken economy. The major problems that they had | | | | remained on private control. And heavy industries |
| faced were:- | | | | were under state control. Some criticize Nehru of |
| 1. lack of capital | | | | neglecting agriculture. Perhaps their point of criticism is |
| 2. lack of financial institutions | | | | towards the Congressional inability to implement |
| 3. lack of infrastructure | | | | concept of co-operative farming. Nehru did talked |
| 4. lack of secondary (industry) or tertiary(service) | | | | about co-operative farming, but it did not materialize |
| sector and hence over dependence on primary | | | | because of political reasons. Nehru because of his |
| (agricultural) sector | | | | astounding majority in the Loksabha could have his |
| At that time there were two models of | | | | will carried away with little opposition, but he did not |
| development open for the policy makers. The first | | | | think it was prudent to start a political crisis during |
| one is the famous Gandhian model of development | | | | the early years of polity. As an alternate to the |
| which was aimed at minimization of wants to meet | | | | co-operative farming he introduced the concept of |
| the lesser supply and second was the Nehruvian | | | | community development project, which aimed at |
| model which was aimed at the maximization of | | | | wholesome development of the rural India. |
| supplies to meet the increasing wants of people. You | | | | So India adopted a model of economy which had |
| can see the diametrical opposition between these | | | | place for both the private player and the state. It |
| two models of development. Today, we may laugh | | | | was like a variable sum approach to power wherein |
| at the Gandhian model for its naivety but at that | | | | no body holds power in exclusion of the other party, |
| point of time it was a major theoretical concept. | | | | though some may say that the model favoured the |
| However the untimely demise of Gandhi, had put an | | | | public sectors or state controlled enterprises more. |
| end to his concept of development and Nehruvian | | | | This is called mixed economic model because of the |
| model remained the only alternate available for the | | | | participation of both private sector as the provider of |
| policy makers. Here we need to consider the lower | | | | consumer goods and the public sector as the |
| level of maturity and low experience of our policy | | | | commanding heights of economy dictating the |
| makers, including Nehru, because it was the first time | | | | infrastructural development of the country. |
| they were doing these kind of things and the | | | | Now before having a conclusion about the pros and |
| enthusiasm had over powered any pragmatic thinking | | | | cons of Nehruvian model which is called Fabian |
| for an alternate, though there were small voices of | | | | socialism we can put our attention to two brief |
| left blocks could be heard here and there. Now, we | | | | economic models. They are:a. redistribution firstb. |
| would see what might have influenced Nehru's | | | | production first |
| conception of the economic plan which later came to | | | | Redistribution first has similarity with communist |
| be known as mixed economy. | | | | economic models. Here the wealth is first |
| We will discuss why this model is called a mixed | | | | redistributed among the various sections and after |
| economic model later; we will first see what prepared | | | | that the development and progress is though of. So |
| for the ground work of this model. At that time two | | | | the cost of development, as in high capital |
| models were prevalent in the world: | | | | investment, is borne by both the present generation |
| 1. capitalist economy: characterized by free economic | | | | and the future generation. On the other hand the |
| forces | | | | production first model aims at increasing the |
| 2. communist economy: state controlled economy | | | | production first and then thinking about redistribution |
| There was enormous international pressure on Nehru | | | | of the production among the people. In this case the |
| to adopt any of these two models. But he was | | | | pressure of high capital investment has to be born by |
| aware of the pros and cons of these two models.a. | | | | the present generation. Nehru as an ideological policy |
| why India could not have adopted a capitalist model:- | | | | adopted the second one, perhaps influenced by the |
| Indian market was not evolved at that time. There | | | | age old Indian tradition of paternal care towards the |
| was lack of capitals. If privatization were free then it | | | | children. |
| would have two serious consequences:i. there would | | | | Many criticize Nehru that this ideology means not |
| have been monopoly of a few private houses which | | | | eradicating the economic inequality. Nehru's logic in this |
| would have ked to heavyinflationii. Secondly, there | | | | case was also equally appreciative. According to his |
| would have been complete neglect of heavy | | | | model, a slight degree of inequality was acceptable |
| enterprises. | | | | for the rapid development. And secondly, if |
| The reason for this was, infrastructure and heavy | | | | redistribution was done first, then the poor who had |
| industrial projects have high gestation periods that | | | | been the victim of poverty would have squandered |
| means the profit would come only after a couple of | | | | their wealth on goods of immediate gratification. This |
| decades. So the private players would not be | | | | would not have helped for saving of the country. |
| expected to invest money on such kind of projects. | | | | So as an ideological model the mixed economic model |
| This would have led India to a country with no | | | | was the best suited model at that point of time. |
| infrastructure at all. So the only alternate left was | | | | Even though the evil repercussions of the model was |
| state investment in such heavy projects. So capitalist | | | | seen in the late 198s in terms of heavy credit crunch, |
| economic model with dependence on market was | | | | but it was more because of misuse than the model |
| struck down.b. Why India could not have adopted a | | | | itself. Besides we should not forget the benefits of |
| communist model? | | | | this model which has manifested in SAIL, GAIL, BHEL, |
| The ardent leftist critics of Nehru say why Nehru did | | | | IITs, RECs, Dams, Ports and other infrastructural |
| not make build India on the lines of Russia. I think the | | | | marvels and also green revolution. So before criticizing |
| following factors would have prevented Nehru from | | | | Nehruvian model one has to understand the temporal |
| adopting a strict communist pattern of economic | | | | dimensions of his policies also. |