Nehruvian Socialism to Free Markets and we move on.
When India became independent, Nehru became first prime minister. Initial years were defined by commanding heights of public sector enterprises. There was not enough capital and it was a planned economy. When I am writing this today we are more or less a free market economy. Indian economy was a planned economy on socialist model. Although there were private enterprises and business houses but there were lots of restrictions. Because of these restrictions private enterprises were not allowed to flourish the way they could have. He even toyed with the idea of soviet style collective farming. This situation continued till 1991. That year because of forex crisis India was forced to open its economy. That was 1991 is landmark year in independent India’s economic history.
After Nehru, Lal Bahadur Shastri had brief tenure. It was not long enough to be judged for any visible directional changes.
Then came Indira Gandhi. Her economic policies were even more communist/socialist than Nehru himself. She nationalized all the private banks. There was curb on manufacturing even the common goods like automobiles, TV, radio set etc. There was wait list for buying almost all manufactured goods, so in a way economic growth was throttled. Inefficiencies were tremendous. So many licenses were required that it was virtually impossible to start the business.
Morarji Desai led Janta Party government was a break in between. They were advocates of free market. But it was short lived and many factions of Janta party were socialist in nature. Nothing much directional change happened even during more than two years.
Rajiv Gandhi continued with the policies of his mother (Indira) and maternal grandfather (Nehru). He had huge mandate but it was all the same policy environment.
Short lived governments of VP Singh and Chandrasekhar were fighting for survival most of the time. Reforms were opposed at all levels. Even though strong need was being felt by that time still nobody could bring about those changes.
And then came the crisis of 1991. P V Narsimha Rao was heading a minority congress government. It was a Congress government for sure but it was for the first time that somebody from Jawaharlal Nehru line was not head it. And then started the reforms. It does not matter now how and why these were mandated but yes these were reforms. And it was the beginning of era of moving away from Nehruvian policies. It is ironic that it started by Congress but yes it started and then there was no looking back. Moving away from the tradition PVN choose a technocrat PM to implement the changes which were forced upon India by World Bank and IMF. Although it was forced but it set the balls rolling. Indian market came out of “Quota Raj” slowly. It was painful for entrenched elites in policy circles, government and some crony capitalists. As large masses do not have understanding of the economics beyond welcoming freebies, they did not react to it. But it benefit the economy tremendously which was shackled by “License Quota Raj” till that time. Words like FDI were alien till that time in India and there were lots of fears. By that time fruits of well-intentioned structured reforms were bearing the fruits in China. Hence, acting as inspiration for India, even though we were more cautious. When PVN left office in 1996 it was very much clear that India was moving in right direction after decades of stagnation.
Then came era of political instability 1996-1998 when we again saw two powerless PMs in the form of H D Devegowda and I K Gujral, but it was soon over with BJP coming to power and Atal Bihari Vajpayee became PM.
Atalji continued the reforms in his two terms totaling 6 years. His second term was first full term for a non-Congress government’s full term. By the time India was going to election in 2004, “India Shining” was the reality as Vajpayee continued the reforms started by PVN. For the first time India was set on high growth trajectory. Unfortunately, Vajpayee lost the election in 2014 but it brought to power another Congress government. But this time it was lead by Manmohan Singh. Another Congress PM outside the Nehru family.
In his first term Manmohan Singh continued the reforms. Fruits of what Vajpayee had done during his six years were ripening by that time and India was on high growth trajectory. Manmohan Singh did not halt the reforms but at the same time he did not pursue the same with zeal. He focused more on socialist schemes and squandered a lot of government money. Scams were regular affair. This resulted in falling growth rate. Economy started suffocating.
So when Modi came to power, reforms were generally acceptable because public had seen the benefits, hence not much opposition. For the first time since reforms were started in 1991, there was a majority government at center, hence bold steps could be taken. Socialism has not gone out of fashion totally but it is no longer the norm. We can not say that Modi did not take socialist decisions but those were few. Emphasis had already shifted to skill development rather than on keeping the people poor and feeding them. So, in a way Modi benefitted from the pace set by his predecessors. He is working towards making India manufacturing hub and ease of doing business is focus of the government instead of making capitalist villains. You might not believe it today but in Nehruvian socialism all businessmen were made to look like thieves. We still have a long way to go.
No comments:
Post a Comment