In The Nehru Development Model, Arvind Panagariya exposes its flaws, failed promises, and grip on India’s economic path, with Sardar Patel’s pragmatism as a counterpoint
Resounding success of the political project and equally resounding failure of the economic project — this starkness of judgement might not have the flavour of nuanced writing but it doesn’t deter Arvind Panagariya, the author of The Nehru Development Model: History and Its Lasting Impact (Penguin Random House), from marshalling his arguments against the Nehruvian paradigm of Economic Development.
In doing so, he takes into account the background to the build-up of the Nehruvian economic model, the high noon of planning and Nehruvian stamp on it and Post-Nehruvian legacy that proved to be too recalcitrant. He casts a wide net and dwells upon the trajectory of the Nehruvian model in relation to its repercussions for nation-building and how things might have evolved differently if Sardar Patel had been at the helm of the nation instead of Nehru. Those what ifs and might have beens of history....
Patel instead of Nehru
Panagariya’s thoughts on this issue — though not original — are certainly interesting. Between Jawaharlal Nehru and Patel, between lofty idealism and rooted pragmatism, between Planning and Free Market, statism and Bazaar — India loves debating what might have been if Patel instead of Nehru had been the first Prime Minister and if Patel had been able to be the PM for as long as Nehru actually was. From his numerous speeches, Panagariya tries to piece together Patel’s views on what could have been an alternative model.
First of all, his preference for arbitration over strikes as the means to the conflict-resolution as any conflict between “labour and capital would deal a disastrous blow to India's industrial future.” Second, between nationalisation and industrialisation, Patel was very clear: “...Industry is to be established before it is nationalised. India is yet industrially in an infant stage.”
Watch: Arvind Panagariya interview: Did Nehru fail India economically?
Third, Patel was not particularly enamoured of the public sector as the producer or of the sole instrumentality of heavy industry or of the efficacy of self-sufficiency — ideas that Nehru set great store by. Fourth, unlike Nehru, Patel understood and advocated the importance of agriculture in conjunction with industry. Fifth, while planning was a matter of credo and offered some sort of panacea for Nehru, Patel was clear that India’s planning must necessarily differ from the planning of developed countries. Given these differences, Panagariya infers that India under Patel would have developed differently than it did under Nehru.
One, the public sector would not have gone on to capture the ‘commanding heights of the economy.’ Two, agriculture would not have been relegated to the secondary importance and self-sufficiency in agriculture might have come much earlier than when it eventually did come. Three, without tethered to an inflexible ideological marker, the Indian economy might have been more nimble-footed in responding to important international developments like the adoption of a flexible exchange-rate system in the early 1970s. One point that the author does not take up is that while Nehru was not invested as much in details, in the nuts and bolts of execution and implementation. So even though his ideas could be lofty and well-intentioned, they could always go astray, lose their way and get lost when it came to execution. Maybe, a Patel here would have done a better job.
The recalcitrant legacy
But more centrally, the author is concerned about the obstinacy of the Nehruvian legacy and how it made the Indian economy hobble for very long. And how despite the structural economic reforms starting from 1991, it continues to cast its shadow on the development of the Indian Economy. He argues that as Nehru wore many hats — the PM, the lynchpin of the Congress and the Chairman of the Planning Commission, the Nehruvian model of the economic development got deeply entrenched so much that despite its patchy performance and its failure to give a fillip to the economic growth and make a dent in — let alone remove — poverty, it continued to be adhered by the successive regimes.
The leftward lurch later on would hobble the Indian economy at a time the Asian Tigers, and subsequently China, would commit themselves to the power of market and international trade to leverage the power of manufacturing and exports. Timid and tentative forays at liberalising the Indian economy in the 1980s would not go far and they would have to await a full-blown balance of payments crisis with India looking down the barrel that the decisive rupture from the Nehruvian model would come. But Panagariya laments that the Nehruvian legacy continues to exert influence even today.
Also read: Panagariya on Nehru's economic model: A legacy of heavy industry, limited growth
Ramachandra Guha, a Nehru sympathiser (definitely not an acolyte), argues that Nehru can’t be faulted for his belief in socialism, planning and public sector as socialism was the flavour of the time, the private sector was not strong enough, the Bombay plan and the Nehruvian model had significant level of convergence. Instead, according to Guha, his successors should have gone for revisions and departures when the limitations of the model had become manifest. Panagariya — while holding his successors accountable and taking them to task — doesn’t absolve Nehru.
The chargesheet against Nehru
The bulk of the book is virtually a chargesheet against the Nehru Development Model. And the charges are scathing. These include the baleful repercussions that followed his belief in the instrumentality and efficacy of socialism, planning, public sector, self-sufficiency and heavy industry. He suggests that the model was too mechanical, with critically flawed assumptions, a conceptual framework that was not fully developed or thought through and execution left to a gargantuan, incompetent, and interfering bureaucracy. With highly exaggerated expectations and extremely poor outcomes, the model became too sacrosanct and self-righteous to have the humility to course-correct itself.
These arguments are not new and have been levelled against Nehru at least since the opening of the economy in the summer of 1991. But the author reminds the readers that whether inside the government or outside, there were little or no signs of dissent and how these ideas had a long run and turned into dogmas. He does well to take a critical look while documenting the role of institutions, including bureaucracy, the planning commission and law and courts in implementing and interpreting the economic model.
The chapter on economists and other policy analysts is also informative and refreshing. The book could have been crisper given that same or similar arguments get repeated at many places. But all said, this is an important book in deciphering the working and legacy of Nehru, especially in the realm of the economy. The author seems to be suggesting that there is no need to subscribe to the view that everything that happened was inevitable just because it happened.
