Page 70 - EW-June-2025

Books

Devastating THE NEHRU DEVELOPMENT entrenchment of socialist
thought in the political,
legacy MODEL: HISTORY & ITS LASTING bureaucratic, intellec-
IMPACT
Arvind Panagariya tual, and even business
constituencies, more than
N THIS NEW AND PENGUIN VIKING seven decades after Inde-
overdue book, Dr. Rs.838 Pages 544 pendence, India continues
IArvind Panagariya, to struggle to extricate
professor of economics itself from the Nehru-era
at Columbia University economic policy frame-
(USA) and incumbent heavy industry, a rapidly The author laments work,” writes Panagariya.
Chairman of the 16th expanding public sector that seven decades Adoption of the public
Finance Commission, and isolation from world after Nehruvian sector-led capital-inten-
starts by commending markets”, an “equally re- socialism devastated sive heavy industry model
Jawaharlal Nehru, inde- sounding failure”. During free India's high- (instead of the labour-
pendent India’s first prime Nehru’s long tenure (1947- potential economy, intensive light indus-
minister, the successful 64) as prime minister, there's no shortage tries wage goods model)
democrat who shaped a national savings and tax of champions of the funded by national savings
fractured, newly indepen- revenue were canalized Nehru model supplemented with infla-
dent India into a robust into heavy industry public tionary deficit financing,
democracy with enduring sector enterprises (PSEs) India’s first populist prime was a non-starter from day
secular and liberal values. managed by business- minster, has been devas- one. Because government
But he severely critiques illiterate bureaucrats and tating. bureaucrats appointed
Nehru, the economist who technicians. Contemporary India’s to manage PSEs had no
ruined the economy and Consequently, annual annual GDP per capita is business management
dashed the modest mate- GDP growth never exceed- a mere $2,600 cf. China’s experience or capability.
rial prosperity and dreams ed 4 percent and averaged $ 13,600 and USA’s Ignoring the proven ca-
of two — perhaps three — 3.5 percent for over 40 $86,000. It’s pertinent to pability of India’s private
generations of citizens of years, even as population bear in mind that although sector business leaders,
free India. growth averaged 2.5 per- a widely used indicator, and instead entrusting
Panagariya first gives cent per year. As a result, per capita GDP is an im- promotion and manage-
credit to the “resounding the high-potential Indian perfect national progress ment of massive PSEs to
success” of Nehru’s po- economy that could have metric as it doesn’t reflect them was akin to an aspir-
litical project to establish been steered to prosperity domestic income inequali- ing householder awarding
India as a full-fledged by the country’s pioneer ties. According to several the construction contract
constitutional democracy entrepreneur-industrialists respected monitors of the to an unskilled contrac-
with universal suffrage — G.D. Birla, JRD Tata, Indian economy, the real tor with the brief to learn
ab initio, which survived Walchand Hirachand, per capita income of 90 on the job. It resulted in
the Emergency and au- Ambalal Sarabhai, Lala percent of Indian citizens post-independence India’s
thoritarian rule (1975-77) Shri Ram, Vellamals, is less than of abjectly poor economy becoming mired
declared by his daughter among others — who had Sub-Saharan Africa, which in an average 3.5 percent
and future prime minister built large conglomer- means they have almost GDP growth rut for over
Indira Gandhi. “Today ates and were poised to nil discretionary purchas- 40 years.
seventy-seven years conquer Asian and other ing power. Against this, af-
after independence, India markets — was strangled Panagariya’s lament is ter communist China
stands out not only as the by a hydra-headed licence- that despite the devastat- self-corrected and took
world’s youngest democ- permit-quota regimen, ing impact of Nehruvian whole-heartedly to the
racy, but also among its even as PSEs failed to pro- socialism which the author capitalist road in 1978, it
most stable and vibrant vide sufficient power, steel, records was not endorsed recorded unprecedented
ones,” he writes. fertilizer and infrastructure by Mahatma Gandhi and compounded annual GDP
On the other hand, and capital goods. Sardar Patel, there’s no growth of 10 percent for
Panagariya forthrightly The impact of this shortage of apologists , two decades (1978-2008),
describes Nehru’s econom- disastrous left turn im- even champions of the vaulting its GDP to $19
ic development strategy posed upon a gullible and Nehru Development trillion cf. India’s $4 tril-
“built on development of uneducated population by Model. “Thanks (sic) to the lion, transforming China

70 EDUCATIONWORLD JUNE 2025