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Business Commentary/Dilip Thakore

Nehru entertained a brahminical disdain for business

In the India of the 1950s through to the 1980s, the month of November was perhaps the most important in the calendar. It marks the birthdays of two of the most important personalities of the political firmament who have shaped contemporary India and impacted – for better or for worse – the lives of one-sixth of the human race. This year the birth anniversary of Jawaharlal Nehru (November 14) was a low-key affair and remembered as Children’s Day rather than as the birth date of the architect of modern India.

November 19, the birth anniversary of his daughter Indira Gandhi, who served as the nation’s prime minister for over a decade, was an even more low-key affair. Though there is the possibility of Sonia Gandhi (the Italian widow of Indira Gandhi’s son Rajiv assassinated in 1991) playing a significant role in the imminent general election, quite clearly the nation’s romance with the Nehru-Gandhi dynasty which ruled post-Independence India from the prime minister’s office for 35 years – Jawaharlal (17), Indira (13) and Rajiv (5) – is over.

Now with time and space having lent a perspective, this is a good occasion to make an objective assessment of the contribution of Jawaharlal Nehru in particular and the Nehru-Gandhi dynasty in general, to India’s national development effort. In retrospect, it is clearly apparent that Jawaharlal Nehru was a greater social than economic reformer. The reformation of Hindu personal law banning polygamy, decreeing property rights for women and facilitating secular marriages (Special Marriages Act, 1954) which he steered through Parliament, have gone a longer way towards modernising Indian society than his economic legislation and restructuring which repressed rather than accelerated economic growth.

Yet even within the field of social reform, Nehru failed to make good a pledge which would have changed the profile of Indian society: universal education for all children up to the age of 14 by the year 1960. The fact that Nehru studied science rather than politics and economics at Cambridge University is not so well known. Consequently, he proved susceptible to the propaganda and anti-business rhetoric of left-wing British socialists and Fabians who were soft on communism. Yet to be fair, one cannot fault Nehru for his socialistic inclinations because in the 1930s and 1940s, the Labour Party and the socialists were the only political formations which were sympathetic to the Indian independence movement. Moreover the worst excesses of Stalinism was a fairly well-kept secret in those days.

However there is no doubt that Nehru entertained a brahmanical disdain for business and businessmen. Like most intellectuals, he felt that little expertise or intelligence was required for success in business and industry. All that was required was commonsense and some administrative ability. This belief prompted Nehru to promote and develop huge public sector enterprises which would enjoy the economies of scale denied to India’s already fairly well-developed private sector businesses. His expectation was that given protected markets, IAS and other professionals would build the nation’s infrastructure and create profitable public sector enterprises which would generate the surpluses to fund the social sector (education and health care) while providing quality products and services at fair prices to citizens. It was a naïve and foolish expectation.

Half a century later, the Indian economy is saddled with thousands of grossly inefficient, resources-guzzling public sector enterprises riddled with corruption. And instead of accelerating economic growth in post-Independence India, the public sector dominated Nehruvian development model moored the Indian economy in the Hindu rate of growth (3.5 per cent annum) which transformed the nation into one of the poorest in the contemporary world. The consequence is that like the old man on the back of Sindbad, the Indian economy is being forcibly straddled by over 20 million largely incompetent government and public sector employees reluctant to give up their power and privileges. And it is this public sector labour aristocracy which constitutes barely two per cent of the national labour force which is blocking the nation’s overdue privatisation programme.

Unfortunately for the nation, Nehru’s daughter Indira Gandhi expanded the public sector by nationalising the major banks and insurance companies while simultaneously imposing more stringent curbs on the growth of private sector businesses. The consequence is that the highly unionised, slow-moving, cumbersome nationalised banks driven by politicised lending officially admit non-performing assets (bad loans) averaging 17.5 per cent of their loan portfolios (against an average 1 per cent in the US).

Likewise, despite winning the largest parliamentary majority in Indian history, the credits of Rajiv Gandhi’s five year tenure as prime minister (1984-89) are weighed down by the debits. His government quintupled India’s foreign debt, precipitated the Bofors scandal and involved India in a ruinous ethnic civil war in Sri Lanka which finally claimed him as its victim. One of the great infirmities of the long-suffering population of post-Independence India is its tendency to idolise its political leaders who should be more rigorously evaluated. It should be obvious that the failures of post-Independent India’s leaders have been greater than their successes. If it were not so, this nation would not be listed among the world’s ten poorest, most illiterate and backword societies in the contemporary world.

In his long tenure as the nation’s first prime minister Jawaharlal Nehru build a durable institutional framework for Indian democracy. But that was the sum of his contribution to national development. Unfortunately, his dynastic successors contributed even less. Half a century after independence, a rigorous, unsentimental analysis of the Nehruvian legacy needs to be debated and broadcast. This is the prerequisite of making a sharp break from the past and devising new economic policies to make up for the lost Nehruvian decades.

Dilip Thakore