Lord Meghnad Desai
I was just into my eighth year on 15 August 1947 when India became independent. Being in Baroda, Gujarat, the trauma of Partition was unknown to us. Baroda was a Princely State and we were aware that there would be a change in the position of the state. That was more traumatic for us when the Baroda State was swallowed up by Bombay state than the Partition.
As I grew up, there were a lot of high expectations of what Independent India could or would achieve. Pandit Nehru was our handsome Prince who was to take us to a shining future. Nehru was afforded the best British education by his father but his ambition that his son would become ICS was abandoned in favour of his choice of following his father in the legal profession. As luck would have it, Nehru never had to work as a barrister. His first paid job was to be the Prime Minister of India at the ripe age of 58. He had prepared all his years in India since he returned from England preparing for this.
The ambition was high. India was to be the moral leader in the World conveying Mahatma Gandhi’s message of Peace and nonviolence. India was to be a leader in Asia; Nehru had already convened an Asian Relations Conference in January 1947 asserting India’s bid for leadership. China attended though Chiang Kai Shek insisted that Tibet should not be there as an independent Asian nation. It was a part of China. Nehru had to concede. China won the first round.
But there was no doubt in our minds through the Fifties that India would rapidly progress to get rid of poverty and illiteracy and squalor. Congress Party, which had fought for independence and was now in power, was going to steer the nation to a high level of prosperity. The National Planning Commission set up by Subhash Chandra Bose during his Presidency of the Congress in 1938 was led by Nehru. It had laboured through the war period and had drawn up plans. Income was promised to be increased five-fold in the first ten years. If anyone had any sense of compound interest rates, they would never have chosen that aim. It was never likely to be achieved and it was not. It would have required double-digit growth rates of 15% per annum.
There was even at that stage a fierce but friendly debate between the Gandhians and the Modernists. Gandhi himself had urged the dissolution of the Indian National Congress at independence. He had also urged that his vision of India as a collection of village republics should be the template of India’s Constitution. He wanted the charkha and the handloom to pave the way to an India which will avoid the scourge of Western mechanisation and industrialisation as he had advocated in his seminal work Hind Swaraj.
Nehru was of a different mind. The Constitution being framed and eventually finalised within twenty months after Gandhi’s death shaped India as a Union of states with much borrowed from the American, French, and of course British Constitutions. India was to be the Democratic Republic with Universal Adult Franchise for its 365 million people. It was to have Fundamental Rights. Gandhi’s hopes were admitted in the Chapter on Basic Principles which were for debate and implementation in the future.
While he followed Gandhi during the fight for independence, Nehru’s ideas for the future for India were based on his knowledge of the developments in Europe, especially the Soviet Union. Science and technology were to be harnessed for India’s progress. He was a Socialist of the Fabian variety. He admired the progress the Soviet Union had made from underdevelopment to industrialisation within his lifetime. That was done by the State playing a leading role in directing and driving the investment and growth process. Nehru also had imbibed the British elite’s snobbish low opinion of ‘trade’ and private business. As a Socialist, he thought profit was a dirty word. Much of his adult life had witnessed the Great Depression signaling the failure of Capitalism.
India was lucky in having a well-developed business class that was supportive of the nationalist struggle (unlike China whose capitalists were denounced as ‘running dogs of imperialism’ by Mao). A group of top business leaders produced a plan – the Bombay Plan (issued as a Penguin Special) in 1944 on the path the government of independent India should take. They identified the basic needs of food, health, and education as a priority but insisted that the lead had to be taken by the Government. ( Sanjay Baru and Meghnad Desai The Bombay Plan (Rupa) Nehru had no time for private business and ignored this advice.
Within three years of independence, Gandhi, as well as Sardar Patel, had died. Nehru was unrivaled in the Congress Party. There was no challenge to Nehru’s ideas and ideals for the length of Nehru’s tenure (at 17 years still unsurpassed) as Prime Minister.
Let me follow the course of India’s growth from its birth as an independent nation to its seventy-fifth year.
The first five years of independence were hard, crowded with events but still exhilarating for the people. Partition clouded the atmosphere in Punjab and Sind on the west and Bengal in the east. There was rationing as well as inflation which carried over from wartime. The Communist Party tried a peasants’ revolt in Telangana which was put down effectively as was the attempt by militants in Nizam’s Hyderabad state to declare full independence. All native states were integrated into the Union except for Kashmir where a war broke out.
Nehru displayed his internationalist credentials and went to U.N. The result was, instead of a decisive victory, a U.N. supervised settlement which has left the problem unsolved for the following seventy-four years. Even so, at the end by 1952, the First Five Year Plan (1951-1956) had been launched and elections were held for the first Parliament of free India.
1952-1957 was a period of hope and despair. These were five years of peace as far as foreign countries were concerned. It was the zenith of Nehru’s reputation both nationally and internationally. India remained in the Commonwealth on its condition by changing its nature. It played a helpful diplomatic role in the Korean War thereby proving the maturity and quality of its diplomatic personnel. It defended China’s right to a seat in the U.N. Security Council. Nehru established himself as leader of the Afro-Asian conference held in Bandung (Indonesia) and also launched the Non Aligned Movement ( NAM).
The economy grew at the best rate it had seen during the Twentieth century. The good harvest of 1954 brought inflation down. The First Five Year Plan was a success and an ambitious Second Five Year Plan (1956-1961) was launched. Nehru championed the building of big dams at Bhakra Nangal and Damodar Valley among other projects calling them ‘temples for the modern age. China under Mao proved to be less than a friend and while asserting its hegemony over Tibet (denying India’s established rights) raised questions about the India- China border.
India turned more left than it had ever been before. At home, the Communist Party made its peace with Congress and thrived. India was seen as more partial to USSR than the USA. It defended Soviet action in Hungary at the U.N. while spurning the alliances the US was forming in Asia. Khrushchev and Bulganin visited India to great acclaim.
Prime Minister manmohan Singh participating in NAM summit
Yet by the date of the launch of the Second Five Year Plan, doubts and despair were growing. The Second Five Year Plan had to be ’pruned’ as there was not enough saving to cover the investment. It seemed China was doing better than India. The USA had to champion India as a democracy and single it out for foreign aid. But as India scouted around for foreign countries to build steel plants, while USSR built one at Bhilai, Germany one at Durgapur, and the UK at Rourkela USA refused. USSR stepped in with another steel plant to save India’s face. The USA however sent shipments of wheat as India faced food shortage and inflation.
1957-1962: Anxiety and despair characterised these years. The food shortage continued as did the US shipment but also Nehru’s pretense that India was Non-Aligned (though with Pro- Soviet bias). But relations with China deteriorated and a hot but short-lived war followed in which India was humiliated. Nehru was devastated. The nation did not blame him but he died in 1964 a broken man. Non-Alignment had failed though it was not abandoned for the next forty years.
1962-1967: This quinquennium came to be known, Chinese style, as the period of Three Twos. There were two wars ( with China and Pakistan), death of two Prime Ministers (Nehru and Shastri), and two famines (1964-65, 1965-66). The triumph against Pakistan on the Punjab frontier cheered India after the humiliation against China. But the humiliation of food shortage and US handouts continued. The devaluation of the Rupee was forced on Indira Gandhi without the promised aid from the World Bank. Lyndon Johnson proved less sympathetic to India than Kennedy. Congress lost many seats in the 1967 election and the majority in many states where a coalition of opposition parties formed governments. Economic performance was dismal during the Third Five Year Plan (1961-66). Shastri declared a Plan holiday rather than launch a Fourth Five Year Plan.
1967-1972: A fundamental reversal of policy took place with the launching of the Green Revolution. The American Rockefeller Foundation helped with high-yielding variety seeds and the farmers (private sector) were called in to help with copious bribes of water and power subsidies to solve the food problem. But industrial policy turned sharply left with a permit-license Raj and much nationalisation of companies, especially the commercial banks in 1969. Communist parties acquired a pivotal position as allies of the Indira Gandhi regime. India tested a nuclear device and defeated Pakistan in the east to help create Bangladesh. Indira Gandhi raised India’s pride though not living standards.
Pakistan Army surrendering to India in 1971 leading to creation of Bangladesh
1972-77: A dark period in Indian history. Worldwide inflation hit India as oil prices quadrupled. Inflation incited popular revolt under the leadership of the veteran Socialist Jayaprakash Narain and Indira Gandhi felt beleaguered when her election in 1971 was called into question by the Judiciary. She retaliated by imposing an Emergency and putting Opposition leaders in jail and censoring newspapers. The Left parties signed up on her side. It allowed Jan Sangh to act as a fighter against tyranny. The economy did not improve and the growth rate sunk very low.
1977-1982: Drift and despair continued. The Janata coalition, the first non-Congress Government of India failed miserably to alleviate either the economic or the political situation and collapsed in three years bringing Indira Gandhi back in 1980. She returned unrepentantly and began with an ill-thought-out intervention in a religious conflict among Sikhs. Thus was the Khalistan movement gave sucker when the infant should have been allowed to make peace with its ill fortune.
Morarji Desai as Prime Minister lead the failed first non-Congress government of India
1982-87: Yet again a quinquennium half bad and half better. Indira Gandhi abandoned the old idea of national self-sufficiency and took a loan from the IMF. This surprised her friends and incited the enemies but she persisted. Her attempts to play the game of politics with Khalistani rebels led to an attack on the Golden Temple and her assassination in 1984.
With the arrival of Rajiv Gandhi as Prime Minister in December 1984, Indian politics took a decisive turn. Rajiv was not groomed for succession but his younger brother Sanjay’s early death bounced him into becoming Prime Minister. He won an enormous majority in the 1984 election (the largest to date.) and ushered in what can be called the first liberal economic reforms. India borrowed money from NRIs, liberalised imports, and celebrated the emergence of a small enclave of rich prosperous section of the population – Bel – India (a Belgium sized slice of the Indian population). Rajiv Gandhi also ushered in Panchayati Raj. He played a balanced hand favouring Orthodox Muslim opinion in reversing the demand of Shah Bano a Muslim divorcee for alimony while pleasing Orthodox Hindu opinion by allowing shilanyas at Ayodhya for the plans to build a Ram temple on the spot where stood an old Masjid.
1987-1991: Rajiv’s failure to win a majority in 1987 ushered in a period of weak governments for the next decade. His defeat ended the period of One Party rule in India for next thirty years, a period in which paradoxically India flourished. Without a doubt, in retrospect, one can say that the forty-two years 1947-1989 saw a disappointing rate of income growth, little removal of poverty, illiteracy or ill health. The period was, sarcastically called the era of the Hindu rate of growth. Even including the five years of Rajiv’s rule, the economy registered barely above 1% growth per annum in per capita income. Other Asian countries – South Korea, Japan, Singapore, and Taiwan experienced rapid industrialisation.
They were the Asian Tigers. India was a goat or perhaps a holy cow. The period 1989-1991 saw weak governments but a most far-reaching political revolution. The Janata Government of 1977-1980 commissioned a report on social and economic deprivation in the Hindu population. The Mandal Commission recommended extensive reservations in public sector jobs and higher education studentships for Other Backward Classes on the lines of the Constitutional guarantee for SCs and STs which transformed the Hindu social order for the first time in millennia. It was a reform Congress never attempted as its leadership was with the elite Brahmans. A new force entered Indian democratic politics.
1991-1997: Congress returned to power but without a majority. The slow growth and the overconfident borrowing of the Rajiv Gandhi period caused a crisis of bankruptcy in the foreign exchange reserves of the economy. India had to pawn its gold reserves to borrow from IMF. The Old Model was disgraced. The Rao – Singh government ushered in an economic transformation matching the social transformation of the implementation of the Mandal Report by the minority government of V. P. Singh 1989-1991. The policy of national self-sufficiency practiced since independence was abandoned. Tariffs and quotas for imports were reduced if not removed. . Exports were encouraged. India gave up the delusion of its unique path of development. Forty-two years had been spent in pursuit of the wrong path by well-meaning politicians. A new generation could abandon old illusions and effect change.
Rao and Singh were lucky in their timing. The Soviet Union collapsed in 1991 and a new era of global growth of international trade and capital movement was ushered in. India’s private sector had grown in the areas ignored by the Planning Commission. The software sector became a niche for India given native mathematical ability and a sizeable number of software engineers trained by the IITs. The growth path for the next thirty years was secured. The weak governments following the failure of Congress to gain a majority in 1996 did not affect the economy.
1998-2019: This long twenty-year period has been the most successful in terms of economic and political stability and power for India. Better late than never. The idea that India needed a single-party majority government disappeared and coalition governments proved more effective. Indian economy enjoyed sustained growth of high single digits for twenty years. The first six years were under a BJP-led coalition and the next ten years under a Congress-led coalition with BJP returning in a coalition in 2014. Despite the change in the dominant political party, economic policy remained much the same. India began to realise that it could benefit by trading with the world and borrowing from abroad. It learned that services such as software skills were as important as its old obsession – Steel – in securing growth. Slowly by 2014 when BJP came back, even issues of health, hygiene, and environment could command the attention of policymakers. Through sheer tenacity, India, now a nation of billion plus, has become the fifth largest economy in the world.
2019-?: Still much remains to be done. India is a laggard in terms of per capita income, ranking around 150th in the world. Its score on the Human Development Index remains way below its neighbour Sri Lanka to say nothing of South Korea or China. We are told that the IMF predicts a decent growth rate after two years of Covid devastation. As always, the future is always brighter for India than the present or the recent past.
India is at seventy-five much as it has been throughout its history. It is populous, soon the number one in the world, four times the size it was at independence. It is rich in total income with many billionaires and unicorns, and yet a majority struggling for a decent life. It is a 20:40:40 Economy. The richest 20% live in a high-income environment of globally comparable standards. The middle 40% are comfortable but just about. They have done all right, but relative to their grandparents they are relatively no better off. Then there are the last 40%. We saw them during the first lockdown of the pandemic desolately walking from where they had lost their jobs to where there was the only shelter they could call their own. They rely on the MGNREGA, a scheme to provide a hundred days' work. They are eternal India. Promises made to them remain to be fulfilled.
WHY HAS INDIA NOT DONE BETTER?
Relative to the high hopes and expectations at the time of independence, India has not done very well. Perhaps its one achievement is in being the largest political democracy with regular elections with a respectable turnout each time, multiple parties, and Universal Adult Franchise. It is not a small achievement. It has stayed united while its neighbours have had civil wars. It has nuclear capabilities but is not nuclear power. It is in G20 but not in G7, let alone P5 of the U.N. Security Council. It is not the lead country in Asia as it aspired in 1947.
It is the fault of the others, Indians will reply. The foreigners, who drained its wealth. But the drain stopped when the foreigner left seventy-five years ago. If South Korea, which was also a colony, can prosper why not India?
It is not religion so much as the social structure in my view. The Hindu caste structure is unique in the world. It is not just the four Varnas. It is the precisely articulated hierarchical jati system, with 7000 jatis precisely ranked as in a honeycomb. Read the Mandal Report.
SO WHAT? HOW DOES JATI SYSTEM AFFECT ECONOMIC PERFORMANCE?
First is the fact that the idea of inborn inequality of status, ability, and character is deeply ingrained in the culture. India May call itself Socialist but it is medieval in its social structure. Whatever the century, Brahmans are always leaders – in culture as well as politics. Be it Congress or BJP. The fact that the present Indian Prime Minister is not a Brahman is constantly remarked upon because it is an exception.
This is why Independent India’s ambition has been so unworldly. It wanted to be the moral leader of the world in the Congress years. Now the RSS wants India to be Jagat Guru – teacher of the world.
This also leads to not wanting to be first in the race between nations. No. India has to be its measure. Thus Non-alignment had to be India’s foreign policy rather than joining this or that side. Again fifty years were wasted posturing. But then from 1998 onwards, the foreign policy became sensible.
But much more seriously in the economic context, it is the low status of commercial classes – the Vaishya – that distinguishes India from other successful Asian countries. Japan set the ideal path for the rapid development of a non-Western country. This was a partnership between the rulers – Samurai and business – the Zaibatsu. South Korea, despite its hatred of the colonialist Japanese, emulated the Japanese Model and built a prosperous economy on basis of a partnership between a smart state and an enterprising business.
Indian – Hindu – culture demeans the Vaishya. Nehru had contempt for private business. Indian planning relied on the State, the public sector, and the civil servant to deliver growth. Indian business class was nationalist during the British period. It was with independence that the permit license raj reduced businessmen to become crony capitalists or perish. To this day, no political party is willing to say that private business is the lifeblood of the economy.
Will wisdom come at 75? Will India ever manage to be among the top ten in terms of per capita income?
(“Extract from “ Azadi Ka Amrit Mahotsav: India AT 75” Edited by Amb. Surender Kumar, published by Har-Anand Publications)