Friday, March 09, 2007

A revisionist(?) look at Nehru's legacy

In column in the Business Standard, the brave Jaimini Bhagwati takes up the tough task of convincing us to give Nehru's economic policies a break. Given the conflicting advice and demands from his associates and others, the 'correct' or 'optimal' economic choices were not at all obvious; and he appears to have chosen a middle path.

Within his political peer group Nehru had sharp differences of opinion both with those who argued for a lower government profile and those who advocated tighter controls. For example, in 1950 the then finance minister, John Mathai, opposed the creation of the Planning Commission. At the same time, Nehru was subjected to severe criticism from the left by Jayaprakash Narayan. It appears that Nehru decided to follow a left-leaning compromise among the several competing points of view. This has been corroborated by Arvind Panagariya in his article titled Political Economy of Trade and Foreign Investment Policies in India 1950-2006 (NCAER Golden Jubilee Conference, December 2006), which concludes that "it can be justifiably argued that if the influence of Nehru had not been dominant and India had strictly followed the prevailing academic orthodoxy, the outcome would have been more, not less, protectionist ... on balance, Nehru's approach produced a more liberal outcome in the 1950s".