The Hindu Business Line : Indian model pays off?

There is every reason for India to be proud of the original thinking on which it had based its overall economic model ever since Independence. India owes its smooth and orderly marshalling of its natural, material and financial resources and their optimum utilisation in industry and agriculture to the perspicacity of Jawaharlal Nehru and the steady and sober handling of related issues by policymakers in the Governments that followed.

Indeed, their adoption of a carefully calibrated India-specific strategy in this respect ensured that India did not fall an unthinking prey to foreign prescriptions for what essentially were problems rooted in the Indian ethos and Indian compulsions. Votaries of free market and deregulation have never taken kindly to Nehru. In fact, he continues to be attacked by assorted critics for his concept of planning and mixed economy which, in their view, put the clock of India's economic development back by many years.

Sacrosanct for them were the mantras chanted by Western nations, particularly the US, to the effect that what was good for the West was good for everybody and one size fitted all. On this unquestioned presumption, the free marketeers, like so many musketeers, were chafing to liberate economic activities from any kind of regulation or oversight mechanism

If they had had their way, India's economy would also be lying in shambles today. It is the Nehruvian legacy of the state keeping vigil on economic players, and on the commanding heights of the economy that has pulled India through many a crisis so far.

I hope that now at least, with all the chaos in the banking and financial sectors ruling in industrial countries, especially the US, Nehru's detractors see the merits of the Indian model.

The freedom heroes, led by Nehru, who followed the British, realised that in the conditions that prevailed immediately after Independence, the highest priority was to reach the fruits of freedom to the people without delay. The problems of poverty, illiteracy, hunger and disease across the length and the breadth of the country were so formidable that only the state with its reach extending right down to the remote villages could take them up with the sustained attention they needed.

The private sector was in its infancy and even if it was willing, it neither had the degree of familiarity with the abominable state of neglect of far-flung areas of the country, nor the administrative capacity nor the commensurate resources to take up the challenge.

Planned economy was the only means whereby scarce resource could be channelled along directions reflecting the priorities and targets for achieving balanced development. Thus, the Nehruvian model was not the product of any doctrinaire obsession on his part but inevitable in the circumstances.

Alert and active

From the very start, Indian policymakers in the financial and economic domains were aware of the dangers of giving free rein to the base impulses of greed and self-aggrandisement. They showed great prescience in setting up appropriate regulatory institutions with adequate statutory powers and safeguards to keep under check the possibility of abuse of authority and mishandling of public funds.

By and large, the Central economic Ministries (Finance, Commerce, Industries and Corporate Affairs) and the concerned departments of State Governments have been sufficiently alert and active in heading off any brewing crises.

Indeed, the industrial countries have something to learn from the Indian model and the leadership and sagacity shown by top policymakers and regulators.

For their future effectiveness, they should continue to have their feet planted firmly on Indian ground, and look at Indian problems with Indian eyes, without allowing themselves to be swept away by exogenous nostrums of no relevance in the Indian context.

B. S. RAGHAVAN

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