Nations, Leaders and their Decisions (Part 8)

An Indian Tragedy

Even as Independent India got off to a false start with the Constitution, the economic decisions of India’s first Prime Minister, Jawaharlal Nehru, laid a foundation from which it is difficult to deviate even now. The single biggest mistake that he made was not to invest in educating the young. All it required was to make one generation of Indians literate. Parents will always ensure that their children are more educated than themselves. The decision to focus on higher education at the cost of primary education still costs India dear. Without a well-educated people, prosperity is a far cry.

The second big error was to put India on the path of central planning and socialism. The seeming success of the Soviet Union may have been an attractor, but how could the even greater prowess of the American model be ignored? America’s 1787 Constitution had ensured a limited government for most of its first 150 years after its Independence, and its economic might was very visible during the Second World War. All India had to really do was to copy America’s political and economic models. Nehru went wrong on both counts in India – we copied the British Parliamentary model and the Russian economic model.

Thus began the Nehru government’s march to take over the “commanding heights” of the economy. A poor nation was impoverished even further as the government put limits on the private sector with the licence-permit-quota raj. Shortages and scarcity become endemic. Enterprise and entrepreneurship were curtailed. Prosperity was banished. Poverty became permanent.

Once the foundation was set, the direction was hard to change. Indira Gandhi deepened the presence of the State in daily life by nationalising banking and insurance. Corruption started seeping in as government officials with decision-making monopoly and discretion milked citizens and corporates alike. The Emergency was an outcome of a desire to suppress the judiciary and inconvenient truths.

Even the Janata government under Morarji Desai continued the torment. Property rights disappeared as a fundamental right. The bad economic decisions of the past were not reversed. And so it went on – under future governments also. India was a poor country, and so the government had to help the poor. There was little understanding of the real causes of poverty and the dangerous side-effects of government interventions. Citizens as voters changed rulers every few years, but the rules stayed the same – and so did the outcomes.

The policies made in the first 30 years after India’s Independence doomed the nation. India’s leaders – Jawaharlal Nehru and Indira Gandhi – made the wrong decisions that have been difficult to undo even now. Since then, many other Prime Ministers have come. Each of them take a few right steps, but many wrong steps. They did not go far enough and lacked the conviction for transformational reforms. And so India languishes. Every few years hope springs eternal, only to be extinguished later. Like in the movies, there is a constant struggle between the good and bad. Unlike in the movies, the bad tends to win more often.

Tomorrow: Part 9

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.