The struggle for India


Along with China, the economic rise of India is at present much debated in the media. Progress is presumed inevitable, but in spite of all the recent positive steps politicians in India have taken in liberalization, there are still critical choices to be taken that will impact the speed and extent of India’s development.

Having recently finished reading the excellent book on the struggles for Indian independence, Freedom at Midnight, I was set to thinking about the historical antecedents of India’s relatively recent liberalization. Throughout the book, there is an undercurrent of a battle of ideas between two members of the Congress Party: Sardar Vallabhbhai Patel and Jawaharlal Nehru.

It was Jawaharlal Nehru, who of course became the first prime minister of an independent India in 1947. He was also obsessed by the Soviet Union, following socialist policies, thus retarding the latent potential for economic and social progress. In contrast to the policies of Nehru, Patel endorsed strong property rights and capitalist led development. Upon Patel’s death, Nehru was unobstructed within the Congress Party to further his socialist ideals, much to the detriment of the people of India.

In The Power of Productivity (by William W. Lewis – founder of the McKinsey Global Institute), from detailed statistics, Lewis extrapolates the principal problems for current growth in India: restrictions on big business, limitations on foreign direct investment, a confusion over property rights, inefficient national industries and a government that interferes too much in businesses. Recently, the Adam Smith Institute’s Senior Fellow, Deepak Lal, has written an excellent piece for the Business Standard calling on India to follow the Anglo-American model of capitalism rather than the corporatist “stakeholder" model pioneered by Germany in late 19th century.

These are the modern equivalents to the ideas that led Patel to oppose Nehru. Let’s hope these latest expressions of freedom win the day.