India’s Tryst with Liberalisation

India’s promising yet complex and chaotic political economy had witne­ssed many dramatic twists and turns ever since the country got its independence in 1947. Unlike the East and the Southeast Asian countries, India’s economic transition was somewhat slow and haphazard. Nevertheless, the popular narrative of India being a severely regulated economy till 1991 could be a misnomer. As Mukherji (2009) points out, it remained only moderately regulated throughout the 1950s and late 1960s, thanks to the socio-economic ­vision of the then Prime Minister Jawaharlal Nehru. The Nehruvian idea of ­nation-building was starkly different from the Gandhian project, which envisaged economically self-sufficient villages as the building blocks of development. Nehru, with his socialist and somewhat statist approach, envisioned nothing less than a structural transformation of the economy and society as a whole from its archaic constancies. However, Lal Bahadur Shastri, who assumed the Prime Minister’s office after the death of Nehru, was not a great fan of the Nehruvian economic vision and tried to reverse the inward-looking policies systematically. Nevertheless, Shastri’s unex­pected death closed India’s trade-oriented route prematurely (Kudaisya 2002).

Between the late 1960s and mid-1970s, the country’s political economy had witne­ssed a gradual but significant change. Mukherji (2009) observes that Indira Gandhi was not just following the ideological legacy of her father by diligently placing herself as the crusader of pro-poor policies and promoting populist slogans like “garibi hatao” (abolish poverty). A deeper analysis would reveal that there could be a covert political agenda to defuse the influence of the powerful “syndicate group” in her party who were more sympathetic to the business class. Nevertheless, Indira Gandhi’s efforts in this direction backfired, and the policies designed to endorse egalitarian distribution eventually evolved into anti-capitalist rhetoric and “licence raj,” which adversely affected eco­nomic growth.