Nehru’s Economic Policies and Their Shortcomings

Source: The post Nehru’s Economic Policies and Their Shortcomings has been created, based on the article “Why criticism over the Nehru-led economy doesn’t hold” published in “Indian Express” on 7th January 2025

UPSC Syllabus Topic: GS Paper3-Indian Economy

Context: The article discusses India’s economic performance during Nehru’s leadership. It highlights his focus on income growth, achievements like a 4% growth rate, agricultural success, and private sector expansion. However, it criticizes the neglect of primary education, limiting human capital development. Nehru’s Economic Policies and Their Shortcomings

For detailed information on Nehru’s Economic Vision and Its Impact on India read this article here

What was Nehru’s economic focus?

1. Nehru’s main economic focus was to raise income levels, which were extremely low due to colonial exploitation.
2. He prioritized practical growth methods over strict ideologies. In 1956, during the launch of the Second Five-Year Plan, he emphasized using “every possible way of growth” rather than following outdated theories.
3. Under his leadership, India’s average annual growth rate was 4%, based on S. Sivasubramonian’s data. This was a significant increase from the less than 1% growth during the last 50 years of British rule.
4. Nehru supported both agriculture and industry. Agriculture thrived, benefiting from industrial inputs and infrastructure.
5. He invited agricultural scientist Norman Borlaug in 1963, leading to the Green Revolution.
6. Public sector savings grew faster than private corporate savings.
7. Private sector investment also surged, growing at least as much as public sector investment.

What were the shortcomings of Nehru’s economy?

1. Neglect of Education: Primary education was severely overlooked, with abysmally low literacy rates in 1947. Critics like B.V. Krishnamurti, Amartya Sen, and J.P. Naik highlighted this failure. Nehru did not adopt a mission-mode approach, especially for girls’ education, unlike East Asian nations. This lack of investment in education created a democratic deficit, leaving most Indians without the skills and opportunities to improve their productivity and quality of life.
2. Public Sector Issues: While public enterprises were designed to generate revenue, their degeneration into inefficient welfare traps occurred under later administrations, undermining Nehru’s vision.

Conclusion

Nehru revived a stagnant economy with significant achievements in growth, agriculture, and private sector development. However, neglect of education created long-term challenges for human development and economic productivity.

Question for practice:

Discuss how Nehru’s economic policies balanced growth in agriculture, industry, and the private sector, while addressing the shortcomings in education.