Economic Policies of Jawaharlal Nehru

The economic policies of Jawaharlal Nehru have been subject to much controversy in the past few decades. However, it is important to place Nehru's economic policies in context for a proper appreciation of his policies.
Nehru's commitment to the cause of India's development remains unquestioned, and it is no doubt that much of his plans and speculations were jeopardized by the unexpected partition that came along with the independence of India, which brought about an unprecedented fissure in the economic resources of the Indian mainland. Nehru himself confessed that the partition brought about a large share of problems, including a great rift in the agricultural and the industrial sectors. A large portion of the most productive agricultural lands fell in Pakistan whereas the corresponding industries remained in Indian dominion. The problem faced by the Jute industry soon after Independence can be stated as a case in the point. The jute producing areas were in Pakistan whereas the Jute processing factories remained in India, thereby affecting jute productions on both sides of the border.

Early Economic Reforms of Nehru: Nehru started his career as the Prime Minister of independent India in 1947, and immediately launched a number of economic reforms. Nehru was a firm believer in state control over the economic sectors. His socialist ideals revealed themselves in the way he introduced laws for land redistribution, in order to curtail the economic disparity in India among the landed and the land-less classes. One of Nehru's key economic reforms was the introduction of the Five Years Plan in 1951. It was introduce to determine the mode of government expenditure and grants in important development sectors like agriculture, industries and education.

The Ideology guiding Nehru's Economic Policies: Nehru's economic policies have often been considered to be Socialist in nature. It is no doubt that Socialism did play a very important role in Nehru's ideological make-up. But at the same time, it is also important to consider that Nehru himself denied any kind of overt Socialist tendencies in the economic policies adopted by him. Nehru advocated a kind of mixed economy. Any kind of unquestioned ideological adherence to any form of economic tenet, or 'ism', he realized, would be detrimental to India's growth. He wanted a practical approach in framing the Indian economy, which would suit best the country's needs. On the one hand, as a devoted Gandhian, he had strong belief in the betterment of rural economy. On the other hand, he had a strong belief that heavy industrial development would be the best way to serve India's economic interests.

Nehru's Industrial Policies: Nehru wanted to create a balance between the rural and the urban sectors in his economic policies. He stated there was no contradiction between the two and that both could go hand in hand. He denied to carry forward the age old city versus village controversy and hoped that in India, both could go hand in hand. Nehru was intent to harness and fully exploit the natural resources of India for the benefit of his countrymen. The main sector he identified was hydroelectricity, and he constructed a number of dams to achieve that end. The dams would not only harness energy, but would also support irrigation to a great degree. Nehru considered dams to be the very symbol of India's collective growth, as they were the platforms where industrial engineering and agriculture met on a common platform. Nehru also considered the possibility of nuclear growth during his tenure as the prime minister of India.

Nehru and Foreign Investment: Nehru inspired the industrialists to provide a fillip to India's economy. However, he had strict reservations on the question of foreign investment. Nehru was wary of foreign investment. Nehru's nationalist ideals confirmed in him the belief that India was self-sufficient to bolster her own growth. Although he did not officially decry the possibility of foreign investment in direct terms, he did stress that the sectors of foreign investment would be regularized, and the terms and conditions of investment and employment would be strictly controlled by government rules in case there were possibilities of a foreign investment. Nehru, moreover, emphasized that the key sectors will always be in government hand. This step of Nehru is much criticized now. Yet, it cannot be denied that Nehru aptly looked forward to long term investments for which he banked more on Indian industries. It is also often suggested that his endeavor to harness international support to develop India's infra-structural profile between 1947 and 1955 did not meet with much success. It, however, remains a fact that Nehru's regime was not one of great economic growth for India. Although his economic policies are blamed for the failure of India to turn into a major economic force in the aftermath of independence, yet Nehru was probably thinking on a more long term basis. It is often inferred that the economic liberation of the later years was possible only because of Nehru's policies in the initial stages.

The State Control in Nehru's Economic Policies: The most distinctive, and often debated feature of Nehru's economic policies, was the high level of state and central control that was exercised on the industrial and business sectors of the country. Nehru emphasized that the state would control almost all key areas of the country's economy, either centrally or on a state-wise basis. His Socialist emphasis on state control somehow seemed to undermine his stress on industrial policies. The rigorous state laws and License rules put a great degree of restrain on the free execution of industrial policies. Even the farmers, along with the business personnel, found themselves to be at the receiving end of rigorous state control policies and high taxation. Poverty and unemployment were widespread throughout Nehru's governance.

Nehru's Views on Rural Economy: Nehru's policy towards the rural economy of India was also significant. Nehru felt for the rural self-development of India very strongly. He tried to boost India's cottage industries. Much on the lines of Gandhi, Nehru believed that the rural and cottage industries of India played a major role in the economic fabric of the country. But most of his cottage industry development programs were meant as a part of community development. He was also of the belief that small scale industries and cottage industries were effective solutions to the massive employment problems that remained a perpetual issue of concern throughout his tenure.

The economic policies of Nehru are often blamed for the poor economy of India in the subsequent years. However, it cannot be denied that his decisions were necessitated by the needs of the times. India needed to effectively harness its domestic means as well as strengthen its governmental control to lay the base for future privatization. It is often speculated that Nehru would have embraced the economic reforms and economic liberalization of the late twentieth century if he was alive.

Last Updated on : 10/08/2012