Keynes was no Marxist or socialist; but he did point out how the ‘State’ sometimes had to step in with massive public spending to save economies and people from recessions and depressions. (Since October 2008, when the global economy looked as if it could plunge into another Great Depression, governments across the world have wasted no time in debates and the ‘State’ has decisively stepped in with stimulus and bailout packages. Incidentally, the ultimate ‘Capitalist’ economy in history, the United States has been the most aggressive in State intervention). Nehru and his team of advisors borrowed a bit of Keynes and a bit of Stalin and launched Five Year plans. The defining moment came in 1956, when a new ‘Industrial Policy’ was launched, decreeing that the ‘commanding heights’ of the Indian economy would be occupied by the public sector, while the private sector would play second fiddle. Ironically, J.R.D. Tata, the private entrepreneur who supported the ‘State’ intervention, realised what it could mean when his brainchild, his baby and his passion, Air India was nationalised and transformed into a public sector company.
So much for history. Till the late 1970s, there was not much debate in the country – barring a few lonely dissenters – about the wisdom in giving a monopoly over the commanding heights of the economy to the public sector. But by 1970s, inefficiency, chronic shortages and egregious cases of crony socialism started blossoming across India. By 1980s, when a youthful Rajiv Gandhi was promising an alternative; a newly ‘modern’ vision of India, the public sector was clearly becoming disreputable. And after 1991, when the-then Finance Minister Manmohan Singh launched liberal economic policies that unshackled the entrepreneurial energies of India, it became fashionable to deride and condemn the public sector in India as a relic of the past, a white elephant that India could no longer afford to feed; a drain on the Indian economy and a playground for unscrupulous politicians and bureaucrats to mint money and dole out favours and patronage. Today, what was fashionable in the early 1990s, is becoming almost received wisdom and dogma. The post modern view is that Nehru’s vision of Public Sector was a disaster.
So much for history. Till the late 1970s, there was not much debate in the country – barring a few lonely dissenters – about the wisdom in giving a monopoly over the commanding heights of the economy to the public sector. But by 1970s, inefficiency, chronic shortages and egregious cases of crony socialism started blossoming across India. By 1980s, when a youthful Rajiv Gandhi was promising an alternative; a newly ‘modern’ vision of India, the public sector was clearly becoming disreputable. And after 1991, when the-then Finance Minister Manmohan Singh launched liberal economic policies that unshackled the entrepreneurial energies of India, it became fashionable to deride and condemn the public sector in India as a relic of the past, a white elephant that India could no longer afford to feed; a drain on the Indian economy and a playground for unscrupulous politicians and bureaucrats to mint money and dole out favours and patronage. Today, what was fashionable in the early 1990s, is becoming almost received wisdom and dogma. The post modern view is that Nehru’s vision of Public Sector was a disaster.
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