Visible hand : public policy and economic growth in the Nehru era

Abstract

This paper investigates the relationship between the policy regime and growth during 1950-64 termed here ‘the Nehru era’. While there exist valuable early appraisals of the period, access to new data and fresh information allows for a longer and comparative view of the outcome. We find overwhelming evidence not only of resurgent growth but also of a lasting transformation of a stagnant colonial enclave into an economy with firmer foundations capable of sustained growth. It is useful to recognise the economic policy of this period as distinct, not only from what preceded it but also from what came after, for that facilitates an understanding of the political conditions needed for economic interventions which are growth inducing. The paper also addresses some lingering perceptions of the economic policy of the time, notably its impact on agriculture and the governance of the public enterprises. The shibboleth ‘Hindu rate of growth’, presumably a broad-brush description of movement in this period, manages to obscure the extraordinary economic dynamics of the Nehru era. Key words: Economic Policy in India, Nehru era, Drivers of Growth, Mahalanobis Strategy, Public Sector Performance JEL Classification: O2, O3, O5, P5