Has dynastic politics kept India poor? There’s more than a kernel of truth to the idea that the Nehru-Gandhis are responsible for India lagging much of East Asia. The continued hold of the dynasty prevents Congress from fully owning the reform programme that it authored in 1991, and inclines the party towards political postures that hinder development. As long as Sonia Gandhi or Rahul Gandhi remain at the helm, the odds of Congress emerging as a champion of reforms remain exceedingly slim.
In the fever swamps of the far right, many people believe that the Nehru-Gandhis deliberately kept India backward in order to nurture a poor and ignorant vote bank. But you need not buy crackpot conspiracy theories to make a more prosaic point. Between them, Jawaharlal Nehru, Indira Gandhi and Rajiv Gandhi, who ruled India for 37 of its first 42 years of Independence, presided over one of Asia’s great economic flops.
In contrast, neither of post-1991India’s reform heroes – P V Narasimha Rao and Atal Bihari Vajpayee – belonged to the dynasty. Indeed, in practice, if not always in rhetoric, both Rao and Vajpayee generated prosperity by dismantling the economic pillars of the Nehruvian project: mistrust of trade, contempt for the profit motive, and faith in state planning rather than in the invisible hand of the market. Nehru’s flawed ideas – in particular his infatuation with Soviet-style planning – ended up doing India grave harm. But though a few prescient gadflies, most famously the classical liberal B R Shenoy and future Nobel laureate Milton Friedman, raised early alarms about India’s chosen path, for the most part Nehru was simply following the conventional wisdom of his time.
As New York University professor William Easterly details in ‘The Tyranny of Experts’, it took decades to discredit the statist development model touted by such luminaries as Gunnar Myrdal and Arthur Lewis. Indians were not alone in suffering. Millions of Africans, Latin Americans and fellow Asians kept us company. The true villain of modern Indian history, dooming millions of Indians to poverty, was Indira Gandhi. Instead of acknowledging a flood of evidence that state planning was not working, Gandhi doubled down on her father’s dubious legacy. In 1966, the year Gandhi took power, the average Indian earned about fourfifths as much as the average Indonesian and about half as much as the average South Korean. By 1990, on the eve of the balance of payments crisis that forced India to reform, the average Indian earned only half as much as an Indonesian and less than one-sixth as much as a South Korean. More than half of India’s then 870 million people lived on less than the World Bank’s current estimate for extreme poverty of $1.90 a day.
Why does this potted history still matter? After all, since 1991India has gone from being seen as a black hole of despair to a bright spot in the global economy. Thanks to the growth spurred by reforms, only about one-fifth of Indians live in extreme poverty today. Soon enough, that figure will likely be reduced to zero.
In a normal political system, Congress would have elevated Rao to sainthood and quietly banished the discredited ghosts of the Nehru-Gandhis. Instead, party leaders twist themselves into pretzels to retroactively give the dynasty credit for reforms, or pretend that the economic disaster they presided over was in fact a great launch pad for what followed. To be fair, the current crop of Nehru-Gandhis no longer quotes Lenin, as Nehru did when he famously declared that the public sector would occupy the “commanding heights” of the economy. But in general the family’s impact on economic policy remains negative. Contrast, for instance, Manmohan Singh’s record under Rao with his record under Sonia Gandhi. As Rao’s finance minister, Singh boldly unshackled the Indian elephant. As Gandhi’s prime minister, he burdened it with too many wasteful welfare programmes and too few growth-inducing policies.
Meanwhile, Rahul Gandhi’s somewhat forgettable political career has been marked by consistently anti-business rhetoric. In 2010, he scuttled Vedanta’s $1.7 billion bauxite mining project in Odisha. The young Gandhi’s rhetoric about “two Indias” and bizarre animus towards people who “drive big-big cars” suggest a dilettantish preoccupation with inequality rather than a serious focus on eradicating poverty. Though the Modi government is responsible for its own tepid reform effort, there’s no question that Rahul’s jibe about the prime minister heading a “suit-boot ki sarkar” has helped vitiate the policy-making atmosphere.So yes, the critics are right about dynastic politics helping keep India poor.
