interview
Role of Ideology in India's Liberalisation
2020
Summary
In this monologue, economist Nimish Adhia argues that India's 1991 economic liberalization had a crucial ideological component, not merely an economic or political one. He contrasts the older 'Nehruvian consensus' — which sought to avoid Russia- or China-style class conflict by leaving existing property untouched while channeling the fruits of future growth to the poor through an interventionist state — with the more liberal ideological vision that emerged in the 1980s. Adhia explains that the Nehruvian framework relied on two pre-existing cultural beliefs in Indian society: a deep suspicion of businessmen rooted in the Hindu caste hierarchy (where the trading caste ranked below the Brahmin scholar-leaders), and the subordination of individual desires to the collective needs of the nation-state. Over the course of the 1980s, both beliefs weakened — individuals grew unwilling to suppress personal desires for the community, and commerce came to be seen as having redeeming social qualities — making the 1991 turn toward liberal economic policies culturally possible.
Key points
- India's 1991 liberalization had a distinct ideological dimension, not just an economic or political one.
- The pre-1991 'Nehruvian consensus' sought to avoid Russia/China-style class conflict by letting property holders keep their property while directing future growth to the poor.
- Implementing this consensus required the License Raj, high taxes, import controls, and curtailed consumption to fund state-led industrialization.
- Indian leaders justified interventionism by drawing on the traditional low caste status of businessmen, who ranked below the scholar castes that supplied most national leaders.
- A second ideological pillar was the subordination of individual desires to the developmental needs of the nation-state.
- Through the 1980s, both ideological pillars weakened — individuals reasserted personal desires and businessmen lost their 'antisocial' stigma.
- These cultural shifts, visible in the films of the era, made the liberal policy turn of the 1990s politically possible.
Transcript
Role of Ideology in India’s Liberalisation
Source: https://www.youtube.com/watch?v=SFVJ7aF5ts0 Duration: 392.0s
Speaker (00:05): So I think there was an ideological component to India’s economic liberalization that started in 1991. I think the old economic policies were motivated by a different ideology that changed in the course of the eighties. And what shaped the new policies was a different ideological vision, a more liberal ideological vision. The old ideology was what is often called a Nehruvian consensus. So the Nehruvian consensus was that, unlike in China and Russia, we want to avoid a conflict between the property holders and without property. And the Indian leaders were very much in favor of redistribution, but they wanted to avoid the class conflict that had led to violent revolutions in Russia and China. And so what they did was they said, okay, we are not going to expropriate the property after property class after independence, but instead, we are going to implement such economic policies that the fruits of any future economic growth, okay, would largely go to the poor people. Okay? So property people, you can keep your property. Okay? But future growth is going to be for the benefit of the poor. And that was the Nehruvian consensus. Now, implementing that Nehruvian consensus required sacrifices all around. It required the freedom of the property holders and the business people to be highly circumscribed, ok, because of the interventionist state. There were high taxes. There was the License Raj. There were import controls. Also, people’s consumption had to be curtailed in order to generate the resources for investment to push for the state led, the state led industrialization. And it is difficult to extract resources from people for, for that was required for planning under a democratic setup. And, in order to justify their actions, in order to justify their interventionist economic policies, the Indian leaders relied on certain ideological beliefs that were already very prevalent in the Indian society. So one of those beliefs was a strong suspicion of businessmen in India, and that is also related to the caste structure. So in the Indian caste structure or the Hindu caste structure, the businessmen don’t rank very high. They are the third caste in the hierarchy of castes. And so those who come from the top two castes, the Brahmins, the scholars, the castes from which most of the national leaders were drawn from, looked down upon businessmen. And so traditionally, business activity has not been accorded a very high social status in Indian or Hindu society. And the Indian leaders were able to draw upon that low status of businessmen to to to justify exercising control over them. You don’t want to entrust the nation to these business people, do you? Right? And it’s better to leave economic policy to the hand of the scholars, disinterested people, which is what the Indian leaders considered themselves to be. The second ideological point that Indian leaders were able to draw on was this idea that individual desires should be subdued to the needs of the community. And, in this case, the community was the nation state rather than, you know, your smaller local community. And so people were told, right, you guys wanna consume, you guys wanna import, you guys wanna do business, but we can’t let you do that because the needs of the community, the nation state, the developmental needs of the nation state are paramount. Okay? Now, over the course of the nineteen eighties, those ideological beliefs kind of weakened and this is what we see in the films. Okay? People were no longer willing to suppress their individual desires, okay, for the benefit of the community as a whole. And businessmen were no longer seen as necessarily antisocial elements. Okay? People were beginning to think that trading, commerce has some redeeming social qualities. And it was because of these two cultural or ideological changes in India that the Indian government was able to move towards more economically liberal policies in the nineteen nineties.
Notable passages
"what shaped the new policies was a different ideological vision, a more liberal ideological vision"
"it was because of these two cultural or ideological changes in India that the Indian government was able to move towards more economically liberal policies in the nineteen nineties"
"the Nehruvian consensus was that, unlike in China and Russia, we want to avoid a conflict between the property holders and without property"
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