Economic policies of Independent India borrowed from the West

The independence of India was the dream realized after the struggles and sacrifices of millions spanning around two centuries. For about eight centuries earlier, India had been facing difficulties due to invasions and governance by rulers from alien backgrounds. Hence Indians were looking for independence which would provide them an opportunity to frame ‘their own’ policies based on the background, experiences and ethos of this age-old nation. There was also an urgent need to set right the distortions that had set in during the regime of the alien rulers during the previous centuries. The British domination had already reduced India to ‘the poorest country in the civilized world’ from the long-held status of the most developed nation in the world.

More than any other personality in the contemporary period, Mahatma Gandhi articulated the need for India-centric economic policies for her overall development, much before independence. Even during his early years of public life, he firmly believed that the western ideas would not suit our country. In his much celebrated work “Hind Swaraj” written during 1909 while he was travelling from London to South Africa, he underlined that the western civilization was doomed for failure and the Indian civilization, with her unique background and fundamentals, should opt for native approaches. In fact even earlier, from 1880 to 1905, some of the Indian leaders advocated nationalistic economic policies. 

Later even while he was completely involved in the freedom movement after his return to India, Gandhiji wanted to initiate a discussion with regard to the type of economic policies that would be suitable to the country after Independence. He was aware that mere transfer of political power from the Englishmen to the natives would not able to improve the conditions in the country, unless economic policies suitable to the country were evolved. Everyone was sure that the policies of the Britishers would not be suitable as they were designed to benefit them. Hence Gandhiji’s initiative assumed significance, as he was really concerned with the situation in the post-independent India. However the leadership of the Congress scuttled his efforts. As a result there was no discussion or debate about the economic policies of free India at the national level.

After independence, when India got the opportunity for the first time after many centuries to plan her economic policies, there was no clarity. Unfortunately many in the policy making circles were not aware of the ground realities of the Indian situation and her history of sustainable economic systems, as they were guided by the western ideas due to their education and understanding. Gandhiji also died within a few months after independence. Subsequently, the Congress under the leadership of Nehru, adopted socialism as the guiding ideology of the party. 

As a result the socialistic policies were imposed on this great country, which had had her own time-tested economic systems that had sustained her as an economic power and prosperous nation for centuries. One has to remember that socialism was born in the west as a reaction to the conditions prevailing there during the nineteenth century. It was based on their outlook and approach. History shows that the ideas and approaches of the western world remained too narrow. Their history itself is very short compared to ours. 

For more than thirty years from the 1950s, India’s destiny was driven by the economic policies based on the socialistic ideas. The license-permit raj with the neta-babu syndrome was obstructing growth. The results were disappointing and the country was not able to achieve even the basic objectives. When the communist USSR collapsed in 1989 and was broken to pieces, socialism was reduced to a text-book theory. Even a decade earlier, the other powerful communist country at that time namely China opted to move away from the ideology of their party. It was only after socialism was widely accepted to have failed that the Indian establishment slowly woke up to the realities. Moreover the serious conditions that the economy was facing during the beginning of the 1990s compounded the situation, and as a result socialism was abandoned. 

History gave another chance to the country to discuss and frame a policy frame work suited to the experiences and aspirations of her people. But the people were let down once again by the elite and the policy making circles. This time the market driven capitalistic model, born and developed in the west, was adopted as the state policy, again without serious debates and discussions. As a result for the second time in independent India, another alien ideology not suited to the culture and ethos of the country began to be implemented. The market centric model is the latest version of the western capitalism whose roots lay in individualism. 

As a result, beginning from the early 1990s, the economy began to be opened up , with many of the controls being removed. Liberalization, privatization and globalization became the mantra for the proponents of the new ideology and the United States became the model. Foreign participation and investments were being freely encouraged in different sectors. 

Now after twenty years of experience with the market ideology, more than one fourth of people go to bed with an empty stomach. The most critical sector of the economy namely agriculture is in serious trouble. Farmers’ suicides have been increasing; in many places the country sides wear a deserted look with villagers opting to go out in search of jobs to make their ends meet. Rural industries are facing extinction. There has been an increase in unemployment resulting in social problems. At the same time the ‘consumer culture’ is spreading fast especially among the higher income, urban and younger sections of the society. Moreover the gap between the rich and poor has been increasing. 

The market ideology has failed to deliver the desired results in India. In fact it is failing even in the west, and many of its supporters have started raising serious doubts about the very theories that govern the ideology. The global economic crisis has revealed to them once again the true nature of their favorite ideology. Paul Krugman, Professor of Princeton University, US and the winner of the Nobel Prize in economics for 2008 notes: ‘much of the past 30 years of macro economics was “spectacularly useless at best, and positively harmful at worst.” 

Thus the economic history of post-independent India shows that the ruling establishments and the policy making circles have let down the country each time an opportunity was presented to them to frame suitable policies for the country. With the result, the country is not able to fulfil even the basic minimum requirements of her citizens, after sixty years of planning. All these years, we have been only aping the west; applying their policies and waiting to listen to their sermons, without the expected results. 

It is another matter that in spite of all confusions and contradictions at the policy making levels, India is emerging as an economic power overcoming many hurdles that lie before her. 


1. Bipan Chandra, The rise and growth of economic nationalism in India, Anamika Publishers, New Delhi, 2004

2. Paul Krugman quoted in ‘What went wrong with economics’, The Economist, July 16, 2009

( Yuva Bharati – Voice of Youth, Vol.38 No.9, Vivekananda Kendra, April 2011)