India must engage with its archive of economic ideas

The men and women who wrestled with the big questions of Indian economics in its early decades often foresaw dilemmas that India still faces

Modern Indian nationalism has, from its earliest days, been built on three pillars — political freedom, social reform, and economic development.

India’s economic policy has had to adapt as the country transitioned from being a colony to an independent nation-State to an emerging global power. Each era solved some problems while seeding new ones. (HT Archive)

The long history of the ideas that helped craft the third pillar has faded away from public memory. This is unfortunate, especially at a time when the old economic consensus is splintering.

Countries are trying to figure out alternative paths that are aligned to their specific circumstances, all against the backdrop of seismic changes in the global order.

Shining a light on the past may help illuminate the way forward. That is true of India as well.

Cut to 1892. The jurist, public intellectual and social reformer Mahadev Govind Ranade gave a speech in Pune on the principles of Indian political economy. He challenged the claim that economic ideas have universal applicability, adding that the lessons from one country cannot automatically be transplanted on to another without understanding the realities of the latter.

Ranade then listed out some of the realities that Indian economics would have to adapt to. Social life was dominated by status rather than contract. Labour was abundant but unskilled. Capital was scarce as well as wary of taking risks. Cooperation between labour and capital on a large scale was scarce. The economic lives of the large majority were hostage to erratic monsoons.

Much has changed since then — and so has Indian economic policy. It has had to adapt as the country transitioned from being a colony to an independent nation-State to an emerging global power.

Each era solved some problems while seeding new ones. The ideas that powered the shifts in policy regimes over these eras came from a stellar cast of economists, political leaders, civil servants, businessmen, farmers, trade unionists, and public intellectuals.

There have been decision-makers as well as dissenters. Indian economics has thus been a flowing conversation rather than a frozen orthodoxy immune from change.

Naturally, these shifts in economic thinking were not smooth affairs. There were intense debates at every point in time. Should India focus on building a new industrial economy or try to revive the traditional economy where the vast majority toiled? What role should the State play in the economic transformation of a country with a vast private sector? How should India engage with the world economy even as it builds domestic capacity? How does one measure the size of the economy, the extent of poverty, and the living standards of people? Can the quest for economic development be divorced from the risk of ecological destruction? What economic principles should be embedded in the Indian Constitution?

Many of these questions linger in public debate even today. Each has had a profound impact on the course of Indian history after 1870, when Dadabhai Naoroji read his paper in front of a London audience on how British rule was further impoverishing Indians.

Others followed, not just with sharp critiques of existing policies but also with road maps for the way forward, a constructive approach that went beyond listing out problems. The result is a rich repository of ideas that has shaped modern India, in good ways and bad, and which can inform our present as well.

The main characters in the long story of Indian economics include many whose names are still recognised by most modern readers. And then there are the greats of the past who have slipped away from public memory.

Among these are Jehangir Coyajee, BP Adarkar, HL Dey, Radhakamal Mukherjee, VG Kale, JK Mehta, PJ Thomas, Gyan Chand, RK Hazari, ML Dantwala, Hannan Ezekiel and BS Minhas, for example. They deserve to be read again today. It is the same with political leaders.

The economic views of the men who held power over the decades is known, but less so with others such as Madan Mohan Malaviya, Lala Lajpat Rai, Hridaynath Kunzru, Charan Singh, Deen Dayal Upadhyaya, Ram Manohar Lohia, HM Patel and Sharad Joshi. BR Ambedkar occupies a unique place in this constellation, as a scholarly economist as well as a political leader.

The Indians who engaged seriously with the economic challenges facing the country did so for four big reasons that spanned human dignity, national unity, geopolitical heft, and social mobility.

First, a higher national income would help Indians lead their lives on firm ground rather than flailing in the quicksand of poverty.

Second, a modern economy would promote economic integration which, in turn, many national leaders saw as a key catalyst for political integration.

Third, economic strength would allow India to protect its political autonomy in a troubled world.

Fourth, economic dynamism would help reduces the layers of traditional privilege that denied opportunities to millions based on their gender, caste, and region.

The men and women who wrestled with the big questions of Indian economics were not infallible, but their successes as well as failures have much to teach us. They often anticipated dilemmas that India still faces. To forget them is to lose a usable past.

As the world searches for new economic paths, India would do well to first engage with its own forgotten archive of economic ideas, not to copy blindly from it but as a source of inspiration on how to think about our challenges.

Niranjan Rajadhyaksha is the executive director of Artha India Research Advisors. His book ‘The Ideas That Shaped Modern India and Its Economy’ will be published by Penguin Random House in October. The views expressed are personal