India gained its independence from British rule on August 15, 1947. Jawaharlal Nehru became the first Prime Minister of India. Nehru was a westernized, secularized individual who was inspired by ideas related to socialism and social democracy.
This period in Indian politics saw almost no, or otherwise negligible, inter-party competition. The Indian National Congress (Nehru’s party) had been at the forefront of the national movement and had played a key role in the assertion of India’s independence. The Indian populous was of course gratuitous to the Congress for their role in ensuring independence. Key leaders, even those with differing ideologies had indeed worked together for the attainment of sovereignty. As such, they had immense respect for each other and refrained from acting on their political differences too much. One proof of this statement is the presence of “opposition leaders” in Nehru’s first cabinet, such as Dr. BR Ambedkar and Shyama Prasad Mukherjee, who had been critical of the Congress at times.
With this kind of variety, it was thought that India would evolve as a result of the considerations of many leaders. However, many opposition leaders would resign when there were differences in policy orientation, in an effort to maintain cabinet solidarity. This eventually led to the cabinet being composed of Nehru’s yes-men.
Nehru thus possessed considerable leeway in dictating policy direction. Nehru had received a Western education and had a particular liking for Marxist and socialist ideas. He started the movement for Non-Alignment in India, which provided a balance between the US and the USSR. At the same time, he believed in a socialist pattern of society for India. His was a socialism different from the traditional sense, he believed that private property was here to stay and democracy was non-negotiable. He was committed to affirmative action.
Nehru’s reign saw the formation of the Planning Commission and the start of the planning era in Indian history. The idea of nationalized planning was based on socialism. The First Five Year Plan began in 1951. But what is most noteworthy is the Second Five Year Plan starting in 1956. Before its launch, the Congress Party announced in its Avadi resolution that the socialist pattern of society was its goal. The Second Five Year Plan had as its base this resolution. It focused on industry. Being based on socialism, it provided a significant role for the public sector in economic activity, and minimized private industry.
There were both upsides and downsides to socialism in India. The upsides included the setting up of indigenous industries, growth in infrastructure and less inequality, while the downsides included a slow rate of growth, delaying of the establishment of India on the international economic stage and stagnation. The Planning Commission attributed a large percentage of resources to welfare programs which prevented economic growth.
Starting 1962, India was engaged in a series of wars with its neighbors: in 1962, 1965, and 1971.
The Sino-Indian war of 1962 saw a largely unprepared India. This war concluded with a swift defeat for India. Perhaps for the first time, serious questions were raised about the political leadership of the country.
India was hit both economically and politically. This defeat had necessitated a rise in the defense expenditure of India (Nehru had been in favor of disarmament). This rise in expenditure could only be financed by redirecting funds from the Planning Commission.
Planning lost its efficacy. It was now being criticized for hampering growth. Although India won the Indo-Pakistan wars of 1965 and 1971, they nonetheless raised grave economic concerns for the country.
Nehru’s death in 1964, after 17 years as Prime Minister gave way to a short stint as Prime Minister to Lal Bahadur Shastri. After his death, Indira Gandhi (Nehru’s daughter) would take over. There were severe doubts about her competency and it was believed that she lacked the political experience to be Prime Minister. The 1967 General Elections in India saw reduction in Congress support-they were able to form the government, but by a very small majority. In order to strengthen her father’s legacy, her own position in politics and to reinstate the Congress party, she undertook a series of policy decisions that strengthened the Leftist orientation of government. In 1971, her entire political mandate was based on the tagline “garibi hatao” (remove poverty) which indicated her dedication to welfare programs for the poor. Moreover, she turned the previously ideological-coalition voter base of the Congress into a specific vote bank-which consisted of women, the poor and the oppressed classes. In order to appeal to these groups, she introduced a series of policy measures: she nationalized banks, abolished princely privileges, and adopted a stronger form of socialism.
Later that year, the 1971 war, although won by India would make a major dent in the Indian economy. Nehru’s policy of non-alignment was also dirtied by Indira Gandhi’s 20-year Treaty of Friendship and Cooperation with the Soviets.
India would soon enter a major economic crisis caused by the 1973 Arab Oil Shock. High rates of inflation, unemployment, depletion of foreign exchange, and stagnation hit the country.
These factors, combined with the political situation in the country led to the start of the National Emergency in 1975. This period, almost lasting two years until 1977, is seen as the darkest chapter of India’s democracy. The Emergency did little to improve India’s economic situation. Its GDP increased at a rate of 1.7% in 1976. Although levels of efficiency went up due to fear and restriction, the political situation in the country was not satisfactory with many political leaders being imprisoned.
It is important to note that it was during the Emergency that the 42nd Amendment to the Indian Constitution was enacted. This enactment added the words “Socialist” and “Secular” to the Preamble, thereby making official the socialist tilt in India’s policy.
After the Emergency, India elected its first non-Congress government. This government however could not last its full term due to lack of coherence and ideas. As a result, Indira Gandhi was re-elected in 1980 and ruled till her assassination in 1984. Her second coming continued with socialism, but replaced the populist Garibi Hatao with pragmatism. Indira Gandhi’s government succeeded in reinvigorating India’s weak economy and reduce levels of inflation and increase growth in GDP. The preceding year in 1979–80 under the Janata Party government had led to the strongest recession (−5.2%) in the history of modern India with inflation rampant at 18.2%. Gandhi’s government saw inflation stabilize at 5% and an annual growth rate of 5.7%.
After her assassination on October 31, 1984, Rajiv Gandhi, her son won office. His reign saw the conceptualisation of economic liberalisation in India and the call for computer availability in India which would facilitate the former. Gandhi started to promote private production and increased India’s emphasis on science and technology. He sought to reduce the restrictions on industry.
During and after his reign, India was hit by several economic problems such as debt trap, depleting foreign exchange reserves, inefficient working of PSUs etc.
This made necessary the $7 billion loan that India took from the World Bank and IMF. These organisations in turn pushed India to liberalise its economic policies.
This led to the adoption of the New Economic Policy of 1991 based on liberalization, privatization and globalization under PV Narasimha Rao and brought an end to socialism in India.
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