Consensus Building and Nehru

Arvind Panagariya

When Lally Weymouth of the Washington Post asked Prime Minister Vajpayee during a recent interview how he would like to change India and what he wants to be his legacy, Mr. Vajpayee was unequivocal in his reply, “I would like India to become a developed country as early as possible.”

            This answer would, no doubt, be music to the ears of all Indians, especially the younger generation, which aspires to avoid the economic fate suffered by its predecessor generations.  And if we go by the economic-reforms agenda that Mr. Vajpayee has been unfolding, we can scarcely doubt his sincerity and commitment to the goal of turning India into a developed country one day. 

            Nevertheless, the glacial pace with which Mr. Vajpayee and Mr. Sinha have been moving is unsettling.  Not only the reforms under way are being introduced slowly, in many areas, no reforms are being contemplated at all.  For instance, there is an urgent need to enact laws that give firms in the organized sector the right to hire and fire workers under appropriate terms; as per the recommendation of the Abid Hussain Committee on Small Enterprises, we must open all products to entry by enterprises of all size; and we must move towards a genuine privatisation of banks.  But these reforms are not even on the radar screen of the government.

            How do we reconcile this slow pace of action in some areas and no action at all in many others with the government’s wish to move India rapidly towards the developed-country status?  When asked recently by India Today (March 13, 2000) why Mr. Sinha had set an abysmally slow pace for disinvestment, the Finance Minister replied, “In a democracy nothing can happen in two days.  Opposition to disinvestment still persists. Consensus-building takes time."

            While this is a credible defence, Mr. Sinha and Prime Minister Vajpayee themselves bear a good part of the responsibility for the slow pace of consensus building.  Like their predecessor governments during 1980s and 1990s, they have waited for the consensus to evolve on its own rather than build it in a pro-active manner.  Instead of taking their case directly to the public and explaining to them the benefits of reforms boldly and expansively, Mr. Vajpayee and Mr. Sinha have essentially relied on slipping in the reforms here and there and hoped that they will automatically build greater support for future reforms.

            This approach of policy change by stealth contrasts sharply with the approach pursued by India’s first Prime Minister Pundit Jawaharlal Nehru in the immediate post-independence era.  In spite of the public confidence he enjoyed, or perhaps because of it, Pundit Nehru used every opportunity available to him to explain to the lay public and intellectuals alike the rationale behind the big economic initiatives he had been undertaking or planning to undertake.  With no television available at the time, he addressed the nation on the radio, held public meetings, and used his speeches to the Parliament, industry groups and other assemblies to discuss planning and development, taxation of income, the food crisis of 1951, large-scale hydroelectric projects, and education policy.

            The speeches Nehru gave on economic policies as early as late forties and early fifties make a fascinating reading.  Take, for instance, the speech ‘Planning and Development’ delivered in Hindi at a public meeting in Patna on June 19, 1951 [Selected Works of Jawaharlal Nehru (1 March 1951-30 June 1951), edited by S. Gopal, Second Series, Volume 16, Part I, pp. 17-30].  Referring to the large scale Kosi project which was just being initiated, Nehru noted, “A map has been drawn up of the Kosi project to construct a huge dam¾it is perhaps to be the highest in the world¾and you may remember what the cost was.  Let me remind you that it was 172 crores of rupees.  Now that is by no means a small amount even for the largest country in the world and certainly it was not, for India.  It is my opinion that the Kosi project is very necessary and should be somehow constructed.  We must make a start even though it may take a few years to complete because as you know, in some parts of Bihar every year a strange difficulty arises, bringing disaster and ruin.”

Later in the speech, Nehru went on to explain the role of the Planning Commission that had been appointed in March 1950, the necessity of the First Amendment to validate the laws abolishing zamidari, and even the guns versus butter dilemma that must be resolved in deciding military spending.  On each subject, he was careful to pitch the arguments at a level that they could be appreciated by a layperson.

During her pre-Emergency tenure, Prime Minister Indira Gandhi continued the tradition set by Nehru.  During late 1960s and early 1970s, when Mrs. Gandhi decided to end the privy purses of what are now former princes, she took her case directly to the public.  The same was true of her approach to the nationalization of banks.  Her public speeches during that period invariably included explanations of why it was necessary to nationalize the banks.

Thus, the “reforms by stealth” phenomenon is relatively new and was the product of the post-Emergency period, beginning late 1970s.  Around this time, the political support for liberal trade policies was virtually absent.  At the same time, some policy makers were beginning to appreciate the huge costs of the controlled regime and business lobbies had begun to push for the liberalization of the imports of some critical inputs.  Quiet reforms at the margin were the natural outcome.

Today, the “stealth” approach has outlived its usefulness and it is time for Prime Minister Vajpayee to revive Nehru’s pro-active approach to consensus building.  The public is receptive, only if the Prime Minister will try.

Economic Times, March 29, 2000