Visible Hand: Public Policy and Economic Growth in the Nehru Era

This paper investigates the relationship between the policy regime and \ngrowth during 1950-64 termed here ‘the Nehru era’. While there exist \nvaluable early appraisals of the period, access to new data and fresh \ninformation allows for a longer and comparative view of the outcome. \nWe find overwhelming evidence not only of resurgent growth but also \nof a lasting transformation of a stagnant colonial enclave into an economy \nwith firmer foundations capable of sustained growth. It is useful to \nrecognise the economic policy of this period as distinct, not only from \nwhat preceded it but also from what came after, for that facilitates an \nunderstanding of the political conditions needed for economic \ninterventions which are growth inducing. The paper also addresses some \nlingering perceptions of the economic policy of the time, notably its \nimpact on agriculture and the governance of the public enterprises. The \nshibboleth ‘Hindu rate of growth’, presumably a broad-brush description \nof movement in this period, manages to obscure the extraordinary \neconomic dynamics of the Nehru era. \nKey words: Economic Policy in India, Nehru era, Drivers of Growth, \nMahalanobis Strategy, Public Sector Performance \nJEL Classification: O2, O3, O5, P5