(Editor’s note – One of the legitimate criticisms directed against rightist political movements in India is excessive focus on identity issues, while refusing to develop a robust economic worldview. CRI is planning to publish a series of articles critiquing the Indian Right for ignoring economics. We want to help our readers understand why the Indian right lacks a coherent economic ideology. 

Can a meaningful economic narrative be shaped by Indian right? This is a question that constantly engages minds of those sympathetic to Indian right.  It’s a challenging task given that classical economic liberals , who have a well developed economic ideas, are unwilling to engage with principal party of Indian right.

Today we are publishing an edited version of essay called “The Economic Impact of Hindu Revivalism” by Prof Deepak Lal that critiques lack of meaningful contribution to economic thought from the Hindu political right. The essay covers the period before 1998 before the advent of NDA to power. Contribution of Economic policies of NDA government, in which BJP was the principal pole, to India’s growth story is widely acknowledged  even by its critics)

Why Hindu Revivalism Has Had No Distinctive Impact On Indian Economic Policy?

    Being a Hindu has always meant adherence to a way of life (that is, a particular social system) rather than to any specific religious philosophy. With no central church or central dogma, Hinduism has no religious fundamentals which can be used to identify or organize a Hindu fundamentalist movement. As many current leaders of the the BJP, which is a successor of the Jana Sangh have emphasized, Hindu fundamentalism is a contradiction in terms.

    Equally, there is nothing in Hindu symbolism to link economics and religion. There is a famous ancient text, the Arthashastra, written by Kautilya in the fourth century B.C.E., on statecraft. It is a Machiavellian manual for an absolute ruler. “It deals exhaustively with all topics connected with internal foreign relations, and sets before a ruler the goal of conquest of the world and describes way of attaining that goal.” But Hindu revivalists have not used this text as a source for any of their economic policies.

    The current wave of support for the BJP is better described, therefore, as representing Hindu nationalism. This in turn follows a long line of descent from various socio-religious movements which have sought to revive Hinduism in the face of perceived assaults by alien cultural influences associated with the foreign rule under which the Hindus have lived since 1000 C.E., first under the Muslims and more recently under the British. These revivalist movements have by and large sought to cleanse Hinduism of what have been perceived by the reformers and unjustified accretions to its core social practices, thereby making the Hindu social system resilient to more radical demands for change. In modern India it was primarily Mahatma Gandhi who sought such a Hindu revival. It is his ideas (however attenuated), particularly on the economy, which continue to resonate in the minds of the Hindu revivalists and are (at least rhetorically) embodied in their current policy programs.

    In assessing the economic impact of Hindu revivalism in modern India, I first briefly outline the characteristics of the Hindu socioeconomic system which was established in the ancient Hindu monarchies beginning in about 500 B.C.E. Second, I discuss how Gandhi sought to refurbish what I have elsewhere characterized as the Hindu equilibrium(particularly its economic aspects) and why his ideas failed to carry the day in the economic policy of independent India. This allows me to move to the third and major section, which traces the vague and essentially incoherent economic policies advocated by the major Hindu revivalist political party – the Jana Sangh and its successor, the BJP. This section also attempts to explain why Hindu revivalism has had no distinctive impact on Indian economic policy, even when the Jana Sangh and its successor, the BJP. This section also attempts to explain why Hindu revivalism has no distinctive impact on Indian economic policy, even when the Jana Sangh was briefly in power as part of the Janata coalition in the mid-1970s.

    At the outset it may be useful to provide a brief outline of the evolution, platforms, and constituency of the Jana Sangh and its successor, the BJP. The Jana Sangh was founded in 1951 with support from a Hindu revivalist voluntary organization, the Rashtriya Swayamsevak Sangh (RSS). The Jana Sangh’s principal leader was S.P.Mukherjee, who had left the Hindu Mahasabha (also an affiliate of the RSS) because it did not allow Muslims to become members. In 1977 the Jana Sangh became a partner in the Janata coalition which defeated Mrs.Gandhi’s Congress party at the polls called after the ending of the state of emergency (imposed in 1975). With the disintegration of the Janata, most but not all of the ex-Jana Sangh elements formed the BJP. Among those from the old Jana Sangh who remained in the greatly attenuated Janata Party was Dr.Subramanian Swamy. There has thus by and large been a continuity in the personnel and platforms of the Jana Sangh and the BJP. The Jana Sangh’s main constituency is in the north Indian Hindi-speaking states, though more recently it has established important beachheads in the southern state of Kerala and the eastern state of West Bengal. Its social bases of support are to be found among urban shop-keepers and small businessmen, big rural landlords, and some middle-income and rich peasants. Its party manifestos have emphasized the maintenance of the traditional Hindu institutions of family, caste structure, and law. On economic issues, they have opposed excessive state control over the economy and the development of heavy industry, but have been against foreign aid and foreign investment and in favor of small-scale local business.

The Hindu Socioeconomic System

    The twin pillars of the ancient Hindu socioeconomic system were the caste hierarchy and the village community. It was a decentralized social system which did not require either a centralized political power or a church for its perpetuation.The village communities were not completely autarkic,  but their trading links were fairly localized. The social system consisted of numerous endogenous hierarchically ranked occupation and often region-specific subcastes (jatis). They were subsumed under the four-fold varna classification, under which there were four broad varnas (castes): Brahmins (priests), Kashtriyas (warriors), Vaishyas (merchants), and Shudras (workers and the rural peasantly). Although this scheme is usually identified as the caste system, it merely provided the broad theoretical framework for Hindu society, with the interweaving of the hierarchically arranged subcastes being the real fabric of the Indian social system. Within the village economy, the relationship between the different caste groups took a particular form. This patron-client relationship, called jajmani in the North, continues to this day. In writing about the social structure of modern-day Indian villages, Srinivas states:

    The essential artisan and servicing castes are paid annually in grain at harvest. In some parts of India, the artisans and the servicing castes are also provided with the free food, clothing, fodder and a residential site. On such occasions as birth, marriage and death, these castes perform extra duties for which they are paid a customary sum of money and some gifts of land ….. Although, primarily, an economic or ritual tie, (the caste system) has a tendency to spread to other fields and become a patron-client relationship. The relationship is generally stable and usually inherited. The right to serve is hereditary, transferable, saleable, mortgageable and partible. The jajmani system bound together the different castes living in a group of neighboring villages. The caste-wise division of labour and the consequent linking up of different castes in enduring and pervasive relationships provided a pattern which cut across the ties of caste.

    One aspect of the caste system, the third of our elements defining the ancient Hindu socioeconomic system, was a set of distinctive social beliefs which influenced Indian ruler’s attitudes towards trade and commerce. This is the Brahminical tradition, which had looked down upon the merchants (vaisyas) and has been suspicious of the self interested pursuit of profit which underlies operations in markets.

    The final element in the ancient Hindu socioeconomic system was a tradition of paying a certain customary share of the village output as revenue to the current overlord, which meant that any new political victor had a ready and willing source of tribute already in place. Given the endemic political instability of ancient and medieval India, the caste system’s vocational segregation meant that war was a game for the professionals, which saved the mass of the populace from being inducted into the deadly disputes of changing rulers. For the latter, however, the ready availability of revenue from customary local arrangements greatly reduced the effort required to finance their armies and could carry on their daily business more or less undisturbed by the continuing aristocratic conflict.

    Thus, the relatively autarkic and decentralized village community came to be the primary economic unit of the Indian economy. Together with the caste system it provided stability to a common society over the millennia, in the wake of political instability, foreign invasions, and the periodic ravages of pestilence of famine. But above all the institution of caste, independent of the government and with social ostracism as its most severe sanction, was a powerful factor in the survival of Hinduism. The Hindu, living under an alien political order imposed from above, retained his cultural individuality largely through his caste, which received most of the loyalty elsewhere felt towards king, nation and city. Caste was so strong that, until recent years, all attempts at breaking it down have ended in failure.

    Various religious reformers like Kabir have tried. The Sikhs, despite the specific injunctions of their religion, never overcame caste feelings. The Roman Catholic and other converts to Christianity brought and perpetuated their caste prejudices, and even the Muslims with their egalitarian religion, once settled in India, organized themselves into castes. The notion of caste has thus formed the framework for the material life of all the peoples in the subcontinent.

    This socioeconomic system succeeded in maintaining an agrarian revenue economy (in the sense of Hicks) which, though stagnant provided for nearly two thousand years an average standard of living probably unparalleled in most other regions and countries over such a long period. India’s economic “failure” only relative when, from the sixteenth century onward, its technological and economic stagnation is compared with what has come to be called the European miracle. By the nineteenth century this relative decline had undoubtedly left India a “backward” country, and it is to the Hindu attempt (initially under British prodding) to overcome this backwardness that we now turn.

    There were two types of responses to the seeming threat posed by the British Raj to the Hindu social system. One was a rejection on rationalist grounds of the whole structure of Hinduism, as epitomized by a young nineteenth-century Anglo-Indian called Derozio. The Nehruvian modernists, Westernized elites who have by and large governed India since its independence, are of the same lineage. The other response was to reform Hinduism in keeping with the sacred texts. Raja Ram Mohan Roy and his new Brahmo samaj sect sought to combine the best features of Hindusm with Christianity. By contrast, Swami Dayananda who founded the Arya Samraj mission, and Swami Vivekanda, who founded the Ramakrishna mission, “sought to return to the past on more orthodox and more drastic lines” It is from the more orthodox revivalism that current Hindu revivalism stems.

    The purpose of these reformers was to assert a distinct Hindu identity in which Hinduism was to be reformed to cope with the modern world. But there was disagreement about how drastic that reform should be and what should be its primary direction: personal, political, or social.

Gandhi and Hindu Economics

    Gandhi provided the most clear-cut outline of a refurbished Hindu society and is, therefore, of interest for our purposes. Like Vivenkanda and Dayananda he sought to revive Hinduism against the onslaught on caste and Hindu society that had been launched by the Christian missionaries and utilitarian reformers in the early part of the nineteenth century. Like them, he sought to affirm the caste system while purging it of certain evils. But for him, even the great curse of untouchability was a matter which Hindu society had to deal with internally and in which other communities had no business. By redefining untouchables ad Harijans (children of God). Gandhi effectively co-opted and annexed these groups (which had been outside the Hindu pale) into Hinduism.

gandhi-charkha2    It was in his little book called Hind Swaraj, written in 1909, that Gandhi most clearly set forth his program for maintaining the ancient Hindu equilibrium. This work is an uncompromising attack on Western civilization and an agenda for maintaining the traditional, albeit refurbished, Hindu socioeconomic system. Gandhi saw swaraj (self-rule) “not as a question of who held the reins of government.” Swaraj was a quality or state of life which could only exist where Indians followed their traditional civilization, uncorrupted by modern innovations. The means to this end was “truth force” (sataygraha). He was implacably opposed to Western education, industrialization, and those other modern forces which could undermine the ancient Hindu equilibrium, Above all, even though he was unequivocally against untouchability, he nevertheless upheld the caste system and its central feature of endogamy. He wished to see a revival of the ancient and largely self-sufficient village communities which were an essential part of the Hindu equilibrium.

    It is surely not accidental that, in Hind Swaraj, Gandhi launches a diatribe against what he saw as the three major agents of Western civilization destroying India- railways, lawyers, and doctors. The railways, of course, destroyed village autarky, the lawyers symbolized the rule of law, which led to the replacement of custom by contract; the doctors, by reducing the mortality rate, caused the population explosion of the twentieth century. Because of the population explosion, labor was no longer scarce, and the labor control embodied in the caste system was increasingly redundant. Thus, all three Western “agents” were changing the basic parameters of the Hindu equilibrium. Small wonder Gandhi should have been opposed to them*

    Gandhian economics is not a systematic body of through. Gandhi’s views on society and the economy were influenced by Tolstoy and Ruskin. Like them he believed that the economy should be founded on morality rather than on conventionally accepted economic principles. He was hostile to modern industrialization and urban produced on a small scale within relatively self-sufficient village communities. He promoted what would now be called intermediate technology, which would use India’s most abundant resource – labor particularly in village industries. Due to his advocacy, hand-spun cloth (khadi), became the uniform of the Indian National congress men and the spinning wheel (charkha) became their emblem. Where the use of heavy machinery was unavoidable, Gandhi wanted the relevant industries to be state-owned for the public benefit.

Though he claimed he was a socialist, much to the chagrin of those who were inspired by the theories of Marx and Lenin, Gandhi disavowed the notions of class and revolution central to those theories. He eschewed the equality of outcomes sought by many socialist, and instead sought an equality of respect for the necessarily unequal but functionally interdependent members of a society represented by the traditional caste system. He was against collectivism, for it suppressed the individual. In its place he hoped to promote his notion of socialist equality by improving the moral fiber of individuals through truth-force. He was in favor of private property and against the redistribution of income and wealth. Rather, he wanted the rich and capitalists to look upon themselves as trustees for society of the wealth their inherent talents (which, he maintained, must always be unequal) had allowed them to acquire. Determined to curb what he saw as the repugnant mass consumption of the West, Gandhi favored a self-imposed austerity whereby individuals would lean not to crave for goods beyond the requirements of their basic needs.

    The resulting Gandhian panaceas have formed in important part of the Hindu revivalist economic programs. These include revitalizing the village economy and deemphasizing industrialization; promoting swadeshi (indigenous) technology and relative autarky in relations with the outside world; and accepting the wealthy as society’s ushers who have a moral obligation to help the poor.

    The Westernized Indians who formed an important part of the polity, while showing some sympathy with Gandhi’s desire to uphold the traditional system, did not accept his wholesale attack on Western civilization and education. As long as Gandhi’s novel methods of mass mobilization (through sataygraha, that is nonviolent civil disobedience) were seen to be successful in challenging the Raj, his socioeconomic views were tolerated. However, with time, as noncooperation penetrated the localities, the clash of interest, particularly of caste and community, was sharpened rather than softened by Gandhi’s tactics. The double-edged nature of Gandhi’s political technique of mass mobilization became apparent. As the political leaders discarded sataygraha, Gandhi’s hope of achieving his ideals through political action faded. His political party, the Congress, was thereafter taken over by the “modernizers’ under Nehru.

Hindu Revivalist Organisation and Economics

    Another revivalist strand runs through the Arya Samaj to the Hindu Mahasabha (HM) (founded in 1921), which absorbed it, and the RSS (a youth wing created by the HM) with its own political affiliates; the contemporary revivalist parties, the Jana Sangh and BJP.

    hedgewarThe RSS under its leader, K.B.Hedgewar, came to be based on a more inward vision. What the Hindus needed according to Hedgewar was not a political party of their own, but communal discipline and revitalization. The RSS and its political affiliates, the Jana Sangh and BJP, have espoused a cultural nationalism which identifies Indian-ness with the culture of the Hindus. Given the doctrinal pluralism inherent in Hinduism, the RSS cleverly absorbed some broad ideological understandings; ideas about hierarchy, pollution, and transmigration of Hinduism with “nationalistic concepts adopted from Western political through.”

 By emphasizing that many of the Indic religions – Janism, Sikhism, Buddhism-arose as offshoots of Hinduism, and as such are part of the Hindu culture, the “alien” was identified as the Muslims and Christians in India. This cultural nationalism also looked upon the Hindu nation as an organic whole, where different castes serve complementary functions but where “the ideal for caste is revised to emphasize all functions as equal in the sense of being necessary for the social organism.” Thus, the revivalist political parties have been against reserving jobs for the lower castes, which have burgeoned in the secular Indian state since independence.

    By separating religion from culture, the Hindu revivalists have sought to incorporate even Muslims into their notion of “Hindu-ness” and have argued against according the Muslims (and other minorities) special treatment. This emphasis on Indian-ness, subsuming the various pluralisms in the subcontinent, has led the political parties of the revivalists to move from the purely communal Hindu Mahasabha toward the more national Jana Sangh and BJP, which admit non-Hindus. The practical goals of the revivalist political parties have “usually included a strong defense, entailing a nuclear arsenal, Indian control of industry, and the removal of preferential quotes for depressed castes as a step towards ending “casteism in general”. The parties have been critical of Western ideologies, both of the liberal, capitalist variety and of the socialist variety, as being divisive and leading to the concentration of power in the hands of either capitalists or the state, and thus destroying that unique organic wholeness that is purported to be the core of Indian cultural nationalism.

    Nehruvian Economics

At independence, the “modernizers” in the nationalist movement triumphed, with Nehru-Gandhi’s political heir-becoming prime minister. He was the leader of the secular Western educated Indians who espoused a modern ideology, Fabian socialism. But this Western import ironically provided a new underpinning for India’s atavistic attitudes toward commerce and the market. India set up one of the most dirigiste systems of economic controls with a large expansion of the public sector, ostensibly to foster “socialism”. Slightly more than lip service was paid to some Gandhian economic panaceas – such as the special protection offered to hand-spun cloth and to small-small-scale industries. We cannot here go into the details of the economic impact of the resulting Permit Raj. All that we need to outline are the basic features of position dependence economic policy.

  nehru  First, the model of development adopted by Stalinist Russia and an extremely pessimistic assumption about Indian export prospects led India to promote the domestic production of previously, imported commodities. In particular, the policy sought the rapid development of heavy industries such as steel, chemicals and machine tools. This heavy industry-biased import substitution strategy was and remains the centerpiece of Indian industrial planning. Second, as agriculture with its myriad producers and special dispersion was not easily amenable to the planners’ desires, it was industry that bore the brunt of the control system of industrial licensing and foreign exchange, price, and distributional controls. Independent India is thus best characterized as Permit Raj. Fourth. an expansion of the public sector to include the so-called commanding heights of the economy, taken to lie in producing basic goods (such as steel, chemicals, machinery), became an important aspect of pubic policy.

    There has been a virtual consensus on these fundamental aspects of economic policy across the political spectrum – except during the brief period in the 1960s when the Swatantra party argued against them on free market lines. But Swatantra’s virtual elimination at the polls in 1971 has meant that there has been no political party since then to espouse the free market in India, even though it is now generally recognized that planning has not delivered the promised economic results. Growth has been well below potential and not based on labor-intensive industrialization. Hence, the alleviation of absolute poverty has been meager while the dirigiste system of controls has bred corruption and black markets on a scale that has put the democratic political process (increasingly based on the distribution of spoils) into directorate.

    As one recent political historian sums up the current Indian political scene; “It would be folly… to be sanguine about the future of India, to consider that the country is only going through a ‘stage’ in its development, and to fail to recognize grave systemic crisis is in progress”

    Single feature of the political movements spawned by revivalism since the nineteenth century has been the desire to revitalize. Hindu traditions and culture by defining and advocating a form of Hindu nationalism. 

Jana Sangh and Economics

    What of their economic policies only Jana Sangh and subsequently its successor, the BJP, have made some attempt to define their economic policies. The major elements in these policies are an extreme form of economic nationalism combined with elements from Gandhian panaceas and Poujadism., But the differences between the resultant economic policies and those pursued by secular post-independence governments are slight, as we shall see. This is hardly surprising, for economics has been secondary to the Jana Sangh – BJP primary aim of establishing a Hindu nation – state. The revivalists presume that the establishment of such a nation-state will occur not by the articulation and implementation of a specific economic program, but by less precise sociopolitical accepted as an all purpose means to this end.

 DEEN-DAYALJI   The economic ideas underlying Jana Sangh – BJP policies are close to those espoused by Gandhi, with the major difference being that unlike him they do not want to completely reject the modern world. This has led to a degree of incoherence unlike Gandhi’s more clearheaded desire to establish a refurbished version of the ancient Hindu equilibrium. The major thinker on Jana Sangh – BJP economic issues was Deendayal Upadhaya. Unfortunately, his ideas were never set down in any systematic fashion. They were set out in a brief volume, published in 1965, But as Atal Behari Vajpayee (past president of the BJP) and Dr.Subramanian Swamy (until recently a leading thinker in the Jana Sangh) testify it is Deendayala’s ideas of “integral humanism” which underlie the Jana Sangh – BJP” position of economic policy. As Vajpayee has put it:

Jan Sangh as a political party had to examine the two existing systems. Jan Sangh as a political party rejected both capitalism and communism because these systems though opposed to each other, lead to similar results in the sense that both result in the concentration of economic power. In capitalism economic power is concentrated in hands of few and in communism it is concentrated in the hands of state… and concentration of economic power leads to dangerous results.

Deendayal’s integral humanism seeks to provide a third path in consonance with ancient Hindu notions of dharma(social order). His panacea: “Swadeshi and decentralization are the two words which briefly summarize the economic policy for the present circumstances.” He advocates the development of the Bharatiya(Indian) technology, which is very similar to Gandhi’s Swadeshi(home-spun) technology. Both are terms for an indigenous technology. But by contrast to Gandhi, who wanted to turn his back to modern technology, Deendayal seems to be arguing for what today is called the appropriate technology that is machines adapted to factor endowments of India with a preponderance of unskilled labour. He also seems to accept Gandhi’s notion of trusteeship. “In [Deendayal’s] terms, man must be encouraged to acquire and save wealth, but then it must be made socially prestigious to giveaway wealth or manage it as a “trustee” for society”. Finally he wishes to add the normal democratic rights which are enshrined in the Indian constitution rights to food, to work, to education and to free medical care.

There is nothing said about the organizational or institutional framework within which such policies could be adopted. Yet it is not difficult to see that ancient Hindu system of relatively self sufficient village communities with patron-client relationships ensuring the rights adumbrated by the above(at the village level) would be one of the viable organizational forms for establishing Deendayal’s vision. It is thus fairly to Gandhi’s vision. But as Gandhi’s it had limited appeal to growing Westernized middle class which influenced policy.

It was left to young Harvard trained economist, Subramanian Swamy, to try and marry the old to the new. In 1969, he prepared a “Swadeshi Plan” which was introduced by Jan Sangh leader A. B. Vajpayee, in budget session of Lok Sabha (lower house of the parliament) in 1970 as an alternative to official plan. Swami openly stated that his plan was based on economic nationalism. It had 5 objectives, “1) 10 percent rate of growth; 2) Full employment; 3) Guaranteed minimum acceptable consumption for all citizens; 4) Total and immediate self-reliance; and 5) Full defence preparedness including manufacture of nuclear weapons” His main aim was foreign aid and foreign investments, which he wanted to cease.

But many of his other economic suggestions were sensible. He advocated relying on the flexibility of the exchange rates to deal with the balance of payments, thereby eliminating import controls; shifting the emphasis of the industries away from heavy capital intensive to “small” labour intensive industries; reducing high marginal tax rates to small savings and to increase tax revenues; and emphasizing agriculture. All these are now recognized by main stream economists as the essential ingredients of a development policy which promotes economic growth with equity in developing countries where labour is abundant.

But Swadeshi Plan had little impact on policy. Like most professional observers, Mrs. Gandhi dismissed it “as devised by a Santa Claus”. Subsequently (after the collapse of the Janata party coalition in late 1970s) Swamy left Jan-Sangh BJP and now he is one of their trenchant critics but he has not given up on devising economic policies which would lead to revival of Hindu nation – on which more later.

In the 1960s, Jana Sangh came to be thought as a party with right-wing economic policies. This was due to the tactical alliance with the Swatantra party. Both opposed Congress party’s proposals for agrarian reform, particularly after the so-called Nagpur Resolution, adopted by the party, which endorsed a program for co-operative farming, “Although Jan Sangh advocated economic policies that were different from the free enterprise program advocated by Swatantra, the party nevertheless adopted a populist rhetoric in calling for a more equitable distribution of wealth”.

This alliance did well in 1962 and 1967 elections. But its electoral eclipse in late 1960s taught Jana Sangh that it could not be seen as associated with a party whose free market ideology was considered by the electorate to favour the haves against the have-nots. In a poor country with universal suffrage and large disparities in income, being charged being against the poor can be electorally disastrous. Hence the populist rhetoric espoused by all Indian political parties. The Jan Sangh’s brief flirtations with free enterprise in the 1960’s were thus motivated more by tactical electoral considerations than by any ideological commitment. When electoral tactics demanded its abandonment, it was jettisoned – particularly as it is conflicted with the critique of capitalism embodied in Integral Humanism.

With Jana Sangh’s entry into Janata Party coalition in 1977, some of the distinctive elements of its quasi Gandhian populism could be discerned in Indian economic policy. But as the constituents of the Janata coalitions were professed Gandhians of some sort who had been brought together by Gandhian and former socialist J. P. Narayan, it is difficult to say that Janata party’s policies represented those of its Hindu revivalist component, the Jana Sangh. Infact even though, Jana Sangh was the largest faction (about 30 percent of Janata’s parliamentary seats), the economic ideas and policies of the Janata were based mostly on the ideas of Charan Singh, the leader of rural peasants. He advocated promotion agriculture rather than large scale industry, a self-sufficient peasantry, and labour intensive small-scale industry. The congruence of Janata policies with some of the policies the Jana Sangh had espoused merely reflects the continuing resonance of the Gandhian ideas across the Indian political spectrum (excluding the communists).

The Jana Sangh while part of the Janata coalition also learned the uses of the broader constituency and thus moderated its communal image further when it re-emerged as the BJP. It now had a Muslim as a general secretary, and Gandhian socialism replaced by Integral Humanism as party’s articulated first principle.

The Janata Party also sought (mostly rhetorically) to reverse the Nehruvian industrial strategy. The main practical manifestation of this desire was policies to protect the small scale and something called the “tiny” sector.This resulted in a policy induced fragmentation of the industrial sector which created in effect an industrial caste system whose economic merits were far from obvious. The implementation of the new industrial strategy did not, moreover, involve any dismantling of Nehruvian panoply of controls and licenses. The Jana Sangh as a part of  the Janata coalition thus seem to embrace the consensual in-ward looking dirigisme which has characterized the Indian economic policy. The only added nuance was a greater emphasis on protecting urban small scale producer and rural kulaks through further dirigisme.

    The small-sale and something called the “tiny” sector. This resulted in a policy-induced fragmentation of the industrial sector which created in effect an industrial caste system whose economic merits were far from obvious. “The implementation of the new industrial strategy did not, moreover, involve any dismantling of the Nehruvian panoply of controls and licenses. The Jana Sangh as part of the Janata coalition thus seemed to embrace the consensual inward-looking dirigisme which has characterized Indian economic policy. Th only added nuance was greater emphasis on protecting urban small scale producers and rural kulaks through further dirigisme.

    The other “new” element of Janata economic policies was the intimation of various direct programs (such as an employment guarantee scheme in Maharashtra and “food for work” programs) to deal with rural under employment. These again can hardly be described as marked departures from the Nehruvian programs. The latter have, at least rhetorically, promised to implement various populist polices to meet so-called basic needs, and have claimed to have a poverty and employment focus since at least the fifth Five-Year plan of Mrs.Gandhi’s government in the early 1970s.

    It was Mrs.Gandhi’s son, Rajiv, who tried unsuccessfully to initiate a more radical break with the Nehru model. His stated desire (soon after his large electoral victory in 1984) was to dismantle the permit Raj and tackle the political corruption it had engendered. His embroilment in his own corruption scandals sailed this brief attempt at liberalization.   

BJP, Dr. Subramaniam Swamy and Economics

What of the new BJP (the successor to the Jana Sangh)? Does it have any distinctive economic policies? Apparently not. There is an emerging consensus in India for Economic liberalization, but no party has advocated a dash for the free market as has happened, for instance, in Eastern Europe. When asked why not, Mr.Advani, the president of the BJP, honestly stated that there were still no votes in it. The party wants a reduction in the role of the public sector, but it wants to restrict foreign investment to high-technology areas. At the same time it supports populist measures, such as the right to work, and the forgiveness or rural debt. The espousal of this populist egalitarianism is largely tactical, to the extent that it goes against the maintenance of a social system based n Herna Hinanchus. This remains a cornerstone of the Hindu culture virtually all Hindu revivalists have sought to revive.

    The BJP’s current economic policies and its justifications for them thus seem very much part of the continuing Nehruvian economic policy consensus in India, namely, to move hesitantly toward some liberalization of the economy but with a predominant role for the state and the bureaucracy. The differences in policy with the Nehruvian model lie essentially in a greater emphasis on the Gandhian features which are already contains in the consensus strategy.

Subramanian Swamy--621x414There is, however, one politician Dr.Swamy (an EX-Jana Sangh), Currently president of the Janata party, who has produced as agenda for the revival of the Hindu nation whose cornerstone is the creation of a market economy. He argues that

the adoption of policies which faster rapid economic growth and increasing social justice is vital for national renaissance… The Hindu ethos is based on individualism. If an individualistic democracy is to strong, which is an important dimension of national renaissance, then the economic philosophy of such a society should accord the highest priority to self-employment and secure jobs to faster the spirit of self-reliance. Since the ethos of the Hindus who are nearly eighty-two percent is individualistic, the correct economic policy is one that largely based on the use of the market mechanism. The government [in such a policy] would have a role, no doubt, but it will be primarily to correct market malfunction, promote minimum standards of living, and generally act as an umpire in the interaction between consumers and producers in the market place.

The government would also have the right to intervene in the market to give protection to those who cannot survive unfair competition, give cheap credit to small producers and arrange marketing facilities for farmers and small industrialists. In such an economy, the government will have no right to occupy the “commanding heights,” the concept favored by Nehru and the Leftists. Overall, the government’s major role would be to levy taxation and set interest rates which induce investments that promote employment, to modernize agriculture, and to encourage small industries, such as the government did in Japan. Such an economic policy is not capitalistic or socialist but is the modern update of Gandhian ideas.

    Whether Gandhi would have agreed with this is dubious. Nor will most revivalists accept the individualism Swamy espouses. Moreover, Swamy’s agenda still pays lip service to finding a middle way;

    The world over, socialism has failed, while capitalism has produced exploitation and social unrest. Thus, we must reject both. Instead we need to rely not on the power of the government, nor on that of capitalists, but to focus power of the human initiative and enterprise to develop by providing the proper freedom and opportunity….. The sixth item on the agenda for national Renaissance is the acceptance of an economic philosophy that is liberal and in which the economic role of the government is limited to providing the physical and policy infrastructure for the market to function efficiently.

    Any free market economist would wholeheartedly concur with this. But it seems a long way from the Hindu revivalist economic program that Gandhi laid our in Hind Samraj. Nor does the individualism Swamy extols seem consonant with the traditional hierarchical social system based on caste. But if the purpose of Hindu revivalism is to create a powerful Hindu nation = state, then Swamy is right in realizing that the most efficient means to that end is a full-fledged market economy.

    However, having left the Jana Sangh, be is unlikely to see his ideas adopted by the BJP in the near future. What his Agenda for Hindu Renaissance does illustrate, how ever, is the absorptive quality of Hinduism,…. Though beginning with the revivalist dream of setting boundaries and purifying Hinduism, the revivalists have steadily moved toward the consensual policies they find have electoral appeal. Once the desire to refurbish the ancient Hindu equilibrium is recognized as impractical, as it increasingly, has become with the spread of the modern economy and the expansion of the middle class, there is no distinctive set of economic policies left to distinguish a Hindu revivalist program from any other program which seeks to adopt polices which foster economic growth and increasing social justice….. vital for national renaissance.

    Elsewhere I have argued that many of the parameters which have sustained the ancient Hindu equilibrium have decisively shifted during the past century. Population growth has ended India’s ancient demographic stability and the need to tie labor down to the land; the Green Revolution has ended village autarky; even the modest industrial growth since independence has replaced custom with the contract in many situations, particularly in the labor market. Meanwhile the growth of Western education and social legislation – which has picked up where Bentinck left off – and the gradual movement of the literary castes into business and commerce and slowly changing long-standing casteist attitudes.

The ancient Hindu revenue economy is thus now being undermined. The impracticality of a full-scale reestablishment of the Hindu equilibrium makes Gandhian economic panaceas look more and more antediluvian and romantic to the electorate. Hindu revivalist parties, therefore, while seeking to uphold Hindu culture, are unlikely to seek a return to ancient economic ways.

Thus, I would argue that, just as there has been no distinctive impact of Hindu revivalism on Indian economic policy in the past, there is unlikely to be a major impact in the future. Nevertheless, the indirect economic consequences of the violence resulting from unleashing religious passions can be dire. As the recent revivalist agitation surrounding the building of a temple on the site of a mosque in Ayodhya attests, when law and order – the basic public good – threatened, there is grave danger that the economic framework will also unravel.

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Deepak Lal

Deepak Lal is the James S. Coleman Professor Emeritus of International Development Studies at the University of California at Los Angeles, professor emeritus of political economy at University College London, and a senior fellow at the Cato Institute. He was a member of the Indian Foreign Service (1963-66) and has served as a consultant to the Indian Planning Commission.