Sardar Patel’s vision could have spurred faster growth than Nehruvian model

Patel’s belief that workers and industrialists need not be in conflict directly contradicts the Nehruvian socialist model.

(Sanghnomics is a weekly column that tracks down and demystifies the economic world view of Rashtriya Swayamsevak Sangh (RSS) and organisations inspired by its ideology.)

There is a general consensus among reform-oriented economists and policymakers that India’s economic growth suffered due to the Nehruvian model imposed by Prime Minister Jawaharlal Nehru and enthusiastically carried forward by the socialist lobby within the Congress party. Could India have fared better under an alternative model advocated by then Deputy Prime Minister Sardar Vallabhbhai Patel?

An intriguing question in the realm of economic policy is: what would have happened had Sardar Patel become Prime Minister instead of Nehru? This brings into focus the ‘Sardar Patel model of development’, a subject that has received little attention.

Arvind Panagariya, the first Vice-Chairman of NITI Aayog and currently Professor of Economics at Columbia University, explores this model in his latest work The Nehru Era: Economic History and Thought. His analysis should prompt renewed interest in a model that was never implemented due to Patel’s untimely death in 1950. Nehru, unchallenged thereafter, had a free hand in shaping policy, leading to the imposition of the socialist Nehruvian model. This was continued by successive Congress leaderships and proved detrimental to the country's long-term economic interests.

“The most plausible inference we can gather on Patel’s economic thought is that India would have chosen a markedly different strategy of development under him. Unlike Nehru, he would not have placed heavy industry at the centre of economic policy. The role of the public sector in industrial production would have been minimal, if any. The country would also have sought self-sufficiency in agriculture much sooner,” says Panagariya.

Between 1948 and 1950, Patel delivered several speeches that reflected his vision for rebuilding an economy devastated by 200 years of British colonial rule.

Addressing a group of industrialists at the Calcutta Club on 5 January 1948, Patel said, “We must remember that socialism in England came after England had advanced considerably on the road to industrialisation. I am convinced that any promotion of conflict between labour and capital at this stage would deal a disastrous blow to India’s industrial future.”

Patel’s belief that workers and industrialists need not be in conflict directly contradicts the Nehruvian socialist model, which was based on such conflict. Interestingly, Dattopant Thengadi, founder of India’s largest labour organisation—the Bharatiya Mazdoor Sangh (BMS)—and a leading ideologue of the Rashtriya Swayamsevak Sangh (RSS), echoed similar thoughts in his seminal work Third Way. Thengadi’s distinct approach is encapsulated in the BMS motto: ‘Nationalise the Labour, Labourise the Industry, and Industrialise the Nation’—a motto that also aligns with Patel’s economic philosophy.

“The theme common to many of Patel’s speeches from 1948 to 1950 is that raising production is the foremost national objective, and achieving it requires cooperation among industrialists, workers, and the government,” says Panagariya.

Patel on Nationalisation

In the same Calcutta speech, Patel candidly addressed the issue of nationalisation. He told industrialists, “The cry of nationalisation is being entered into merely to cause panic. If you get panicky, you fall into the trap. You should yourself realise that industry is to be established before it is nationalised.” He further emphasised that, despite having a Labour government and advanced industrialisation, England was not eager to pursue nationalisation.

Patel on Socialists

On 20 January 1948, while addressing a large gathering of workers in Mumbai, Patel criticised socialists for encouraging strikes. “The socialists threaten to break away from Congress. The doors are open. But I would urge them not to mar the progress of the young nation, which has after all got the rare opportunity to mould itself according to its dreams and desires after many hundreds of years.”

Patel on Fiscal Discipline

Patel believed in strict fiscal discipline and, had he led the nation, would have likely kept inflation under greater control. In a speech titled The Economic Situation, delivered on 11 November 1949, he stated, “With our incomes shrinking and the prospect of further shrinkage, unless we stage a quick recovery, we must cut down our expenditure in order to balance our budget.”

Thengadi and other stalwarts of the RSS have also repeatedly said that the Indian economic model shouldn’t be based on consumerism. Too much reliance on consumption  would result in a destructive development model, according to the RSS.

Patel Model and an Open Economy

Had India rejected the socialist Nehruvian model in favour of the Patel model—championed later by RSS thinkers like Thengadi and Deendayal Upadhyaya—the shift to an open economy, which occurred in the 1990s, might have happened in the 1970s. According to Panagariya: “Without the baggage of socialism, when the world moved to a flexible exchange-rate system in the 1970s, it would have been easier for India to let the rupee depreciate and move away from import licensing. The transition to an open economy would thus have taken place nearly two decades earlier than it actually did.”

Earlier Sanghnomics columns can be read here.