There are several noteworthy contributions of Jawaharlal Nehru to India’s development – the fight for independence, the institution of democracy, the prevalence of a free press. Something that India is not indebted to Nehru is his economic policies and/or the economic legacy. India, and the world, have changed considerably since 1947. An assessment of Nehruvian economics requires us to understand whether it was appropriate in the 1950s and 1960s. I am afraid the answer is that it was not appropriate then, and is even less relevant today.

A distinguishing characteristic of India in those formative years was that there was as much regard for political freedom in India as there was in the western democracies. Our economic policies, however, were closer to that of the Soviet Union. In other words, while Nehru had deep respect for political freedom, he believed that economic freedom was for the birds, or educated democracies like the United States. Let us dwell on this schizophrenia for a moment. Nehru's belief was that the illiterate masses of India were quite capable of deciding who among several individuals was capable of ruling the country, but were quite incapable of deciding for themselves whether they should be producing matchsticks, or pens, or steel. There was Big Brother for all of this, namely the government. And the henchmen of Big Brother had to be paid for making the final decision.

Nehru's economic vision was that of an elite. Like all elites, he and like minded PLUs (people like us) felt that the Indian economy needed to be guided along with enormous help from the state. It is quite obvious that the state is needed to provide infrastructure, and to redistribute income, as well as provide traditional public goods like defence and police services. But nowhere is it written, besides the Communist manifesto, that the state should be involved in all economic activities. And nowhere is it written that the state should not only finance public goods, but should also produce public goods. There is one set of people who actually believe that the state making all the economic decisions was the state - Communism. As Nobel prize winner Hayek pointed out as early as 1945, there was precious little difference between totalitarianism, fascism, communism and "democratic" socialism.

Nehru and his economic team must have realized that economic planning meant corruption. If I don't have to get a license to produce matchsticks, or to increase the production of pens, or to shift production to pencils, or to sell my rice to a particular buyer i.e. the government, then I don't have to bribe anyone to proceed with my normal choices, do I? But if it is required that I seek permission, then I have to pay somebody for that privilege. And so it happened that a society of entrepreneurs became a culture of the corrupt. For that, we have to thank Nehru's legacy. To be fair, it is unclear whether Nehru himself was personally corrupt; to be fair, Nehru was too intelligent not to have known what his policies would generate.

There were - are - consequences of this legacy, besides a culture of corruption. The growth rate of the economy was much less than what it could have been, and this for some thirty years after the implementation of the "commanding heights" corrupt economy. Of course, the situation became worse once Nehru was no longer PM - both in terms of state control of the economy and in terms of corruption. Perhaps not a coincidence that the individual who took Nehru's economic policies to their ultimate conclusion was his daughter, Mrs. Indira Gandhi. Higher corruption and lower growth rate meant a sharply lower pace in the reduction of absolute poverty. According to National Sample Survey data, absolute poverty in India in the early fifties was close to 45 % of the population, and it was the same in 1983.

Indian policy makers started to dismantle Nehru's economic legacy in 1991. Today, fourteen years later, the task is still incomplete. The present government, along with its left partners, keep reminding us daily that the economic vision of Nehru and Mrs. Gandhi is still relevant for India today. It is hard to keep some bad ideas out, especially if such bad ideas create a constituency that benefits from their implementation. Even Nehru felt that times, and history, moves