Addressing a post-budget meeting of the Confederation of Indian Industry, arguably the largest representative body of private organised sector big business, on July 30, even if somewhat belatedly Prime Minister Narendra Modi clarified the BJP/NDA government’s economic development ideology. He described India Inc leaders as “wealth creators” and “driving force of India’s growth story”. Decoded, this means that socialism — the dominant ideology which posited government-promoted public sector enterprises (PSEs) as the driving force of the economy with the mission to dominate its “commanding heights” — has been given a quiet and overdue burial.

This public endorsement of private enterprise and entrepreneurship is necessary and commendable because Rahul Gandhi, the de facto chief of the Congress party and officially recognised leader of the opposition in the Lok Sabha, doesn’t seem to have learned any lesson from post-independence India’s disastrous romance with socialism officially adopted as the national ideology at the behest of his great grandfather, Jawaharlal Nehru, against the advice of Mahatma Gandhi and Sardar Patel. Inorganic Nehruvian socialism was continued by Rahul’s grandmother Indira Gandhi, who unmindful of the subcontinent’s sophisticated banking traditions dating back several centuries, nationalised the country’s major banks. In addition, she nationalised insurance, copper, and coal industries. Simultaneously she tightened the licence-permit-quota regime to prevent expansion of private industry.

Unfortunately, PSEs charged with the task of sparking a new industrial revolution in newly independent India, proved unequal to the task. National savings poured into PSEs for over four decades provided an average ROI (return on investment) of 1-2 percent cf. 12-15 in private industry. As a result, the expected PSE surpluses for investment in the social sector (education and health) never materialised transforming high-potential post-independence India, with an average annual GDP growth of 3.5 percent cf. 8-10 percent in China (post-1978) and the tiger economies of South-east Asia, into one of the poorest countries worldwide.

On the other hand in 1978 under the guidance of Deng Xiaoping who proclaimed that “to be rich is glorious”, communist China “took the capitalist road”. After that landmark year, China’s annual GDP growth rate leapt forward to 10-12 percent. Now some 40 years later, it has risen to $18 trillion, second only to the US while India’s GDP is an embarrassing $3.5 trillion.

In his tirades against the BJP and PM Modi, Rahul Gandhi also routinely abuses Ambani & Adani — India’s most successful businessmen and largest taxpayers. This is reminiscent of continuous disparagement of private industry and business during his grandmother’s regime. Contrary to Rahul’s belief, it is the duty of the Prime Minister — regardless of his political party affiliation — to encourage the country’s successful businessmen and entrepreneurs and proclaim them abroad. Informed public opinion should discourage reversion to anti-private enterprise socialism which has beggared the nation.

Also read: “I believe Nehru’s greatest failure was to ignore primary education…”