Liberalism is distinguished by its focus on the primacy of the individual in all spheres of human life—political, economic, and social. Individual well-being is the standard to assess suitability of norms, customs, policies, and institutions. As Adam Smith and Friedrich Hayek have demonstrated there is no conflict between pursuit of self-interest and social good. Liberalism helps identify the rules necessary to achieve the harmony between self-interest and social good: limited government, rule of law, private property, free competition, and voluntary interactions.
India’s liberalism has evolved through stages that first emphasised earthly life and materialism, then social reforms and political independence, and now economic and social freedom.
Ancient liberalism of materialism
The culture as old as India’s would obviously have a strand of thought that is labelled today as liberalism or libertarianism. Liberalism is a philosophy for living life on this earth. It does not directly concern itself with, or rather leaves individuals free to choose their beliefs, about after-life. The major focus of much of Indian philosophy has been on the life before and after the one on earth and their interconnections: to explain the status in the current life by considering what was done in the previous lives and to predict the future life by evaluating the conduct in this life. Nevertheless, many thinkers brought in earthly enjoyments and material aspects to articulate a philosophy of living this life, Charvaka being the most prominent of these thinkers. Their focus on the good and virtuous life to be lived on this earth could be seen as the first stage of liberalism in India.
Modern liberalism in India took roots during the social reform movements of the middle and late nineteenth century. Raja Ram Mohan Roy, Gopal Krishna Gokhale and others launched a systematic attack on anti-life social practices like sati and the ban on widow remarriage through movements like the Brahmo Samaj and Arya Samaj. These movements influenced a large section of the population, particularly in eastern and western parts of India, where they still have a following. Despite the start much remains to be done in this area of social reforms.
With the rise of demands for independence from the British, the social reform liberalism gave way to the liberalism of political independence.
Liberalism of political freedom
Intense discussions and debates engaged all activists not only about strategies and tactics to get the British to quit India. They also focused on the type of political and economic system that India should adopt post-independence. Social reformers as well as freedom fighters all worked under the banner of the Congress Party.
The exposure to and attraction of Fabian socialism for many leading freedom fighters shaped the debates about India’s future political and economic institutions. Socialists formed a separate Congress Socialist Party and the liberals formed a liberal group, but they all worked under the Congress Party umbrella. The Indian National Congress was the pre-eminent arbiter of the freedom struggle, whether of social reforms or political independence.
Jawaharlal Nehru’s affection for Fabian socialism as well as Soviet communism was the most critical factor in determining India’s path towards democratic socialism. Nehru shaped political institutions so that democracy could take root despite a very large illiterate and poor population, and an inexperienced political leadership. India was the shining star of democracy among the countries that achieved independence from the colonisers in the first of half of the twentieth century. India’s democracy, however much chaotic and dynastic, is widely viewed as her singular achievement.
Soviet-style five-year plans came to rule the economic life of independent India. Rapid, large-scale industrialisation was deemed to be impossible without the state dominance of the ‘commanding heights of the economy.’ Indian people were seen lacking in resources, capital, and entrepreneurial and managerial talents. The Indian government therefore took over the responsibilities of economic development. No one asked if the people of India did not have the capital and the talent, where the government of India would acquire them from. Despite the existence of private airlines, railways, automobile factories, steel mills, and power plants, there was a lack of confidence in India’s private sector. Many of these companies had successfully competed in international markets. India’s share of trade in manufactured goods and machinery was higher at the time of independence than it has been any time since. Nonetheless the state dominated the economy.
Despite the all-powerful planning commission and all-pervasive five-year plans, Nehru left alone whatever remained of the private trade and industry. He did however try to collectivise agriculture in line with the Soviet model. This attempt united all the disparate liberal groups in the country, leading to the formation of a new political party, the Swatantra Party. This party of farmers, small traders, and liberal intellectuals became the main opposition party in the Parliament after the 1967 general elections.
With the successful war against Pakistan and the campaign slogan of ‘Garibi Hatao’ (Eliminate Poverty) Indira Gandhi decimated the Swantantra Party in the 1971 election. It never recovered from the blow. The first political challenge to central planning was summarily squashed, but it proved successful in convincing the political establishment not to try collectivisation of agriculture again. Lessons of Swatantra Party’s failure though remain to be systematically analysed and understood.
Indira Gandhi changed the focus of planning from state-led growth to state-directed redistribution. The lack of certainty of electoral victory, unlike her father, induced Indira Gandhi to use the machinery of the state for electoral politics. Redistributive populist policies became the norm: nationalisation of banking and insurance industries, subsidies to vote banks defined by caste, class, or religion, licensing of firms and industries, heavy import tariffs and restrictions.
A few of these policies, it must be noted, were necessitated by the inherent contradictions of the state-led growth. The state dominance of the economy had stifled private initiative and the resources required to fulfil grandiose plan targets were forever short. The state had to engage not in just sectoral but even firm-level planning and allocate each ounce of capital very carefully, balancing all the time necessities and luxuries so as not to squander any amount of resource.
Nehru’s democratic socialism metamorphosed into Indira Gandhi’s license-permit-quota socialism. She produced the unique brand of Indian socialism. The slippery slope of planning—the logic of more and more intensive and extensive government interventions and controls—just could not be escaped.
Liberalism of economic freedom
B R Shenoy’s famous Note of Dissent on the Second Five-Year Plan can be seen as the foundation from which the challenge to planning and the loss of economic freedom began. Until his death in 1978, he tirelessly argued for denationalisation, privatisation of public sector enterprises, responsible monetary policy, rejection of foreign aid, open competition, free trade and the abolition of central planning. A D Shroff, a Bombay businessman, started the Forum of Free Enterprise to educate the public about the vices of planning and virtues of private markets. M R Pai has ably carried forward the mission of the Forum. Minoo Masani, one of the founders of the Swatantra Party, launched several freedom organisations. His journal, Freedom First, and the Indian Liberal Group continue to discuss and apply liberal principles and policies.
A new farmer organisation took shape under the leadership of Sharad Joshi. He had resigned from the Indian Administrative Service to become a farmer, but the plight of agriculture under the policy of forced industrialisation turned him into a political activist. He founded Shetkari Sanghathana, the only farmer’s organisation that demands removal of all subsidies in exchange for freedom to trade. Its political arm, the Swatantra Bharat Party, has played a noteworthy role in the politics of Maharashtra state. Madhu Kishwar’s magazine Manushi provides uniquely gendered liberal analysis of the economic and social problems.
All these sustained attempts were inadequate given the scale of the problem. Nonetheless, India did begin on the path of liberalisation in 1991 when faced with a severe foreign-exchange crisis by opening up international trade and abolishing the license-permit raj.
The real challenge then lies in further liberalisation of the domestic sector—the agenda set out by Dr Shenoy decades ago. The little progress on this second phase of reforms is clear indicator of the lack of understanding on the part of political and intellectual leadership of the broader framework of policies and institutions that can harmonise personal interest with public interest.
Two men politically responsible for the 1991 liberalisation are the then Prime Minister P V Narasimha Rao and his finance minister, Manmohan Singh. Mr Rao publicly repudiated his own policies and has proclaimed that they were a mistake. Dr Singh has shown little enthusiasm in explaining and defending them with the general public. Reforms are seen as the domain of technocrats. Without the public support, the harder reforms of privatisation of PSUs, liberalisation of agriculture and labour markets, abolition of the reservation for the small-scale sector, rationalisation of subsidies would be impossible to implement. And without these reforms, India will not be able to sustain its high-growth rate trajectory.
New liberal organisations have come up since the 1990s to bolster the efforts of the earlier ones. Some of these have survived and continued the struggle whilst some have not. But all these experiences have created a stronger breed of committed liberals in India than ever before. Though the Association of Youth for a Better India (AYBI) in Mumbai did not survive, one of its founders established another organization—Praja, which is doing remarkable work in accountability in Mumbai. Lok Satta, Liberty Institute, Indian Liberal Group (ILG), Liberal Group Kerala, and Centre for Civil Society (CCS) are the old hands in the Indian liberal canvas. Jayaprakash Narayan’s Lok Satta movement has transformed itself into a political party and has won a seat in the Andhra Pradesh assembly.
Recent elections have seen a whole new wave of alternative politics which independent candidates as well as new parties and groups entering the political playground. Whilst most of these parties argue for liberal governance in their policy prescriptions, some like the Jago Party are more aggressively liberal when it comes to economics. Sanjeev Sabhlok’s Freedom Team of India aims to recruit 1500 liberal political leaders before general elections 2014. Flowering of younger liberal organisations—Prabodh, Centre for Public Policy Research, Pratigya, Liberal Youth Forum—hold out the hope of a much larger and diverse liberal network. The Friedrich Naumann Foundation has had an important role in supporting liberal initiatives in India.
India’s first freedom struggle gained political independence from the British in 1947. Successful flourishing of the democracy since then has fulfilled the political part of the liberal project. However the Indian state has continued to dominate the economic and social life of its citizens. The Second Freedom Struggle shall then deliver economic and social freedom to the people of India. To the Second Freedom Struggle!