History of Indian economic thought: the forgotten subject

The dynamic political economy of today needs many of the economic thoughts that were propounded by our early nation builders to set this nation straight, again.

It is true that the world realised the importance of the history of economic thought long before India, as an integral part of economic education, for not just students and teachers but also policy makers and researchers. It is also recognised that this discipline (if well structured in schools and colleges) inevitably helped people integrate with the contemporary public policy discourse. However, it has not taken off in India yet, despite the knowledge globalisation, vigorously followed all these years.

After more than sixty years of independence, lack of interest among economics students has resulted in this discipline remaining at its infancy, covering only a few thoughts which the elite understand. Economic historian Mark Blaug remarked that “it is no secret that the study of the history of economic thought is held in low esteem by mainstream economists and sometimes openly disparaged as a type of antiquarianism”. However, compared to the history of western economic thoughts, the Indian economic thoughts are still in its embryonic stage.


Joseph Schumpeter, one of the most persuasive economists in history of economic thought, spelt out in his book History of Economic Analysis, the following three ‘profits’ or reasons for studying the discipline. One, studying history of economic thoughts provides a sense of direction and meaning to students. Two, it offers new ways to look at familiar problems. Three, the most important in Schumpeter’s own ranking, it provides new insights into the ways of the human mind.

The history of Indian economic thought is little known either in India or elsewhere. Hardly any research is being done by economists. The subject has the potential in offering a variety of principles that could help Economics evolve further. It is important to revitalise the discipline and instill a fresh zeal among students and others.

The basic foundation for teaching of Indian Economics as a separate subject were laid down by Dadabhai Naoroji. But it was Mahadev Govind Ranade who gave shape to Indian economics and succeeded in establishing it as a separate subject in the early days, much before the momentum gained for Independence movements. Indeed, he is hailed as the “father of Indian economics”.

There are arguments which indicate that the term “Indian Economics” was introduced by nineteenth-century Indian writers who believed that the Principles of Economics, as they are taught in the west, did not apply to Indian conditions. In fact, economist Brij Narain said there “is no science of Indian economics” as apart from the science of “general economics” because people in India are economically motivated as men in other parts of the world. This was, for example, witnessed by Ram Mohan Roy who stressed the importance of private property on the tradition of classical economics pursued by great economists and philosophers like Jeremy Bentham and Adam Smith.?
Economists like B R Ambedkar too advocated for radical ideas such as free banking (against government monopoly of printing legal tender), gold standard, decentralised planning, private property right, economic freedom or free enterprises, individual liberty, etc. Moreover, Ambedkar had well understood the knowledge problem in society and its relevance for decentralised planning rather than centralised planning (as perceived in the Independent India).
Unfortunately, one of the great tragedies that continues to exist in the history of Indian economic thought is the marginalisation of economic thoughts of stalwarts like R B Lotvala, V S Srinivasa Sastri, Lajpat Rai, Gopalakrishna Gokhale, Ranade, S V Doraiswami, B R Ambedkar, C. Rajagopalachari, B R Shenoy, N A Palkhivala, Bankimchandra Chattopadhyay, Minoo Masani and the likes, despite their original and novel contributions made to Indian economic thought.

India’s loss has become the west’s gain as some of S V Doraiswami and Ambedkar’s economic theories figured prominently in the 20th century western economic thoughts such as economic and political decision making in an environment of dispersed knowledge, alternative monetary system like denationalised production of money and decentralised approach to planning. Similarly, there are several theories of these stalwarts that have been considerably underestimated and, thus, excluded from the history of Indian economic thoughts. Eminent economists like Rajaji and Shenoy were staunch proponents of economic freedom in Independent India, Rajaji is indeed a “father of economic freedom”, envisioned for 21st century India. Similarly, late Nani Palkhivala argued profoundly for rationalisation of budget making and taxation programmes; R B Lotvala who founded The Indian Libertarian: Independent Journal of Public Affairs in 1954 based on the principles of free enterprises system to counter the socialist pattern that prevailed at that time.

Half baked analysis of fairly well researched works, poses another problem for the history of Indian economic thought. For instance, M K Gandhi’s views was that the higher education system should be in the hands of private sector that runs companies and corporation as it has incentive to run it efficiently, (instead of inefficient system of government) hardly find mention. Economist Narendra Jadhav once opined that the widespread ignorance of some of the Indian economic thoughts is because of the “intellectual slavery of the Indian society”. The future direction of the history of Indian economic thought depends on how open minded economists broaden the logical thinking with sound reasoning.

Excluding original contributions made by our own thinkers and economists is unethical and would result in collective failure to draw the right lessons from our antiquity, which is detrimental to the development of the discipline itself. The dynamic political economy of today needs many of the economic thoughts that were propounded by our early nation builders and thinkers to set this nation straight, again. Time will tell us how we move from here.

Photo: Sean Kirkpatrick