The Nehruvian model and the economic reforms of 1991 represent two distinct approaches to India’s economic development. Here’s a breakdown of their key differences:

Nehruvian Model (Pre-1991):

• Focus: Import substitution industrialization (ISI) – building domestic industries to reduce reliance on imports.
• Role of Government: Strong state intervention through Five-Year Plans, directing investment into heavy industries like steel, coal, and power.
• Trade: Protectionist policies with high tariffs on foreign goods to shield domestic industries.
• Public vs. Private Sector: Dominant role for Public Sector Undertakings (PSUs) with limited private sector participation.

Economic Reforms (1991 onwards):

• Focus: Liberalization, Privatization, Globalization (LPG).
• Role of Government: Reduced government control, allowing market forces to play a bigger role.
• Trade: Lowering tariffs and promoting exports to integrate with the global economy.
• Public vs. Private Sector: Increased role for the private sector, with disinvestment of PSUs in some areas.

Here’s a table summarizing the key differences:

The reforms aimed to address the limitations of the Nehruvian model:

• Slow growth: The focus on heavy industries yielded slow economic growth.
• Inefficiencies: PSUs often faced bureaucratic hurdles and inefficiencies.
• Limited competition: Protectionism stifled innovation and competition.

The reforms have had mixed results:

• Faster growth: India’s economy grew at a faster pace after 1991.
• Increased foreign investment: The reforms attracted foreign investment and technology.
• Poverty reduction: Poverty rates have declined significantly.

However, challenges remain:

• Income inequality: The benefits of growth haven’t been evenly distributed.
• Job creation: The shift to a service-oriented economy hasn’t created enough jobs.
• Rural development: The reforms haven’t adequately addressed the needs of the rural sector.

In conclusion, the shift from the Nehruvian model to the 1991 reforms reflects a move towards a more market-oriented economy. While the reforms have led to growth, addressing inequality and rural development remain crucial for India’s economic future.