How Socialism Ruined My Country

How my country has fared under Socialism. Are people living under socialism better off?

South Korea

South Korea, a country that had much worst colonial history than India. It has witnessed the brutal Japanese colonialism and was ravaged by the Korean war in the 1950s, at that time in the 1950s, India had all the institutions left by Britain to build a new economy for a new country. Today South Korea is a developed economy and India is still a developing nation.

2/3rd of the poorest people of the world live in only five countries and India is one of those countries.

What happened? What went wrong?

There are multiple things responsible for India’s slow development process. let us start with the first culprit

India’s first Prime Minister’s love for the so-called Socialism.

India copied the concept of Socialism from the soviet union. In USSR, when Lenin introduced the new economic policy in 1921, he said a state should hold everything in the economy Means the government should have absolute control over the market and economy. The Market had no role to play in it. Everything was nationalized.

Nehruvian Socialism

Jawaharlal Nehru tried to build India’s bureaucratic and Economic model based on the model of the Soviet Union. But soviet union itself could not survive its own model and as a result soviet union was dissolved in 1991.

Socialism believes in making companies and businesses nationalized.

 Nationalization means when a government takes control of a company or industry. However, this so-called model of socialism to run a country always fails. Socialism promotes the idea of having control over all businesses and taking money from rich through heavy taxation and giving it to poor people.

Jawaharlal Nehru and Tata Airlines

Prominent Indian businesspersons never liked Nehru’s economic policies. Many said that Jawaharlal Nehru hated Businessman because of his pro-socialism ideology.

Once there was a Tata airline in India founded by JRD Tata and was making a good profit. Jawaharlal Nehru approached JRD Tata and Said, JRD Profit is the dirty word. Nehru nationalized Tata airlines and made it Air India. Today we all know how air India has failed. That is why the Government should never take control of companies.

Poverty and Literacy in India

In 1947 the literacy rate of India was just 12 percent and 65 percent of the Indian population was living in poverty.

Socialism offers straightforward solution to end poverty by increasing more funding to poverty programs. They believe that they need to transfer more money through government taxation from people who have money to people who don’t.

However, giving poor people free stuff and free subsidies through government programs makes them lazy. For developing the economy of any country, encouraging more people to work is important. This kind of socialism is also the reason why India lagged behind in terms of Innovation.

Complicated Bureaucratic Mechanism

Let me point out the Difference between Nehru and Lee Kuan Yew, the Father of Singapore. Lee first decided to focus on manufacturing products and encouraging entrepreneurs to start new businesses for attracting the foreign investment then he focused on building a bureaucratic mechanism, which will help the economy to grow.

Indian Bureaucracy

Nehru on the hand went on to create a bureaucratic mechanism after mechanism, which made the whole system very complicated, which did not help the economy to grow. Now, Singapore is a developed economy and pretty freaking awesome.

The License Raj

From 1947 to 1990, licenses were required to start or run a business in India. Simultaneously, the government’s bureaucracy was so complicated that getting licenses or permits was very difficult and that is the reason middle class or lower middle class never dared to open a business. Only a few rich people could get the licenses either by bribing or by using the favors given by the Indian politicians.

However, in 1991, PV Narasimha Rao became the prime minister of India and brought significant economic reforms. PV Narasimha Rao along with his Finance minister Manmohan Singh abolished License Raj and liberated Indian economy.

The Modi Factor

After 1991, the next big reforms to start or open a business are being implemented by Narendra Modi, India’s 14th Prime minister.

Prime Minister Modi took the following steps for ease of doing business.

  • Firstly, he encouraged Indian youth to come forward for becoming the active part of startup ecosystem of India.
  • He reduced the layers of Bureaucracy and implemented E governance so that no one would need to go from one government office to another for registering a startup. Now pretty much all procedures of registering startups can be done online.
  • Then Narendra Modi did the remarkable work at speeding up the judicial system.

Before Narendra Modi’s Goverment, if someone had violated your business patent, you had to fight for many years in court. Businesses were tired of wasting time in Indian Courts. Now the judicial system is showing some good pace in solving matters.

The next step taken by Modi is not yet fully successful.

As I already told you because of the Nehruvian socialism and the license raj general public of India was too afraid to enter into business. Many people of India still have anti-business sentiments, which were nurtured during the socialist era.

We are yet to see how more and more people of India utilize this opportunity because under prime minister modi India’s ranking of ease of doing business has improved from 142 to 77. Modi further aims to take it to below fifty.

We saw how historically India has handled its economy now let’s see what can be done in the future to improve it further and Why India is lagging behind China? (Start Watching at 5:56

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