4 min readAug 15, 2026 06:30 AM IST
First published on: Aug 15, 2026 at 06:30 AM IST
Several posts on social media have underlined how the Leader of the Opposition ignored two leading corporate leaders at a private function in Delhi. His constant diatribe against the economy and vilification of those corporate giants were in the news. They remind us of the early decades of Independence, when socialism became the fad of the ruling class and hatred for profits and wealth creators was the prevailing order.
A recently released movie on an OTT platform deals with the consequences of that socialist mindset. It shows how in early 1991, India’s forex reserves tumbled below $1 billion, creating a massive balance of payments crisis. People attribute India’s economic turnaround to the reforms brought about by P V Narasimha Rao and Manmohan Singh. But the film highlights the role played by Prime Minister Chandra Shekhar, who was running a lame-duck government in 1990-91.
The crisis was so acute that then RBI governor S Venkitaramanan said that the only option left was to mortgage India’s gold reserves to the Bank of England and the Bank for International Settlements, Switzerland and borrow dollars. Chandra Shekhar, who began his political career under the tutelage of socialist stalwarts like Acharya Narendra Dev and Ram Manohar Lohia, faced an ideological dilemma. But Venkitaramanan convinces him that the country is more important than his socialism.
On this Independence Day, when India has comfortable forex reserves of $700 billion, including 880 tonnes of gold reserves, we can breathe easy. Our forex reserves more than doubled during the 12 years of the Narendra Modi government. But the events of 1991 remind us that we could have done much better had we not lost four decades after Independence to the fad of socialism.
It began with Jawaharlal Nehru’s visit to Moscow in 1927 to participate in the decennial celebrations of the October Revolution. He started calling himself a socialist after his return and declared in 1929, as the president of the Indian National Congress, that “India will have to go the socialist way”. When he persisted with this rhetoric, a revolt happened in the Congress Working Committee in 1936. Seven senior leaders, including Sardar Patel, Rajendra Prasad, C Rajagopalachari, J B Kripalani and Jamnalal Bajaj, resigned. Gandhi had to elicit a commitment from Nehru that he would not make socialism Congress’s official policy. Nehru was forced to honour that commitment as long as Gandhi and Patel were alive. But after 1950, he returned to his pet theme.
In 1955, the Congress session in Avadi, Tamil Nadu passed a resolution declaring a “socialist pattern of society” as the goal of his government. Policies that emphasised state-led growth and discouraged individual entrepreneurship through the licence-permit-quota system were put in place through five-year plans. The results were evident soon. The decadal data in 1965 showed that the poverty rate in the country had gone up from 52.66 per cent to 58.60 per cent. India was the only country to have continued with food rationing two decades after World War II. Agricultural productivity remained one of the lowest in the world. Lohia created a flutter in Parliament in 1963 when he asserted that 270 million Indians were living on a horribly meagre income of three annas (19 paise) a day while Nehru’s pet dog cost nearly three rupees a day.
Despite this disastrous experience, Prime Minister Indira Gandhi continued with those policies and used the infamous 42nd Amendment to insert “Socialism” into the Preamble. China discarded the fallacy of socialism in 1978, when Deng Xiaoping introduced “Four Modernisations”. The Soviet Union simply collapsed in the early 1990s. We finally managed to shed the socialist baggage in 1991 and began the new journey of economic openness and market reforms.
But those lost decades must not be forgotten, especially when some opposition leaders continue to rubbish our vibrant economy.
The writer, president, India Foundation, is with the BJP
A recently released movie on an OTT platform deals with the consequences of that socialist mindset. It shows how in early 1991, India’s forex reserves tumbled below $1 billion, creating a massive balance of payments crisis. 
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