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The country was on the brink of bankruptcy and was saved by a reluctantly ratified economic liberalisation program.
However, since then, there has been no looking back for the Indian economic landscape.
India adopted a planned and mixed economy, as is known, soon after Independence.
Most of the industrialists even before Independence supported some form of government control or regulation over the production of products and rendering of services. They issued a formal plan regarding this which was termed the “Bombay Plan.”
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The rationale behind it was that the newborn Republic of India’s industries are still nascent and requires governmental protection.
This system was called the ‘License-Permit-Quota Raj’ by Chakravarti Rajagopalachari, the last and only Indian Governor-General of India.
Rajaji, as Rajagopalachari was fondly called, favoured freedom in everything whether it be in one’s life or the economy of one’s country.
In 1959, in opposition to Nehru and Congress’s economic policies, he founded the Swarajya Party, espousing free markets, trade and commerce.
Very few in India then stood unrelentingly against the idea of an authority dictating terms to a person.
For them, personal liberties were sacrosanct and one of the foremost among those liberties was the liberty of a person to engage in manufacturing, trade and commerce without any artificial, manmade hindrances.
One such stalwart of economic freedom was Bellikoth Raghunath Shenoy or BR Shenoy.
Shenoy was born near Mangaluru on June 3, 1905. His ancestors were had come from the village of Bellikoth near present-day Ajanur in Kerala’s Kasargod district.
It is not known where he did his schooling but in 1929 he ranked first in the MA (Economics) examination at the Benares Hindu University and then went to the London School of Economics where he studied for an MSc and PhD between 1929-32.
He did, during his students years, participate in agitations against the British and was jailed at Nagpur. He was highly influenced by Madan Mohan Malaviya and it was the supposed reason that he came to Benaras to study at the university founded by him.
In January 1931 he was much influenced by a lecture titled “Prices and Production” by the famous Austrian-British economist Friedrich Hayek and in the same year, published an essay, “An Equation for the Price Level of New Investment Goods,” in the ‘Quarterly Journal of Economics’ marking him as the first Indian economist to have research published in a reputed scholarly journal.
After returning from London, he became a professor and taught in Pune’s Wadia College, Ahmedabad’s Gujarat University and the University of Ceylon. The last of which brought him further years of association with the Government of Ceylon (Sri Lanka) where he worked at the government’s Commission on Currency and the Department of Commerce.
He returned to India and became the principal of LD Arts College at Ahmedabad in 1942.
From 1945 to 1954, he worked in various prestigious positions.
He joined the Reserve Bank of India in 1945 and while working there he also became the Far Eastern Representative of the International Monetary Fund (1948) and an Alternate Executive Director of the International Monetary Fund as well as of the World Bank (1951-53).
In 1954, Gujarat University, where he had previously worked, had started the School of Social Sciences and appointed him its first Director where he remained till 1968.
It was during this period an act of his made him known throughout the echelons of the government and bureaucracy as a staunch free-market advocate.
In 1955, Shenoy was appointed to the Panel of Economists – a group of 21 eminent economists selected to appraise the Second Five Year Plan (1956-61).
He was the only one to have resisted much of the Plan’s logic and appended “A Note of Dissent on the Memorandum of the Panel of Economists.”
In the Note, he stated his opposition to the Panel’s recommendations and the entire Plan Frame which included heavy industrialisation of the country.
He explained in the Note that it will be a disaster as the money required for the Plan does not exist, government spending will create inflation and doubted whether the industrial outputs envisaged in the Plan can be consumed within the country.
He further added that any sort of government intervention in the economy even for a short time will make it repetitive and create artificial distortions in commodity prices.
However, his words were unheeded but, as mentioned earlier, were prophetic.
Shenoy resigned from his job as a professor at the Gujarat University in 1968 and founded the Economic Research Centre at Delhi.
He wrote volumes upon volumes on the economic situation of the country through the Centre till his death on February 8, 1978.
There is hardly any mark of legacy available of Shenoy in the economics academia of the country even though he was a profound figure in the subject.
In his lifetime, most of his admirers were from Europe and America, including the Nobel laureate and prominent economist Milton Friedman.
He was extended the membership of the Mont Pelerin Society founded by his London School of Economics teacher Hayek and also had Friedman as its member.
Shenoy was also a member of the Indian Economic Association in 1957 and was a Visiting Professor at the London School of Economics his alma mater.
In 1996 a collection of his writing works were published as “Planned Progress or Planned Chaos.”
Even though it has been more than 30 years since India’s economy was liberalised, many of Shenoy’s economic principles and policies remain unrealised.