ABSTRACT
Ever since the Aid-India Consortium was formed in 1958, aid has been accused of helping to repress or distort market forces. In 1958-63, this market critique had little impact on either Indian policy or foreign aid. Indian consensus around the Nehru-Mahalanobis view (of social democracy spearheaded by forced savings via capital-intensive and stateowned industrialization) complemented the donors’ neo-Keynesian consensus (around a ‘big push’, state-led even in a private enterprise economy, in which numerous expanding sectors would demand one another’s extra products) (Mahalanobis, 1955; Nurkse, 1953). On such models, aid would help the GoI to set up an infrastructural and industrial base for steady private-sector growth in India, and to maintain balanced expansion of markets, not to undermine them.
