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Mainstream, VOL LII No 36, August 30, 2014

Planning in India

Sunday 31 August 2014, by Girish Mishra

Ever since the ideas about planning took roots in India, certain political formations have been hostile to it. During the 1930s, the Hindu Mahasabha and, later, the Bharatiya Jan Sangh started attacking it. Later, when the Jan Sangh merged into the Janata Party, it took cudgels against it. It supported Morarji’s “rolling plan” which meant that planning was to be buried forever. Fortunately, the Morarji Government did not last long. When the saffron party came out of the government as the Bharatiya Janata Party, it began attacking the very concept of planning. It forgot that the Karachi Congress, which was presided over by Sardar Patel, which highlighted the Resolution on Fundamental Rights and Economic Programme, stressed that “in order to end the exploitation of the masses, political freedom must include real economic freedom of starving millions”. It called for the protection of industrial labour and a living wage for it, besides the abolition of all extra-economic compulsions, protection of women workers, prohibition of child labour and the right of labour to form unions to protect its interests and a substantial reduction in agricultural rent to provide relief to peasants.

When the Congress formed the National Planning Committee during the second half of the 1930s that was another landmark. In 1935, the Congress formed Ministries in seven provinces under the Government of India Act of 1935. The massive vote received by the party even under a restricted franchise system aroused new expectations and gave it a moral authority. It created the impression that the day was not far when the country was going to get independence.

In 1938, Subhash Bose succeeded Nehru as President of the Indian National Congress and presided over the 51st session at Haripura. In his presidential address, he spoke of the planned economic development of independent India on socialistic lines. To quote: “I have no doubt in my mind that our chief national problems relating to the eradication of poverty, illiteracy and disease, and to scientific production and distribution can be effectively tackled only along socialistic lines. The very first thing which our future national government will have to do would be to set up a commission for drawing up a comprehensive plan of reconstruction. This plan will have two parts—an immediate programme and a long period programme. In drawing up the first part, the immediate objectives which will have to be kept in view will be three-fold: firstly, to prepare the country for self-sacrifice; secondly, to unify India; and thirdly, to give scope for local and cultural autonomy.”

It was underlined that the state would work under the guidance of a Planning Commission which would bring under its purview the entire agricultural and industrial system. Extra capital would be arranged for this by internal or external loans.

Subhash Bose wanted to set up the National Planning Committee under Nehru’s leadership but Nehru was reluctant to take up the responsibility because of his personal problems. He was involved in sending a medical team to China and supporting the Republicans in Spain besides looking after States’ People’s Conference. But, he ultimately had to yield to the persuasion by Gurudev Rabindranath Tagore. He wrote to Nehru through Anil Kumar Chanda that “there are only two modernists in the High Command—you and Subhash Babu” and since Subhash Bose had become the Congress President, there was nobody left besides Nehru to head the NPC. Nehru wrote to Chanda on December 1, 1938: “I have written to Gurudeva separately. So far as the Planning Committee is concerned, I shall associate myself with it because I am intensely interested in planning. But all this kind of work requires a certain background, a certain atmosphere and a certain human material. I fear that much of this is lacking here. Still it is a good thing to begin thinking on right lines and make others to do so.”

In October 1938, the National Planning Committee (NPC) was set up under Nehru’s chairmanship and its members included top businessmen of the day, Dr J.C. Kumarppa, Prof Meghnad Saha, M. Visveswarayya, Prof K.T. Shah, N.M. Joshi, G.L. Nanda, Dr V.K.R.V. Rao, Dr Gyanchand, V.V. Giri and so on. In its very first meeting, Nehru underlined: “I would like to stress the need for the committee to bear in mind that no conflict should arise between village and cottage industries and bigger industries. I would also urge the committee to suggest ways for the co-ordination of these two kinds of industries. It is also essential that we include a representative of labour in the Planning Committee.”

On November 14, 1939, Nehru told a gathering of students and teachers of the University of Delhi that planning was not merely for industrialising the country, but it concerned almost all aspects of socio-economic life of the people. Even if one began with industrialisation, one would have soon to concern oneself with other areas of life. Nehru illustrated this by saying: “The opening of new factories would not usher in the millennium till the purchasing capacity of the masses, which is very low at the moment, is apparently raised. That brings us face to face with the problems of currency, exchange and prices.” Not only this but one must deal with the vested interests hindering the development of productive forces.

It was pointed out that planning would be undertaken only after the country became independent and political power was transferred to the Indians. Prof K.T. Shah stressed that planning in any real sense could be possible only within the framework of socialism. Nehru was of a different view. He thought that for tactical reasons too much stress should not be laid on the fact that real planning was possible under socialism because this would frighten a number of “people and irritate the ignorant”. Development of productive forces at a faster rate might necessitate the changes in relations of production, making them more oriented towards socialism.

Nehru emphasised that the principal objective of economic planning in India was to attain self-reliance and it must be reflected in the external trade and balance of payments. The main thing was to avoid economic imperialism. The country must meet the needs of both agricultural goods and industrial commodities. He wanted a national minimum standard of living to be fixed and assured. The state in independent India must guarantee 2400 to 2800 calories to every person daily, 30 yards of cloth every year, and a covered area of 100 square feet for housing. The importance of agriculture must be under-lined for achieving food sufficiency, adequate raw material supply to the industrial sector, expansion of the rural market and releasing labour for industries. Moreover, planning was aimed at liquidating illiteracy, eliminating epidemics, expanding health facilities and raising the average life-span.

Regional imbalances and social inequalities must be rapidly reduced to strengthen the integrity of the country and bring about social cohesion. Investment and location policies of both public and private sectors must be determined by keeping these two objectives in mind.

Scientific and technological research must be promoted and institutions must be established all over the country. Technical institutions must be set up urgently to promote self-reliance in technologies.

The NPC had to be suspended in 1940 as the Congress started Individual Satyagraha and then came 1942 when the “Quit India” resolution was passed, leading to a countrywide uprising.

The activities of the NPC attracted the attention of Indian big business which came out with its own plan for development. It was known as the Bombay Plan or the Tata-Birla Plan. At the same time, a section of the Left, headed by M.N. Roy, came out with a People’s Plan.

The activities of the NPC aroused interest in both Britain and America. On April 6, 1946, Nehru was interviewed by the BBC. He told the BBC that the real problem of the country was economic and plans would be formulated and implemented to get rid of it. Feudalism in agriculture had to be ended to expedite its development. A few months earlier, Nehru had told a press conference that there was a general agreement in the NPC that “we should keep out foreign economic control” and that “control and development of Indian industries should be in Indian hands”.

It is propagated by certain sections that Mahatma Gandhi was against planning and especially the development of basic and heavy industries. This propaganda is malicious. Nehru along with Dr V.K.R.V. Rao met Gandhiji and there was a long discussion which was recorded by Rajkumari Amrit Kaur. Gandhiji was fully convinced and supported Nehru. To quote, he had “no quarrel with the industrialisation of India or heavy industries. I subscribed to the Karachi Resolution of which I was a part author.”

Though the Planning Commission came into being in 1950, the Plan in the real sense started with the Second Plan. Prof P.C. Mahalanobis brought experts from all over the world to his Indian Statistical Institute where they debated on various aspects of the Second Plan. Since then, India has executed a number of Five Year Plans.

But the situation radically changed in 1991 when Dr Manmohan Singh, as the Finance Minister, brought in neo-liberalism and reduced the role of the state and public sector. The Vajpayee Government and its Minister for Disinvestments, Arun Shourie, sold a large number of public undertakings.

With the ascendancy of Narendra Modi to power, ‘market fundamentalism’ has been dominating the government. The Economist (August 23) is elated when it comments: “Mr Modi has made some bold decisions.... He is scrapping the Planning Commission, a vestige of centralised economic thinking. In its place he wants a development think-tank, reportedly to host pro-market figures. That should herald more liberal policies and, as important, leave States rather than the Centre to make many of the decisions on policy and spending. If that helps spur competition among States, all the better.“

The author, a well-known economist, used to teach Economics at Kirorimal College, University of Delhi, before his retirement a few years ago. He can be contacted at:

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