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Mainstream, VOL LII No 37, September 6, 2014

Early Days of Planning : P.C. Mahalanobis

Saturday 6 September 2014, by Ashok Mitra

Ideology unites, bringing like-minded people under a common sky. But ideology also divides: friends, who have enjoyed one another’s company for long years during their adolescence and early youth, attending music, poetry and dance recitals together, watched together with avidity avant-garde films and had literary taste which differed only slightly from one another’s, suddenly realised from a chance happening that their political and economic points of view were sharply at variance. This is an experience which is rarely avoidable; a stage comes in life when past personal loyalties tend to weaken as ideological divergences appear to become increasingly insurmountable.

We, the small batch of friends crowding the Pandara Road apartment as our base in the 1950s, were in a sense fortunate; ideology did not yet intrude into our daily perambulations. The major reason must have been the euphoria which dominated a newly independent nation. We were living right in the nation’s Capital, important events were unfolding with us occupying the ringside seats. Some of us were in government, some outside, but the charisma of the Prime Minister, Jawaharlal Nehru, made victims of each and everyone. Even though the Home Minister, Vallabhbhai Patel, might have held other views, the thrust of Nehru’s personality blew away whatever reservations individual Ministers might have had concerning some of the Prime Minister’s assertions. India, his perorations put the theme across, would make nonsense of ideological divides, India’s general economic stance was bound to be Left-of-Centre, given the all-important need to eradicate poverty and inequalities and the accompanying crying need to push the economy forward through developing agriculture and industry at a very quick pace; a task which would be feasible only if the government played the leading role. The Planning Commission, put together by Nehru in 1950, reflected this spirit. It was somewhat of an odd mixture of radical-minded Cabinet Ministers, prominent represen-tatives of trade and industry, some extremely conservative civil servants who were the residual elements of the old colonial adminis-trative framework, and one or two harmless economists who knew little about planning or the processes of governance.

None of this unnerved the Left either. Nehru was full of the glorious achievements of Soviet Five-Year Plans which had transformed that socialist republic from its near-primitive state and had enabled it to have developed enough economic strength, including armed resources, to enable it to vanquish the hated Nazis. There were also effusive words concerning the just emerging People’s Republic of China. Chou En-lai had visited New Delhi a couple of times to thunderous welcomes and mutual camaraderie between the two countries oozed through the pores.

This was the general climate in the country and the national Capital in the 1950s. It was also the milieu in the flat at Pandara Road. While enjoying a close relationship with friends there, I could also find the time to maintain my contact with the Communist Party of India. It may now surprise many, the Communists constituted the leading Opposition group in Parliament, having captured roughly 10 per cent of the votes cast in the Lok Sabha polls in 1952. The party’s was therefore an important presence in New Delhi. I would, at least twice

or three times in the week, go over to the Communist Party’s commune at Bhupesh Gupta’s commodious Feroze Shah Road flat officially allotted to him. My friend, Ajit Dasgupta, and his wife, Sipra, both trained economists, and Ajit with a tripos from Cambridge, had decided to work full-time for the party and were accommodated at Bhupesh Gupta’s commune. A very quiet comrade, one of the politest and gentlest of persons I have ever come across, Tushar Chatterjee, who was elected from Serampur defeating the formidable Calcutta barrister, Sachin Chaudhuri, was also staying there; Tushar Chatterjee was later sucked into the frenzy of the Naxalite movement and disappeared in the wilderness. Also staying there was Dwijendra Nandi, then a very important figure in Left circles since he was the General Secretary of the India-China Friendship Association. He later attained celebrity status by his research in the National Archives which claimed to expose S.A. Dange’s confidential correspondence with the British authorities seeking clemency and pledging to give up his communist activities.

Bhupesh Gupta himself was quite an extraordinary individual. A short, diminutive man, scion of a land-owning family in Kishoregunj in East Bengal, he got involved with terrorist groups while still in his teens and was seized by the police. His rich father arranged to get him released and sent him off to England where, it was hoped, he would be called to the bar and develop a taste for earning money, finally returning home to safe, secure, luxurious living. Instead, he was quickly converted to revolutionary communism and was part of the close group of young Indian students in England which included Jyoti Basu, Snehangshu Acharyya, Mohan Kumaramangalam and P.N. Haksar. They congregated in Krishna Menon’s India League where they grew close to Feroze Gandhi. Through the mediation of the latter, Bhupesh Gupta also developed a kind of a cordial relationship with Indira Gandhi, who was then around in England. Their cordiality lasted for the rest of their lives.

It was at Bhupesh Gupta’s suggestion that I began writing economic notes for the Comm-unist Party journal, New Age. Of the Pandara Road crowd, only Mohit Sen knew of this extracurricular excursion on my part; he, of course, kept the fact to himself. I also remember Bhupesh Gupta choosing a name for ascribing the authorship of the notes. That particular pen name, Charan Gupta, I had later made use of for writing stuff in different periodicals during periods I was on a government assignment.

While all this was happening on the personal plane, P.C. Mahalanobis was creating a convulsion in the national Capital. Nehru had inducted him into the Planning Commission and he lost little time in taking charge of the country’s planning apparatus. He had as impeccable a Cambridge background as Nehru’s, who was overwhelmed by the sheer force of PCM’s personality and the boldness of his approach to the nation’s growth process. Mahalanobis convinced the Prime Minister that

the timid approach embodied in the First Plan was silly and laughable. India had huge natural and human resources and was capable of advancing at a far, far greater pace if only the authorities made up their mind. The key issue was to develop a strong heavy industry base

that could produce machinery for producing other machinery, thereby accelerating the growth of economic infrastructure, which was crucial for development of not just consumer goods industries but defence too. India had the basic raw materials and minerals; it had, too, a growing crop of young scientists, engineers and technologists to back up such a gambit, taking it to be a noble adventure. That was the only way to make secure the country’s place in the comity of nations. Mahalanobis made mincemeat of the sitting members in the Planning Commission and poured scorn on their easygoing, cautious, conservative approach.

Receiving enthusiastic support and encou-ragement from Nehru, PCM drafted an outline of the Second Five-Year Plan which captured the imagination of the nation’s intelligentsia. Given his scientific background, his presentation of the detailed features of the Plan was in clipped sentences, succinct and non-tolerant of any ifs and buts. In developing the model underlying this draft of the Second Plan, he had borrowed greatly from a model developed by the Soviet planners in the early 1930s. The message it carried was simple: investment as a proportion of national income had to increase sharply if the compulsion was to accelerate growth. Standard pleas to the people to save and invest more and consume less were hardly likely to have any impact. Rather than that, it was wiser to allocate an increasingly larger and larger share of what was invested for the purpose of producing machinery and even more machinery and equipment for producing capital goods and proportionately less and less for the consumer goods sector. If this trend continued for some time, there would be a steady relative shrinkage in the availability of consumer goods, the pro-portion of consumer goods in the total national output would fall, so that people would be automatically forced to raise their saving and investment; they could not eat up capital goods.

In the hoopla generated around the Maha-lanobis Plan, few either noticed or were prepared to question the suitability of such a model, in existing Indian conditions. Nearly everybody was for ambitious economic planning. Herd instinct was at work. Left ideologues, naturally, were happy beyond words. Nehru and Mahala-nobis had given them a great boost. Whether a soft state like India could enforce the discipline called for to translate into action the measures that were crucial for the effective implementation of the model was left unmentioned.

(Courtesy: The Telegraph)

The author, a noted economist who served in the Union Government in various capacities, is a former Finance Minister of West Bengal during the Left Front rule in the State.