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Mainstream, VOL LII, No 47, November 15, 2014

Nehru and Planning in India

Sunday 16 November 2014, by Girish Mishra

In 1937, the Congress formed Ministries in seven provinces under the Government of India Act of 1935. The massive vote received by the Indian National Congress even under a restricted franchise system aroused new expectations and imparted it with a great moral authority. It created an impression that the day was not far away when the Congress would come to power at the Centre.

In 1938, Subhas Chandra Bose succeeded Nehru as the 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. He said: “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 socialist 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 for 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.”

The long-period programme was to tackle the problem of increasing population and concentrate on eradicating poverty which, in turn, would necessitate the reform of land system and abolition of feudal relations, liquidation of rural indebted-ness, provision of cheaper credit, extension of the cooperative movement and modernisation of agriculture. Agricultural improvement alone would not be sufficient to eradicate poverty. Bose added: “A comprehensive scheme of industrial development under State ownership and State control will be indispensable. A new industrial system will have to be built up in place of old one, which has collapsed as a result of mass production abroad and alien rule at home. The Commission to be set up for planning will have to consider carefully and decide which of the home industries could be revived despite the competition of modern factories, and in which sphere large-scale production should be encouraged. However much we may dislike modern industrialism and condemn the evils which follow, we cannot go back to the pre-industrial era, even if we desire to do so. It is well, therefore, that we should reconcile ourselves to industrialisation and devise means to minimise its evils and at the same time explore the possibilities of reviving cottage industries where there is a possibility of their surviving the inevitable competition of factories. In a country like India there will be plenty of room for cottage industries, especially in the case of industries, including hand-spinning and hand-weaving, allied to agriculture.

“Last but not the least, the State, on the advice of a Planning Commission, will have to adopt a comprehensive scheme for gradually socialising our entire agricultural and industrial system in the spheres of both production and distribution. Extra capital will have to be procured for this, whether through internal or external loans or through inflation.”

The same year the Ministers of Industries of the Congress-ruled provinces met in Delhi and adopted a resolution which said: “This Conference ... is of the opinion that the problems of poverty and unemployment, of National Defence and of the economic regeneration in general cannot be solved without industriali-sation. As a step towards such industrialisation, a comprehensive scheme of national planning should be formulated. This scheme should provide for the development of heavy key industries, keeping in view our national require-ments, the resources of the country, as also the peculiar circumstances prevailing in the country.

“The scheme should provide for the establishment of new industries of all classes and for the development of existing ones.”

The Conference also urged that steps should be taken to start basic and heavy industries without delay.

In October 1938, the Congress President, Subhas Chandra Bose, set up the National Planning Committee (NPC) and requested Pandit Jawaharlal Nehru to become its Chairman. Initially, Nehru was reluctant to take up chairmanship of the NPC because he was so busy that he would not be able to do justice to the new assignment. He ultimately had to yield when Rabindranath Tagore conveyed to him through Anil Kumar Chanda that “there were only two modernists in the High Command—you and Subhas Babu”, and since Bose had become the Congress President, there was nobody left besides Nehru to head the NPC. Nehru replied 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.”

Nehru prepared a number of important documents to guide the NPC. He wanted to avoid unnecessary controversies and frictions and channelise the discussions in the desirable direction. At the very first meeting of the NPC, he cautioned: “I would like to stress the need for the committee to bear in mind that no conflict should arise between village and cottage industries. I would also urge the committee to suggest ways for the coordination of these two kinds of industries. It is also essential that we include a representative of labour in the planning committee.”

Coming to the details, he wanted a national minimum standard of living to be fixed and assured. In ten years national income and national wealth should go up by two to three times. After independence, the government 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 underlined for achieving food sufficiency, raw material sufficiency, expansion of the rural market and releasing labour for industries.

Planning must aim at liquidating illiteracy, eliminating epidemics, expanding health facilities and raising the average life span. A rational population policy would have to be framed to enable economic growth to improve the standard of living of an average Indian. Labour must be assured better and hygienic conditions of work and protection from sickness and accidents. Unemployment insurance and minimum wages must be provided statutorily.

Regional imbalances must be removed as far as possible so that national unity was strengthened and divisive forces and elements were kept at bay. Investment policies and location policies of both public and private sectors should be formulated by keeping this objective in view.

The fruits of development must be distributed in an equitable manner so that the gap between the rich and poor is reduced rapidly. The oppressed classes of the society must be provided reser-vations in the matter of jobs and also in the legislature so that they feel that they are not neglected and their voice also mattered.

The NPC put great emphasis on the promotion of scientific and technological research. Institutions were to be established to achieve this end. Latest technologies could be imported on selective basis but only to promote self-reliance in the years to come.

Peasants were to be guaranteed remunerative prices for their products and a reasonable relation was to be established between the prices of agricultural products and manufac-tured goods. Radical land reforms were to be carried out. Minimum wages were to be guaranteed to landless labourers. The sub-committee on land policy pleaded for cooperative farming so that resources could be used rationally.

The NPC under Nehru wanted to emphasise that India must work towards achieving the goal of an independent economy based on its own resources, its own market and, as far as possible, on its capital accumulation. During the 1950s and 1960s, books and research papers were authored to attack this model. It was emphasised that India must confine itself to small and cottage industries and keep away from large-scale industries. Had India listened to these advisers, we would have remained at a very low level of industrialisation. The so-called experts conveyed to the Government of India that it was futile to search for oil, but the credit goes to K.D. Malaviya who was encou-raged by Nehru to go ahead with the exploration work that yielded remarkable results. 

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: gmishra@girishmishra.com