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By the decade of the 1930s, the idea of planning had already entered the domain of intellectual and political discussion in India. Many fresh proposals suggesting immediacy of planning in India were put forward, though the erstwhile British government remained almost immune to them. But these humble proposals of planning served their purpose once India became independent and decided to adopt a planned economy.
The credit of proposing the first blueprint of Indian planning is given to the
popular civil engineer and the ex-Dewan of the Mysore state, M. Visvesvaraya. In his book The Planned Economy of India, published in 1934, he outlined the broad confours of his plan proposal.6 His ideas of state planning were an exercise in democratic capitalism (similar to the USA) with emphasis on industrialisation—a shift of labour from agricultural to industries, targeting to double the national income in one decade. Though there was no follow up by the British government on this plan, it aroused an urge for national planning among the educated citizens of the country.
In 1934, a serious need of national planning was recommended by the Federation of Indian Chambers of Commerce and Industry (FICCI), the leading organisation of Indian capitalists. Its President N.R. Sarkar proclaimed that the days of undiluted laissez-faire were gone forever and for a backward country like India, a comprehensive plan for economic development covering the whole gamut of economic activities was a necessity. Voicing the views of the capitalist class, he further called for a high powered ‘National Planning Commission’ to coordinate the whole process of planning so that the country could make a structural break with the past and achieve its full growth potential.7
By the late nineteenth century, the economic thinking of the nationalists (such as M.G. Ranade and Dadabhai Naroji) was in favour of a dominant role of the state in the economy and doubted the prudence of the ‘market mechanism’. This thinking was further reinforced by the Keynesian ideas in the wake of the Great Depression, the New Deal in the USA and the Soviet experiment in national planning. Thus, the Indian capitalist class were also influenced by these events which were voiced in the FICCI articulation for planning.
Though the Gandhians and some of the business and propertied representatives were opposed to commit the party to centralised state planning (including Mahatma Gandhi),8 it was on the initiative9 of the INC
president Subhash C. Bose that the National Planning Committee (NPC) was set up in October 1938 under the chairmanship of J. L. Nehru to work out concrete programmes for development encompassing all major areas of the economy. Basically, the NPC was set up in a conference of the Ministers of Industries of the Congress-ruled States (though other states were also invited to participate) where M. Visvesvaraya, J.R.D. Tata, G.D. Birla and Lala Sri Ram and many others including academicians, technocrats, provincial civil servants, trade unionists, socialists and communists, etc., were also invited. The 15-member NPC with 29 sub-committees and a total of 350 members produced 29 volumes of recommendations.10 The work of the committee was interrupted when the Second World War broke out and in the wake of the Quit India Movement many of its members including the chairman were arrested, and between 1940 and 1945 the Committee had only a nominal existence. Though the final report of the NPC could only be published in 1949, many developments related to planning took place during the Interim Government upto 1946.
“A series of valuable reports were published which brought together the constructive thinking done by the committee and the sub-committees and the materials collected in the course of their work. The importance of the NPC lies not so much in these reports as in the wide interest it created throughout the country for co-ordinated planning as the only means of bringing about a rapid increase in the standards of living and its emphasis on the need for bringing fundamental changes in the social and economic structure.”11
Some of the important developments after the NPC was set up which prepared a foundation for coordinated planning in Independent India are given below:
(i) Post War Reconstruction Committee: Early in June 1941, the Government of India formed (on popular demand) a Post-War Reconstruction Committee which was to consider various plans for the reconstruction of the economy.12
(ii) Consultative Committee of Economists: A consultative committee of economists under the chairmanship of Ramaswamy Mudaliar was set up in 1941 as a ‘think tank’ to advise the four Post-War Reconstruction Committees for executing national plan for the country.
Though the committee suggested many plans for different areas of the economy, they had negligible practical significance as these suggestions were imbued with academic biases.
(iii) Planning and Development Department: After all possible delays, it was in 1944 that the government created a Planning and Development Department under a separate member of the Viceroy’s Executive Council for organising and co-ordinating economic planning in the country. Ardeshir Dalal (the controller of the Bombay Plan) was appointed as one of its acting members. More than 20 panels of experts were set up. The central departments and the governments of the Provinces and Indian states were invited to prepare detailed plans for industrialisation.12 This Department was abolished in 1946.
(iv) Advisory Planning Board: In October 1946, the Government of India appointed a committee called the ‘Advisory Planning Board’13 to review the planning that had already been done by the British government, the work of the National Planning Committee, and other plans and proposals for planning and to make recommendations regarding the future machinery of planning and also in regard to objectives and priorities. The Board strongly recommended the creation of “a single, compact authoritative organisation ... responsible directly to the Cabinet ... which should devote its attention continuously to the whole field of development.”14 This was an emphatic advice for the creation of a National Planning Commission, similar to FICCI’s view of 1934, which will have autonomy and authoritative say on the process of development planning, working in tandem with the Union Cabinet and also influencing the developmental decisions of the states. This happened in 1950 with the setting up of the Planning Commission.
The Board, in its Report of January 1947, emphatically expressed the opinion that the “proper development of large-scale industries can only take place if political units, whether in the provinces or states, agree to work in accordance with a common plan.”15 This suggestion worked as a great influence on the planning process of Independent India as it always tried to give unifying nature to development planning. But, this process also induced a serious tendency of centralisation in the Indian planning to which a number
of states were to pose objections and straining the centre-state relations, time and again.16 However, the political leadership, right from the 1920s, was very conscious of the need for decentralised planning in the country.17
45. Out of these eight industrialists, Purshotamdas Thakurdas was one among the 15 members of the National Planning Committee (1938);19 J.R.D. Tata,
G.D. Birla and Lala Sri Ram, were members of the sub-committees (29 in total) of the National Planning Committee.20
The popular sentiments regarding the need of planning and criss-cross of memberships between the NPC and the Bombay Plan club made possible some clear-cut agreements between these two major plans, which ultimately went to mould the very shape of the Indian economy after Independence. We may have a look at some of the very important agreements:21
(i) A basic agreement on the issue of the agrarian restructuring—abolition of all intermediaries (i.e., zamindari abolition), minimum wages, guarantee of minimum or fair prices for agricultural products, cooperatives, credit and marketing supports.
(ii) Agreement on rapid industrialisation for which both the plans agreed upon an emphasis on heavy capital goods and basic industries (the Bombay Plan had allocated 35 per cent of its total plan outlay on basic industries).
(iii) Taking clues from the Soviet Planning, the NPC and the Bombay Plan both were in favour of a simultaneous development of the essential consumer goods industries, but as a low-key affair.
(iv) Both the plans agreed upon the importance of promoting the medium- scale, small-scale and cottage industries as they could provide greater
employment and require lesser capital and lower order of plants and machineries.
(v) Both the plans wanted the state to play an active role in the economy through planning, controlling and overseeing the different areas of the economy, i.e., trade, industry and banking, through state ownership (public sector) or through direct and extensive control over them.
(vi) Large-scale measures for social welfare were favoured by both the plans, which suggested to be based on issues like, right to work and full employment, the guarantee of a minimum wage, greater state expenditure on housing, water and sanitation, free education, social insurance to cover unemployment and sickness and provision of utility services such as electricity and transportation at a low cost through state subsidies.
(vii) Both the plans agreed upon a planning which could do away with gross inequalities. Through measures like progressive taxation and prevention of concentration of wealth. Inequality was considered undesirable as it tended to restrict the domestic market.
Espousing the spirit of the Gandhian economic thinking, Sriman Narayan Agarwal formulated The Gaudhian Plan in 1944. The plan laid more emphasis on agriculture. Even if he referred to industrialisation, it was to the level of promoting cottage and village-level industries, unlike the NPC and the Bombay Plan which supported a leading role for the heavy and large industries. The plan articulated a ‘decentralised economic structure’ for India with ‘self-contained villages’.
It needs to be noted here that the Gandhians did not agree with the views of the NPC or the Bombay Plan, particularly on issues like centralised planning, dominant role of the state in the economy and the emphasis on industrialisation being the major ones.22 For Gandhi, the machinery, commercialisation and centralised state power were the curses of modern civilisation, thrust upon the Indian people by European colonialism. It was industrialism itself, Gandhi argued, rather than the inability to industrialise,
which was the root cause of Indian poverty. This was until the 1940s that the Congress supported the above-given view of Gandhi to mobilise a mass movement against the colonial rule. But it was in the NPC that the Congress tried to articulate a different view on these issues, almost taking a break from Gandhi’s ideas. The very first session of the NPC was brought to an impasse by J.C. Kumarappa (the lone Gandhian on the 15-member NPC) by questioning the authority of the NPC to discuss plans for industrialisation. He said on the occassion that the national priority as adopted by the Congress was to restrict and eliminate modern industrialism. The impasse was normalised after Nehru intervened and declared that most members of the NPC felt that large-scale industry ought to be promoted as long as it did not ‘come into conflict with the cottage industries’.23 This was a long-drawn ideological impasse which made it necessary to articulate the Gandhian view of planning via this plan.
In 1945, yet another plan was formulated by the radical humanist leader M.N. Roy, Chairman of the Post-War Reconstruction Committee of Indian Trade Union. The plan was based on Marxist socialism and advocated the need of providing the people with the ‘basic necessities of life’.24 Agricultural and industrial sectors, both were equally highlighted by the plan. Many economists have attributed the socialist leanings in Indian planning to this plan. The common minimum programmes of the United Front Government of the mid-nineties (20th century) and that of the United Progressive Alliance of 2004 may also be thought to have been inspired from the same plan. ‘Economic reforms with the human face’, the slogan with which the economic reforms started in the early 1990s also has the resonance of the People’s Plan.
After the reports of the NPC were published and the government was set to go for the five-year plans, a lone blueprint for the planned development of India was formulated by the famous socialist leader Jayaprakash Narayan—
the Sarvodaya Plan published in January 1950. The plan drew its major inspirations from the Gandhian techniques of constructive works by the community and trusteeship as well as the Sarvodaya concept of Acharya Vinoba Bave, the eminent Gandhian constructive worker. Major ideas of the plan were highly similar to the Gandhian Plan like emphasis on agriculture, agri-based small and cottage industries, self-reliance and almost no dependence on foreign capital and technology, land reforms, self-dependent villages and decentralised participatory form of planning and economic progress, to name the major ones.25 Some of the acceptable ideas of the plan got their due importance when the Government of India promoted five year plans.
By the early 1960s, Jayaprakash Narayan had become highly critical of the Indian planning process, especially of its increasing centralising nature and dilution of people’s participation in it. Basically, the very idea of democratic decentralisation was disliked by the established power structure, namely, the MLAs/MPs, the bureaucracy and the state-level politicians.26 This led the Jayaprakash Narayan Committee (1961) to decide against the centralising nature of Indian planning. The committee pointed out that after having accepted Panchayati Raj as the agency responsible for planning and execution of plans, there is “no longer any valid reason for continuing the individual allocations subjectwise even to serve as a guide.”27
Disregarding the humble advice of the committee, central schemes like small farmers development agency (SFDA), drought-prone area programme (DPAP), intensive tribal development programme (ITDP), intensive agricultural district programme (IADP), etc., were introduced by the government and were put totally outside the purview of the Panchayats.
It was only after the 73rd and 74th Amendments effected to the Constitution (1992) that the role of local bodies and their importance in the process of planned development was accepted and the views of Jayprakash got vindicated.
The idea for the need of a planned development of India became more and
more popular by the decade of the 1940s. It was under this popular pressure that the Government of India started taking some planned actions in this direction. In the 1940s, we see several area-specific reports being published:28
(i) Gadgil Report on Rural Credit
(ii) Kheragat Report on Agricultural Development
(iii) Krishnamachari Report on Agricultural Prices
(iv) Saraiya Report on Cooperatives
(v) A series of reports on Irrigation (ground water, canal, etc.)
All these reports, though prepared with great care and due scholarship, the government had hardly any zeal to implement the plans on their findings. But independent India was greatly benefited when the planning started covering all these areas of concern.
There is no doubt in drawing the conclusion that prior to Independence, there was thus a significant measure of agreement in India between the Government of India under the Secretary of State, the Indian National Congress, prominent industrialists and the others on the following principles:29
(i) There should be central planning, in which the state should play an active part, for social and economic development to bring about a rapid rise in the standard of living;
(ii) There should be controls and licencing in order, among other things, to direct investments into the desired channels and ensure equitable distribution;
(iii) While there should be balanced development in all sectors of the economy, the establishment of basic industries was specially important. In this, state-owned and state-managed enterprises have an important role to play. There were, however, differences of approach with regard to the specific fields to be allocated to the public and private sectors.
It is highly interesting and important to note that all the above agreements and opinions were reached through an evolutionary manner in the last two- decades before Independence in the deliberations and excercises regarding
the need for economic planning in the country.
“The plans prepared by the Governmnt of India, the Bombay Plan and other above-discussed plans (except the NPC and the Sarvodaya Plan) suffered from serious limitations. When they were prepared, it was known that transfer of power was to take place quite soon; but the exact form of the future government was not known, the plans consisted largely of proposals of experts, which were not effectively co-ordinated. They had no social philosophy behind them. With the advent of Independence, they became inadequate, though the thinking that had taken place on planning generally and its techniques proved useful for the future.”30