2. Development Planning

Economic policies adopted in India after 1947 were conditioned by the colonial legacy and the prevailing international situation. The strategic design of these policies was tremendously influenced by the dominant ideology of the Indian national movement and the ideas of nationalist leaders, especially Nehru. At the time of Independence, India was in the stranglehold of stagnating per capita national income, static and semi-feudal agriculture, poorly developed industry and inadequate infrastructure, mass poverty, extreme unemployment and underemployment, massive illiteracy, high birth and death rates and deplorable health con- ditions. Independent India faced the gigantic task of undoing the damage caused by British Rule. There was a need to put in huge and organized effort on a national scale to achieve substantial progress on the socio-economic front. Towards this end, planning was accepted as the key strategy of India's developmental efforts.

Planning was considered a superior way of developing the Indian economy than the market mechanism. While the market gives priority to high-profit activities, planning makes a systematic utilization of the available resources at a progressive rate to ensure quick building of the productive capacity of the country. Planning was looked upon as an instrument that could enable the state to undertake several massive development projects and unemployment and poverty alleviation programmes. Furthermore, planning was essential to deal with difficulties caused by the partition of the country in 1947, that is, huge influx of refugees from East and West Pakistan and the loss of raw material-producing areas.

Several international developments in the early decades of the 20th century revealed the limitations of market mechanism with respect to both efficiency and equity. After the 1917 revolution, the Soviet Union became the first socialist state and adopted a planned economy model. Its remarkable achievements on the socioeconomic front greatly inspired the nationalist youth in India. Around the same time, the Great Depression of 1929-33 exposed the problems of a free market economy. Keynesianism, a product of the Depression, strongly advocated the case of economic management by the state through taxation and spending policies.

In fact, the economic critique of colonialism by the national movement and its explicitly articulated set of economic objectives provided the foundation to the strategy of development planning in India after Independence. While criticizing colonial underdevelopment and the dependent character of the Indian economy, Indian nationalists put forward the idea of a self- reliant independent economic development in which state planning would play the key role. In the 1930s, ideas on development planning were crystallized due to the influence of the Russian experiment, Keynesian economic ideas and the New Deal programme in the US seeking state intervention in the economic forces. The need for planning was so strongly felt that the Indian National Congress set up the National Planning Committee (NPC) in 1938 under the chairmanship of Jawaharlal Nehru. This plan was to have great implications on the post- Independence economic strategy in India. In addition to this plan, several plan documents were prepared along different ideological lines in the 1940s: the Bombay Plan was authored by India's eight leading capitalists, the People's Plan prepared by M. N. Roy took a left position, and the Gandhian Plan formulated by Shriman Narain pleaded for a self-sufficient village economy. However, there was a broad consensus among the Gandhians, the capitalists, the socialists and the communists on the necessity of planning as well as the nature and path of development to be followed after Independence.

Jawaharlal Nehru, the chief architect of planning in India and the country's first prime minister, was greatly influenced by democratic, socialist and Gandhian values. He believed that socialism and democracy were inseparable. Hence, he described democratic socialism as the vision of independent India that would seek to make democratic social transformation an integral part of the country's economic strategy. Nehru spoke of his approach as a third way that takes the best from all existing systems—the Russian, the American and others—and seeks to create something suited to one's own history and philosophy. He thought that planning introduced in a democratic manner could become the instrument for growth and reduction of inequalities while ensuring individual freedom and avoiding the violence of revolutionary change. He hoped for a society organized on a planned basis for raising humankind to higher material and cultural levels, to cultivation of values, of cooperation and ultimately a world order. He also considered planning a positive instrument for resolving conflict in a large and heterogeneous country.