Don’t blame Nehru’s socialism for the fate of Air India. First read the 1944 Bombay map

An Air India Ltd. on the tarmac at Indira Gandhi International Airport in New Delhi | Bloomberg

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AThe privatization of India is finally underway, albeit belatedly. Therefore, this led to conversations around the planned economy, and in turn blamed the socialist economy for India’s woes. These debates assume that India was forced to plan; this assumption undermines the country’s economic history and ignores the role Indian companies played in shaping the economic policy leading to independence.

In 1944, at the height of the Bengal famine and with the apparent inevitability of independence, JRD Tata and seven other industrialists and leaders – GD Birla, Purushottam Das Thakurdas, Ardeshir Shroff, Kasturbhai Lalbhai, Ardeshir Dalal, John Matthai and Lal Shri Ram – came together to draft a manifesto on the future of India’s economy after independence. This was known as the Bombay map, or more officially called An Economic Development Plan for India. The plan’s authors helped establish the Reserve Bank of India (RBI), the Federation of Indian Chambers of Commerce and Industry (FICCI), supported the Indian National Congress (INC) during the freedom struggle and even served on the Executive Council of the Viceroy during WWII.

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View on the economy

The Bombay map aimed to express the authors’ point of view on the post-independence economy. It included the following elements: a transition from agricultural domination to industrialization; the allocation of resources through central planning and the division of industries into “basic industries”, dominated by the state, and “consumer industries”, left to the private sector. From its inception, the plan recognized the primacy of the state in the organization of the economy and the supply of basic necessities to citizens. Historians such as Medha Kudaisya call the plan “a revolutionary idea” in state planning since it adopted a middle path for the private sector to coexist in a planned economy. On the other hand, Vivek Chibber in Locked in place, argues that the plan was a way for companies to consolidate their own vested interests. (Vivek Chibber, Locked in Place: State-Building and Late Industrialization in India (Princeton, NJ; Princeton University Press, 2006), 86.)

The main objective of the plan was “to double the current per capita income within fifteen years of its entry into force”, and to increase the production of electricity and capital goods. He then defined a reasonable standard of living, the cost of housing, clothing and food for individuals, housing needs and the provision of essential infrastructure such as sewage treatment, water and electricity. . He planned to achieve these goals in three “jumps” spread over five years, similar to the five-year plans. The table below reflects these priorities.

Graphic by Ramandeep Kaur | The imprint

Planners argued for a “mixed economy” model, where the government would take control of “basic industries” and the private sector would take over “consumer industries”. Basic industries included transportation, chemicals, power generation, and steel production. More importantly, they argued that nationalizing basic industries could reduce income disparities and that the government should prioritize basic industries over consumption to reduce poverty.. The planners conclude this section by saying, “for the success of our economic plan that the basic industries, on which ultimately all the economic development of the country depends, should be developed as quickly as possible”, stressing that the government should take a leading role in the economy to ensure their supply. This shows that the business community has recognized the centrality of the state in the construction of the Indian economy.

The plan was well received, with the approval of the FICCI, RBI Governor CD Deshmukh and the Viceroy, who, in response to the plan document, had established a planning and development department in 1944. (Try with prosperity). Newspaper editorials in India and abroad supported the plan. The Glasgow Herald commended planners for reflecting on issues such as “public health, population control and education” that “India’s political leaders [could not] to think, however urgent it may be. The New York Times reported that “the main political factions in India do not appear to offer such practical approaches,” reiterating the view that the Indian political elite had not considered political solutions to India’s problems. However, the plan document was also criticized for being inaccurate and a vehicle for the elite to advance their interests over the interests of the poor by KT Shah, secretary general of the AFN 1937-38 and Gulzarilal Nanda, future minister. of Planning (1951-63) and other economists. His calculations were based on statistics from 1932, which made his assumptions very outdated and he underestimated the costs of implementing his goals.

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Influence on economic planning

The paper was important because it reframed debates about state planning – from whether the state should dominate the economy to analyzing the extent to which the state should be involved in the economy. . Its influence on Indian economic planning is clearly visible in the aftermath of World War II and in the First and Second Five-Year Plans which prioritized agricultural development and industrial growth, respectively. It also paved the way for India to adopt a third way in structuring its political economy by offering the country the opportunity to combine aspects of Western capitalism, Soviet planning and Western socialism, allowing India to chart its own independent path. For many, the plan was a way for companies to signal to INC management that they were ready to accept state supremacy in the economy, while recognizing the role of the private sector in supporting consumer activity.

Insisting that Nehruvian’s socialism was the cause of India’s economic ills without acknowledging the political and economic backgrounds of post-independence India reflects an incomplete understanding of India’s formative years after independence. Bombay plan is an essential document for understanding the events that led to the creation of India’s planned economy, and reiterates the view that planning was not forced upon the country, but was widely debated in spheres private and public in the years leading up to independence.

Vibhav Mariwala studied history and anthropology at Stanford University. Opinions are personal.

(Edited by Anurag Chaubey)

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