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Indian Freedom Struggle (1707–1947 A.D.)

Notes capitalists as well as the Communists (barring brief sectarian phases), were all more or less agreed
on the following agenda: a multi-pronged strategy of economic development based on self-reliance;
rapid industrialization based on import-substitution, including of capital goods industries;
prevention of imperialist or foreign capital domination; land reforms involving tenancy reforms,
abolition of zamindari, introduction of cooperatives, especially service cooperatives, for marketing,
credit, etc., growth to be attempted along with equity, i.e., the growth model was to be reformist
with a welfare, pro-poor orientation; positive discrimination or reservation, for a period, in favour
of the most oppressed in Indian society, the Scheduled Castes and Tribes; the state to play a
central role in promoting economic development, including through direct state participation in
the production process, i.e., through the public sector, and so on.
Most important, there was agreement that India was to make this unique attempt at planned rapid
industrialization within a democratic and civil libertarian framework. All the industrialized
countries of the world did not have democracy and civil liberties during the initial period of their
transition to industrialism or period of ‘primitive accumulation’. Nehru and others including the
capitalists were acutely aware that they had chosen an uncharted path. Yet, they were committed
to it. Nobody in India ever argued for a variant of the model followed in parts of Latin America,
East Asia, etc., where an authoritarian government in partnership with the capitalists would push
through a process of rapid development in a hothouse fashion. It is this consensus, a product of
the nature of the national movement in India, which enabled India, virtually alone among the
post-colonial developing nations, to build, retain and nurture a functioning democracy.
Planning and the Public Sector
As early as the late nineteenth century, in the economic thinking of the early nationalists such as
M.G. Ranade and Dadabhai Naoroji, the state was assigned a critical role in the economic
development of India. This trend of seeking state intervention and not leaving economic forces
entirely to the market got further crystallized and acquired widespread acceptance in the inter-
war period, partly due to the influence of Keynesian economic ideas, the experience of the New
Deal in the US and the Soviet experiment. In 1934, N.R. Sarkar, the president of the Federation of
Indian Chambers of Commerce and Industry (FICCI), the leading organization of Indian capitalists,
proclaimed: ‘The days of undiluted laissez-faire are gone for ever.’ Voicing the views of the
leadership of the capitalist class, he added that, for a backward country like India, a comprehensive
plan of economic development covering all aspects of the economy, agriculture, industry, power,
banking, finance, and so on, chalked out and coordinated by a high-powered ‘National Planning
Commission’, was essential for India to make a structural break with the past and achieve her full
growth potential. In 1938, under the leadership of Jawaharlal Nehru, the greatest champion of
planned economic development for India, the National Planning Committee (NPC) was set up,
which through its deliberations over the next decade, drew up a comprehensive plan of
development, its various subcommittees producing twenty-nine volumes of recommendations.
Apart from the general recognition of the need for state planning, there was a wide consensus
emerging around the notion that the role of the state would not only involve the proper use of
fiscal, monetary and other instruments of economic policy and state control and supervision over
the growth process, but would also have to include a certain amount of direct participation in the
production process through the public sector. The famous Karachi Resolution of Congress in 1931
(as amended by the AICC) envisaged that ‘the State shall own or control key industries and
services, mineral resources, railways, waterways, shipping and other means of public transport’.
Indian business leaders were also, along with Nehru and the NPC, among the early proponents of
the public sector and partial nationalization. The critical reason for business support to the public
sector was elaborated in the Plan of Economic Development for India, popularly called the Bombay
Plan, authored by business leaders in 1945. The Bombay Plan saw the key cause of India’s
dependence on the advanced countries to be the absence of an indigenous capital goods industry.
Anticipating a basic element of the Second Plan strategy, the Bombay Plan declared, ‘We consider
it essential that this lack (of capital goods industries) should be remedied in as short a time as

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