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Indian Economic Policy

Notes every village self-sufficient in cloth. At the same time, the Gandhian plan wants the State to consider
the revival and expansion of rural cottage industries as the main plank of its industrial planning.
Gandhi emphasized the conflict between village industries and capital-intensive pattern of
industrialisation based on high degree of urbanisation. E. Haribabu of the Indian Institute of
Technology (Kanpur) writes : “The twin compulsions of reconstructing the economy and achieving
rapid economic development after Independence, prompted India’s rulers to adopt a model of
development based on the experience of the West : the implicit emphasis on capital-intensive
industrialisation and urbanisation. Over a time a distinct bias became apparent towards urban
settlements in general and big cities in particular”. Explaining the role of rural areas in the process of
industrial development of India in the post-Independence period, the late Annasaheb Sahasrabudhe
wrote : “The rural areas were encouraged to start such industries which provide urban population
with things like milk, vegetables, oil seeds, cotton and foodgrains and purchase from the urban areas
items such as cloth, oil and other manufactures”. The villagers have thus been turned into second
class citizens to supply cheap raw materials and semifinished products to the urban organised sector.
The principal element in this strategy is the transfer of all but most primitive jobs to the cities. In 1910,
village industries constituted 40 per cent of the labour force. By 1946, this had decreased to 10 per
cent. Today, they remain at two per cent.” Claude Alvares, therefore, questions in a very incisive
manner : “How long can we continue to assume the illusion that when the British destroyed local
industries, that was wicked, but that when we do so, it is desirable.”

Basic Industries
There is a general misconception about Gandhi being against the development of large-scale industries.
Actually, the Gandhian Plan recognises the need for and the importance of certain selected basic
and key industries in India, especially defence industries, hydro-electric and thermal power
generation, mining and metallurgy, machinery and machine-tools, heavy engineering, and heavy
chemicals. The Gandhian Plan would like the development of basic industries not to interfere with or
to hinder the growth of cottage industries. The most dynamic scientific aspect of the Gandhian model
is that the basic and key industries will be owned and managed by the State-they will be in the public
sector. On this point there is no difference between Nehruvian and Gandhian models of growth.
Generally, people assume that Gandhi’s emphasis on cottage industries and handicrafts is a clear
indication of his opposition to modern machinery. This is wrong. Gandhi is not against all machinery,
for the spinning-wheel itself is a piece of machinery. He protests, however, against the craze for
machinery and its indiscriminate multiplication. He believes that the factory system using extensive
machinery has become the source of exploitation of labour by a few capitalists. He welcomes machinery
and modern amenities wherever they lighten the burden of the villagers without displacing human
labour. Machinery is good when it operates in the interests of all; it is evil when it serves the
interests of the few.
If we carefully analyse the Gandhian model, we will find that the aim is to develop agriculture and
industries side by side and to integrate them. The handicrafts and cottage industries are emphasised
from the point of view of production as well as that of employment. After Independence. Nehru
dominated the Indian scene and Gandhi and his economic ideas were forgotten. During the short
period of the Janata rule 1977-79 as well and as in the Draft Sixth some of these ideas were incorporated.
In concernt terms the Gandhian model of growth calls for following changes in the present system of
planner.
(a) Employment-oriented planning to repeat production-oriented planning : The basic prem here
is that unemployment is our greatest enemy that in its solution lies the key to the problems
poverty and inequality. It would, therefore, advisable to replace production-oriented planner
with employment oriented planning. This work necessitate demarcation of areas of high
employments potential which also ensures high and efficiency production.
(b) Agriculture and employment potential : Agriculture offers great scope for enlarging emplement
in : (i) agriculture including animal husband compost-making, sanitation and gobar gas;

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