Chapter 3 Politics Of Planned Development

Political Contestation

Answering questions about conflicting interests and development requires more than expert opinion. Such decisions involve weighing one social group's interests against another's, and balancing present needs with future consequences. In a democracy, these major decisions should be taken or approved by the people or their representatives, who are expected to reflect public sentiment. While expert advice (mining, environment, economics) is important, the final decision is inherently political.

After Independence, India faced numerous complex decisions of this nature. These decisions were interconnected, guided by a shared vision or model of economic development. There was broad agreement that India's development should encompass both economic growth and social and economic justice. It was also agreed that the government must play a central role, not leaving development solely to private actors. However, disagreements existed on the specific nature of the government's role (centralised planning, state-run industries) and the balance between economic growth and justice. These debates and contestations, with their political consequences, make the study of development a crucial part of Indian political history.

Ideas Of Development

Contestation often revolves around the very idea of development itself. The Orissa example shows that 'development' has different meanings for different people: an industrialist aiming for a steel plant, an urban consumer of steel, and an Adivasi living in the resource-rich region. Any discussion on development inevitably generates contradictions, conflicts, and debates.

In the first decade after independence, there was significant debate on this question. The 'West' was often seen as the standard for development, equated with becoming 'modern' like the industrialised Western countries. Modernisation was associated with the breakdown of traditional structures, rise of capitalism/liberalism, growth, material progress, and scientific rationality. This perspective categorised countries as developed, developing, or underdeveloped.

India faced two dominant models of modern development: the **liberal-capitalist model** (Europe, US) and the **socialist model** (USSR). Many in India, including some in Congress (like Nehru), were impressed by the Soviet model, while few supported the American style. This reflected a consensus from the national movement that the government of free India should focus on poverty alleviation and redistribution, unlike the colonial government's commercial role.

While industrialisation was a favoured path for some, others prioritised agriculture and rural poverty alleviation. These different visions contributed to the debates on the direction of development.

Planning

Despite differing approaches, a consensus emerged on one point: development could not be left solely to private enterprise; the government needed to create a design or plan for development. The idea of planning gained widespread support globally after WWII, influenced by experiences of the Great Depression, post-war reconstruction, and Soviet economic growth.

Planning was not a sudden concept in India. The **Bombay Plan (1944)**, drafted by big industrialists, proposed state initiatives in industrial and economic investment, showing that even private investors saw a role for state planning. Thus, planning was the preferred choice across the political spectrum after Independence. The **Planning Commission**, chaired by the Prime Minister, became the central body for shaping India's development strategy.

The Planning Commission was established in March 1950 by a government resolution, not the Constitution (Source on Planning Commission details its establishment and objectives). Its role was advisory, recommendations effective upon Union Cabinet approval. Its mandate included promoting welfare, securing adequate livelihood, distributing material resources for common good, and preventing wealth concentration, aligning with Directive Principles.

The Early Initiatives

Following the Soviet model, India opted for **Five Year Plans (FYP)**. This involved preparing a government document outlining income and expenditure over five years, with the budget divided into ‘non-plan’ (routine yearly items) and ‘plan’ (five-year priorities) components. FYPs allowed governments to focus on long-term goals and interventions.

The draft and final document of the **First Five Year Plan (1951-1956)** generated public excitement and debate across different sections of society. Enthusiasm for planning peaked with the Second FYP (1956) and continued through the Third (1961). By the Fourth Plan (due 1966), novelty had faded, and India faced economic crisis, leading to a 'plan holiday'. Despite criticisms of priorities and processes, these plans laid the foundation for India's economic development.

The First Five Year Plan

The **First Five Year Plan (1951–1956)** aimed to lift the economy out of poverty. Economist K.N. Raj, involved in drafting, suggested a gradual approach to development to avoid endangering democracy. The plan primarily focused on the **agrarian sector**, including investment in dams and irrigation projects like the Bhakra Nangal Dam, recognising agriculture was hit hardest by Partition. The plan identified unequal land distribution as a major obstacle and prioritised **land reforms**.

A basic goal was to raise national income, requiring increased savings. With low spending levels in the 1950s, pushing up savings was challenging due to low capital stock. Savings did rise in the initial phase of planning but not as much as expected. The savings rate even dropped consistently from the early 1960s to early 1970s.

Rapid Industrialisation

The **Second FYP** shifted focus to **heavy industries**. Drafted by a team led by **P. C. Mahalanobis**, it aimed for rapid structural transformation across all sectors. The Congress party adopted the goal of a ‘socialist pattern of society’ at its Avadi session, reflected in the Second Plan. The government imposed high tariffs to protect domestic industries (both public and private). Increased savings and investment allowed for the development of public sector industries (electricity, railways, steel, machinery, communication).

This push for industrialisation marked a turning point but presented challenges: technological backwardness required spending precious foreign exchange for imports, and focusing investment on industry risked food shortages. Balancing industry and agriculture proved difficult. The Third Plan largely continued the Second Plan's strategy. Critics argued the plans had an "urban bias," wrongly prioritised industry over agriculture, or should have focused on agriculture-related industries.