India's forgotten blueprint for growth

At the outset, Bombay Plan is undoubtedly a far more thorough, comprehensive and honest economic document than we see from the industry associations of today

The Bombay Plan

Blueprint for economic resurgence

Sanjaya Baru and Meghnad Desai (Eds)

Rupa Publications

364 pages; Rs 500

It was the mid-nineties. I had joined the National Council of Applied Economic Research some time earlier and was working on Indian industrial reforms. Prakash Tandon, the first Indian chairman of Hindustan Lever, used to frequent the library and would often answer my queries on industry and how it was affected by the reforms. Visibly excited, he once asked me what I knew about the Bombay Plan. I vaguely knew it was put together by industry in the 1940s, and called for a mixed economy. You must read it, he said as he handed me a printout. It is more than two decades since I first read the Bombay Plan and I was tasked to review this volume on the topic. I started by re-reading the Plan, which is laid out in the economically typeset appendix.  At the outset, it is undoubtedly a far more thorough, comprehensive and honest economic document than we see from the industry associations of today. 

The Bombay Plan, which counts among its authors J R D Tata, G D Birla, Purushottamdas Thakurdas, Kasturbhai Lalbhai, Ardeshir Dala, Lala Sri Ram, John Mathai, and A D Shroff, is no doubt a serious piece of work, admittedly with gaps and uncovered areas. Also admittedly, it is more a set of detailed objectives rather than an implementation plan.  Doubling per capita incomes and trebling national output within a 15-year period, the targeted growth rate of 7.6 per cent and doubling agricultural production are just some of the impressive targets that it attempts to achieve. In other words, the Plan was aiming at a complete overhaul of the Indian economy via a combination of direct economic interventions and social sector initiatives.

Those were the days when Fabian Socialism had taken over the imagination of academia and political leaders across the world.  Political leaders ranging from Subhas Chandra Bose to Muhammad Ali Jinnah to Jawaharlal Nehru all swore by the need for a much greater government role in the economy to achieve a more egalitarian society. The USSR’s strides, backed by its five-year plans and its focus on heavy industry, were also fresh in everyone’s mind. Arguably, the Bombay Plan’s call for a greater role of the State, focus on heavy industry, limiting entrepreneur freedom, or ‘forced’ savings to achieve higher long-term growth, were fairly common ideas of the times.

But the Plan was more than merely about a greater role of the State; the human focus of the planners is evident all over the document. Whether it is about the need for land reform, greater focus on the social sector, especially basic education, avoiding the high economic growth-high human-suffering model of Joseph Stalin’s USSR, the list is long. It is evident that some of the humanistic ideas of Fabian Socialism also seeped into this document.  

But the Bombay Plan is by no means a socialist document: “…the free choice of consumers in respect of consumption goods should suffer no restriction [section 46]."  While talking about the greater need for basic industry, the Plan leaves open who is to do it; though the government may need to focus more on it, it does not call for either nationalisation or public sector monopolies.  

The volume comprises monographs by P S Lokanathan, who reviewed it in 1945 and comments on the reasons for its widespread acceptance. This is followed by an insightful article by Amal Sanyal on how such an important document faded from public memory. Gita Piramal details how some of the architects of the Plan got an opportunity to incorporate its elements in the economic policy of the colonial government. Omkar Goswami pens a delightful piece on how the politics of the day impacted both its character and its eventual disappearance from memory. Sanjaya Baru points to the over-dependence of Western intellectual ideas in Indian economic policy as is also evident in the Bombay Plan. Tulsi Jayakumar and R Gopalakrishnan allude to the absence of operationalisation as its key weakness. Meghnad Desai paints a broad canvas of global and economic political economy and how Indian economic history is an outcome of a range of forces beyond the obvious. The last monograph by Ajay Chhibber is far more critical and suggests that the Plan’s over-dependence on state interventions may have impacted Indian policy over the decades.

The key question -- why business leaders would call for greater state intervention at the cost of their own interests —  is seen differently by the authors. Whether it is Mr Goswami’s view that nationalism was the over-riding concern, or Mr Baru’s take that Western intellectual fashions tend to corrupt Indian economic policy, or Mr Desai’s take that economic policies need to be understood under a global political economic lens, or, for that matter, Mr Chhibber’s simple take that the authors could have been more forthright, the reader gets a great perspective on the various elements that together form economic policy.  

The Bombay Plan is a must-read for everyone interested in Indian political economy.  

The reviewer heads Indicus Foundation