MODULE 1

1.4 TOPIC: Planning as a Determinant of Poverty: The Nehru Phase (1950-

1964)

Sources:

1.www.soas.ac.uk/cedep-demos/000_P530_RD_K3736-
Demo/unit1/page_13.htm

2. archive.unu.edu/unupress/unupbooks/uu30ce/uu30ceOd.htm

1.1 Introduction
After independence in 1947, India was among the poorest countries in the world.
Two centuries of plunder, neglect, and exploitation by the British, had left a
country of over 300 million people destitute and lost. India’s entire infrastructure,
it’s economy, it’s bureaucracy, it was all designed and built solely to serve the
needs of British industry and further Britain’s interests. India had been drained of
its resources and manpower, so that Britain could win wars on the European
continent; the Bengal Famine would kill 3 million Indians in WW II, because
Churchill did not wish to ‘waste’ grain on his Indian subjects when there were
Englishmen to feed. And as a final parting gift, the British co-engineered the
Partition in 1947, leading to around 14 million refugees and mass killings all over
the subcontinent. Half the population of India now lived below the poverty line,
and over 80 percent of the people were illiterate. The country was famine-ridden
and life expectancy was around 30 years. The per capita income, the agricultural
output, and the food grains output had all been continuously shrinking for the
previous three decades. Around 1700, the Mughal Empire produced one-third of
the global GDP. For the Indian republic in 1947, this was less than 10 percent.

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When the 1950s rolled by, and consecutive 5-year plans were drawn up and
executed, it came to the world’s attention that India was doing remarkably well;
Percival Griffith, a former colonial administrator who was highly sceptical of
India’s capabilities, wrote in 1957 that post-independence foodgrain production
had been ‘spectacular,’ and that India was succeeding in doing what he himself had
thought impossible. He noted that it was ‘impossible to travel round India (…)
without feeling that the country has entered a new, dynamic phase,’ and that ‘the
signs of a rise in the standard of living are unmistakable.’
Nehru was the leading figure of India, and his vision of India would shape the
country’s initial development and lay the foundations upon which it still builds
today. As such, it is well worth investigating what this vision was and how it gave
form to the Indian republic’s formative years.
2.1 The four pillars of Nehruvian thought
Nehru’s idea of India’s modern nationhood consisted of four key dimensions:
democracy, secularism, socialism, and non-alignment. These dimensions came
about through long discussions between Nehru and Gandhi, Nehru’s own
experience in the independence movement, and his observations as he saw the
world change and move into new, unknown territory. India’s democracy took ideas
from both Westminster and Capitol Hill; India became a union of states with strong
local government like the US, but with a parliamentary system like the UK. For
Nehru, democracy was not just about the right to vote, but also having the
economic means to leverage your democratic rights. Political democracy would be
meaningless without economic democracy. Nehru was also a strong advocate
for Panchayati Raj, the idea of self-governance for villages. Much like Gandhi,
Nehru believed development should not be dictated from above, but rise up from
below. In 1957, Nehru would initiate the introduction of a three-tier system

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of Panchayati Raj, which was to be spread over all of rural India. For seven years,
democracy was deepened down- and outwards over the whole land.
Nehru’s idea of secularism was to be often tested during his premiership; with
Partition and the creation of Pakistan.
Nehruvian socialism and planning were the centre-pieces of the economic
platform. He did not believe in the regimentation of society, the brutal dictatorship
of the proletariat, or forced acquisition and collectivisation. Instead, Nehru’s
socialism was to be on the basis of democracy and non-violence, leading to the
establishment of a cooperative, socialist commonwealth. He advocated for the
abolition of the zamindari system of feudal landownership, and the rapid
acceleration of industrialisation through central planning.
Nehru’s foreign policy for India was to be shaped by the idea of non-alignment.
Nehru rejected the false dichotomy of American capitalism or Russian
communism. Instead, he chose the third path of non-alignment. The idea of non-
alignment finds its roots in India’s struggle for independence.
2.2 Development under Nehru
All the efforts of post-colonial development had to happen within the framework
of non-alignment and democracy. Combining rapid industrial development with
democracy was something none had tried before, and thus Nehru had to tread
uncharted territory. Nehruvian Socialism did not allow for the forced acquisition
and collectivisation of land, meaning that the necessary surplus for industrialisation
could not be forcibly attained over the backs of the Indian working class and
peasantry.
Dedication to non-alignment meant that India could not accept foreign aid, foreign
capital, or other types of foreign intervention that would make India a junior
partner of the industrialised nations. Nehru understood well that political
independence would have little meaning if it was not combined with economic
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independence. However, the nature of British colonialism meant that India had
become completely dependent on the developed world for capital goods,
technology, and investments. In 1950, over 90 percent of India’s capital,
machinery, and even basic tools, had to be imported from abroad. This type of neo-
colonialism forced Nehru to compromise on his non-alignment position, but it also
motivated him to adopt a path of industrialisation, based on heavy industry and
capital-goods industry. Since India lacked a sufficient private sector with the
necessary start-up capital for industrialisation, and since foreign investment would
have jeopardised India’s independence, it was the state which became the heart of
Indian industry. However, this did not mean the state started to dictate the private
sector or confiscate its property. Nehru’s commitment to democracy meant that the
private sector was largely left to its own devices, and that only the railways, the
airlines, left-behind British firms, and the Imperial Bank (later renamed as State
Bank of India) were nationalised. Where the state came into its own, was in
pioneering new avenues of growth and in taking risks the private sector could not
afford to take. Planning was another key ingredient of the Nehruvian Socialist
economy.
During Nehru’s three 5-year plans (1951–1965), India’s industrial sector would
grow at 7,1 percent a year, the number of consumer-goods industries would
increase by 70 percent, the production of intermediate goods would quadruple, and
the output of capital goods would increase tenfold. India went from a situation
where 90 percent of its industrial goods were imported, to halving that in 1960, and
having only 9 percent of its goods come from abroad in 1974. This form of
economic autonomy freed India from the industrialised countries and strengthened
its position as a non-aligned country. Besides cutting ties when it came to imports,
India also made sure it would not be dependent on a few industrialised nations for

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its export. Instead, India deliberately diversified its trade and made sure no
particular region or bloc was left out or favoured.
As with the industrial sector, post-independence agriculture was sorely lacking in
India. British neglect had allowed Indian agriculture to stagnate and decline,
leading to successive famines and widespread malnutrition. After 1947, India faced
acute food shortages and 14 million tonnes of food had to be imported between
1947 and 1953. As with capital goods, India would never be truly independent if it
was reliant on others for basic survival. Hence, Nehru took upon himself the task
of revolutionising agriculture. But again, as with the industrial sector, Nehru’s
commitment to democracy meant that he could not forcibly reform land ownership
or coerce the peasants into collectivisation. By 1957 the 150-year
old zamindari system was all but gone. Cooperative and institutional subsidies for
farmers had freed them from the stranglehold of landowners and moneylenders.
Such loans would increase from Rs 0.23 billion in 1950, to Rs 3.65 billion in 1966.
With public investments in scientific agricultural research, irrigation, and electric
power projects, India’s agriculture was rapidly modernising. Nehru understood that
an agricultural revolution could not happen without innovation in its methods —
e.g. without electricity, tractors, pumps, chemical fertilisers, etc. This combination
of public investment and cooperative land reforms saw agriculture grow annually
by 3 percent from 1951 to 1965. Even the Green Revolution, which for the first
time in decades would give India a food surplus, would not have been possible in
the ’70s, had it not been for the groundwork laid by Nehru.
And lastly there was the knowledge sector. The British had deliberately left India
as an intellectually barren wasteland, depriving its population of any opportunity to
develop scientific or creative thought, and Nehru was fully aware of how
backwards India was in 1947. As with agriculture and industry, it was important
that India would develop its own institutions for scientific education and research,
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or forever become dependent on the advanced world for intellectual development.
He oversaw the founding of the prestigious IITs (Indian Institutes of Technology),
the CSIR (Council of Scientific and Industrial Research), the Bhabha Atomic
Research Centre, the National Physical and Chemical Laboratories, the AIIMS (All
India Institutes for Medical Sciences), and many other such institutions all over
India. An atomic reactor was set up in Bombay, which would attain criticality in
1956. But his focus on high-level education did not mean Nehru neglected basic
education for the less-well off. As far back as the Karachi Congress of 1931, Nehru
had been committed to free, public, and compulsory basic education for everyone.
Primary schools were set up all over India, and funding was provided to ensure
they were properly staffed.
3.1. Democracy and development
Most newly-independent nations prioritised economic development over
democratisation. For Nehru however, political democracy was a necessary
condition for people’s empowerment and an integral part of economic
development.
It was Nehru’s dedication to democracy and civil rights, that prevented India from
experiencing large-scale famine deaths as a result of radical reforms. Over 40
million would die in China between the 1950s and 60s due to Mao’s poor
governance. The absence of free media in the People’s Republic left the Chinese
powerless to inform each other about it, thus giving incompetent officials free
reign over the country. In India, with over 70,000 newspapers and countless
television channels, it would have been impossible for the government to keep a
famine under wraps, thus forcing officials to be held accountable for their actions.
Nehru sought to empower the villages and common people economically, by
improving their agricultural methods and giving them better means of
communication, education, and health. His objective was to ‘unleash forces from
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below among our people,’ by ‘creat[ing] conditions in which spontaneous growth
from below was possible.’ Nehru sought to integrate it with the elected, locally
self-governing bodies of the villages. He set up local cooperatives in banking,
marketing, and other services, while emphasising the critical role of cooperation
between these institutions and the Panchayati Raj. By keeping both democracy and
development close to the poorest of India, an inflationary path to growth, which
always hits the poor the hardest, was never adopted. For several decades, the trend
rate of inflation would not touch two digits in India.