Politics of Planned Development

Lecture by: Ayush Raj [Alumnus JNU, Jamia]

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Topics to be covered

▪ Political Contestation
▪ Ideas of development
▪ Planning
▪ The Early Initiative
▪ The First Five Year Plan
▪ Rapid Industrialisation
 Political Contestation

• After independence, almost everyone agreed that the development of India

meant both economic growth and economic social justice.

• It was also agreed that this cannot be left to the businessmen, industrialists and
farmers alone.

• Government should play a key role.

• But, there was disagreement on the kind of role that the government must play.
 Left vs Right

Left Ideology: Right Ideology:

▪ Favours the poor ▪ Emphasizes free

and downtrodden. competition and
▪ Supports market economy for
government progress.
policies benefiting ▪ Advocates minimal
marginalized government
sections. intervention in the
economy
 Ideas of Development

The term "development" is subjective and varies based on individual perspectives.

Post-Independence Development Debates:

▪ The first decade after Independence in India witnessed extensive debates on
development.
▪ There was a tendency to measure development against Western standards,
associating it with modernization, industrialization, growth, material progress,
and scientific rationality.

Two Models of Modern Development:

▪ The liberal-capitalist model (Europe & US) and the socialist model (USSR).
▪ The ideological divide between these models was evident during the Cold War.
▪ India chose the mixed model.

Influence of Soviet Model:

▪ Indian leaders, including those from the Communist Party of India, Socialist
Party, and even leaders like Nehru in the Congress were impressed with Soviet
model.
 Planning

In the 1940s and 1950s, there was widespread public support for the idea of
planning as a process of rebuilding the economy.
Reasons:
▪ Great Depression in Europe,
▪ Post-World War reconstruction in Japan and Germany
▪ Economic growth in the Soviet Union during the 1930s and 1940s.

Origin of Planning Commission:

Bombay Plan
• In 1944, a group of big industrialists came together and proposed the plan.
• It suggested that the state should take major initiatives in industrial and
economic investments.

This proposal indicated that contrary to the assumption that private investors
oppose planning, a section of big industrialists supported the idea of a planned
economy.
 Planning Commission

▪ Established on 15 March 1950

▪ Ex-Officio Chairman: the PM of India

▪ Neither Constitutional nor statutory body.

▪ Function: To give advice to the govt and make Five Year

Plans for the overall development of the country

▪ It has an advisory role and its recommendations become

effective only when the Union Cabinet approved these.

• Planning Commission was replaced with a new institution

named NITI Aayog (National Institution for Transforming India).

• This came into existence on 1 Jan 2015.

• Ex-officio Chairman: The PM of India

 Five-Year Plans in India

FYP Year
First 1951-56
Second 1956-61 ▪ India, inspired by the USSR, adopted five-year plans (FYP).
Three 1961-66
Three Annual Plans 1966-69 ▪ FYP outlined government income and spending for five years,
(Plan Holiday) with 'non-plan' and 'plan' budgets.
Fourth 1969-74
Fifth 1974-78* ▪ Non-Plan budget: Expenditure on routine items on yearly basis
Annual Plan (Rolling 1978-80
Plan ▪ Plan budget: Expenditure on planned items on five-year basis
Sixth 1980-85
Seventh 1985-90
Annual 1990-92
Eighth 1992-97
Ninth 1997-02
Tenth 2002-07
Eleventh 2007-12
Twelfth 2012-17
 First FYP (1951-56)
▪ Focus: Primarily on the agrarian sector, addressing challenges post-partition.
To raise national income by promoting higher savings.

▪ K.N. Raj, a young economist, argued that India should ‘hasten slowly’ for the first two
decades as a fast rate of development might endanger democracy.

▪ Huge allocations were made for large-scale projects like the Bhakhra Nangal Dam.

▪ Main obstacle: the pattern of land distribution in the country.

▪ It focused on land reforms as the key to the country’s development.

▪ One of the basic aims of the planners was to raise the level of national income, which
could be possible only if the people saved more money than they spent.

▪ The planners sought to push savings up. People’s savings did rise in the first phase
of the planned process until the end of the Third Five Year Plan, but not as expected.

▪ From the early 1960s till the early 1970s, the proportion of savings in the country
dropped consistently
 Second FYP (1956-61)

▪ Focus: Development of heavy industries (Rapid Industrialisation)

▪ It was drafted under the leadership of P C Mahalanobis

▪ If the first plan had preached patience, the second wanted to bring about quick
structural transformation by making changes simultaneously in all possible directions

▪ Before this plan was finalised, the Congress party at its session held at Avadi near the
Madras city, declared a ‘socialist pattern of society’ as its goal.

▪ A bulk of industries like electricity, railways, steel, machinery and communication were
given into the hands of the public sector.

▪ Such a push for industrialisation marked a turning point in India’s development.

▪ However, some wanted to focus on agriculture-related industries rather than heavy ones.
Problems:

▪ India was technologically backward, so it had to spend precious foreign exchange to

buy technology from the global market.

▪ That apart, as industry attracted more investment than agriculture, the possibility of
food shortage loomed large.

▪ The Indian planners found balancing industry and agriculture really difficult.

▪ The Third Plan was not significantly different from the Second. Critics pointed out that
the plan strategies from this time around displayed an unmistakable “urban bias”.

▪ Others thought that industry was wrongly given priority over agriculture. There were
also those who wanted focus on agriculture-related industries rather than heavy ones.
 THANK YOU
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