Politics of Planned Development — Notes

Development means improving people's lives, but every project creates gainers and losers (jobs and output for some; loss of land, forest or livelihood for others). Choices of priority and of who bears the cost are therefore settled through public debate and politics.

Two models at independence:

• Liberal-capitalist (Western Europe, USA): private ownership, market decisions, promise of growth and freedom.
• Socialist (USSR): state ownership, central planning, promise of equality.

India's choice: a mixed economy, with a public sector in key industries, private property and private firms elsewhere, and state planning of investment.

Consensus: across views, leaders accepted that the state must plan and invest to overcome poverty.

Bombay Plan (1944): a joint proposal by a group of leading industrialists for a planned economy with large state investment in industry, showing that business groups too backed planning.

Planning Commission:

• Set up in March 1950 by a resolution of the Government of India.
• Advisory: neither a constitutional nor a statutory body.
• Chairperson: the Prime Minister.
• Prepared Five Year Plans and guided public investment.

A National Development Council of the Prime Minister, chief ministers and others was added in 1952 to involve the states.

First Plan (from 1951): focus on agriculture, irrigation, dams and land reform. Economist K. N. Raj urged a steady, cautious pace in the first two decades.

Second Plan (from 1956): focus on heavy industry (steel, machines, power), shaped by P. C. Mahalanobis; public investment and protective tariffs on imports. Both the public and the private sector grew.

Debate 1 — agriculture versus industry: critics (e.g. Chaudhary Charan Singh) said villages were neglected; defenders said industry was essential and agriculture still received funds.

Debate 2 — public versus private sector: a large public sector was defended for basic industries and regional balance, and criticised for inefficiency and licence controls.

Alternative voices: J. C. Kumarappa proposed a Gandhian, village-centred plan.

Foundations: multipurpose dams and canals, public-sector steel plants (e.g. Bhilai, built with Soviet collaboration), and research and training institutions. The private sector expanded behind protection.

Land reform:

• Abolition of zamindari — largely achieved.
• Consolidation of holdings — in some states.
• Land ceilings — weak; evaded by landowners with political influence.
• Tenancy reforms — uneven.

Food crisis: droughts in the mid-1960s caused shortages and grain imports; three annual plans (1966–69) replaced a Five Year Plan for a time (the "plan holiday").

Green Revolution (from the late 1960s): high-yielding seeds + fertiliser and pesticides + assured irrigation + support prices and subsidies; first in irrigated areas.

Results: grain output rose and India became largely self-sufficient in food grains. Gains were concentrated in Punjab, Haryana and western Uttar Pradesh and among better-off farmers, widening regional and class inequality.

Political effects: middle and rich farmers emerged as an organised political force; inequality fed unrest in some areas.

Operation Flood (from 1970): spread the Anand cooperative pattern, associated with Verghese Kurien, across India; village milk societies, district unions and city markets, owned by producers. It raised incomes of small and landless households and is called the White Revolution.

Displacement: large dams, mines and industries displaced forest and rural communities; movements raised questions of consultation, rehabilitation (land for land) and sharing benefits.

NITI Aayog (National Institution for Transforming India) replaced the Planning Commission on 1 January 2015:

• Created by a government resolution; chaired by the Prime Minister.
• Works as a policy think tank; does not allocate plan funds.
• Governing Council of chief ministers and union territory heads, to promote cooperative federalism.

Supporters saw it as suited to a market-led economy and to a larger voice for states; others worried that states lost a forum for discussing funds. Its record is still debated.