Politics of Planned Development

Written and reviewed by Subhra Gupta, Humanities faculty at UniDrill (M.A. Sociology, University of Delhi · 7 years teaching Humanities). Based on NCERT Political Science Class XII (Politics in India since Independence), Chapter 3.

Who should decide how a poor country grows?

Imagine you have to build a country's roads, dams and factories with very little money. Do you leave it to businesses, which will build where profit is highest? Do you let the state decide, which may build where need is greatest? Do you start with farms or with factories? These were not questions for experts alone. This chapter shows how India answered them in the 1950s and why the answers were political choices.

Why development is a political question

The third challenge of the new nation, after unity and democracy, was ensuring the well-being of everyone. The textbook says success here has been much more limited than in the first two. It gives two reasons why development always involves politics.

What development meant to different people. An industrialist thought of more factories, an urban consumer of cheaper goods, and an Adivasi of protecting a way of life and a habitat. These meanings pulled in different directions, so debate was unavoidable. Even so, there was a broad consensus at Independence on two points: development meant both economic growth and social and economic justice, and the government must play a key role, not businesses or farmers alone.

Left and Right

Two broad positions structured the debate, and the labels recur in CUET.

These labels shaped almost every choice on land, industry, agriculture, foreign exchange and the public sector.

Two models, and the choice of planning

At Independence India saw two models. The liberal-capitalist model was found in Europe and the United States, and the socialist model in the Soviet Union (USSR). Nehru, the Socialist Party and the Communist Party of India were impressed by Soviet planning, and very few supported the American style of capitalism. The shared conclusion was that development could not be left only to private actors, and that the government needed to design a plan.

The Bombay Plan. In 1944, a section of big industrialists drafted a joint proposal for a planned economy. Called the Bombay Plan, it wanted the state to take major initiatives in industrial and other economic investment. So even large business supported planning. From the Left to the Right, planning had become the obvious choice.

Pause and predict: If big industrialists supported planning, what does that suggest about their view of what the state should do?

Check your answer: They saw a role for the state in areas where private investment was not enough, such as large industrial and infrastructure projects. This is why the Bombay Plan is a favourite for NTA: it contradicts the guess that business always opposes state initiative.

The Planning Commission and the Five Year Plans

The Planning Commission was set up in March 1950 by a simple resolution of the Government of India. It was not created by the Constitution or by an Act of Parliament. It had an advisory role, and its recommendations became effective only when the Union Cabinet approved them. The Prime Minister was its Chairperson. On 1 January 2015, the NITI Aayog (National Institution for Transforming India) replaced it.

India adopted Five Year Plans (FYPs), on the model of the Soviet Union. A government budget has two parts: the non-plan budget, which is routine yearly expenditure, and the plan budget, which funds the priorities set for the five years.

The first plan document was released in December 1951, and the Second Plan and Third Plan began in 1956 and 1961. The First Plan's outlay was about Rs 2,069 crore.

The First Plan: cause → effect. The plan identified the existing distribution of land as the main obstacle to agricultural growth, so it emphasised land reforms. It invested in dams and irrigation to increase food production. The aim was to raise national income to a level at which the economy could sustain itself, so it broke the cycle of poverty. Savings rose in the early years, but then fell consistently from the early 1960s to the early 1970s.

The Second Plan: cause → effect. The designers wanted a fast structural change. They argued that rapid industrialisation, led by the state, would build the base for later growth. To protect domestic industry, the government imposed substantial tariffs on imports. The public sector expanded into electricity, railways, steel, machinery and communication. The plan was drafted under P. C. Mahalanobis (1893–1972), a scientist and statistician who founded the Indian Statistical Institute in 1931 and supported rapid industrialisation with an active public sector.

Two views. For the exam: the Second Plan favoured heavy industry, and critics argued that this was a wrong priority of industry over agriculture. Another reading: supporters of the strategy argued that India needed heavy industry for self-reliance, and that a poor country could not depend on imports for steel, machinery and power. Critics replied that the benefits did not reach villages. Why it matters: NTA often asks which side made which argument, so keep the two sides straight.

Two views. For the exam: planning was seen by most leaders as the right way to develop. Another reading: some argued that the Centre's planning was disconnected from village realities, a point a well known cartoon of the time made, and that the model could not foresee the food crises of the mid 1960s. Why it matters: the textbook presents planning as a contested political choice, not a settled technical one.

Plan holiday of 1966

The Fourth Plan was due to start in 1966. By then, the novelty of planning had declined, and India faced an acute economic crisis. The government took a "plan holiday", pausing five-year planning. Annual plans followed until the Fourth Plan began in 1969.

The early projects

The early plans produced basic industrial infrastructure, a few of which appeared on stamps issued between 1955 and 1968.

Beyond the textbook. For the exam: Five Year Plans followed the Soviet model, with the state taking the lead and the public sector expanding. In reality: India's model kept the private sector alongside the public sector, which is why industrialists themselves could back the Bombay Plan. Why it matters: "socialist pattern of society" in the Avadi resolution should not be read as "no private sector".

Timeline

Key people and terms

Exam traps

60-second revision

Where this chapter connects

• Previous: Era of One-Party Dominance shows the political setting, in which one party could carry its plan through.
• Next: India's External Relations links the quest for self-reliance with non-alignment and with the war years.
• Later: Globalisation returns to the debate on the role of the state and the market in a very different period.