Planning, persuasion, and the young republic

Combining a history of Indian planning with a biography of its most influential proponent

Nikhil Menon’s Planning Democracy combines the history of Indian planning in its heyday with the biography of Prasanta Chandra Mahalanobis – arguably the most influential architect of planning. As such, the book adds texture and details to the broad outlines of the history of Indian planning in addition to providing nuggets on the life of an extraordinary institution builder.

On the eve of Independence, India was predominantly an agrarian economy. Three commodities – tea, jute and cotton – accounted for nearly half the Indian export basket in 1955. The immediate need, therefore, was the creation of an industrial base. It was felt that a big push – with the State at the commanding heights – was needed for structural transformation.

The eponymous Mahalanobis strategy identified basic and capital goods industries – like metallurgical and heavy machinery – as central to this structural transformation. In those sectors, the state was either to bear the exclusive responsibility, or the new enterprises were to be progressively state-owned.

This specific strategy, however, ran into two different challenges. Menon’s book has two parts – data and democracy – that deal with the response of planners to those two challenges respectively.

The first challenge was technocratic. Planning required the extensive collection and processing of data. As the pioneer in the science of sample surveys, Mahalanobis was responsible for laying the foundation of the statistical infrastructure for this goal. The book provides a ringside view of the establishment of institutions like the Indian Statistical Institute and the Central Statistical Organization.

In fact, the book also contains a primer on the colonial government’s efforts to collect data. Obviously, the need for numbers was greater in an economy that was going to be centrally planned. Menon argues persuasively that Indian statistical infrastructure and planning were joined at the hip. In fact, the Planning Commission and Central Statistical Organization were even housed in the same building for a while. As the book quotes: “Statistics are the bricks from which plans are made”. The tight embrace of statistics and planning also explains how a single individual like Mahalanobis ended up playing a formative role in both fields.

The chapter Chasing Computers describes Mahalanobis’ struggle to get computers from the United States. Apparently, he ran into a technology- denial regime while trying to import them. The details, amusing as they are, also underline an important point: economic self-reliance – atma nirbharta – will remain a chimera unless the nation is at the forefront of technology.

The second challenge that planners encountered was political in nature. Mahalanobis’ strategy entailed the maximization of savings for capacity creation, which, by definition, required a suppression of domestic consumption. In a democratic setup, this was considered difficult, as it could lead to a political backlash.

BR Shenoy, the most prescient critic of the Mahalanobis Plan, put the argument succinctly: Consistent with individual freedom and democratic institutions, there is no device of significantly adding to the volume of the flow of savings.… The situation, however, may be significantly different under a totalitarian regime, which may impose authoritarian reductions in consumption… I presume that planning in India would be consistent with democracy and democratic institutions.

The commitment to “democracy and democratic institutions” could be maintained in two ways. The first way was through gradualism, often expressed through the oxymoronic euphemism “hastening slowly”. The other option was to shape public opinion through persuasion. The second part of Menon’s book – called Democracy – details efforts in this direction. Multiple channels – including films, literature, periodicals and even religious leaders – were utilized to win public approval for planning. Even though the book does not pass judgment on the success or failure of the Mahalanobis strategy, the question remains: How should we assess it? Eventually, the Mahalanobis strategy ran into a number of challenges including the foreign exchange crisis, war and droughts. The dreaded political backlash did materialize. Prime Minister Jawaharlal Nehru had to spar with articulate opposition leaders like Rammanohar Lohia on why immediate poverty alleviation was not an objective. Later, Indira Gandhi took a more populist turn, which was at odds with the Mahalanobis strategy.

But it would be a mistake to write off the Mahalanobis strategy as failure. The growth rate during the first three plans was decent by historical standards. India did develop a diversified industrial base. Even post- reform entrepreneurship was deeply influenced by the early public investment in key sectors due to knowledge spill overs. To give an example, if Hyderabad is the bulk drug manufacturing capital of India, it is partly because of the early presence of PSUs like Indian Drugs and Pharmaceuticals Limited (IDPL) in the city. The legacy of planning is writ large on the economic geography of India. Planning was more than a collection of sundry projects. For a nation emerging from the burning embers of Partition, it was an effort to script a shared futuristic story. It was the manifestation of a newly independent nation’s resolve to reach the global frontiers of technology and knowledge as fast as possible. Perhaps a song that Menon calls “the theme song of Nehru’s vision” captured the zeitgeist succinctly:

Chhodo kal ki baatein, kal ki baat purani/ Naye daur mein likhenge milkar nayi kahani

Let’s leave talk of yesterday, it is old/In the new era, together, we will create a new story.

Nikhil Menon

360pp, ~799, Penguin