Prime Minister Modi during his independence address from the ramparts of the Red Fort August 15, 2014 declared the demise of Planning Commission, a 64-year-old old institution founded on Command economy model of the Soviet Union. Arun Jetley described Planning Commission as ’redundant organisation, relic of the past which is irrelevant in a market driven India.’ While the planning commission had developed a number of warts & moles, many discerning analysts believed that the Prime Minister had acted in haste and ’thrown the baby with the bath water’.
Harking back to history he notes how USSR established Gosplan as the centralised agency to foster rapid industrialization. Grigory Feldmen, an electrical engineer and economist was its prime architect (1928-1932). Interestingly, when economic depression struck the USA in 1930s it was left to Simon Kuznets to bring out National Statistical Data about the dip in GDP & unemployment. This formed the basis for Franklin D Roosvelt to launch state planning through the New Deal program. The 1930s thus witnessed a coalescence of planning as a public policy, for ideologically different countries. The dawn of independence laid to a surge in India’s interest in data. Stimulated by the needs of a planned economy, the 1950s saw a massive expansion in the fledgling state’s data capability. At the centre of this development was PC Mahalnobis, the presiding genius of statics in India and of Indian Statistical Institute , Calcutta, where he was the patriarch. With full political support of Nehru who established the planning commision in 1950, he was the author of the crucial 2nd five year plan (1956-61) which underlined stretegy of vast public sector footprint, import substitution and heavy industrialisation as its grand archtecture.
While Nehru called the 2nd Plan document ’the horoscope of Mother India’ Prof. BR Senoy dissented as also politician Kripalini who considered it anti-Gandhian. The 2nd plan reflected the policy of import substitution and heavy industrialisation by giving low priority to investment in agriculture. This kind of thinking was driven by a seminal paper by Hans Singer and Raul Prebisch in 1950 who brought out that the terms of the trade in less developing countries declined relative to richer country in view of their higher content of primary goods. Paul Rosentein Rodan in 1943 had also strongly advocated for a Big Push theory which advocated injection of industrial investment beyond a certain threshold to break through a new equilbrium. While the 2nd plan started in full cry in the initial years, it had to be aborted towards the end as India was bleeding out of its foreigh exchange reserves.
Ironically the policy of self reliance and protectionism which were the defininig features of Nehruvian economics are back in fashion with Modi’s Atma Nirbhar Bharat campaign. This is not peculiar to India. From Washington to Bejing , London to France, the governments are falling in love with economic self sufficiency, state intervention and hyper nationalism. What distinguishes the present moment in India from Nehruvian times is official anti intellectulism that manefest in the short shrift being given to professional expertise. The public still yearns for a technocrat who can deliver economic bounty. It was Prof. Mahalnobis who played that key role in the 1950s, Dr Manmohan Singh in the 90s and to a certain extent it was Raghu Ram Rajan during 2013-16.
India’s experience with economic planning has to be udnerstood from the frame of technocracy and technology on one hand and the political project of democratic planning on the other. By establishing a planned economy, India instituted capability like NS survey, National income accounts, and a Central Statistical body. Mobilising citizens for development needs without totalitarian means was integral to the Nehruvian ideas of a state which chose a neutral path during the cold war. Planning is a technology exercise in directing the economy as a means for modeern state building. By decimating the planning structure , the Modi government has snuffed away a major mechanism that set the template for reviewing state’s progress against various macro and sectoral targets.
The whole edififice of democratic planning is getting obfuscated under the smokescreen of cooperative federalism , pious platitudes & rhetoric. Mahalnobis’s profound legacy lies in ruins.
The writer teaches economics.