Bombay Plan
Encyclopedia
The Bombay Plan is the name commonly given to a World War II
-era set of proposals for the development of the post-independence economy of India
. The plan, published in 1944/1945 by eight leading India
n industrialists, proposed state intervention in the economic development of the nation
after independence from the United Kingdom
(which occurred in 1947).
Titled A Brief Memorandum Outlining a Plan of Economic Development for India, the signatories of the Plan were Jehangir Ratanji Dadabhoy Tata
, Ghanshyam Das Birla
, Ardeshir Dalal, Sri Ram, Kasturbhai Lalbhai, Ardeshir Darabshaw Shroff
, Purushottamdas Thakurdas and John Mathai
. The Plan went through two editions: the first was published in January 1944. This first edition became "Part I" of the second edition, published in 2 volumes in 1945 under the editorship of Purushottamdas Thakurdas.
Although Jawaharlal Nehru
, the first Prime Minister of India, did not officially accept the plan, "the Nehruvian era witnessed [what was effectively] the implementation of the Bombay Plan; a substantially interventionist state and an economy with a sizeable public sector." Its perceived influence has given it iconic status, and "it is no exaggeration to say that the Bombay Plan has come to occupy something of a mythic position in Indian historiography. There is scarcely a study of postwar Indian economic history that does not point to it as an indicator of the developmental and nationalistic aspiration of the domestic capitalist class."
The basic objectives were a doubling of the (then current) output of the agricultural sector and a five-fold growth in the industrial sector, both within the framework of a 100 billion Rupee
(£72b, $18b) investment (of which 44.8% was slated for industry) over 15 years.
A key principle of the Bombay Plan was that the economy could not grow without government intervention and regulation. Under the assumption that the fledgling Indian industries would not be able to compete in a free-market economy, the Plan proposed that the future government protect indigenous industries against foreign competition in local markets. Other salient points of the Bombay plan were an active role by government in deficit financing and planning equitable growth, a transition from an agrarian to an industrialized society, and—in the event that the private sector could not immediately do so—the establishment of critical industries as public sector enterprises while simultaneously ensuring a market for the output through planned purchases.
Although the Bombay Plan did not itself propose a socialist agenda, "virtually all" commentators acknowledge "that there is a direct line of continuity from the Bombay Plan of 1944-1945 to the First Five-Year Plan
in 1950." An alternative line of reasoning is that the Bombay Plan was a reaction to the widespread social discontent of the 1940s (resulting from unprecedented industrial growth during wartime), and a product of the fear that the movement against colonial rule would become a movement against private property.
The Bombay Plan reaped criticism from all quarters: the far left criticized the capitalistic background of the Plan's authors or asserted that the plan did not go far enough. The far right foresaw it as a harbinger of a socialist society, and considered it a violation of the agreements of the United Nations "Bretton Woods Conference"
(which Shroff had attended). Economists criticized the plan on technical grounds;cf. that it did not take into account the fact that creating capital had an inflationary effect, and with that, its authors had overestimated the capacity of the Indian economy to generate further capital. With rising prices, the purchasing power (for investments) would fall.
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
-era set of proposals for the development of the post-independence economy of India
Economy of India
The Economy of India is the ninth largest in the world by nominal GDP and the fourth largest by purchasing power parity . The country is a part of the G-20 major economies and the BRICS, in addition to being partners of the ASEAN. India has a per capita GDP of $3,608 as per 2010 figures, making it...
. The plan, published in 1944/1945 by eight leading India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
n industrialists, proposed state intervention in the economic development of the nation
Nation
A nation may refer to a community of people who share a common language, culture, ethnicity, descent, and/or history. In this definition, a nation has no physical borders. However, it can also refer to people who share a common territory and government irrespective of their ethnic make-up...
after independence from the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
(which occurred in 1947).
Titled A Brief Memorandum Outlining a Plan of Economic Development for India, the signatories of the Plan were Jehangir Ratanji Dadabhoy Tata
J. R. D. Tata
Jehangir Ratanji Dadabhoy Tata was a pioneer aviator and important businessman of India. He was awarded India's highest civilian award, the Bharat Ratna in 1992 and the Legion of Honour from the French government in 1954.-Early life and education:J. R. D...
, Ghanshyam Das Birla
Ghanshyam Das Birla
Ghanshyam Das "G.D." Birla was an Indian businessman and member of the influential Birla Family.Birla's grandfather Shiv Narayana Birla wanted to diversify from the traditional marwari business of lending money against pawned items. He left Pilani, his hometown in Rajasthan with a modest capital...
, Ardeshir Dalal, Sri Ram, Kasturbhai Lalbhai, Ardeshir Darabshaw Shroff
Ardeshir Darabshaw Shroff
Ardeshir Darabshaw Shroff was an eminent industrialist, banker and economist of India. In 1944, Shroff served as a non-official delegate at the United Nations "Bretton Woods Conference" on post-war monetary and financial systems...
, Purushottamdas Thakurdas and John Mathai
John Mathai
John Matthai was an economist who served as India's first Railway Minister and subsequently as India's Finance Minister, taking office shortly after the presentation of India's first Budget, in 1948. Mathai graduated in economics from Madras Christian College. He served as a part-time professor in...
. The Plan went through two editions: the first was published in January 1944. This first edition became "Part I" of the second edition, published in 2 volumes in 1945 under the editorship of Purushottamdas Thakurdas.
Although Jawaharlal Nehru
Jawaharlal Nehru
Jawaharlal Nehru , often referred to with the epithet of Panditji, was an Indian statesman who became the first Prime Minister of independent India and became noted for his “neutralist” policies in foreign affairs. He was also one of the principal leaders of India’s independence movement in the...
, the first Prime Minister of India, did not officially accept the plan, "the Nehruvian era witnessed [what was effectively] the implementation of the Bombay Plan; a substantially interventionist state and an economy with a sizeable public sector." Its perceived influence has given it iconic status, and "it is no exaggeration to say that the Bombay Plan has come to occupy something of a mythic position in Indian historiography. There is scarcely a study of postwar Indian economic history that does not point to it as an indicator of the developmental and nationalistic aspiration of the domestic capitalist class."
The basic objectives were a doubling of the (then current) output of the agricultural sector and a five-fold growth in the industrial sector, both within the framework of a 100 billion Rupee
Indian rupee
The Indian rupee is the official currency of the Republic of India. The issuance of the currency is controlled by the Reserve Bank of India....
(£72b, $18b) investment (of which 44.8% was slated for industry) over 15 years.
A key principle of the Bombay Plan was that the economy could not grow without government intervention and regulation. Under the assumption that the fledgling Indian industries would not be able to compete in a free-market economy, the Plan proposed that the future government protect indigenous industries against foreign competition in local markets. Other salient points of the Bombay plan were an active role by government in deficit financing and planning equitable growth, a transition from an agrarian to an industrialized society, and—in the event that the private sector could not immediately do so—the establishment of critical industries as public sector enterprises while simultaneously ensuring a market for the output through planned purchases.
Although the Bombay Plan did not itself propose a socialist agenda, "virtually all" commentators acknowledge "that there is a direct line of continuity from the Bombay Plan of 1944-1945 to the First Five-Year Plan
Five-Year Plans of India
The economy of India is based in part on planning through its five-year plans, which are developed, executed and monitored by the Planning Commission. The tenth plan completed its term in March 2007 and the eleventh plan is currently underway...
in 1950." An alternative line of reasoning is that the Bombay Plan was a reaction to the widespread social discontent of the 1940s (resulting from unprecedented industrial growth during wartime), and a product of the fear that the movement against colonial rule would become a movement against private property.
The Bombay Plan reaped criticism from all quarters: the far left criticized the capitalistic background of the Plan's authors or asserted that the plan did not go far enough. The far right foresaw it as a harbinger of a socialist society, and considered it a violation of the agreements of the United Nations "Bretton Woods Conference"
United Nations Monetary and Financial Conference
The United Nations Monetary and Financial Conference, commonly known as the Bretton Woods conference, was a gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, to regulate the international monetary and financial order after...
(which Shroff had attended). Economists criticized the plan on technical grounds;cf. that it did not take into account the fact that creating capital had an inflationary effect, and with that, its authors had overestimated the capacity of the Indian economy to generate further capital. With rising prices, the purchasing power (for investments) would fall.