THE REPUBLICinterrupted by the war. On the other hand, the war had made the British
Indian government—earlier wedded to a laissez-faire attitude—
interventionist with a vengeance as it had to coordinate war production
and procure and ration food grains, etc. In the last years of the war a
group of Indian industrialists, among them Gandhi’s friend G.D.Birla and
J.R.D.Tata, had drafted a fifteen-year plan for the postwar period. Known
as the ‘Bombay Plan’, it emphasised public sector investment in
infrastructure and heavy industry probably with the tacit assumption that
the state should foot the bill for intensive, low-return investment, while the
private sector could concentrate on more immediately profitable
investment. The ‘mixed economy’ which actually emerged in independent
India was clearly foreshadowed in this plan. Whether they wanted it or
not, the planners of the Government of India were going to help the
Bombay planners to realise their objectives.
In 1950 Nehru established the National Planning Commission, with the
prime minister as ex officio chairman. His chief planner for the first two
five-year plans was Professor Mahalanobis, who drafted them very much
along the lines of the earlier plans of the Soviet Union. Public sector
investment in the steel industry and in heavy machine tools was a high
priority, especially of the second plan. The scheme soon depleted the
sterling balances in the Bank of England which had accumulated due to
India’s forced saving in the war—when the British had taken away much
of India’s production on credit—and by 1956 India had to turn to the
Western nations for development aid in order to finance the ambitious
plans. Nehru believed that a great breakthrough could be achieved by this
massive industrial investment: he saw India close to the famous ‘take-off
into self-sustained growth’. But this was not so easily achieved. The old
agrarian system which was still very much dependent on the vagaries of
the monsoon did not support the modern industrial superstructure
adequately. The poverty of the rural masses meant a lack of buying power
which affected the demand for industrial products.
Land reform, which had had a high priority for Nehru ever since he
worked for the cause of the peasantry in the campaign of 1930, remained
more or less at the level predetermined by British Indian Tenancy Acts. These
Acts had secured the rights of those peasants who held their land directly
from the landlord (zamindar), but had left subtenants and other categories of
the rural poor unprotected. With the only effective land reform, zamindari
abolition, the already rather extenuated rights of these superior landlords
were done away with and they joined the ranks of their former tenants, who
now emerged as a kind of peasant landlord with perfect freedom to exploit
the rural poor. Of course, there were ceilings on landholdings imposed by
legislation and there was the prohibition of the subletting of land. But in the
absence of a proper record of rights, breaches of the law were hard to prove
and this type of legislation remained a mere eyewash.