Planning failures

Print edition : May 31, 2013

May 1956: Prime Minister Jawaharlal Nehru, as the Chairman of the Planning Commission, signing the second Five Year Plan document. Photo: THE HINDU ARCHIVES

Journalist-economist D.K. Rangnekar’s impressions of the economic policies of the first three and a half decades after Independence.

IN the 1960s, 1970s and the early years of the 1980s, D.K. Rangnekar’s was a powerful voice on matters relating to what may be described as the political economy of free India’s attempt to achieve planned economic development within the framework of liberal parliamentary democracy. After his higher education in Bombay and Cambridge universities, he took a doctorate in economics from the London School of Economics. Rangnekar decided to practise economics via journalism. He had an initial stint in Ceylon (Sri Lanka), but returned to India to join The Economic Times, which was started in 1961. Subsequently he moved to Business Standard, of which he was the editor for many years until death snatched him away in 1984 at the relatively young age of 53.

The Politics of Poverty brings together a collection of his writings as editorials and special articles in Business Standard and in other publications such as Economic Weekly (which later became Economic and Political Weekly), Seminar and so on . One of them was published in Time magazine.

A legitimate question that can be raised is the relevance of bringing out these writings of several decades ago, particularly after the path pursued in those years has been given up and a different strategy of economic growth has been accepted which, many would claim, has shown that what was claimed to be a unique Indian experiment was not much of a success anyway.

But Rangnekar had a different take on the economic policies of the first three decades after Independence. He was very much in favour of the basic strategy of that period and defended it. He lamented the failure to implement it properly and criticised sharply the deviations from it. Such critical evaluation of the first few decades of the country’s political and economic experiments needs to be brought to the notice of today’s citizens, especially to the younger generation.

Consider some of the specific issues that were debated in the early 1950s. We are now into the country’s Twelfth Five Year Plan and planning as the basis of economic policies has been widely accepted even when the market has been the place of honour on economic matters. But the early years after Independence saw a heated debate on the feasibility of a planned economy within a democratic political set-up. Planning was so closely associated with authoritarianism, if not totalitarianism, that some found it a contradiction in terms to talk about “democratic planning”. Rangnekar pays tribute to Prime Minister Jawaharlal Nehru’s vision that made it possible to combine parliamentary democracy and economic planning and recalls that those who were directly involved in economic affairs such as the Tatas and the Birlas had no difficulty in accepting a major role for the state in economic affairs. After all, one of the early plans for the country, the “Bombay Plan”, was the handiwork of the leading industrialists themselves.

However, Rangnekar was not giving a full endorsement of the kind of planning that Nehru and his Planning Commission had adopted. Far from it. He wrote: “After some initial fumbling with radical ideas, Nehru struck a characteristic compromise, giving the country an institution called the Planning Commission, but without anything like a philosophy of planning and well-charted strategy of development. Going through the documents of the Commission, I find hardly any study which attempts an intelligent discussion of the political and economic issues involved in planning in Indian conditions or projecting an appropriate, or even plausible, philosophy of development and indicating the institutional and other changes required to make the planning experiments a success.” Such half-hearted planning, he said, “has virtually dissipated the powerful forces released by the early nationalist fervour”. He criticised the planners for always talking about resource allocation, forgetting that its canvas was only a small segment of the economy, the public sector, and even within that largely in financial terms. For anyone who is interested in issues relating to planning in a country such as ours, I strongly recommend the piece in the volume entitled “Second Thoughts on Indian Planning”, which Rangnekar wrote in 1967.

That piece may give the impression that Rangnekar was totally negative about what planned development had achieved. In the celebrated piece published in Time magazine late in 1978, he said: “The vision and courage of Jawaharlal Nehru and the dogged determination of the people have paid rich dividends, and today one can speak of India as an emerging industrial power.” He went on to say: “Industry and business contribute today more than one-third the national income as compared with a mere 5 per cent or so before Independence in 1947.” He pointed out how India had attained “a remarkable degree of self-sufficiency and a highly diversified range of industries” and commented on the “investment boom” that had emerged since Independence.

But by the early years of the next decade Rangnekar began to notice a “radical shift lately in the focus of political discussion in India” and a “dithering” on economic matters although “inequalities have increased, unemployment had become chronic and the gains of years of sacrifice and investment have been cornered by ill-deserving power-hungry groups, elements which have no integrity and no sense of social responsibility”. In the article “Failure to Stem Structural Deterioration” published in August 1981, Rangnekar lamented: “In recent years manufacturing in particular has perhaps given way to real estate, finance, banking, defence, administration, hotels, transport and communication, all representing the lifestyle of the elite classes…. The increased poverty of a larger proportion of the population is an important manifestation of the complex dualism between the growing importance of the commercial sector and the lingering poverty of the farm sector. The system operates in favour of the landlords, traders, moneylenders and the political satraps for reasons which political leaders feel least inclined to alter.” Few others saw in the early 1980s that India was departing from the basic principles of planned development accepted immediately after Independence and that change in direction would logically lead to the “reforms” of the early 1990s.

The collection also carries articles on specific issues such as fertilizer imports and pricing, changes in inter-sectoral prices, inflation, the North-South divide, budget and tax policies, and the controversial borrowing from the International Monetary Fund in 1980.

Together they provide an easy read on the crucial economic and political issues of the first three and a half decades after Independence. Rangnekar’s writings communicate the feelings of one for whom these were of more than professional interest: he had a passionate personal involvement in national issues, particularly the fate of the vast majority of fellow countrymen caught up in poverty and misery. He wrote in 1984: “The mood in the country is one of disenchantment…. If today the country is passing through a traumatic experience it is because the social crisis has deepened, inequalities have increased, and unemployment has become chronic. The gains of years of sacrifice borne in the name of development have been cornered by ill-deserving, power-hungry groups, people who have no integrity and no social responsibility. Behind the intellectual crisis lies a total collapse of values.… The crisis is predominantly economic and social. But there are also other dimensions to the crisis which go deeper. They concern the direction of national policy, political integrity, quality of leadership and intellectual honesty.” These words reflect the anger and anguish of a generation of people who as teenagers had welcomed Independence with great expectations, but felt let down by the course of events within a very short period.

In introducing the collection of essays, Pratap Bhanu Mehta says: “What is most impressive about these essays is how they have stood the test of time. In many respects, the biggest surprise on reading these essays is that they feel so contemporary.” I fully endorse this statement and commend the volume to those who are searching for explanations for the paradoxes of our time.

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