The industrialists behind India’s first national economic plan

“The Bombay Plan” is the nickname of a 15-year economic plan for India proposed by a group of industrialists and technocrats in January 1944.

Initially, it was released for private circulation only. Soon afterwards, the plan was published as a pamphlet in response to the interest generated by it. Demand led to a number of reprints within the first few months; the document was also translated into several languages during this period. Within a few weeks of publication, Lord Wavell, the Viceroy of India, mentioned it as containing a useful and novel approach to the country’s economic problems,and Jeremy Raisman, the finance member, welcomed it, though doubting some of its financial assumptions (Lokanathan, 1945). By March of that year, the FICCI (Federation of Indian Chambers of Commerce & Industry) endorsed the plan at its annual meeting. Later, the document was edited by Purushottamdas Thakurdas into two tiny pamphlet-sized volumes and published as A Brief Memorandum Outlining a Plan of Economic Development for India in 1945.

Looking back at it today, one cannot help feeling that the plan lives a curious, almost spooky, existence. Books on Indian planning mention it as a mythical forerunner without revealing any more detail. Students generally get to know of the existence of such a document, but very few have had an encounter with it. The plan has faded out of public memory as completely as it had occupied centre-stage soon after publication. This is curious because the plan’s strategy and methods foreshadowed the official Five Year Plans of independent India launched just a few years later. Hence it would have been educative to use the Bombay Plan to discuss the evolution of the methods and strategies of official planning in India. But it has not been used for this purpose. Secondly, the Bombay Plan’s targets were overwhelmingly more ambitious than anything the Planning Commission of the government of India ever attempted. It had envisaged the doubling of per capita income over fifteen years and proposed appropriate sources of finance for that ambitious target. The Planning Commission never addressed why a target close to the Bombay Plan’s was never aimed for by it. Was the Bombay Plan unrealistic in its technical assumptions or did the proposed finance options become unfeasible afterwards? These questions are of interest to students of economic history and planning, and to economists generally.

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Making of the plan

The Bombay Plan had as its backdrop the political developments of the 1930s that began emphasising economic issues. The Congress had adopted an economic programme and an agrarian programme in 1931 and 1936 respectively. The Wardha session of 1937 debated the need for national planning as a means of economic development and closed with a resolution in its favour. Next year, the Haripura session followed it up and set up the National Planning Committee with Jawaharlal Nehru and K T Shah as chairman and secretary respectively. The Bombay Plan was published against this background in January 1944. Though the National Planning Committee had started work, it did not publish anything until 1948. Therefore, the Bombay Plan was not a reaction but an original proposal.

The document was signed by the following:

• J R D Tata, son of a cousin of Jamsedji Tata, one of India’s pioneer industrialists. At the time of the Bombay Plan, J R D Tata had business interests in iron and steel and the aviation industry. He would later develop one of the largest industrial conglomerates and be regarded as an industrial leader of modern India.  
• G D Birla, the leader of the Birla group of industries. At the time he had business interests in textiles, jute and insurance. At least three large business groups originated from the businesses established by G D Birla. 
• Sir Ardeshir Dalal, a noted administrator and technocrat, had experience of working in government administration in various capacities and was the first Indian appointed as Municipal Commissioner of Bombay in 1928. He joined Tata Iron and Steel Company Ltd. as resident director in 1931 and initiated reforms like a profit sharing bonus for workers, which were a first at the time. In 1944, the Viceroy of India invited him to join the executive council as member-in-charge of planning and development.
• Lala Shri Ram, a prominent north Indian industrialist who turned the Delhi Cloth Mills (DCM) into an industrial conglomerate later known as the DCM Shri Ram Industrial Group. Lala is reputed for early managerial and workplace reforms like profit sharing with employees and workers’ participation in management. He established, or was a major influence, in a number of institutions: Shri Ram College of Commerce, Lady Shri Ram College for Women, Indraprastha College for Women, and the Shri Ram Institute for Industrial Research.
• Kasturbhai Lalbhai had wide ranging interests in textiles business and shipping. He served as a director of the Reserve Bank of India (RBI) from 1937 to 1949. Active in the education sector, he was a member of the group that started the Ahmedabad Education Society which grew into the Gujarat University. He was also an important influence in establishing and developing the Indian Institute of Management, Ahmedabad.
• D Shroff was director of a number of prominent industries including a few of the Tata Group. He was an unofficial delegate to the Bretton Woods Conference. He later became the founder-director of the Investment Corporation of India and the chairman of the Bank of India and the New India Assurance Company Limited.
• John Mathai was a professor of economics at Madras University and a political personality as well. He served as the director-general, commercial intelligence and statistics during 1935-40. He was India’s first railway minister and then served as finance minister for two years. He was also director of Tata Sons Ltd.
• Purushottamdas Thakurdas was a Mumbai-based businessman and business leader. He, along with G D Birla, was involved in building business associations like the Indian Chamber of Commerce (ICC) and FICCI. He was an advisor for the Indo-British Trade Agreement and served as member in a wide range of public committees and negotiations.

The purpose of the Bombay Plan, as the signatories discussed among themselves, is recorded in the minutes of the Plan’s secretariat meetings. According to the minutes, the following was the purpose behind the effort. The government (they meant the future government of free India) might take populist economic measures in a hurry after the war. Such measures were all the more likely if the government faced organised political demands for redistribution of income and wealth. These measures would harm the prospects of India’s economic development in the long run. However, this possibility could be avoided by proceeding in an orderly and more caring path of development before such a contingency arose. The plan was proposed to initiate the process and make both the government and the public aware of the long run issues of development and income distribution.

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The aim of the Bombay Plan was to attain in fifteen years’ time, “a general standard of living which would leave a reasonable margin over the minimum requirements of human life” (Bombay Plan, p.7). This minimum requirement comprised food, clothing, shelter, healthcare, and basic education. It was calculated that per capita real income of the time would have to be doubled to attain the targeted consumption. But because population was increasing by 5 million a year, national income had to be trebled in fifteen years to attain the proposed increase of per capita income.

A set of sectoral growth rates was then established from this targeted increase of national income. Together, the rates would ensure the required growth of national income and were taken to be feasible, given the technology of the time. Over the fifteen year horizon, the Plan envisaged 130% increase in agricultural output, 500% in industry and 200% in the services.

This meant a structural transformation of the economy. According to the Plan’s calculation, the contribution of agriculture, industry, and services to GDP would change from 53, 17, and 22% respectively at the time, to 40, 35, and 20% at the end of the proposed plan.

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For some time after its publication, secretariat members did actively promote the plan in various constituencies and forums. But after a period of activism, they seemed to have withdrawn from the campaign and even stopped referring to it. They did not try to revise, edit or reprint the document any time later. The probability that this happened by default is very small given the involvement of a group of serious-minded industrialists and technocrats. It is more likely that the authors consciously decided to allow the document to fade from public memory.

Excerpted with the permission of Rupa Publications from The Bombay Plan : Blue print for Economic Resurgence by Meghnad Desai and Sanjaya Baru. We welcome your comments at [email protected].