When India got freedom in 1947, it inherited a very miserable situation. Colonialism destroyed economic and societal fabric and kept it isolated from modern industrial developments that were taking place across the world. Structural damages in economy and society carried out by the colonial rulers along with acute poverty, illiteracy, ruined agriculture and industry made building India as a self-reliant country a very difficult task. To fulfil the dreams of freedomfighters, these bottlenecks have to be eliminated. For rapid industrial growth, this colonial legacy has to be removed. After two hundred years of the First Industrial Revolution, industrialising India in a modern way was really an enormous task.
After independence, the process of rebuilding India was started. India had plenty of problems but at the same time it possessed some invaluable gems also. One of the gems was the high capability of the Congress Party with a long list of dedicated great leaders. Pandit Jawaharlal Nehru was the pioneer.To support him, there were a lot of leaders who had played memorable roles in the freedom-struggle. All Congress leaders under the leadership of Pandit Nehru had the same picture of free India in their dreams. They were totally dedicated to rapid social and economic transformation. In their opinion, economic development was mandatory for national unification.
From the very beginning, the nationalist leaders of the Congress Party unanimously concluded that the aim of building India can only be achieved through modern farming and modern industries. Specifically, all they wanted was the transformation on the basis of modern science and technology.
Senior leaders of the Congress Party firmly believed that industrialisation must be started and later it should be closely associated with agriculture. They also believed that industrial development was mandatory for rural development. It might ease the burden of population on land and also increase employment opportunities in rural areas. Large capital based industries and machine-manufacturing sector were considered the core-areas. Their absence was considered as an indicator of economic dependency and backwardness. The leaders of the Congress party also advocated strengthening of medium, small and micro enterprises. The enterprises of this sector were offered incentives and safety so that employment opportunities might increase. Employment generation was a part of an overall development-strategy.
During the decades of 1930’s and 1940’s, the national movement of the Congress party accepted reinvigorating and making structural changes in agriculture. The movement’s vision for economic restructuring was based on the pro-active and central role of the state. The state would do economic planning and development it was accepted in 1930’s. The government had to develop infrastructure including roads, power, irrigation and water-supply. For this, the government had to mobilise its own resources since Indian capitalists were unable to invest on such a large scale. It was a huge task. Indian National Congress in its Karachi session passed a resolution which stated, “Infrastructure industries and services, mines and minerals, railways, waterways, shipping and public transport will be owned and controlled by the state.” The draft of this resolution was prepared by Pandit Jawaharlal Nehru. Planning was considered as a vital tool for integrated and multi-dimensional development. In 1938, Indian national Congress proposed National Planning Committee.
Under the leadership of top leaders of the Congress party, a small but independent industrial base owned by Indian capitalists came into existence between 1914 and 1947. A group of Indian industrialists were successfully making their presence felt across the country. They could be very helpful for planned development. Even under the British rule, big business houses like Tata, Birla, Dalmia, Singhania were being recognised far and wide. The Congress party encouraged them and they were expanding rapidly in sectors like trade, banking, transport and industry.
India got freedom in 1947 and Pandit Jawaharlal Nehru became the first primeminister of the country. He put forward an agenda for development and almost all were agreed to this agenda. The main points of this agenda were multi-dimensional strategy for economic development, selfreliance, rapid industrialisation of coresectors as an alternative for imports, ban on foreign and imperialistic capital and land reforms. The land reforms comprised abolition of zamindari, reforms in farming, establishment of co-operative societies for farm-loan, sell of produce etc, development based model for the welfare schemes meant for the poor, reservations for a limited period for the deprived sections of the society like scheduled castes and scheduled tribes and state’s central role in economic development specially through the public sector. But the most important thing was the extraordinary effort for rapid industrialisation keeping democratic and liberal values hand-in-hand.
The country’s capitalists were devoted to rapid industrialisation under the leadership if Pandit Jawaharlal Nehru and other top leaders of the Congress Party. In the initial phase of industrialisation, democracy was not the form of government in all industrialised nations. India didn’t even think of adopting the capitalist model present in any country belonging to South America, East Asia or any other country for that matter. The governments in these countries were pushing for artificial high growthrate in close association with the capitalists. In India, there was unanimity on the development model. It was the contribution of the freedom-struggle led by the Congress Party.
The country’s first prime-minister Pandit Jawaharlal Nehru was the harbinger of planned economic development. All India Congress Committee forms an Economic Programme Committee in 1947 under the leadership of Pandit Nehru. It recommended the priority for defence, public services and core-sector industries. Against this backdrop, National planning commission was formed on 15th March, 1950. It has authority and enjoyed immense power. Its president was Pandit Jawaharlal Nehru himself. In the decades to come, it chalked out and finally prepared a massive and detailed planning for development and at the same time its sub-committees prepared a report for development in 29 sections.
The First Plan (1951-56) was mainly dedicated to accomplish the unfinished tasks. Efforts were also made to combat the crisis of the post-war situations. The famous Nehru- Mahalanobis strategy for development was implemented in the Second Plan (1956-61) which continued further in the Third Plan (1961-66) also. This strategy’s one of the important features was to develop the industries of the core-sector as public undertakings. During the Second Plan, three steel industries came up under the public sector.
For self-reliance this industry’s development was essential. It had to reduce our dependency on imports and for that matter on foreign countries. Pandit Nehru’s vision was that in the prevailing circumstances exports can’t be increased in the same proportion of imports machinery and basic finished products.
Apart from the development of heavy industries, small and micro industries had to be developed for the production of consumer goods. These industries were labour-centric. It was planned that under community development schemes, labour’s maximum utilisation will be adopted through community programmes. In the long run, it will generate capital also. Agriculture co-operatives will play an important role in these programmes. An important aspect of Nehru-Mahalanobis planning was to focus on both development t and equality. So for both agriculture and industry, centralisation and distribution were given special importance.
The most important and at the same time most complex tasks were planned development by the state; division of responsibility between public and private sectors; protection to small industries; maintaining regional balance and resource mobilisation and usage according to aims and priorities. For accomplishing all these tasks, some exhaustive and complex system of controls was needed. Industrial licensing was also important. These all were resolved by the introduction of the Industrial Development and Regulation Act (IDRA) of 1961.
Pandit Jawaharlal Nehru led Congress government adopted the above-mentioned policies. It resulted in an impressive achievement on many fronts. This period is of first three Five-Year plans i.e. up to the middle of 1960’s. Indian economy developed impressively in comparison to the colonial period. National Income or Gross National Product of India increased at an annual rate of 4 %. In comparison to last 50 years of the British rule, this growth was four times. The growth rate India achieved after independence was more or less the same what developed countries achieved in their initial phase of industrialisation. In the words of renowned economist Prof. K.N. Raj, “It is often comprehended that during the latter half of 19th century and the first quarter of 20th century, Japan developed rapidly. But during the period of 1893-1912, the growth rate of its national income was little less than 3 % and in the next decade it didn’t go beyond 4%. Keeping these parameters in mind, India’s growth rate for the last 15 years (1950-65) is very satisfying.” To increase growth-rate, investments had to be multiplied.
An important achievement of this period was the sharp rise in the rates of savings and investment. Based on then available data, the draft of the fourth Five-Year plan mentioned the achievements of Indian economy. The draft expressed that both domestic savings and total investment were 5.5 % of the National Income in 1950 51 and it jumped up to 10.5 % and 14 % respectively in 1965 66. After some years, the gap between domestic savings and investment was brought down partially with the help of foreign exchange reserves. Sterling reserve in particular was very large. It was equal to Rs 1600 crores.
After independence, reforms on a very large scale were introduced in agriculture sector. Multiple programmes and schemes were implemented up to the micro level i.e. village for community development and reforms in agriculture.
Large scale investments were made for the infrastructure development and research in sectors like irrigation, energy and agriculture. Under the leadership of Prime-Minister Pandit Jawaharlal Nehru the Congress government started path-breaking initiatives that ultimately resulted in the overall development of agriculture. During first three Five Years plans, the growth rate for agriculture was 3 % annually. This growth rate was 7.5 % more if we take last 50 years of the British rule in consideration. The growth rate was more or less the same as that of Japan and China during their respective initial phases of development. But the importance lies in the fact that India achieved it with land reforms and under modern democratic structure and the system of civil rights contrary to most of the nations like China, Japan, Korea, Taiwan, USSR and Britain.
During the first three Five Year plans that were implemented by Pandit Jawaharlal Nehru led Congress government, the growth rate of industry was higher than that of agriculture. Between 1951 and 1965, its annual growth rate was 7.1 %. The rise of industries led to a fall of imports. First in consumer goods and later in basic goods and other articles.
Emphasis was given tom basic goods. It was clear from the fact that in the Second Five Year plan, 70 % outlay was meant for machinery, metallurgy and chemical industries. It shot up to 80 % in the Third Five Year plan. Between 1951 and 1969, the industrial production increased three times. The main reasons behind this sharp rise were an increase of 70 % in consumer goods, ten times increase in basic goods and four times increase in other goods. From the consideration of any parameter, the increase in basic goods was very impressive. Medium and basic goods industry like metallurgy, chemical automobile, both electrical and non electrical machinery and textile witnessed sharp rise between 1951 and 1971.
Under the guidance of the Congress government and senior leaders of the Congress party, the country’s economy marched on the path of progress. It is amply clear from the following table INDUSTRIAL SECTOR 1951 1961 1971 GENERAL 55 109 153 TEXTILE 80 103 106 METALLURGY 47 119 209 ELECTRICAL 26 110 405 MACHINERY (Source India A Referance Manual; Govt of India; New Delhi; 1980. PAGE NO 312)
Under the Congress government, manufacturing developed and expanded. It diminished drastically our dependency on foreign countries for machinery. This was necessary for investment and capability building. At the time od independence, most of the machinery needed to set up a factory had to be imported. For example, 89.8 % machinery was imported in 1950. It decreased to 43 % in 1960 and further came down to only 9 % in 1974. During this period, investments increased two and half times.
In 1970’s, India was able to mobilise major part of its investment by itself. It was an outstanding achievement of the Congress government. It also decreased our dependency on developed countries as far as the mobilisation of capital was concerned. This achievement along with the Green Revolution became the guiding force for our independent foreign policy which faced the immense pressure of the foreign countries courageously.
When India got freedom, there were serious problems before its economy. Even though, the Congress government succeeded in keeping less dependency on foreign sources, foreign aid, and foreign private investment. During the first Five year plan, the assistance India used was only 0.4 % of the national Product. It increased to 2.25 % in the second Five year plan and 3.17 % in the third Five year plan. It decreased sharply in 1960’s. Apart from this, the actual shape of foreign resource was government assistances.
According to an estimate, the ratio of 1948 and 1961 in terms of foreign private investments was 6;1. In the first Five year plan, 71 % of the foreign assistance was utilised for the repayment of the loan amount of wheat purchase while in the second and third Five year plans, 98 % of the total foreign assistance were invested in the sectors like iron and steel, automobile, communication and power. On the whole, 95 % of the foreign assistance was utilised in sectors like core industries, transport and power under the three Five year plans. America provided food grain assistance under PL-480. This fund was also used for the development of above mentioned sectors. In the second Five year plan, assistance provided by the USSR was used for the public sector undertakings especially for infrastructure industries.
On account of the policies adopted by the Congress government led by Pandit Jawaharlal Nehru, the public sector got prominence gradually. The industries under foreign companies were a small part and it got smaller with the passage of time. In this sense India stands contrary to Latin American countries where the public sector developed due to the investments made by multinational corporations.
In 1951, the public sector accounted for 3.4 % of the total capital of the corporate sector in India and it jumped up to 30 % in 1961 and 75 % in 1978.
The Congress government gave emphasis on industry and farming along with infrastructure development, education and health. During the colonial rule, these sectors were neglected. In the first three Five year plans, the expenditure on transport and communication was Rs 1300 crore. It stood at 26 % of the total expenditure of every plan. For social/ community services and energy they were Rs 940 crore and Rs 616 crore, which stood at 19.9 % and 10.6 % respectively.
In the latter stage, planned investments in these sectors and in irrigation proved very important. Due to these policies of the Congress government private investments and production increased manifold. It was underlined in agriculture during the Green Revolution.
After freedom, the Congress government adopted visionary policies. It resulted in the development of infrastructure and rise in per capita income. It was more than the increase in population. In between 1950 51 and 1965 66, the capacity for power generation increased 4.5 times; electrification in rural and urban areas 14 times; beds in hospitals 2.5 times enrolments in schools 3 times. For technical education, seats in engineering colleges increased 6 times and for diploma courses 8.5 times. During this period, the population increased by one third only.
Pandit Jawaharlal Nehru, senior leaders of the Congress Party and planning strategists were very well aware of the backwardness of the country especially in the field of science and technology. During the colonial rule, these sectors were kept neglected intentionally. So they began to bring about changes in this sector on a large scale. Pandit Jawaharlal Nehru was a responsible and visionary prime minister.
He started to build “new temples for modern and secular India”. These new temples were big dams for irrigation purposes, iron and steel industry, power plants, colleges and universities for higher education and institutions for engineering and technological education.
During the first Five Year plan, Council for scientific and Industrial Research (CSIR) established a number of modern laboratories and institutions. These laboratories and institutions were associated primarily for research work on physics, chemistry, fuel, glass and clay of China, food technology, medicines, electro chemical, roads, leather and housing.
Pandit Jawaharlal Nehru government formed atomic Energy Commission in 1948. It laid the foundation for nuclear science. Besides, opportunities for science and technological education in institutions and universities increased extraordinarily. National expenditure on scientific research and development continued to increase in every Five Year plan. For example, the expenditure was Rs 1 crore in 1949 which shot up to Rs 450 crore in 1977. During this period, scientific and technological manpower increased from 1.9 lakh to 23.2 lakh registering a rise of 12 times. After the unification of the USSR, India stood at no. 2 on this scale. This was an extraordinary achievement from any point of view.
This achievement becomes more prominent when in modern age “information” has become an important tool for production. All over the world, education and human resource development are being given more and more importance. Today India is ready to join the process of globalisation particularly in the field of latest and ultra modern technology. It has become possible only due to the fact that the Congress government paid special attention for human resource development specifically in science and technology since independence.
After independence, to eliminate colonial backwardness was the need of the hour. Changes had to be carried out while maintaining democratic values. This task was very well planned and executed by the Congress party government led by Pandit Jawaharlal Nehru. But today it has become a fashion to look down upon the achievements of the Nehruvian Model and at the same time the policies adopted by the Congress governments. It was the Nehruvian Age of the Congress Party which emphasised on the development of human resource and infrastructure which ultimately proved pre - conditions for an overall development of our country.