Planning

Planning

As early as the late nineteenth century, in the economic thinking of the early nationalists such as M.G. Ranade and Dadabhai Naoroji, the state was assigned a critical role in the economic development of India.

The idea of planning as a process of rebuilding the economy earned a good deal of public support in the 1940s and 1950s all over the world. The experience of the Great Depression in Europe, the inter-war reconstruction of Japan and Germany, and most of all the spectacular economic growth against heavy odds in the Soviet Union in the 1930s and 1940s contributed to this consensus.

In 1938, Jawaharlal Nehru, a staunch advocate for planned economic development in India, led the formation of the National Planning Committee (NPC). Over the next decade, the committee worked on creating a comprehensive development plan for the country.

Indian business leaders, along with Nehru and the NPC, became early supporters of the public sector and partial nationalization. A major reason for their backing was outlined in the 1945 Bombay Plan, a blueprint for India’s economic future, created by leading business figures.

The Bombay Plan identified the lack of an indigenous capital goods industry as the primary reason for India’s reliance on foreign nations. It argued that the public sector needed to take the lead in developing key industries, particularly capital goods and heavy industries, which required significant investment and would take years to show returns.