Industrialization in the Nationalist Movement
Liberal or Moderate phase of the
Movement and Industrialization
•
The aim of industrialization goes back to the beginnings of
the nationalist movement in India. During the
liberal or
moderate phase of the movement, from 1885 to 1905, the
goal of industrialization through large –scale industries
was taken to be a self-evident proposition.
•
Indeed, by the end of the 19
th
century, the demand for
rapid industrialization of the country along modern
industries had assumed national proportions.
•
The Congress leadership deemed such industrialization as
essential
for a variety of reasons: removing poverty and
unemployment, eliminating the exclusive dependence on
agriculture, developing the productive powers of the
nation, achieving a higher level of civilization, and
promoting national integration.
Liberal or Moderate----(contd.)
•
Towards that end, the moderate leadership endorsed the
prescriptions of the nineteenth century
German economist
Friedrich List for state intervention in the economy
for
purposes of development, refusing to buy the laissez-faire
logic preferred by the British colonial authorities.
•
By the
first decade of the 20
th
century
, the moderate phase
of nationalism had been overtaken by extremism and
militancy. During this phase
it was felt that Britain did not
simply fail in actively helping with industrialization, but
that it was a fact that it thwarted industrialization as a
matter of deliberate state policy.
•
As early as in
1936,
in his presidential address to the
Congress party at Lucknow,
Nehru declared that he
believed in the rapid industrialization of the country
which would substantially improve the standards of the
people and combat poverty.
Nehru, Socialism and the Mixed
Economy
•
Fundamentally,
Nehru’s vision of the public
sector stood on a different footing from that of
the Bombay Plan
or Tata-Birla Plan (developed in
1945). For the Bombay planners,
the role of the
state in the economy was only temporary
and
for specific purposes. Their aim was to build a
more flourishing industrial capitalism.
•
Nehru, on the contrary, envisaged an ever-
expanding public sector.
Both absolutely and
relative to the private sector,
in possession of the
commanding heights, fundamentally as a route to
a socialist society.
National Planning Committee
•
After he became
Chairman of the National Planning
Committee in 1938,
Nehru increasingly turned his
attention to the question of adapting socialism to
Indian conditions.
•
He came to the conclusion that the
mode of transition
to socialism was to be by way of a ‘mixed economy’,
though it was not yet termed as such, under which all
key industries were to be state-owned and state-
managed.
•
As the public sector expanded under a regime of
planning in the mixed economy,
the private sector
would be reduced to an economic appendage,
and
thus a peaceful transition to socialism would take
place.
Nehru’s Commitment to Democracy
•
At the same time, in contrast to orthodox Marxists who
were votaries of revolution,
Nehru was committed to
democracy as the political route to the socialist society.
•
Having arrived at this model before independence,
Nehru
had to be quiescent about socialism for several years
after
independence because of the turmoil of Partition and the
factional divisions within the party and government.
•
It was only
in 1954, after he had consolidated his power
both in the party and government, did Nehru begin to give
public expression to the kind of society he eventually
envisioned for India.
In November that year, he made it
clear that he rejected capitalism, because a system which is
based purely on the acquisitive instinct is immoral and he
regarded its days to be numbered.
Lok Sabha Resolution
•
A month later, the Lok Sabha passed a resolution
supporting Nehru’s vision, and in January 1955 the
Congress party in a historic resolution stated that ‘planning
should take place with a view to the establishment of a
socialistic pattern of society, where the principal means of
production are under social ownership or control,
production is progressively speeded up and there is
equitable distribution of the national income’.
•
Significantly, referring to the two resolutions by parliament
and party, Mahalanobis acknowledged in the model
document that ‘these decisions settled, in principle, the
type of economic development of India in future’, and in
the plan-frame he recommended: ‘The public sector must
be expanded rapidly and relatively faster than the private
sector for steady advance to a socialistic pattern of
economy’.
The Second Five Year Plan and the
Industrial Policy Resolution, 1956
•
The Second Five Year Plan repeated the theme: ‘the basic
criterion for determining the lines of advance must not be
private profit but social gain… The public sector has to
expand rapidly… it has to play the dominant role…the
public sector must grow not only absolutely but also
relatively to the private sector’.
•
The Industrial Policy Resolution of 1956 then reserved
solely for the public sector ‘all industries of basic and
strategic importance, or in the nature of public utility
services’; not only that, ‘other industries which are
essential and require investment on a scale which only the
State, in present circumstances, could provide, have also to
be in the public sector.
•
Meanwhile, the private sector was placed under a rigid
system of licensing and strict controls over installation and
expansion of industrial capacity.
The Third Five Year Plan and the Role
of the Public Sector
•
The Third Five Year Plan (1961) later elevated the role of the public
sector to a higher level, both politically and ideologically. It posited
an ‘even more dominant role’ for the public sector in economic
development, and projected it ‘to grow both absolutely and in
comparison and at a faster rate than the private sector’.
•
The end purpose in assigning this role to the public sector was the
achievement of a socialist society: ‘In an underdeveloped country, a
high rate of economic progress and the development of a large
public sector and a cooperative sector are among the principal
means for effecting the
transition towards socialism’.
•
Thus, once the principal means of production would come to be
publicly owned while the private sector had been drastically
reduced to a relatively insignificant position, the transition to
socialism would be completed. Indeed, Nehru believed in respect of
the future of the private sector that it would gradually and
ultimately fade away.
The aim of industrialization in India during the liberal or moderate phase of the nationalist movement from 1885 to 1905, reflected in the ideologies of leaders like Nehru. This period saw a shift in focus from agriculture to modern industries, aiming to combat poverty, unemployment, and promote national integration through rapid industrialization. The evolution of economic ideologies towards socialism and a mixed economy, as advocated by Nehru, played a significant role in shaping India's industrial path.
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Presentation Transcript
Liberal or Moderate phase of the Movement and Industrialization The aim of industrialization goes back to the beginnings of the nationalist movement in India. During the liberal or moderate phase of the movement, from 1885 to 1905, the goal of industrialization through large scale industries was taken to be a self-evident proposition. Indeed, by the end of the 19thcentury, the demand for rapid industrialization of the country along modern industries had assumed national proportions. The Congress leadership deemed such industrialization as essential for a variety of reasons: removing poverty and unemployment, eliminating the exclusive dependence on agriculture, developing the productive powers of the nation, achieving a higher level of civilization, and promoting national integration.
Liberal or Moderate----(contd.) Towards that end, the moderate leadership endorsed the prescriptions of the nineteenth century German economist Friedrich List for state intervention in the economy for purposes of development, refusing to buy the laissez-faire logic preferred by the British colonial authorities. By the first decade of the 20thcentury, the moderate phase of nationalism had been overtaken by extremism and militancy. During this phase it was felt that Britain did not simply fail in actively helping with industrialization, but that it was a fact that it thwarted industrialization as a matter of deliberate state policy. As early as in 1936, in his presidential address to the Congress party at Lucknow, Nehru declared that he believed in the rapid industrialization of the country which would substantially improve the standards of the people and combat poverty.
Nehru, Socialism and the Mixed Economy Fundamentally, Nehru s vision of the public sector stood on a different footing from that of the Bombay Plan or Tata-Birla Plan (developed in 1945). For the Bombay planners, the role of the state in the economy was only temporary and for specific purposes. Their aim was to build a more flourishing industrial capitalism. Nehru, on the contrary, envisaged an ever- expanding public sector. Both absolutely and relative to the private sector, in possession of the commanding heights, fundamentally as a route to a socialist society.
National Planning Committee After he became Chairman of the National Planning Committee in 1938, Nehru increasingly turned his attention to the question of adapting socialism to Indian conditions. He came to the conclusion that the mode of transition to socialism was to be by way of a mixed economy , though it was not yet termed as such, under which all key industries were to be state-owned and state- managed. As the public sector expanded under a regime of planning in the mixed economy, the private sector would be reduced to an economic appendage, and thus a peaceful transition to socialism would take place.
Nehrus Commitment to Democracy At the same time, in contrast to orthodox Marxists who were votaries of revolution, Nehru was committed to democracy as the political route to the socialist society. Having arrived at this model before independence, Nehru had to be quiescent about socialism for several years after independence because of the turmoil of Partition and the factional divisions within the party and government. It was only in 1954, after he had consolidated his power both in the party and government, did Nehru begin to give public expression to the kind of society he eventually envisioned for India. In November that year, he made it clear that he rejected capitalism, because a system which is based purely on the acquisitive instinct is immoral and he regarded its days to be numbered.
Lok Sabha Resolution A month later, the Lok Sabha passed a resolution supporting Nehru s vision, and in January 1955 the Congress party in a historic resolution stated that planning should take place with a view to the establishment of a socialistic pattern of society, where the principal means of production are under social ownership or control, production is progressively speeded up and there is equitable distribution of the national income . Significantly, referring to the two resolutions by parliament and party, Mahalanobis acknowledged in the model document that these decisions settled, in principle, the type of economic development of India in future , and in the plan-frame he recommended: The public sector must be expanded rapidly and relatively faster than the private sector for steady advance to a socialistic pattern of economy .
The Second Five Year Plan and the Industrial Policy Resolution, 1956 The Second Five Year Plan repeated the theme: the basic criterion for determining the lines of advance must not be private profit but social gain The public sector has to expand rapidly it has to play the dominant role the public sector must grow not only absolutely but also relatively to the private sector . The Industrial Policy Resolution of 1956 then reserved solely for the public sector all industries of basic and strategic importance, or in the nature of public utility services ; not only that, other industries which are essential and require investment on a scale which only the State, in present circumstances, could provide, have also to be in the public sector. Meanwhile, the private sector was placed under a rigid system of licensing and strict controls over installation and expansion of industrial capacity.
The Third Five Year Plan and the Role of the Public Sector The Third Five Year Plan (1961) later elevated the role of the public sector to a higher level, both politically and ideologically. It posited an even more dominant role for the public sector in economic development, and projected it to grow both absolutely and in comparison and at a faster rate than the private sector . The end purpose in assigning this role to the public sector was the achievement of a socialist society: In an underdeveloped country, a high rate of economic progress and the development of a large public sector and a cooperative sector are among the principal means for effecting the transition towards socialism . Thus, once the principal means of production would come to be publicly owned while the private sector had been drastically reduced to a relatively insignificant position, the transition to socialism would be completed. Indeed, Nehru believed in respect of the future of the private sector that it would gradually and ultimately fade away.
