The planning model adopted by India, was not about choice, but necessity. Examine in context of conditions in Indian economy on eve of independence? (10 marks, 150 words) (GS-3 Indian Economy)

India went for a mixed economy model after independence in which both state and private sectors would steer the economy towards development. The Planning Commission was set up in 1951 to judiciously use the resources of the country.

India, however, went for this model out of necessity as under-

• The foreign rule had exploited the economy for nearly two centuries plundering its wealth and deprived it of the industrial revolution. The share of India in world economy was mere 4.2% in 1950.
• There was extreme poverty, illiteracy, ruined agriculture and industry.
• There was deficiency of good entrepreneurs who could use the natural resource endowment of India for economic development.
• The private sector lacked the necessary resources and the proper mindset to bring about rapid economic growth.
• Inspired by the Russian Revolution and Lenin, we went for planning as a state instrument. Resources were to be allocated both at the Centre and in the States according to the plan priorities decided in a five-year plan to be set by the Planning Commission.
• The national freedom struggle and the ideals propagated by the leaders like J L Nehru, Ambedkar also supported this model. M G Ranade, Dadabhai Naoroji etc had also supported state’s role in economic development.
• At the time of independence, there were only some consumer industries available. We neither had technology nor expertise for heavy industries which had to be imported. Only state could finance that.
• It was critical of capitalism and more inclined towards socialism. However, owing to the Non-Alignment Movement, it could not get any funding from the two blocks (USA and former USSR)
• Being short of funds, it went for self-reliance as a motto. Thus, came import- substitution doctrine in which our aim was to restrict the imports.

However, India also had certain advantages as compared to other similarly-placed nations-

• The capitalist class had taken roots in India during 1914-1947. We had various business classes like Tatas, Birlas, Dalmias etc. which had acquired dominance over the financial sphere like banking, life- insurance, etc.
• India had broad consensus on the nature and path of development to be followed after independence. E.g.- self- reliance, rapid industrialization, prevention of foreign capital dominance, abolition of zamindari, support to cooperatives etc. were agreed by all.

Thus, the planning model adopted by India was a result of the circumstances present and the wisdom of our national leaders to steer the economy on the path of rapid socio- economic development.