India is and will remain a socialist country, Planning Commission or No Planning Commission
Before February 8, 2015
Since February 8, 2015
The same building
Since February 8, 2015
The same building
On January 1, 2015 the Indian Cabinet headed by the country’s 14th Prime Minister, Narendra Modi, adopted a resolution to replace the 65 year old Planning Commission (PC), called Yojna Aayog in Hindi, with the National Institution for Transforming India (NITI Aayog)). It was formally inaugurated by Modi on February 8, 2015, almost 65 years after India’s first Prime Minister Jawaharlal Nehru had inaugrated the Planning Commission (PC). The historic change was widely hailed by all those who considered the PC a relic of the Nehruvian socialist era. Nehru’s critics often argue that he was the father of the PC and set up a body for centralised planning because he was highly influenced by the Soviet model. The critics have been arguing that with the increasing role of the private sector, the Indian has changed significantly and socialism has become an outdated ideology and with that the PC has become an anachronism. Another criticism was that the plan model developed in 1950 was no longer valid; it was working like a “control commission” and had become an impediment to reform, growth and progress.
The PC of India has become history but certain myths must be dispelled. Briefly, Nehru was not father of planning or PC; PC did not impose any ideology on Indian rulers; and India is and will remain a socialist country, PC or no PC. Moreover, India will always need an advisory body like PC.
First, it is true that Nehru set up the PC but he was not the first to suggest setting up of such a body and preparation of five-year plans (FYPs) for economic development. It was M Visvesvaraya, an engineer and a visionary who had studied western industrialised countries, who first suggested a ten-year plan and gave outline of a planning body. In his book “A Planned Economy for India” (1934), he wrote “Left to private enterprise, industries will not make satisfactory progress. Government should take the lead, as every progressive government is doing now.” The idea was lapped by legendry Subash Chandra Bose who as Congress President in 1938 (Nehru was in England at that time) said: “The state on the advice of a PC will adopt a comprehensive scheme for gradually socialising our entire agricultural and industrial system...” He made Nehru chairman of All India National PC though it remained a non-starter due to outbreak of World War. In 1945, eminent capitalists like JRD Tata and GD Birla, prepared “A Brief Memorandum Outlining a Plan of Economic Development for India” for economic development of post-Independence India.
Secondly, whatever faults one can attribute to PC, it cannot be accused of ever adopting a dogmatic attitude. PC being a creation of government and working under the chairmanship of the Prime Minister, accepted socialism or need for moving away from it as per the government’s directions. Moreover, government’s resolve to provide lead role in economic development came before PC was set up. Following the first Industrial Policy Statement (1948) which accepted the principle of government ownership and control in critical sectors of the economy while accepting cooperation of the private sector in other areas, the first FYP document assigned greater role to the state and secondary role to the private sector because the latter was quite weak at that time. According to the Industrial Policy Resolution, adopted by the Parliament on April 30, 1956, "The adoption of the socialist pattern of society as the national objective, as well as the need for planned and rapid development, requires that all industries of basic and strategic importance, or in the nature of public utility services, should be in the public sector.” The second FYP was prepared to lay the foundation of socialistic pattern of society. Third plan document stated that “disciplined and national unity are the very basis of social and economic progress for the achievement of socialism.” In Preface to Fourth Plan document Prime Minister Indira Gandhi wrote that “with its implementation, we shall have advanced yet another stage towards our goal of a prosperous, democratic, modern, socialist society. The plan document explained that “Socialism involves a reordering of society on a rational and equitable basis and this can only be achieved by assigning an expanding role to the public sector. However, the Fifth Plan document (1974-79) did not mention the word “socialism”. In Her Foreword to the Sixth plan document Nehru’s daughter and the then Indian Prime Minister, Indira Gandhi, said that “for democracy to have meaning in our circumstances, it must be supported by socialism which promises economic justice and secularism which gives social equality.” That democracy in our circumstances ‘must be supported by socialism which promises economic justice and social equality”. In his Foreword to the Seventh plan document Indira Gandhi’s son and successor Prime Minister Rajeev Gandhi stated that the plan reaffirmed ‘our commitment to” socialism. Eighth plan (1992-97) document sang a different song: “The centralised planning of the type practised in socialist economies did not exist in India, ever. In practice, the market has determined allocations in a major segment of the economy.” The term has not found any mention in a plan document thereafter.
The website of erstwhile PC summarised the progress as follows: “For the first eight Plans the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature.” In fact, Eighth Plan was a watershed; the focus started shifting to deregulation of economy and increasing role of the private sector. Before that, the industrial policy announced in July 1991 suggested removal of bureaucratic controls that parted industrial development and opening up of large number of industries to the private sector.
Thirdly, the planning model has not remained static since 1950. First plan had no model. Economist YK Alagh who had long association with PC has mentioned four stages of evolution: (1) second to fourth FYP based on (very simple) Mahalanobis model with emphasis on heavy industry; (2) fifth FYP when income distribution and sectoral planning strategies were included and project appraisal became necessary before major investment decisions; (3) sixth and seventh FYP with greater emphasis on sectoral planning, though emphasis remained on public investment; (4) since eighth Plan, with greater emphasis on increasing private investment.
Fourthly, with Prime Minister as its chairman and all its employees being government servants, PC could not behave the way the Congress Party supremo Sonia Gandhi headed National Advisory Council during the Prime Ministership of Dr. Manmohan Singh did, to impose its views on the government. At best, it gave advice which might or might not be accepted. Whenever the government of the day found any member or deputy chairman the PC inconvenient, he was given marching orders. Indira Gandhi did so in 1971 when deputy chairman and member in-charge of industry opposed her son Sanjay Gandhi’s car project. There are also examples of members and senior officers going out of way to please political masters and of meekly listening when Prime Minister made fun of them. If the quality of work in PC deteriorated or its officers created hurdles, fault lied with the appointing authority. The deterioration in PC was in line with all-round deterioration in the government, especially during the period Sonia Gandhi’s nominee, Dr. Manmohan Singh, was Prime Minister of India.
Fifthly, whether critics like or not, India is and will remain a socialist country, PC or no PC. Socialism has come to stay exactly as democracy has come to stay. We were not “socialist” when we got independence and became a democratic country, not even when we became a Republic. The opening sentence of the Preamble of the Indian Constitution that came into force on January 26, 1950, described India as a "SOVEREIGN DEMOCRATIC REPUBLIC". The word "SOCIALIST" was not mentioned anywhere in the original Constitution. We came somewhere near it in December 1954 and became full-fledged socialist country during the last days of the Emergency imposed by Indira Gandhi when the 42nd Amendment Act (1976) to the Constitution added words “socialist” and “secular” to the Preamble to declare India a "SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC". According to the “Statement of object and Reasons” of the Amendment Act, insertion of the two words - SOCIALIST and SECULAR - became necessary because the democratic institutions “had been subjected to considerable stresses and strains … Vested interests have been trying to promote their selfish ends to the great detriment of public good.” Many believe that Indira Gandhi added the terms “socialist” to express her strong relationship with the Soviet Union.
Most of the countries that sometime or other claimed to be socialist – of Marxist variety or of non-Marxist variety – have abandoned socialism but India remains a socialist country, thanks to the above amendment to the India Constitution. In fact, now, there are just eight non-Marxist socialist countries, India included, whose Constitution refers to socialism. In addition, there are only four countries including China which are characterised as communist or Marxist socialist.
Every citizen of India is bound to respect the Constitution and abide by its provisions in letter and spirit. In addition, every person contesting elections or assuming an important office in government, judiciary, Armed Forces, etc., has to take oath of allegiance to the Constitution. The Preamble of the Constitution is not a window-dressing or of mere cosmetic value. In a landmark judgement in 1973 (known as the Kesavananda Bharati case), the Supreme Court of India held that the Preamble of Constitution was its integral part. Twenty-two years later, in another landmark judgement (known as the LIC of India case), the apex Court reiterated the 1973 verdict.
In 2007, a public interest litigation (PIL) was filed in the Supreme Court seeking removal of the word ‘socialist’ from the Preamble on the ground that it amounted to breach of the basic structure of the Constitution. The same PIL also requested the apex Court to strike down a provision of the Representation of People Act according to which political parties must swear by socialism in order to be recognised. The argument was that a political party which did not subscribe to socialism had to pretend to adhere to it for the sake of recognition. Dismissing the PIL on January 8, 2008, Chief Justice K G Balakrishnan, who presided over the three-judge bench, observed: "Why do you take socialism in a narrow sense defined by communists? It hasn't got any definite meaning. It gets different meanings in different times. In broader sense, it means welfare measures for the citizens. It is a facet of democracy.”
So, even diehard critics of socialism, who are living in India, are living in a socialist state, whether they like the term or not. But socialism is longer the same as described by Marxist and non-Marxist ideologues. Now it means equality and justice to be achieved through democratic means, without the state controlling most of the economic activities. Even China, ruled by a communist party, has adopted mixed economy for higher economic growth. Ultimately, the choice of economic policy has to be determined by economic interests, not vice versa.
Lastly, as stated earlier, the government would need an organisation to draw a roadmap for country’s progress. Developed countries like Japan and Germany and developing countries like Mexico, Malaysia and South Africa have got such institutions. In the US, there is a Council of Economic Advisers to advise the President on economic policies. The organisation carries out objective empirical research and prepares annual Economic Report for the President. The NITI Aayog, the PC’s successor in India, is expected to provide road maps in different fields for transformation of India into a socially and economically developed country.
Whatever the declared economic policy of the government, under the Constitution India is a socialist state.
If you like, you may say, Marxism is dead, long live socialism.
(A former head of the Project Appraisal Division of the Planning Commission of India)