Economics

The Bombay Plan: The Plan for India’s economic resurrection

The Bombay Plan

Even before the independence, by the start of the 1930s, economic planning was initiated by the intellectuals, capitalists, and political leaders of the country. Many proposals were put forward by them about how India should plan its economic development. However, the British Government was ignorant of these proposals, but it was these very proposals that led India to its way of planned economic development in the post-independence period. And in this article, we’d be discussing one of the major plans put forward during the period by the leading capitalists of India, called the Bombay Plan.

The Bombay Plan
Image by- Twitter, @PenguinIndia’s video Tweet

The Bombay Plan

‘A Plan of Economic Development for India’, popularly known as the Bombay Plan, was put forward by the leading capitalists of India during the period. It was during the period of World War 2 and India’s independence from the British was around the corner, so, the top capitalists of the country came together to plan for India’s economic development in the post-independence period, and developed the Bombay Plan. The plan envisioned to triple India’s GDP in the next 15 years and significantly increase the per capita income, ultimately enhancing the overall standard of living. There were eight leading capitalists involved in the planning, they were:

  • Purshotamdas Thakurdas
  • J.R.D. Tata
  • G.D Birla
  • Lala Shri Ram
  • Kasturbhai Lalbhai
  • A.D. Shroff
  • Avdeshir Dalal
  • John Mathai

Among these eight capitalists, Purshotamdas Thakurdas was one of the 15 members of the National Planning Committee, Moreover, J.R.D Tata, G.D Birla, and Lala Sri Ram were the members of the sub-committees of the National Planning Committee. Moreover, the makers of the Bombay Plan helped in setting up the Federation of Indian Chambers of Commerce and Industry  (FICCI) and the Reserve Bank of India and were also a part of the Viceroy’s executive council during World War 2.

The Bombay Plan
Image by- National Herald

The Plan was published in 1944-45, and it ultimately helped in shaping the Indian Economy after Independence. Moreover, as the authors of the Bombay Plan were also connected to the National Planning Commission, there were some clear agreements between the two major plans.

The important agreements between the two plans were:

Rapid Industrialization

Both the plans agreed upon an emphasis on rapid industrialization of the Indian Economy. There was an agreement on prioritizing the development of capital goods and basic industries. Moreover, the Bombay Plan had allocated 35% of its total plan outlay on basic industries.

Agrarian Restructuring 

Both the plans agreed upon the importance of agrarian restructuring in India, by emphasizing the abolition of all intermediaries such as the zamindari system. The Bombay Plan however supported the ryotwari system. The plan also advocated for cooperative farming on a large scale. There was also an emphasis on the guarantee of minimum or fair prices for agricultural products, minimum wages, cooperatives, credit, and market supports.

The Bombay Plan
Image by- The Statesman

Medium-scale, small scale, and cottage scale industries

The Bombay Plan and NPC agreed upon the importance of promoting the medium-scale, small-scale, and cottage-scale industries. This was because these industries would guarantee greater employment and require lower capital and lower order of plants and machinery.

The Role of State in the Economy 

Both the plans agreed that the State shall play an active role in the Economy through planning, controlling, and overseeing the different areas of the economy. The State should do it by either having state ownership or directly controlling the trade, industry, and banking. So, ultimately, even though being industrialists and capitalists, they supported and advocated for a state-dominated economy, or, specifically, mixed economy. Under this economic system, the State would take control of the basic industries of the country, whereas the consumer industries would be left for the private sector. So, even though they advocated for the state-dominance, they also sought the protection of business interests of the capitalists in the country, in the consumer industries such as the textile, cotton, tobacco, glass and paper. So, the Bombay Plan, instead of determining whether India should have a planned or market economy, debated about the extent of the State’s interference in the economy.

Essential Consumer Goods

The Bombay Plan and the NPC favored the development of essential consumer goods (i.e. the goods which are necessary for the health, safety, and welfare of the public) industries such as food, clothing, transportation, pharmaceuticals, etc.

Social Welfare

Image by- In22labs

Both the plans favored social welfare measures and schemes. The measures were based on issues such as a guarantee of a minimum wage, greater State expenditure on housing, water, and sanitation, right to work and full employment, free education, social insurance to cover unemployment and sickness, and provision of utility services such as electricity and transportation at low costs with the help of state subsidies.

Reducing Inequalities

Both the plans agreed to put a special emphasis on ways to remove the gross inequalities in Indian society. This was to be done through policies like progressive taxation and the prevention of the concentration of wealth. Inequality was considered bad for the economy as it restricted the domestic market.

Interested in Economics?

Fiscal Deficit: Implications and Benifits

Shell Companies: Are Shell Companies the Future?

Bond Yield : Factors influencing the yields

Bad Bank : Solution to the banking crisis?

NPA: Causes and Effects

National Income : GDP, GNP, NDP and NNP

Bad Bank : Reconstructing the Reconstructors

Market Economy : Origins and The Great Depression

Mixed Economy: The Perfect Economic System?

Non-Market Economy: Best system for social development?

Second Generation Reforms: Economic Reforms in India

Financial Sector Reforms: Narasimham Committee I

Washington Consensus: Reforming or Ruinous?

Important Terms in Stock Market: Terms to know before investing

Structure of the Indian Capital Market

Types of Disinvestment: India’s Disinvestment Policy

Changes in Cropping Patterns: Different patterns in India

Financial Sector Reforms: Narasimham Committee I

Financial Relations between Centre and State

 

Leave a Reply

Your email address will not be published.