Indias business class drew up a comprehensive strategy of economic development that was both self serving and a contribution to nation building
If British imperial government had been as supportive of Indian business as it had been of the feudal nobility the maharajahs and the nawabs Indias struggle for independence and the course of economic development this half century may well have taken a different route. Fortunately for the national movement, a myopic Raj suppressed indigenous enterprise for far too long, and when the redressal began in the 1930s it was too little and too late. A new economic and social class had already come into being a class that political economists began to celebrate as Indias patriotic bourgeoisie.
The support that Indian business lent to the Indian National Congress is now comprehensively documented by historians and business biographers, though nuggets of interesting information still remain tucked away in many personal and official archives. For instance, researching on sugar policy in the pre-Independence period I stumbled upon the personal papers of Seth Walchand Hirachand, in the archives of the Nehru Memorial Museum and Library, which contain correspondence between Indian sugar millers and Congress leaders like Rajendra Prasad and Jawaharlal Nehru testifying to the good rapport between native businessmen and national leaders. There was nothing hush-hush about their support for each other and few regarded this relationship, best symbolised by Mahatma Gandhis preference to live in Birla House, as unethical.
Many eyebrows would be raised today if a businessman wrote the kind of letter that Lala Karamchand Thapar wrote to Babu Rajendra Prasad in June 1940: In May 1940 under instructions from B M Birla I had sent you a cheque for Rs 5,000 to enable you to help the sugar industry in whatever manner you might think best. I have advised the Indian Sugar Syndicate office to send you another cheque for Rs 5,000 which I hope you will be receiving very soon. Note the fact that the payment was by cheque!
The woods must, however, not be missed for the trees. While individual businessmen undoubtedly secured their IOUs from nationalist leaders, they also played their part in the bigger game of nation-building and the best example of this role was the publication of what has come to be known as the Bombay Plan a long-term, 15-year, macroeconomic plan for industrialisation.
Seven businessmen and an economist lent their names to the document Purushothamdas Thakurdas, G D Birla, J R D Tata, Ardeshir Dalal, Lala Shriram, Kasturbhai Lalbhai, A D Shroff and John Mathai. Entitled A Brief Memorandum Outlining A Plan of Economic Development for India, the Bombay Plan was published in 1944. Part I set out the quantitative dimensions of a plan aimed at ensuring 10 per cent industrial growth over a 15-year period. It estimated the funds required and suggested means of raising these including a generous proportion through deficit financing, or what the Bombay Plan called created money. It underscored the vital importance of investing in education, health and other infrastructure necessary to sustain the target rate of industrial growth.
Part II discussed in detail the role that government and the public sector ought to play in facilitating this process of capitalist industrialisation. The Plan spelt out the principles of industrial policy thus: first, there should be sufficient scope for the play of individual initiative and enterprise; second, the interests of the community should be safeguarded by the institution of adequate sanctions against abuse of individual freedom; and third, the state should play a positive role in the direction of economic policy and the development of economic resources. It is from this angle that we approach the problem of determing the place of the State in a planned economy in India. While emphasising the crucial role of the state in building an industrial economy, the Bombay Plan also visualised the privatisation of state enterprises if private finance is prepared to take over these industries.
The real significance of the Bombay Plan was not so much its economics and quantitative projections but the overall perspective of development. Few decolonising and developing economies of the time had a visionary native business class capable of formulating a strategic industrial policy that was self-serving but was also a contribution to nation-building. Times have, however, changed. Fifty years after independence when the sons and grandsons of the authors of the Bombay Plan huddle into a Bombay Club and seek protection from global competition, few are willing to view their plea as an act of patriotism and suspect it is little more than a petition for self-preservation.
Admittedly, there are more businessmen today willing to take on foreign competition, daring and raring to go global than half a century ago and that, indeed, is the contribution of independence and self-government. Equally importantly, in many parts of the sub-continent new business communities have come into existence in this half-century, first generation entrepreneurs and professionals with the heat in their stomach and the energy in their brain to take on the dinosaurs from among the old patriotic big business and the dragons from distant lands.
However, the general impression being created by the recent posturing of some of the more important organisations of Indian business, like the Ficci and even the CII, is that domestic enterprise no longer has the energy or the vision to refashion a new Bombay Plan for the next half century. Rather, there seems to be a preference to seek the security of a cosy club. Not only must domestic business and enterprise contend with new challenges from abroad but it must also come to terms with the aspirations of a new generation of independent-minded Indians. Its an entirely new ballgame being played out there and the sooner we understand its dynamics and implications, and learn to play by the new rules of the game the better. Otherwise, the gains of this half century may yet be wasted.