Nehru: Planning for Poverty

As Prime Minister, Jawaharlal Nehru spent the last 13 years of his life as the Chairman of the Planning Commission,  an area he was passionate about. He had great dreams for India: increase the living standards of people, provide them with new opportunities, drive rapid industrialization, expand  employment opportunities, reduce income and wealth inequalities, distribute economic power, and achieve self-sufficiency in food grains. These were noble goals with which no one could disagree and if these goals were achieved in the planned time frame, India would have been a different place. What happened was something else and the reasons for the failure of the planning makes for depressing reading.

The Commission

Since the Prime Minister himself was the head of the Commission it served as an alternate power center. People who could not get a cabinet position, people who lost elections, or those who were in transition found their way into the Commission. Some of them never quit. Also for the Prime Minister, this provided yet another opportunity to reward people since not much expertise was required to be a member. Their actions were not scrutinized nor their qualifications questioned. The organization eventually turned out to be a monster, with a budget of a 1 crore in 1964 with almost all the cabinet functions duplicated.

Among the sweeping goals that had been set, no one knew which ones had priority. Even those which they set out to do were done without checking (1) if the project was needed and (2) if a proper technical study was done before green lighting. If such commonsense checks were done, the country would have saved money. For example, after 11 crore was spent on a petrochemical plant, it was discovered that  basic raw materials were not available.  Another plant was started to make optical glass and later it was found that the country wanted ophthalmic glass; an additional crore was spent to install new machinery.

Even on projects which passed the checks, no attention was spent on running the plan efficiently. Since it was public wealth, money was spent as if there was no tomorrow. The Rourkela Steel Mill took three years more to complete and the initial cost estimate doubled. The story was the same with fertilizer plants and hence fertilizers had to be imported. This in turn affected food grain production and so food grains too had to be imported. Systemic failures were occurring all over the country, but no one wanted to analyze the failures. Instead they ignored them and buried their heads wishing that the problems would — poof — disappear.

Of Agriculture and Fertilizers

The concept of planning was imported from Soviet Union, but during the import process, the details were left out. In countries where proper planning is done, every basic unit that is involved — factory, workshop — keeps track of the progress and coordinates with other cells to remove bottlenecks. The Soviets also kept track of time and their work charts measured progress. In the pyramidal system of Indian planning, progress was measured by the amount of money spent. Sometimes political influence derailed the planning and even the Parliament did not know about such things. One of the optical plants was switched from Naini to West Bengal simply based on a telephone call from the Chief Minister of Bengal regarding a bye-election.

For an organization which was set up to plan things properly, it functioned in exactly the opposite way. Nehru, for instance, did not pay much attention to agriculture and somehow the available food grain was distributed around. When it came to the Second Plan, it was decided that food production had to be boosted and a target had to be set. Nehru said that since the the Chinese had proposed to increase production at 7.9 per cent per annum, India would be able to increase it by 40 per cent. No studies were done by the Food and Agriculture ministry. No notes were distributed in the commission. The decision came from the top of the pyramid and the minions knew what they had to do.

Due to mismanagement even 19 years after the end of World War, India was rationing food.  While Nehru promised self-sufficiency year after year, the per capita consumption of food grains fell short of the prescribed level and it was the poor who suffered more. Meanwhile, the population was increasing and Nehru did not see much cause for alarm. The Americans were willing to help, but they required India to buy agricultural commodities and pay the freight in USD. The sad part was only the public sector could manufacture fertilizers and they could not deliver. Rather than open the sector to private enterprises, the government decided to import it from abroad.

What was shocking was the ignorance of these esteemed members of Indian history or polity. People in Jhusi had been cultivating rice since the 6th millennium BCE without imported fertilizers and suddenly why was there a need for something without which we had done so well. But that did not matter to Nehru and his planners who were obsessed with foreign technology. The people who were part of the swadeshi movement, once they got power, started importing goods like raw cotton, yarn, and pulp. Steel replaced wood and bamboo, naphtha replaced coal for fertilizer manufacture and petrol replaced coal for power generation. Gandhi wanted an India which would rely on its strengths than on foreign goods, but with each passing year India became indebted to other countries.  Finally Nehru realized his mistake and opened up fertilizers to the private sector.

In Debt

It was not all downhill; there was growth in  national income, in agricultural production, and industrial production. While Nehru gave speeches arguing that the less privileged should get the benefits, nothing of that sort happened. Instead the focus was more on stuff which they could never get their hands on. The planning did nothing to realize Nehru’s dream of income disparity. As Ram Manohar Lohia said, while crores of people lived on 3 annas a day, Nehru’s dog lived on 3 rupees a day.

Another plan the administration came up to remove income disparity was direct taxation through wealth tax, gift tax and expenditure tax, but there was no efficient way of collecting taxes. Tax evasion was quite high; even ministers like Jagjivan Ram did not file income tax for years. Nehru had promised to hang black marketers and anti-socials, but that too did not happen. He complained about ministers and officials living in big houses while he himself lived in a mansion.

As the plans failed to deliver as expected and the foreign dependencies started increasing, Nehru was clear about one thing:  India would not ask for foreign aid because the loan sharks would definitely set their terms which would not be in India’s interest. But as the size of the five years plans increased, the foreign reserves started dwindling and austerity measures had to be implemented. Anything that involved foreign exchange had to be stopped, both in the public and private sector. Delegations which went abroad were controlled and student travel abroad was restricted.

Even such rules could not be effectively implemented. The Second Plan was cut down and the Reserve Bank Act had to be amended to raise the notional value of its gold reserve by 300 percent. Finally, Nehru changed his attitude towards foreign aid and decided to borrow extensively. With each plan, the foreign aid component increased and by the time he died the country was 2000 crore in debt.

Nehru, as always, put the blame on others. It did not matter if he chose the wrong people, followed wrong policies and had the wrong prior
ities. According to him the planning was fine, it was the implementation that was lacking. He complained as if the man who ran the government was someone else.

Reference

1. Adapted from Rao, Amiya Rao, B. G. Six Thousand Days : Jawaharlal Nehru, Prime Minister. Sterling Publishers, 1974.