Economic planning is not considered fashionable today. Nevertheless, contemporary economic debates will have much to gain by revisiting the ideas on planning, championed in particular by Jawaharlal Nehru.

Centralised planning regime of India –

  • India under Nehru’s leadership inaugurated a strategy for industrialisation of the country in the early 1950s.
  • This involved the setting up of public sector units (PSUs) in diverse areas of manufacturing; research institutions in cutting-edge technologies of the time such as space and atomic energy; and centres of higher learning, including the Indian Institutes of Technologies (IITs).

Challenging the orthodox mindset –

  • From the time of David Ricardo, many economists had argued that countries should develop industries based on their comparative advantage.
  • According to this theory, a labour-surplus country like India should be limiting its industrial development ambitions to labour-intensive sectors, such as garments or leather.
  • Since early 1940s, Nehru had argued that the fundamental requirements for a modern India included “a heavy engineering and machine-making industry, scientific research institutes, and electric power.”
  • The programmes launched in India from the 1950s onwards to build indigenous capabilities in capital- and technology-intensive sectors, despite the general poverty of the country, became a model for other developing and Third World nations.

Achievement –

The successes that India enjoys today in the information technology and knowledge-intensive sectors owe much to the research and educational institutions that were built during the early decades.

Failure –

Planning did very little to remove the hurdles to the growth of agriculture and small-scale industries. The benefits from state-led development have so far reached only a minority of Indians.

Need for reviving planning –

  • Despite the emergence of such a large domestic market, the record of Indian manufacturing in absorbing the large labour reserves in the country remains abysmal.
  • The imports of machinery, transport equipment, electronic goods and all their components have been rising continuously in India from the 2000s onwards.
  • The employment challenge that India faces — close to 15 million waiting to be absorbed in the industrial and services sectors every year require systematic planning to introduce technological advances that create new economic opportunities and absorb — not displace — labour.

International examples –

  • The successes achieved by East Asian countries such as South Korea in manufacturing are, to a great extent, the result of strategic planning over several decades by their governments.
  • Chinese achievements in the field of science and technology, renewable energy and economy as a whole owe much to the careful planning and investments made by its government, particularly in the area of science and technology.

Conclusion –

India’s research institutions and our PSUs should engage in the creation and dissemination of such technologies. The country’s industrial policies should be able to enthuse young and educated entrepreneurs from rural areas to make use of these technologies to create new jobs. And, for all these, planning should be brought back to the centre of our economic discussions.

SourceThe Hindu

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