Abstract
In 1944, a group of Indian businessmen issued A Plan of Economic Development for India. This came to be known as the Bombay Plan. The attitude of Indian industrialists to the economic structure of independent India was encapsulated in the Plan. The views of the bourgeoisie were, by this stage, closely aligned with those of the Indian National Congress. The Plan therefore contained a strong endorsement of state economic intervention and planning. The motives of the bourgeoisie in this endeavour are the subject of this article.1 Rejecting claims that the Indian bourgeoisie put forward the Plan as a ruse, the author concludes that the bourgeoisie’s self-interest at the time demanded state economic intervention—as did the interests of the nation.
The Congress and Planning
Since the 1930s, the Indian National Congress had become identified with a centrally planned economy. 2 In 1938, Congress premiers (in May) and Congress industry ministers (in October) had resolved to set up a National Planning Committee (NPC) for the future Indian economy. The Congress president, Subhas Chandra Bose, set the tone when he told the industry ministers that India needed ‘an industrial revolution’. Would it be gradual, on British lines, or a ‘forced march’ as in the USSR? ‘I am afraid that it has to be a forced march in this country’, he said. 3 The industry ministers declared that ‘the problems of poverty and unemployment, of national defence and of the economic regeneration in general cannot be solved without industrialisation’. For this, a national plan was needed. 4 The NPC started meeting in December under Jawaharlal Nehru. Its membership included Purshotamdas Thakurdas, A.D. Shroff and Walchand Hirachand from the business community. 5
Nehru’s guiding ideas were evident throughout the early activities of the NPC. In various memoranda and notes to committee members, he set out the principles that underlay his (and in general, the Congress’) economic thinking at this time. The first was the need for national independence (‘an indispensable preliminary for taking all steps that might be found necessary for carrying out the plan’) and national self-sufficiency. 6 Citing the resolutions of the 1931 Karachi Congress on state ownership and control, Nehru told the NPC, ‘A legitimate extension of this principle would be to apply it to all large-scale enterprises … even if the State does not own such enterprises, it must regulate and control them in the public interest’. 7 He directly related the necessities of war-time state regulation to the virtues of post-war planning.
War has compelled planning, though this planning is for the specific purpose of destruction. When the war ends, this planned economy and State control cannot be given up and there appears to be no possibility [of] a reversion to pre-war capitalism. 8
Thus the NPC’s general objective was ‘a socialistic planned structure’. Nehru added:
‘Private enterprise has certainly not been ruled out but it has to be strictly controlled
and co-ordinated to the general plan’.
9
It followed that the defence industries were first in line for state
ownership.
10
Beyond
defence, ‘key industries’ and public utilities were considered. Nehru reported: Regarding Key industries, the majority were of the opinion that they should also be
State-owned, though a substantial minority considered that State control would be
sufficient. It was made clear, however, that any control of such industries must be a
rigid one. Public Utilities, it was also decided, should be owned by some organisation
of the State.
11
Sub-committees on the key industries elaborated on the theme. The sub-committee on engineering industries said that they were essential for both development and defence—‘[s]uch a key industry is the foundation for all Planning’. All such industries should be state-owned or controlled. In terms of new industries, such was the enthusiasm on the sub-committee for central control that it advocated ‘the concentration of … this heavy mechanical industry in one National Workshop situated in the coal mining area of Bihar–Bengal’. 12 Meanwhile the sub-committee on manufacturing industries resolved that ‘all monopolies which are injurious to public interests, or whose acquisition is beneficial to public interests, should be acquired by the State’. 13 The sub-committees on chemical industries, power and fuel, and currency and banking all wanted state ownership or control of the industries in their areas. 14 In addition, currency and banking wanted the state to ‘prevent profiteering and control price levels’, while general education proposed one year’s compulsory labour service for all those between the ages of 18 and 22. 15 As Nehru wrote a little later, ‘The more we thought of this planning business, the vaster it grew in its sweep and range, till it seemed to embrace almost every activity’. The process, he said, ‘was inevitably leading us towards establishing some of the fundamentals of the socialist structure’. 16
The Congress was not alone in its promotion of state economic intervention. On the other side of what was now the communal divide in Indian politics, the Muslim League was promoting similar ideas. In March 1943, Muhammad Ali Jinnah had fulminated against ‘landlords and capitalists’ who presided over a ‘vicious and wicked system’. 17 At the League’s Karachi session in December, Jinnah was authorized to appoint a committee to prepare a five-year plan for development and industrialization in the Pakistan zones. 18 Thus was born the All-India Muslim League Economic Planning Committee. Its chairman, Ali Nawaz Jung told the first meeting that the need for ‘some form of State interference’ was ‘increasingly evident’, especially in defence, key industries, services and mineral resources. The Committee’s Draft Plan (submitted to Jinnah) contained much on the alleviation of poverty, a list of industries for nationalization and the call for land reform. 19
The activities of both the Congress and the League in this regard should be seen as part of the process of a new state (now perhaps two states) solidifying within the shell of the old. The process was much more advanced in the Congress case simply because its leaders had been at it longer—and in India, even an India minus ‘Pakistan’, they had the prospect of a viable industrial economic unit that could be centrally controlled and planned.
But the NPC’s activities were halted by the outbreak of the war. Nehru argued in late September 1939 that ‘[t]here is no question of our stopping our work because of this war. Indeed our work has to be carried on with greater vigour’. 20 But the resignation of the Congress ministries ‘added to our difficulties’, while ‘[b]usinessmen were busier than ever making money out of war requirements and were not much interested in planning’. Furthermore, ‘the government was not interested in our work and in fact viewed it with great disfavour’. 21 The NPC meetings of September 1940 would be its last. Nehru himself was arrested in late 1940 and the Government of the United Provinces informed the Committee that ‘Government are unable to agree to his [Nehru] carrying on the work of the National Planning Committee while he is in jail’. 22
The Capitalist Attitude
Not surprisingly, India’s industrialists were occasionally disturbed by the more extreme statements on state ownership and socialism expressed by Nehru, the NPC and the Congress generally. However, in the inter-war period, the economic interests of the Indian bourgeoisie had found themselves repeatedly blocked by a political obstacle in the shape of the British state. If economic interests were to be pursued from this point, the political obstacle had to be removed. A political strategy was therefore economically necessary. This began with attempts to pressure the existing state for reforms but developed into the demand for a new, Indian national state. In this way, the hard-headed pursuit of profit led to nationalist politics. 23 That being the case, by the end of the inter-war period, the leading elements of the Indian bourgeoisie had evolved a series of economic demands that, in their view, were essential for India’s economic progress—but which could not be satisfied within India’s existing economic structure and political system.
A National State
For a state to promote development it has to have its own concept of the national interest—and that has to have some degree of acceptance by the people at large, including the bourgeoisie (unless their expropriation is part of the state programme). The Government of India had no such concept—it remained subordinate to the interests of the British Government. As Homi Mody told the Federation of Indian Chambers of Commerce and Industry (FICCI) in 1930, ‘our great grievance is that our government’s outlook on economic matters is anything but national with the result that today the industrial and commercial community of India are among the strongest critics of the present government’. 24 The point was made repeatedly by capitalist representatives that, had India a national government (rather than a British one), it would do more and better in protecting and developing the Indian economy. 25
For economic planning to be effective, there had to be a state that could and would plan, on the basis of such a national interest. In his speech endorsing planning in 1934, FICCI President Nalini Ranjan Sarkar noted, ‘I fully realise that, in the absence of political power, it would be difficult to induce the Government to accept our proposals’. 26
Domestic Economic Policy
British attempts to deal with the economic problems of the inter-war years were seen as
self-serving by the Indian bourgeoisie, making the Indian situation worse. That meant that
those attempts were damaging an economy that the bourgeoisie hoped to inherit. Despite
negotiations, conferences, commissions and Government of India declarations to the
contrary, Indian business was not able to exercise control over the domestic economy.
Without political power, government economic policy could not be held to account.
Hirachand, speaking on the drop in India’s balance of trade, told FICCI in 1933: [I]n India, unfortunately, the administration not being in national hands, there have
been no re-adjustments in either the currency or the tariff policy of the Government
of India whose currency policy has always been subordinated to the interests of Great
Britain.
27
Even when, in the negotiations for a replacement for the Ottawa Trade Agreement (against which the industrialists had campaigned furiously), the Government of India appointed the leading lights of FICCI as ‘unofficial advisers’, it eventually rejected their advice. The new agreement was rejected by the Legislative Assembly but put into force by the British Government. 28
International Economic Policy
In the view of the Indian bourgeoisie, external economic policy was formulated by non-representatives of the nation and placed dangerous restrictions on Indian trade in order to skew it in the interests of the British Empire. Hirachand told FICCI in 1933 that ‘the nation’s rightful representatives’ should attend the next world economic conference and ‘express candidly the nation’s point of view before it’. He said, ‘India will have to strike out [on] an altogether different path of her own’, even if this meant ‘an honest clash of interests between the western nations and herself’. 29 The next FICCI president, Kasturbhai Lalbhai, objecting to the Government of India’s view that India should concentrate economically on the Empire, declared that ‘India, as a substantial producer of raw materials [could] not in the long run afford to depend upon one single market—however stable—at the risk of losing her place in the other important foreign markets of the world’. 30
FICCI therefore campaigned, eventually successfully, for the termination of the Ottawa agreement. The Legislative Assembly passed a Congress motion to this effect in March 1936. The termination of the agreement, however, did not result in proponents of India’s economic interests representing India at future international gatherings, nor did it allow India to pursue an international trade policy of her own devising.
State Intervention
The pivotal issue in carrying out development, initiating planning and instituting economic policies in India’s national interest was the question of state intervention. The bourgeoisie was well aware of this, despite its devotion to the rights of private property. By the end of this period, rather than a begrudging acceptance of a limited role for the state in the economy, there was instead a demand from the bourgeoisie for full-scale state intervention in heavy and strategic industries, in planning and in policy. 31 The Indian bourgeoisie had before it the example of a number of state-driven war economies (the Soviet Union, Italy, Japan, Germany) that appeared to leave previous attempts at industrial development in the shade. 32 In a period in which the state in all industrialized nations moved to protect its national economy, the Indian bourgeoisie looked for state intervention—and found that it had no state. The British state (both in London and New Delhi) was intent on protecting the British Empire, industrially and strategically. It would not serve Indian purposes.
In sum, the imposition of British policy preferences economically, politically and
militarily was too much for the Indian bourgeoisie to accept by the late 1930s. It was
true that, from the bourgeoisie’s point of view, the British state provided a commercial
and legal infrastructure, law and order, some tariff protection and some government
contracts.
33
But
this was no longer enough. More than that, it was an obstacle to providing those things
necessary to raise the level of the productive forces in India. Frederick Engels wrote in
Anti-Duhring that: where … the internal state power of a country becomes antagonistic to its economic
development, as at a certain stage occurred with almost every political power in the
past, the contest always ended with the downfall of the political power. Inexorably
and without exception the economic development forces its way through.
34
For this, however, an alternative political power and a political struggle were necessary to burst the fetters holding back the forces of development.
The industrialists had no substantial objection to the nationalization of defence and some key industries. This was, in their view, in the national interest. It reflected their basic agreement with the view that in India state intervention was required for industrialization and for building a viable national economy.
As noted above, business was in favour of state economic planning. 35 In his 1943 pamphlet, Principles of Planning, Ghanshyamdas Birla cited the experience of planning in the Soviet Union and Germany as well as in mobilization for total war. Even under capitalism, the power of the state was expanding into new areas. Economic controls would continue after the war. Furthermore, ‘[u]nder the new planned economy the role of the capitalist entrepreneur will be different from what it was in the past’. 36 But, he asked, could there be planning without socialism—‘For let there be no mistake about it; socialism is totalitarian … It is bound to be dictatorial’. Birla advocated a ‘middle way’. State ownership of defence industries, basic industries and some monopolies had to be tempered by democracy over the state. Meanwhile, ‘private enterprise will function under definite limits subject to overall co-ordination by the planning authority’. 37 Other business leaders were advancing similar ideas. 38 FICCI was represented on the Government’s Reconstruction Committee and its sub-committees. Ardeshir Shroff told the Reconstruction Committee that ‘the business community was convinced that during the post-war period, it would be necessary for Government to exercise far-reaching control in all fields of business activity—and that business would cooperate in the interests of economic development’. 39
When the Congress set up the NPC, M.A. Master wrote to Hirachand that ‘it is necessary
for us to establish our contact with this committee’. He suggested that Hirachand should
become a member, which he duly did, along with Shroff and Thakurdas.
40
Naturally, the business
representatives were not comfortable with the demands for total nationalization made by
some of their fellow committee members. Nehru wrote that ‘Big business was definitely
apprehensive and critical, and probably joined up because it felt that it could look after
its interests better from inside the committee than from outside’.
41
But the business representatives stuck
with it—in fact, their ideas may have changed as a result. Nehru again said: The big business element was the biggest single group, and its outlook on many
matters, especially financial and commercial, was definitely conservative … Yet the
urge for rapid progress … [was] so great that all of us were forced out of our grooves
and compelled to think on new lines.
42
The Bombay Plan
When the NPC ceased to function, it was the most prominent industrialists who took the
initiative in advancing the case for a planned economy. J.R.D. Tata proposed a meeting of
major industrialists to create an ‘informal Post-War Economic Development Committee’. The
meeting took place in the Tata Board Room on 11 December 1942. Present were Thakurdas, Shri
Ram, Birla, Kasturbhai Lalbhai, Shroff, John Mathai and Tata himself. Thakurdas was elected
chairman.
43
This
committee eventually produced A Plan of Economic Development for India— the
Bombay Plan—the first part of which was published in January 1944, and the second a year
later. The Plan envisaged extensive state intervention. Baldev Raj Nayar comments: [T]here was something inherently contradictory in a group of businessmen devoted to the
pursuit of private profit proposing a program of economic development on the pattern of
the Bombay Plan, with its firm invitation to the government for the state regulation of
the business community.
44
The Plan was received with some enthusiasm in business circles and by the political elite. FICCI welcomed it as ‘a remarkably constructive contribution’ and endorsed its essential principles. 45 The second part of the Plan was given varying degrees of editorial approval by The Hindustan Times (17 January 1945), The Bombay Chronicle (18 January 1945), Amrita Bazar Patrika (19 January 1945) and The Hindu (21 January 1945). 46 Sir Mokshagundam Visvesvaraya (former Diwan of the princely state of Mysore and a prominent member of the All India Manufacturers’ Organization) declared himself ‘in general agreement’ with it, while C.D. Deshmukh (Reserve Bank governor and future Finance Minister) said: ‘I welcome the second part of the Bombay Plan as an expression of the readiness of acknowledged leaders of industry and commerce to submit to much wider restraints on business in the interests of planning’. 47
The Plan gave rise to a series of alternative plans: from the Indian Federation of Labour (under the influence of M.N. Roy), the All-India Manufacturers’ Organization and from Visvesvaraya himself. Industries left out of the Plan wanted to be included. M.A. Master and G.L. Mehta met with Tata in June 1944 ‘in regard to the omission of shipping from the 15-year Plan of the industrialists’. Tata admitted the oversight.
Mr Master stated that the question of a mercantile marine for a country like India was of vital importance in any scheme of national planning, not merely from the economic point of view but also from the point of view of national defence … a proper freight policy could be evolved so as to encourage industries and develop export markets only if shipping was under national control. 48
The British meanwhile, whose hostility to the capitalists had steadily increased during the
war,
49
regarded the
Plan as a conspiracy on their part to make money. The Intelligence Bureau told the
Government of India that the Plan was ‘to the moderate benefit of India’s millions and to
the immense profit of Indian “Big Business”’.
50
The bellicose former Finance Member of the
Government of India, now British Secretary of State for War, Sir Percy Grigg, told the War
Cabinet: This is a wild and chimerical scheme for spending thousands of non-existent crores
[tens of millions of Rupees] in no time on lines very similar to the Soviet 5-year
plans, except that in India the industrialists and they alone are to be exempted from
totalitarian control.
51
Such a view was entirely mistaken. If the Plan was ‘totalitarian’ (which it was not), then the capitalists had declared their willingness to be placed under its ‘totalitarian’ controls. In fact, the Bombay Planners’ extensive concessions to state intervention and a state-run economy simply demonstrated their alliance with (not their domination of) the future Congress state.
Sections of the Indian left voiced their disapproval of the Plan as well. The Communist Party of India criticized it for not taking up the question of income distribution before denouncing it as simply a plan for building capitalism (which indeed it was). 52 The Radical Democratic Party (Royists), declared that the Plan (which they called ‘the capitalist plan’ or ‘the Big Business Plan’) ‘frankly postulates a dictatorship of big business’. 53 India’s Trotskyists considered that the bourgeoisie had been ‘frightened out of their wits by the revolutionary energy of the masses in 1942’ and were now trying ‘to by-pass political power through an economic weapon.’ 54
Such arguments have by no means gone out of fashion. Vivek Chibber levels similar criticisms against the Plan and the bourgeoisie in his account of Indian economic development, Locked in Place. First, he says, the Bombay Plan was a ‘manoeuvre’ by the capitalists, panicked into action by the Quit India movement and designed to forestall socialism. 55 Second, the bourgeoisie were in fact against state control and only prepared to accept ‘capitalist planning’. 56 Third, the bourgeoisie retreated even from this position at top speed after 1947. 57 Finally, this position of the bourgeoisie inhibited the construction of a ‘developmental state’ (à la South Korea) in India after 1947. 58 Before turning to my own views on the Bombay Planners’ motives, let me take up each of these points in turn.
If the Bombay Plan was a mere ruse, it was certainly a most elaborate one—a charade played out as much between its authors as for the benefit of the mass movement. There is no hint of this in the notes, letters, memoranda and drafts preceding the Plan available in Indian archives. The Plan was not a reaction to the Quit India movement. The mass phase of that movement had been repressed ‘within a period of six or seven weeks’ of its commencement in August 1942. 59 The first meeting of the Planners’ committee was held at the end of the year (and there is no mention of Quit India in its proceedings). The first part of the Plan was published in January 1944. In fact, the bourgeoisie was not unduly alarmed by the mass movement. They were concerned about the advance of ‘socialism’—though what this could possibly have meant in Indian conditions remains unclear. At any rate, Chibber himself tells us that ‘[b]y 1945 the Old Guard [i.e., the Congress Right] was firmly and visibly in control of the party machinery again’—so why at this point the industrialists should be pretending to be state capitalists is a mystery. 60
The Indian bourgeoisie had evolved steadily in favour of state intervention, planning and state control. 61 One hundred years of Indian business history—of calls for state intervention, acceptance of a war economy, of agreement with Congress economic policy—all stand against Chibber on this point. He argues that the bourgeoisie, while furiously resisting ‘socialist planning’, was prepared to accept ‘capitalist planning’. It is hard to understand what is being discussed here. In Indian conditions, socialism was an impossibility. Capitalist (and state) planning was all that was on offer. Chibber says that the Bombay Plan was not ‘a clarion call by a nationalistic bourgeoisie to its peers, exhorting them to join in the forward march of national progress’. On the contrary, he continues, it was ‘a document … opening the way for capitalist planning’. 62 In India, in the late 1940s, these two things were one and the same.
Chibber produces very little evidence for the bourgeoisie’s ‘complete volte-face [against ‘a disciplinary planning regime’] within a two-year period, between 1945 and 1947’. 63 Even then he admits, ‘[i]t is not clear if their [the Bombay Planners’] views regarding the necessity of some degree of control had veered to a contrary position’. 64 And in the end, ‘the future direction of industrial development was still to be guided by the state’. 65 No doubt some sections of business reacted adversely when they realized the extent of the Congress state’s economic control. But the relationship of the bourgeoisie to the new state would evolve slowly over the next four or five decades. It did not snap smoothly into a ‘state versus capital’ confrontation in 1947. 66
What Lay behind the Plan?
Why did they do it? Clearly, Indian capitalists wanted some input into
independent India’s economic policy. Tata said that the Plan ‘started with a feeling that
Indian businessmen must prepare themselves for what was to happen after the war …
Businessmen and not only the Government should play a role’.
67
A further consideration was certainly a fear
of state socialism which seemed to be advancing on all fronts after the war. In a memorandum
for the first Post-War Economic Development Committee meeting, Mathai, noting developments
in Eastern Europe and China, wrote: The inevitability of a change in the direction of a socialist economy even in a country
like India must now be recognised and leaders of industry would be well advised to take
this into account and be prepared to make such adjustments as may meet all reasonable
demands before the socialist movement assumes the form of a full-fledged
revolution.
68
The approach was to accommodate rather than confront socialist demands. The committee did not want to be seen as vindicating capitalism. Indeed, ‘[t]he enquiry should begin with a study of the defects of capitalism, particularly in respect of planning and distribution’. Then it should look into ‘what modifications are necessary to enable [capitalism] to render the best possible service to the country’. 69 The Plan itself argued that ‘the distinction … between capitalism and socialism is somewhat overdone’ and called for a ‘judicious combination’ of both. While continuing to defend private enterprise, it said it had to be ‘enterprise which is truly enterprising and not a mere cloak for sluggish acquisitiveness’. 70 The Plan, Birla told FICCI after the release of the first part, sought ‘to mobilise and harness the good will of all sections of the society, be he the leftist or the rightist, of all progressive minded citizens’. 71
The Plan was characterized by the essential features of what had become the bourgeois
political and economic programme: The independence of India and the unity of the Indian economy.
72
Economic uplift and the reduction of inequality. The Plan recognized that the
existence of the latter retarded the progress of the former. It acknowledged that
private ownership had ‘failed to bring about a satisfactory distribution of the
national income’. It pledged to double per capita income within fifteen years while
reducing inequalities of wealth and property.
73
Industry, and ‘especially heavy industry’, as a priority. Attention had to be
directed ‘primarily to the creation of industries for the production of power and
capital goods’. Basic industries were to be given ‘priority over the other type of
industries in the earlier years’. Otherwise, ‘we shall naturally be at the mercy of
foreign countries’.
74
State control.
75
The Bombay planners acknowledged that ‘the State should exercise in the interests of
the community a considerable measure of intervention and control’. These controls
would be similar to those of the war economy, ‘to which the country has become more or
less accustomed; but they will be better coordinated and more systematically
administered’.
76
There should be state ownership of defence industries and of new industries important
to public welfare or security. Key industries should be state controlled, and here the
Plan warned: ‘[t]he rights attaching to private property would naturally be greatly
circumscribed’.
77
Land reform. In the ryotwari system, ‘the State should take over the
landlord’s functions’, paying the latter fair rent. Later, ‘this may be commuted into
a lump-sum payment and the landlord’s claim finally extinguished’. This system should
also be extended into the zamindari areas. The aim was ‘the establishment of a class
of peasant proprietors’. To help in this process, there should be ‘a large extension
of model farms’.
78
The Interests of the Bourgeoisie
Some comments about the class nature and class interests of the bourgeoisie are appropriate here. The political leaders of the Indian bourgeoisie became aware of the need for a mass political organization to fight against the existing state, as well as a new political elite to replace it. For this reason the political leadership of the bourgeoisie turned towards the Congress. It is necessary to make two qualifications at this point. First, the bourgeoisie’s relationship with nationalist politics (a relationship between capital and a future state) was a coincidence of interests. The bourgeoisie did not endorse nationalist politics because they represented the nation’s good (except in individual cases) but because they furthered their own. Second, this did not, of course, place Indian business in the militant vanguard of the Civil Disobedience Movement. The moderation of the bourgeoisie’s anti-colonialism has often been pointed out. 79 They worked for ‘a non-revolutionary pattern of anti-imperialist struggle … [a] stage by stage (or step by step) advance towards a bourgeois nation state and independent economic development’. 80 This was hardly surprising given the bourgeoisie’s objective class interests (what Bipan Chandra calls ‘the capitalist character of the Indian capitalist class’). 81 Those interests and the evolving nature of their position can account for the timidity of their initial approach, for the differences in approach between them and their preference for moderate tactics. But these factors and their unwillingness to adopt a more radical road for India (‘socialism’, for example) should not blind us to the bourgeoisie’s support for the Indian national movement. Economic interest ensured that support. Questions of law and order did not at any stage permanently deter it.
As the leaders of the bourgeoisie were compelled to enter the world of nationalist
politics, they were also compelled to express their class interests as the interests of the
nation.
82
Karl Marx
and Frederick Engels drew attention to this phenomenon in a different historical context: For each new class which puts itself in the place of one ruling before it, is
compelled, merely in order to carry through its aim, to represent its interests as the
common interest of all the members of society … it has to give its ideas the form of
universality and represent them as the only rational, universally valid ones.
83
For Marx and Engels, there is clearly an element of deception or even trickery here. The bourgeoisie (for that is whom they are discussing) is ‘compelled’ to ‘represent’, to ‘give its ideas the form’ of general aspirations. For this, the bourgeoisie has been, from then until now, lambasted by Marxists (and others) for entrancing their followers with false consciousness. There is, however, a period in historical development—the era in which the bourgeois revolution allows and pursues progress in society—when the interests of the progressive bourgeoisie really do coincide with the interests of society as a whole. Countering their own implied accusations in The German Ideology, Marx and Engels also point out that the bourgeoisie can portray its aims as universal precisely because ‘its interest really is more connected with the common interest of all other non-ruling classes, because under the pressure of hitherto existing conditions its interest has not yet been able to develop as the particular interest of a particular class’. 84 At the stage of the development of India’s productive forces with which we are concerned, the interests of the Indian bourgeoisie 85 actually did represent those of Indian society at large.
The Indian struggle for independence was the beginning of the bourgeois revolution in India. It brought into being a new, independent state power, dominated by the Congress, with worked-out ideas on a new economic structure for India in which the state would figure strongly. It was aided in this venture by a politically conscious bourgeoisie prepared to accept a state-dominated economic structure. It established national independence; the authority of a central state over (most of) India; a national market; and the conditions for reorganizing the economy—most importantly, conditions in which Indian industry and Indian business could flourish.
It differed from the ‘classical’ bourgeois revolutions in that, while it enjoyed the support of a mass movement for 40 years or so, it was achieved by an alliance between the leadership of a new state and that of the bourgeoisie. Economically and numerically, the Indian bourgeoisie recognized its own weakness. A political leadership, capable of mobilizing masses, and a new state, capable of organizing the economy, were vital to its future. It found both these things in the Congress and therefore, subordinated itself to the future Congress state.
Given events in the rest of the world, the state-directed path to development seemed overwhelmingly plausible, despite the whimpers of private enterprise. Post-independence euphoria, the towering popularity of the Congress and the widespread enthusiasm for planning and for the idea that the state should triumph over private interests were hard to beat. Many of these sentiments existed within the Indian bourgeoisie itself. The capitalists found themselves both dominated by, and profoundly entangled with, the new Congress state. The Indian state produced capitalism of a sort. But it was a capitalism largely subject to the state’s political will, not one devoted solely to the pursuit of profit.
The Bombay Plan was, most decidedly, a capitalist plot—but not in the sense denounced by the British, the Indian left or modern analysts like Vivek Chibber. It was not a trick—a piece of statist camouflage designed to hoodwink the masses and the Congress leadership. Such a view completely misunderstands the relationship between the Congress and the capitalists. 86 To raise the level of India’s productive forces it was necessary to initiate the bourgeois revolution. In India’s case this meant breaking the power of the British state and replacing it with an Indian state which could take the necessary economic measures to move forward. The Indian capitalist class had realized that their interests, along with those of the nation, were for the moment bound up with that state. The Bombay Plan represented an acceptance of that fact.