Should development be planned from the centre?
Context: the Congress adopted a socialistic pattern of society in 1955, and the Second Five-Year Plan of 1956 committed India to state-led heavy industry. In January 1959 the Nagpur session of the Congress resolved in favour of cooperative joint farming and state trading in foodgrains.
Planning on this scale concentrates economic decisions in offices that cannot possibly hold enough information to make them well, and hands officials a power over private life that no democratic check can reach. The Nagpur resolution alarmed him most: state trading in food and joint cultivation, he argued, would put the peasant’s land and the family’s food supply at the discretion of the administration.
India in 1956 had almost no domestic capital market, a tiny industrial base, and a population living close to subsistence. Left to private investment, steel, power, machine tools and fertiliser would not have been built at all, or would have been built by foreign capital on foreign terms. Planning was the only instrument available for turning a poor agrarian economy into an industrial one within a generation, and it did build a heavy-industrial base that later governments inherited.
AfterwardsJoint cooperative farming was never implemented on the scale Nagpur envisaged. Industrial licensing survived until the reforms of 1991, when much of it was dismantled — a reversal that made Rajaji’s critique look prophetic to his admirers, while historians of Indian development continue to argue that the early public investment was a precondition for what came after.