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Workers’ International News, December 1944

M. Naidu

The Bombay Plan

From Workers’ International News, Vol.5 No.7, December 1944, pp.1-4. [1*]
Transcribed by Ted Crawford.
Marked up by Einde O’Callaghan for ETOL.

India presents, in common with all industrially backward countries, the spectacle during the war of an unprecedented industrial expansion, accompanied by the intensified impoverishment and the starvation of the masses.

The entire resources of the world are drawn into the struggle of the Imperialists for the redistribution of the economic spheres of influence. In India, the picture presented today is quite comparable to the early hectic days American industrial expansion. The same feverish activity, the same growth of mushroom companies, the same grab, irrespective of the human consequences. The essential difference is that the Americans had a continent to exploit, by driving and expropriating the native population. In India the land relations and methods of production are fettered by the feudal and Asiatic relations. Consequently, the Indian scene presents the possibilities of violent upheavals. This polarisation between the masses reduced to the lowest level of human misery, and the unprecedented prosperity of the bourgeoisie will lead to new revolutionary struggles of the masses which will sweep away the power of British Imperialism in the East.

Temporarily this artificial prosperity gives a tone of confidence to the Indian bourgeoisie. Today they can contrast their position with the British bourgeoisie and acclaim satisfactorily that they have strengthened themselves. Britain has lost most of her foreign investments, and she will emerge out of the war the greatest debtor country in the world; India will have a sterling balance of a £1,000,000,000, and considerable dollar assets. The ownership of the various Indian industries, the railways and public works have changed hands. In the production of various consumers’ goods for which India previously depended upon British exports, the volume of her internal production exceeds Britain’s, and in the post-war period they look confidently to out-compete Britain in the Asiatic and African markets in many of these commodities.

In addition to this changed relationship of forces between Britain and India, the Indian bourgeoisie have established direct links with the American capitalists. In the development of aircraft and the manufacture of automobile parts, Americans have established the necessary factories in India. The capital is predominantly American, and the management is entirely in American hands. A purchasing Commission of Indian. industrialists is now in New York, to place large scale orders on American industry. The composition of the Indian imports clearly reveals the measure of this process. The need of Indian industries is now mainly for machine tools and heavy equipment. American products in this direction have far outstripped the outmoded British models.

This changed position in relation to America is revealed in the insistence of the Indian delegates at the Bretton Woods Conference that the sterling assets of India should be convertible into dollars. Though this was scotched at the Conference, leading American Wall Street journals have taken up the argument. A second aspect of the same problem can be presented in a different way. Until recently, Indian dollar assets were turned over to Britain to finance the British purchases in America. This resulted in a corresponding increase of Indian sterling assets. But now the Indian industrialists have insisted, and with the support of Wall Street, have obtained the retention of the dollar assets by the Reserve Bank of India for the direct placing of orders in America.

This change in the economic position of Britain and India started with World War I. Temporary dislocation in the flow of goods from Britain to India and the needs of the armed forces in the Egyptian and the Mesopotamian campaigns, compelled the extended growth of an indigenous Indian industry. Undoubtedly, the entire range of production was controlled by the Munitions Board. The industry itself was fostered behind tariff walls, intended at that time only for the purposes or revenue. This reversal of the enforced free trade of the previous period gave an impetus to Indian industry.

The end of the war and the reopening of the World Markets revealed the shaky position of the Indian industries. The report of the Indian Industrial Commission in 1918 revealed the great industrial potential of the country. The Indian bourgeoisie, who were represented on the Commission, opened a campaign for control over tariffs and foreign exchange as a means of consolidating their position, and extending it. Basically the participation of the Indian bourgeoisie in the struggles of 1919-21 was to obtain these results. But the Civil Disobedience movement went further than they intended, and the peasant rebellion forced them to seek a compromise.

The British Imperialists met them half-way. The Fiscal Committee Report (1922) granted them a “discriminate protection” and a Tariff Board was set up in 1924. For a period the rupee-sterling ratio was maintained at 2/- to the rupee. The Indian bourgeoisie were demanding a devaluation at 1/4d. to the rupee. This was intended to give favourable terms in external markets. The fantastic 2/-exchange rate was given up and a new exchange rate was set up at 1/6d. Even with these moderate concessions Indian industrialists reaped a rich harvest of profits. New fields of enterprise grew apace, in cotton, jute, matches, cement and sugar.

While the industrial expansion of India was increasing, correspondingly the British position as the leading industrial country in the world was being undermined. As early as 1927, the Liberal Enquiry Commission approached the problem with apprehension. The rate of investment was falling and no surplus was available for exports of Capital. In the thirties, the situation was aggravated by the Japanese encroachments in the Eastern markets: German domination of the Balkan and Scandinavian Markets; and the American penetration of Latin America. In short, before the beginning of World War II Britain had already lost her leading role in World Economy.

A plan for the post-war industrialisation of India has been published by a group of Indian industrialists. The signatories include G.D. Birla, with wide interests in the textiles, jute and insurance; J.R.D. Tata, with interests in iron and steel and internal air lines; and Kasthuribai Lalbai, with interests in textiles and shipping. This is the well known “Bombay Plan”.

The material base of the optimistic note in the plan put forward by the Indian industrialists can now be summed up. Firstly, it is based upon an increased industrialisation of India accentuated by the war. Secondly, on the weakened position of British capitalism. Finally, on the possibility of a deal with the American Capitalists. In fact, the fear of a revolution at home has forced them to seek the alliance of the American bourgeoisie. Patting the renegade M.N. Roy on the back, the Economist of London writes on May 13th, 1944:

“The question is whether these Indian Democrats (M.N. Roy & Co.), who are turning to co-operation with the British in order to avoid ‘the millionaires’ exploitation of India or the possibility which they also envisage, of a deal between Indian and American business men are sufficiently important in the turbulent stream of Indian politics to offer the chance of a solution on the old lines.” (“Liberal democratic on the basis of co-operation with Britain.”)

The political setting for the present plan for the industrialisation of India in the post-war period is clear. In 1942, the Indian bourgeoisie, speaking through the Congress, for a while assumed the historic tones of the bourgeoisie of the West in the 18th century. They paraded their programme in terms of justice, liberty and human dignity. The tremendous pressure from the impoverished masses forced them to seek power in the name of the workers in the factories and the fields. For a while, forgetting the belated nature of their appearance on the world scene, when capitalism is cracking on a world scale, they promised to unify the nation, clear away the feudal and Asiatic fetters on the productive forces and drive the British Imperialists out of India. Once again as in 1921, but on a higher plane, the workers and the peasants demonstrated that a revolutionary struggle would sweep away the bourgeoisie along with British Imperialism. While in grandiose words, announcing their intention to fight, at the same time, the Indian capitalists could not cease collaboration with the Imperialists. After all the war is a profitable business. Millions are made out of it and their representatives on the various Government Boards are securing the best terms for them. It is ironic that in India today this parading of high sounding noble phraseology, and bare and cringing collaboration go hand in hand.

Having been frightened out of their wits by the revolutionary energy of the masses in 1942, now the Indian bourgeoisie attempt to by-pass political power through an economic weapon. This is the background of the famous “Bombay Plan” put forward by the Indian industrialists.

The plan aims to provide a minimum standard of living in terms of food, clothing, housing, health and social services within a period of 15 year To provide this minimum with some extra money for the enjoyment of life and cultural activities, “the plan assumes that it is necessary to double the per capita income of the population. (Taking the most. thoroughgoing investigation and the latest figure of Dr. Rao in 1939, 117/-. Doubled it is to be 234/-). At the present rate of increase in the population, the total national income, has to be trebled in 15 years. To achieve this result the Planners aim at increase of 135 per cent in agricultural production and 500 per cent in industrial production.

The total Capital investment proposed for agriculture, industry, and public services is estimated at £7,500,000,000. This is calculated on the basis of the 1939 prices. If the figure is to be brought into line with the post-war prices, it will have to be doubled. That is to say the actual investment required would be 15,000,000,000. The distribution of the investment between different fields and the method of obtaining it is summarised in the following table taken from the Banker (July 1944).

The plan based upon an attractive schematism, ignores two vital questions. It bases itself on the assumption of a continuation of capitalism internationally but fails to examine the relation of Indian economy the international competition. In this sense it is an attempt to create an economic autarchy. Secondly, it does not examine the most important problem in a prosperous development of Indian Capitalism – the agrarian revolution and the creation of a prosperous peasantry to provide the necessary internal market.

It is obvious at the outset the hopes of the Indian bourgeoisie are belated and out of tune with the economic realities of the world. At the end of the last war, even at a much smaller tempo of international competition, they were shaken and had to retire behind a tariff wall. The extent of their fright can be gauged by the level of tariffs between the wars. The Textile industry enjoyed a protective duty of 50 per cent ad valorem (for a short period 75 per cent), the steel industry was given high protection and bounties. Besides these two important industries the chemicals, paper, matches, tanning and sugar received protection. But none of these measures could save the weakest section of them from bankruptcy. The highly rationalised textiles of Japan, steel from America and Germany, matches from Sweden flooded the Indian markets. The Indian bourgeoisie, unable to compete with the more highly developed technique of the competitors could only turn on the workers and attempt to slash their wages. Miserable as the pittance of wages offered to the workers prior to 1929 they were lowered still more, in the period of depression.

The Indian bourgeoisie will face a far more serious situation at the end of the war. All the paper millions made during this war are shadows without substance. The accumulation of reserves and surplus is not based in great part upon the increased productivity of Labour or of technical developments. It is the direct result of inflated prices due to war time conditions (an inflation which has ruined the masses) and a general economic and social chaos in the country. Basically no alteration has taken place in the industrial structure of the country. No heavy industry of considerable importance has developed. In iron and steel the total output has increased only due to a fuller utilisation of plant. Even then compared to the steel production of highly industrialised countries it remains infinitesimal (just 1,000,000 tons). Ship building is confined to the production of coastal barges, useful only because of the preoccupation of the giant ships of American, Britain, Japan and other countries in the carrying of munitions. Above all machine tools production has not even passed the experimental stage. (All these facts are revealed and significantly traced to deliberate British policy in India in the report of the American Economic Mission in India). It is with these crude instruments that the Indian bourgeoisie intend to pit themselves against the competition of the powerful capitalists abroad.

In contrast with their weak base in industrialisation, what have they to produce abroad? The American productivity has reached a stage where no continental market is enough for it. The British bourgeoisie through their mouthpiece Halifax, announce that must export or die. Already the commercial rivalry between these two “allies” is expressing itself through their contradictory policies in China, in the Middle East, in India and in South America. Besides, there are many lesser claimants for the same markets. In every capitalist country in the world the same naked contradiction is revealed. Everywhere productive forces and national boundaries are in conflict. It is into this world of economic realities, where capitalism is facing its death agony on a world scale, that the Indian bourgeoisie is entering with a naive faith, to solve its own problems. It is obvious that in face of this scramble for world markets, the Indian industries will be left behind even in the internal market of India. This is the unsurmountable obstacle on which the Bombay plan will be smashed to bits.

Not touched on by the writers in the document but running through tile whole plan is an assumption that after all India has an internal market larger than any other country in the world with the exception of China.

The question can be raised, the creation of a prosperous .peasantry will solve this problem. The debts can be abolished; the absentee, parasitic Zamindars can be expropriated and the land handed over to the peasants. This is a lesson they can take from the bourgeoisie of the West in the 18th century.

A closer historical analysis of the rise of the Indian bourgeoisie and their position in Indian Society will reveal the insoluble contradictions they face. The predecessors of the present Indian bourgeoisie were the old Dubasies under time East India Company and later under the British Capitalists who had the monopoly of the Indian market. The Dubasies were the link between the. Indian market and the British industries. As commercial agents they made fortunes.

In the later part of the nineteenth century, when export of capital began from England with a falling rate of profits in home Investments, the growth of the Indian industries was fostered by the combined capital of the British interests and the Dubasies. Most of the big millionaire families of India today can be traced in their origins to the Dubasies. They had changed from being commercial agents into Junior partners in the ownership of Capital.

Even then they had no independent access to the markets of the World. The Indian Capital market was undeveloped and the necessary corollary of this situation was the development of an institution called the Managing Agency System. It is a private partnership of three or four members usually related to each other and the ownership is hereditary. They hold a large number of shares in the mills and make themselves responsible for the supply of materials and sale of goods.

The Managing Agents act through the Exchange Banks for financing the entire World trade of India. They rely on the banks for the necessary current expenditure. In the ultimate analysis the link between the world markets and the Indian products are the five Big Exchange Banks with their headquarters outside India. There is not one of them controlled by Indian interests.

This is only one aspect of the problem. This simply indicates the reliance of Indian Capital on foreign banks and their inability to break away from these chains. The second aspect is rooted in their position in Indian Society. The above analysis reveals the position of the Indian bourgeoisie. Within the country, the necessary accumulation which flows into the Capital market is drawn mainly from the big landowners. The landowners themselves combine in many cases, the functions of money lenders and grain dealers. Consequently a large part of the Capital accumulation in India is drawn from the heavy rents extracted from the peasants; indebtedness of the peasantry and the land mortgages. Socially it has resulted in an integration of the families of the old Dubasies and the big Zamindars.

By financial and family ties, the land-owners and the bourgeoisie have merged together. This is an inescapable contradiction in which the Indian bourgeoisie find themselves. [1] The crux of the agrarian revolution in India is to sweep away the power of the landowners and the money lenders. That is why every national struggle in India from 1920 onwards results in the direct seizure of land by the peasants. That is why every struggle leads the bourgeoisie to seek a compromise. Every peasant uprising strikes terror Into the hearts of the Zamindars and the bourgeoisie! There can be nothing more clear than the words of the Bardoli Resolution in 1921 calling off the mass Civil Disobedience Movement:

The Congress Working Committee advised Congress workers and Organisations to inform the ryots (peasants) that withholding of rent payments to the Zamindars is contrary to the Congress resolutions and injurious to the best interests of the country.

The Working Committee assures the Zamindars that the Congress Movement in no way intended to attack their legal rights. (Resolution of the Working Committee, Feb. 12th, 1921).

The contradictions and antagonisms of the Indian social fabric have deepened since then. The war has rooted up the agricultural labourers who have flocked to the industrial cities. Evictions and sales of land have increased the numbers of the agricultural proletariat. The inflation of war time has impoverished the small middle class. Considered either from the point of view of international competition or of the domestic market, the Bombay plan is a utopia. The Indian bourgeoisie can neither carry through an agrarian revolution nor can they clear the British out of India. That is a task which can only be accomplished by the Indian working class leading the peasantry m a struggle against the Imperialists. 15 year plans as envisaged, are incapable of realisation under Capitalism. But by the nationalisation of all the means of production after the conquest of power by the workers, a planned economy is possible. Even in a backward country such a plan can lead to tremendous increases in productive capacity as demonstrated by Russia. With the technical and cultural aid of the workers of the more advanced countries, it can increase the standard of living of the Indian masses at a tremendous pace.

Therefore when the Bombay plan sounds a note of confidence it is an artificial note. It is more a sign of bravado like the voice of Nick Bottom in the Midsummer Nights Dream. All over the world the bourgeoisie is facing a crisis. Even in mighty America and in Britain which held the hegemony of the world for a century, signs of cracks and crisis are evident. How much more so in India, one of the last to enter the field?

All these contradictions contain within themselves a social dynamite ready to explode at the slightest provocation. Desperate political and economic deals with the British and the American bourgeoisie will not save the Indian Capitalists. The revolutionary masses of India, steeled in the struggles of the last 25 years will sweep them into the dustbin of history. In those struggles they will have mighty allies in the workers and peasants of other Asiatic countries and of America and Europe. The Bolshevik Leninists of India will play their part in leading the masses to a victorious conquest of power.

Footnote

1. This contradictory position of the bourgeoisie and their support of the reactionary landlords is common to all backward countries. In Spain a similar tendency operated during the Civil War.

“Strangely enough Spain’s small industrialist class supported the reactionary position taken by the landlords. The industrialists should have welcomed a land reform which would create a home market for their goods, But they believed more than economics was involved. They found that the granting of land to the peasantry would rob the owning classes of political power.” (Louis Fischer, The War in Spain, published by the Nation.)

Note by ETOL

1*. M. Naidu was the pseudonym of V.S.S. Shastri.

 
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