Nehru’s India in the Plan Era

[p032] Nehru’s India in the Plan Era THE drawing to a close of India’s Second Five- Year Plan and the discussion going on around the Third Plan provide an appropriate moment for an interim assessment of the historical significance of the development of Nehru’s India since Independ- ence. There is scarcely need to underline the fact that fateful issues are at stake in India. If public opinion generally, and the Labour Movement in particular, displays ignorance and unconcern, there is no doubt that the informed spokesmen of capital- ism anxiously watch the economic performance and political stability of the sub-continent. While some people on the Left have been under the illusion that the Indian government is seeking, and perhaps find- ing, a ‘third way’, between Western capitalism and Russian-style planning, realistic defenders of the IN THE PLAN ERA 111 leadership. Somehow we are asked to accept that authority in itself is a bad thing, indeed the main enemy. This is really a retreat from Marxism. It is not bureaucratic or authority-wielding individuals who rule the lives of men under capitalism, but the force of capital, produced by men, yet alienated from them in a structure with its own law of motion, its own imperious demands in terms of human life and effort. Our aim is not the abstract one of ‘abolishing the distinction between order-givers and order-takers’ but the political overthrow of the class whose interests lie in the perpetuation of the domination of capital, in order that the forces produced by man shall be at his service. For that task we need, not an abandonment of discipline and centralized authority, but its heightening to an unprecedented degree. It is nonsense to sup- pose that as the working class itself comes on to the political scene, its consciousness developing to new heights, the need for organization and disci- pline will decline. On the contrary, a more active and politically conscious labour movement will de- mand it all the more insistently. Just because the rise of the working class is the most universal and world-shaking of all historical transformations, against the strongest ruling class in history, so it requires a higher level of consciousness and a higher degree of organization than any previous class in history. Tom Kemp former stress unambiguously that, if Nehru’s way fails, a serious and perhaps fatal blow will have been struck at the system which they support. This anxiety stems from the fact that India is a test case for economic development in a backward coun- try without the elimination of private ownership of the means of production and what are euphemistic- ally talked of as democratic rights and liberties. If the test fails—and it is universally recognized that the most difficult problems lie ahead—then through- out the ‘Third World’ of the underdeveloped coun- tries Western influence will decline. At the same time, it is assumed, the prestige and direct influence, or even control, of the USSR will grow. India is thus a great prize in the unremitting world contest between two incompatible social systems. But while

[p033] 112 there is a great deal of truth in this assumption it does not therefore follow that the choice for India lies only between remaining part of the capitalist world and joining up with the Soviet bloc under the aegis of the Communist Party of India. Other possibilities are open, and indeed preferable; but they exist because of the constellation of world forces created by Soviet economic growth and the tapid upbuilding of the new China. Before Independence, India was the advanced point of the colonial liberation movement under the mature leadership of the national bourgeoisie organized politically in the Congress Party. It was to this class and its political organ, then, that the British Raj transferred power in 1947, not out of generosity but because it had no choice; a full-scale repressive war in India would not have been tolerated by the British people. As it was, all authorities admit that the transfer of power was carried out with admirable smoothness: without an open struggle or even great animosity, and without the stormy eruption of the masses into political life as an independent force.! Partly owing to the mistakes of the Communist Party of India—especi- ally its support of the war from 1941 onward—the great hopes and energies of India’s downtrodden millions were canalized into the Congress Party be- hind the messianic figures of Gandhi and Nehru. Consequently there was no social revolution, even in the Indian princely States. Existing property relations remained intact, and with them the exist- ing distribution of prestige and Power below the level occupied by the British. At this level, in the administration at any rate, the comparatively small number of top expatriate British Civil Servants was replaced by Indians, mostly from a lower echelon. In political life the Congress, which had already acquired political experience in the provincial assemblies as well as in the national struggle, took over, creating in the process, and with the blessing of the British, replicas of those institutions which educated Indians had so frequently admired at work in Britain. The whole apparatus of the State, as built up under British rule, thus passed into the custody of the bourgeoisie. Though, as we shall see, this bourgeoisie had special characteristics which derived from India’s long subjection to British imperialism, there can be no doubt that the dominant class in the new Indian State was strictly comparable to that of the ruling class in a capital- ist country. Nothing which has happened since then has dislodged it; that is basic to any analysis of subsequent Indian history. 1 Though not, of course, without a frightful com- munal blood-letting, which was a by-product of ‘divide and rule’. LABOUR RE VIEW—October-November, 1960 Inevitably there was carried over into the new era an incredible weight of traditional backward- ness: an archaic and distorted land system, economic Stagnation, dire mass poverty, sloth, superstition and filth—everything associated with a technically back- ward and socially retarded country. One, however, which had experienced two centuries of alien rule by a more advanced economy which had clamped on the suckers and contributed thereby its own part to the state of Indian society but, at the same time, had implanted there, albeit in distorted form, many of the attributes of an advanced society, Railways, factories, banks; a proletariat; a bour- geoisie; these were part of the legacy. India com- bined in a specific, historically-determined way the archaic with the ultra-modern, sacred cows with a sophisticated intelligentsia; paradoxes and contra- dictions abounded in society, in classes, in indivi- duals. While in the economy a certain amount of capitalist development of a one-sided kind had taken place in the century before Independence, it had been confined to certain areas or activities. The land system remained tied to the forms which English administrators had given it in the late 18th and early 19th centuries. Landlordism, sub-division of land and usury bore down on a teeming peasan- try, a large part of which was on or below the subsistence level. And Indian capitalism co-existed with this backward agrarian structure; some sections were even drawn into alliance with it. As for the stake of British imperialism, that had been dwindling relatively between the wars and shrank absolutely after 1939; what remained after Inde- pendence was appreciable, but India had already ceased to play the role which had been hers before 1914. Nevertheless, the sub-continent remained firmly within the sphere of the world capitalist market, attached by many golden chains: not the least the credits which had been built up in Britain during the war. This, in short, is the background to Nehru’s India, which entered in 1951 on the first of a series of Five-Year Plans intended to break the strangle- hold of backwardness on the economy. A web of myth and legend has been woven around subse- quent developments, to which reference has already been made. This article seeks to assess in brief what has really been happening in India in the social and economic sphere, not by a technical examination of the plans, or by a quantitative pic- ture of the extent of change, but rather by asking a few pertinent questions. For example. what are the dominant class forces? Is India moving towards a form of socialism? Have the basic problems been tackled and can they be tackled within the present Social structure? At the same time some views will be offered about the relations between India and world capitalism and the challenge of China.

[p034] NEHRU'S INDIA IN THE PLAN ERA Who Rules India? As the advanced character of the pre-war In- dependence movement showed, the Indian bour- geoisie was able to develop and attain greater politi- cal self-consciousness under British rule than was possible at that time for most similar classes in the colonies. Actually the bourgeoisie was not a homogeneous force but was structured in a particu- larly complex way as a result of caste and religious differences as well as the forces of attraction and repulsion which played upon it from the dominant alien imperialism. Moreover, while some sections sprang directly from trade, money-lending and later industry, recruits to the bourgeoisie also came from the ranks of landowners and the privileged higher castes. That is to say, there was a strictly capital- ist or business class, buying and selling, hiring wage labour and undertaking activities which were generally not favoured by traditional codes; this was a new, emerging class, subordinate to imperial- ism or in conflict with it according to circumstances. This section of the bourgeoisie was generally in the background as far as the national struggle was concerned; it provided funds, and perhaps some of its idealistic young people; its main concern was to garner the harvest. The other main section of the bourgeoisie was recruited, through the educational channels offered by the British, largely from the traditional ruling class and high-caste sections of Hindu society. In time a more or less distinct educated professional stratum was formed, around which flowed a multiplicity of ideological forces to which it, and especially the younger generations, were by the 20th century particularly susceptible. The influences of British liberalism, Fabianism, Marxism and so on merged in various proportions with the traditional outlook of high-caste Hinduism, or of people in this social position regardless of tradition. On the whole, however, members of this stratum were likely to be drawn to oppose imperial- ism. From it came the chief spokesmen and cadres of the national movement which, when it gathered force and became politically important, did so because it represented a real need of nascent Indian capitalism and won its backing. In the nature of things, then, the Indian bour- geoisie was a kind of synthetic formation merging different elements with different social starting points and disparate intellectual baggage. The national struggle brought them together, gave added coherence and additional ties of common interest in the political machine and, later, the offices at its disposal. But all contradictions were not thereby resolved and they persist to this day. Their nature will be more apparent when we take a closer look al the Indian businessmen and consider the social position of the educated or professional elements. The bourgeoisie in India differs from that in ad- vanced countries owing to the relative weakness of its economic base and its sense of precarious- ness in society as a whole, as displayed in the way it undertakes its business. Under British rule Indian traders first participated in the collection of commodities for export and distributed imported manufactures in the home market. They existed on the fringes of Hindu society and tended to be looked down upon, as traders always are in societies bound by tradition and prestige. Recruitment to business activity was mainly restricted to such non- Hindu groups as the Parsis or certain Hindu or Jain sub-castes from particular areas, notably Gujarat and Merwar. Indian business was thus mainly in the hands of small, close-knit communi- ties and was carried on on a family basis. As these business communities grew in wealth they found certain avenues of investment blocked by the policy of the British Raj. Before 1914, and even later, orders for railway material, for example, were placed in Britain. Most capital equipment came from the same source. Little scope, there- fore, existed for investment in industries producing means of production (lack of such industries is the great obstacle to growth at the present day). On the other hand India was not suitable for much European immigration on anything like a perman- ent basis: this left internal trade and then, by ex- press policy, the lower echelons of the bureaucracy, open to Indians. Even business firms with branches in India or regular transactions there preferred to operate them through the comparatively few British permanent residents or through local capitalists. Hence there grew up the ‘managing agency’ system not only for trading, but also for the operation of factories.2. Indian capitalists, with their knowledge of local conditions, were able to get a toe-hold through this method of doing business. Others, favoured by the spread of money economy, the im- provement of transport and the extension of the market which followed British penetration, were able to build up their wealth and win a place in such expanding industries in the 19th century as cotton and jute. Indian capital expanded still further between the wars and increasingly sought 2A ‘managing agency’ was a firm established in India which undertook business for British firms on a commission basis. Later, such agencies floated and controlled companies and became a means for a high degree of financial concentration and of influence over the modern industrialized sector of the economy by British and Indian big business.

[p035] 114 outlets in other fields. It found itself frequently at odds with the British administration or with the entrenched interests of British capital: hence its interest in a policy of wringing concessions from the British or getting rid of their domination altogether. By the Second World War a quite highly con- centrated capitalist class existed which was able to take advantage of the conditions created by the war. Foreign imports were restricted, while direct contracts or spending emanating from the British forces greatly expanded demand. Assisted by the general political uncertainty Indian capital was able to buy out British factory owners or secure a stake in British-managed business houses. At the same time, sizeable Indian balances were accumulated in London in payment for goods and services sup- plied during the war. However, Indian capital did not take over all British enterprises in India, and even if it had done the economy still reflected the consequences of the type of development associated with imperialism. There was little heavy industry, most industrial equipment had to be imported, while power, trans- port and similar facilities were small in relation to needs and constructed to suit the ruling power. When that power was handed over, Independent India had a business bourgeoisie of a rather special type. It still had much of the outlook of the trader living on sufferance; it sought quick returns; it had an unenviable reputation for narrowness and avid- ity; it exploited its workers with considerable un- concern. At the same time it did not have the means, as a class, to lead the economy forward on a path of rapid growth; but its far-sighted elements had long seen that such growth was necessary for its own survival. In this Indian capitalists shared common ground with what we have called the intellectual or professional bourgeoisie, just as it had done in the national struggle and in the build- ing of the new state itself. In all this there was a division of labour, combined with plenty of scope for disagreement and discord. But there was a Steady pressure from below; the mass of the Indian people were beginning to look for some improye- ment in their standard of life. What they actually received in the years after Independence consisted mainly of promises and formulas; but the bour- geoisie did retain control of the situation and begin to rectify some of the deficiencies in the economy of which it was most conscious. The political framework of present-day India consists of a parliamentary regime with the custom- ary bourgeois liberties based on the British model. This appears somewhat incongruous in a backward country with an impressive illiteracy rate,3 but it 3One of the highest in the world at the time of LABOUR REVIEW—October-November, 1960 clearly makes sense to the Indian bourgeoisie, who were not innovators in discovering that a wide fran- chise could be a conservative force in a predomin- antly rural and traditional society. Ostensibly democratic and liberal, political life is dominated by the Congress Party. At the local level Con- gress is run by notables from the rural gentry, the richer peasantry and professional and business circles. Idealism has given way to machine politics and Congress runs the gauntlet of the ballot box nationally without serious risk of defeat. And events have shown that the liberal mask is removed whenever it is necessary to preserve class rule. That is the simple picture. In practice it is ob- viously more complex. The most important com- plications arise from the Structuring of the bour- geoisie itself. For simplicity’s sake we may note the two extremes: on the one hand the business groups, on the other those who staff the state ap- Paratus. The former can be narrow-mindedly con- cerned with short-term gains or up-to-the-minute emulators of American techniques and forms of organization;4 they distrust state action at times but cannot dispense with it. In the bureaucracy, and the intelligentsia at large, there linger the ideal- istic aspirations of the national struggle; there is greater openness towards ideas, as is to be expected, and an appreciation that only a planned economy can make possible economic growth in Indian con- ditions. Despite a willingness to learn from the USSR or China and to use a socialist phraseology in public documents, the bureaucracy itself is un- able to go outside the limits imposed by the pre- vailing social relations. It is not an independent force. Nor is the state which it mans a direct emanation or simply a passive instrument of the industrial and commercial bourgeoisie. The two are bound together by mutual ties of interest which override seeming divisions of outlook and policy. The practical outcome of this is displayed most fully in the relations between the State and the economy. Independence ‘ and _ still exceptionally high. If the British, plus the nature of Indian society, gave rise to a highly educated but narrow stratum, neither favoured mass education. There has still been no mass literacy drive on the scale of that of Russia and China. 4‘The Economist’, March 26, 1960, notes the emer- gence of what it calls ‘The growing managerial class’ . +. ‘who talk the new language of the growth economy’, and adds, significantly, that ‘Their Opposite number in government, while maintaining firmly that there must be public control over the big concentrations of capital, now admit the large part to be played by private enter- prise. . . .. Undoubtedly both American ‘efficiency’ and Russian ‘planning’ are attractive to such people— in each case placed in an ‘elitist’ conception in con- formity with the outlook of the tuling class.

[p036] r, 1960 2», who > fran- jomin- ensibly iinated Con- gentry, usiness politics ot box And smoved le. is ob- t com- bour- y note usiness ate ap- ly con- minute rms of times ucracy, > ideal- here is ‘pected, sonomy im con- om_ the seology is un- he pre- pendent direct of the ae two t which policy. d most ind the If the > tise to favoured literacy a. le emer- al class’ conomy’, imber in ore must f capital, te enter- fficiency’ people— in con- NEHRU’S INDIA IN THE PLAN ERA State and Plan The declared aim of the economic policies of the Indian Government is the establishment of a ‘social- ist pattern of society’, an expression used in the In- dustrial Policy Resolution of 1956. Seeing that there is an impressive state sector and economic planning many observers have taken this statement at its face value—some socialists with approval, extreme free enterprisers with dismay. Americans wishing to win support for India have explained that really India is not socialist at all in the ‘bad’ sense. After all, the Indian Government defined its ‘socialism’ in ostensibly undoctrinaire terms as ‘the raising of living standards, the enlargement of op- portunities for all, the promotion of enterprise among the disadvantaged classes and the creation of a sense of partnership among all sections of the community’. These may be laudable aims and they have certainly been accepted as genuine by many well-meaning people, both in India and outside, but verbal assent could be given to them by practic- ally any enlightened businessman. Everything de- pends upon how such pious hopes are translated into practice, upon the policies which prevail and the context in which they arise. As far as industry is concerned the State sector has not involved expropriation of former capital- ist owners. The State has established enterprises which the private capitalists could not or would not undertake because the capital outlay was too great and the returns too doubtful or likely to be spread over too long a period. On the other hand these projects—steel mills, engineering works, power sta- tions, irrigation works, etc.—were necessary to cor- rect the one-sidedness of the Indian economy and provide it with a basis for further growth. ‘Chemically-pure capitalism’ is never found; a greater or smaller admixture of State enterprise is inevitable. In a backward country it is bound to be greater rather than smaller because if things are left to the forces of the market and the spon- taneous response of private business there is little or no certainty that growth will take place and there will be no future for capitalism. Debate is more likely to arise about the extent of State owner- ship and economic planning than about whether it should take on such tasks at all, In the light of the actual role of fhe State in the economy, what we have already seen about the nature of the ruling class, corroborated in the form of reassuring state- ments made by Indian leaders to the bourgeoisie abroad, there is no doubt that the Indian economy 5 Such as the well-known statement of the Governor of the Reserve Bank to a conference of industrialists in the USA in October, 1957. The relevant phrases were that socialism in India is ‘4 system under which is not a form of socialism and is not heading for socialism. oa What the official documents do is to express in the most conscious way the inescapable necessity for State initiative in mobilizing resources in order to raise a backward economy to 4 higher productive and technical level. The phraseology used evidently serves a useful purpose, and may even be sincere: it wins wider support and raises the policy above class differences in a supposedly national cause. Where it is sincere it is merely an aspiration—actual conditions, as we shall note later, are very distant from the word. Commenting on the policy statements a United Nations report puts the matter thus : ‘In operational terms . - - the extension of social ownership and social control of the means of pro- duction visualised in the plan (i.e., the Second Plan —T.K.) is not very great. In the sphere of organ- ized industry (industry organized as factory enter- prices), only about 3.5 per cent. of the total capital in the country is at present owned by the state... - In a mixed economy of the Indian type, there seems to be ample scope for free enterprise and private capital, and it is not clear that the course of industrial development will necessarily differ in a fundamental way from that of the industrial- ized economies of the West.’ The authors added that the ratio of government expenditure to gross domestic product was, in 1954, actually lower, at 12 per cent., in India than in the United States, at 19 per cent.é Indeed, not despite but because of the two Five- Year Plans, private business has done very well over the past decade. Even with a growing state sector the effect is to open up more favourable prospects to private business by expanding the market—e.g., in contracting, supplies of materials, demand for ‘wage goods’ (ie., very cheap consumer goods) and so on. As the state plants come into operation so they offer better supplies, without the need for foreign exchange, and induce private in- vestment in using industries. competitive private enterprise has and will continue to have a vital role to play; it is a system which respects private property, and provides for compensation if such property is acquired by the state... - The most im- portant schemes which have been reserved for the public sector are those for which the private sector is unable to find resources... - the result of the setting up of plants by the government will necessarily be to create conditions in which the private sector can operate to advantage. . - 4 6 Economic Survey of Asia and the Far East, 1957. pages 69-70. ‘In the sphere of small scale industrial enterprises and agriculture, almost the entire stock of capital is privately owned.”

[p037] 116 Even the investment undertaken in the public sec- tor was not financed entirely through taxation or external loans and grants. Something like half represents voluntary private savings, presumably in large part from the business classes, giving them a capital claim and the right to interest payments and representing their confidence in the mixed economy of the plan era.? Despite private indus- try’s complaints about high taxation, which are sometimes echoed in the press in Britain. new enter- prises have been granted considerable concessions and overall levels have not been high.8 It is part of the socio-political balance of Nehru’s India that, despite socialist and liberal phraseology, the rights of private capital are sacrosanct even where they impede the attainment of rates of growth thought to be desirable. The necessary incentives have to be offered to private investors and business- men, including foreigners, to fill gaps in the plan. Indeed joint private state concerns, often involving the financial participation of foreign firms, have 7*Savings in India are still essentially private. Government surpluses on current account were not expected to be significant over the second plan period. The public investment programme has essentially de- pended upon borrowing domestically and abroad’. Mandelbaum, W., in ‘American Economic Review’, June, 1959. 8‘Some people have the impression that tax rates are high in India. This is wrong. Only corporation tax and direct personal tax on the very rich are high, and the latter is not effective. Other rates of tax are mostly low.’ Little, I. M. D., ‘Economic Review’, May, 1960. LABOUR REVIEW—October-November, 1960 been set. going in a number of industries? The logic of the mixed economy is not to break the hold of private capital but to delimit its sphere of unfettered operation under conditions where profit- able outputs actually expand faster, and under more stable conditions, than would otherwise have been the case. While this has been the situation in India in the 1950s, the other side of the mixed economy has been shown in the failure of economic achievement to match expectations and the cloud of uncertainty which hangs over the Third Plan. For all the fine words of the statesmen the problems at the end of the Second Plan are as immense as those at the beginning of the First. The Plans have not broken out of the circle of quasi-permanent backward- ness and stagnation. In income per head little or no gain has been recorded. Chronic malnutrition bears down upon the masses of the people. Mas- sive unemployment and underemployment con- tinues in town and country. Only small inroads have been made into the prevailing illiteracy, ignor- ance and superstition. Overcrowding and a low expectation of life are still the lot of the vast majority. Famine may strike from one year to the next. This remains the social reality of India be- hind the statistical record of the Plans. Of course, without the Plans things would have been worse; the question is why they have not been better. 9‘Almost every one of the Indian Government’s new industries has been set up and started in close co- operation with some foreign firms.’ ‘Public Enter- prise in Indian Industry. Baldwin, G. B., ‘Pacific Affairs’, 1957, page 7. Barriers to Advance It is not the intention of this article to give a tech- nical appraisal of the Plans.!0 Within the social and political structures summarized here it is un- likely that any re-arrangement of the same total of investment would have given greatly different results; or that a greatly larger total was feasible. The planners have been essentially right to place priority emphasis on heavy industry; it is not the emphasis itself which is at fault. It is true that some unforeseen circumstances cut into the Plan in 1957-8, namely, unfavourable monsoons, which re- duced the foodgrain harvest, drained away foreign exchange and distorted the economy through the effect on prices and market demand, and the world 10 An excellent recent one is in the article by LM. D. Little, note 8. 11 Of course, as most economists agree, it—and the total envisaged for the Third Plan—is entirely in- adequate for India’s needs. “ recession. Foreign aid, about which more will be said later, plugged the gaps and averted disaster. For many the major problem of India is the Malthusian bogey of too rapid population growth which, on a per capita basis, eats up practically all the increase in production attained by the plans. There is no wish to underestimate this problem, but it is a little too easy to shift the burden on to the Indian women who think that by moving along the beads given them to calculate the safe period they can avoid pregnancy.!2 If a more concerted attack had been possible upon other aspects of backwardness the population problem might not have loomed so large, both because incomes might have increased faster and resistance to birth con- trol would have been weaker. The crucial fact which hangs over the entire dis- !2 As seemed to be the implication of a recent ‘Times’ editorial on the subject. mroma acumrn Irons ha ARO AAR AD tr nes

[p038] NEHRU’S INDIA IN THE PLAN ERA cussion is that in the same decade the economic growth of China was vastly more impressive. Not only has investment been greater but consumption levels, while still low, have been rising at a steady rate.!3 If the issue is to be decided on economic grounds it can be confidently asserted that India has already lost and is losing further ground each year.!4 But before China’s economic expansion could take place there had to be a decisive break out of the barriers imposed by the old social and political structures. Such a social revolution has not taken place in India. In fact the Indian bourgeoisie has not been able to perform the role which was played by its counterparts in the advanced countries; it has not been able to carry out even the historical 13 The careful comparison of Indian and Chinese development by W. Mandelbaum, one of the best in- formed American economists on Indian matters, already cited, is striking and authoritative. Thus, in the fifties indian growth was at a rate of 3.5 per cent. per annum, China’s was threefold (300 per cent. for the decade). As for the supposed restriction of consumption in China he writes ‘despite China's larger allocations to investment and to other government uses, and despite iis more rapid rate of population growth, the per capita levels of household consumption began to forge ahead of the levels prevailing in India’. On the basis of greater reliance on domestic investment, China’s potential for economic growth has increased faster; the gap will widen to India’s *disadvantage. 14A French agricultural economist has written that ‘The agricultural competition China-India has already been clearly won by China’, R. Dumont, ‘France-Ob- servateur’, May 29, 1959. 117 tasks of a bourgeois revolution. It has not been able to carry out an agrarian reform because it is linked in Congress and Parliament with the land- lords and usurers who batten on the peasantry and keep it in tow. It has not dared to lay its hands on the caste system and the uneconomic religious prac- tices of Hinduism because it profits from the former and is afraid of the demands which the common people would make once they were freed from the consolation of starving alongside their sacred cows. Yes, it is capable of brave words, progressive- sounding declarations and even technical achieve- ments of no mean order—but it is no more ready than any other ruling class to risk its social exist- ence or to abdicate its power. A strong bourgeoisie, based on an advanced industrial and commercial structure is in a different position. So was the ascendant bourgeoisie of Europe in the period of capitalism’s youthful vigour, when it was still a buoyant and expansive system; such a bourgeoisie was self-confident, ready, when occasion demanded, to take on king or priest. The bourgeoisie of a backward country in the mid-twentieth century is in a consideraby weaker position than either of these cases. Backwardness makes it weak; because it is weak it cannot make a frontal attack on the main sources of backwardness. It makes a brave show of advancing in one sector—as the Plans show— while in others it prefers to let things take their course. In the event that means inevitable depend- ence upon the rest of the world bourgeoisie to whom it looks for help in solving problems which, from its standpoint, are otherwise insoluble. The Agrarian Question The inability of the bourgeoisie to tackle the agrarian problems of India is the most glaring redection of its impotence. The nature of these problems is no mystery and lip-service is repeatedly paid to the need for a change in the land system and in the methods of agriculture. What has been accomplished by the government through land re- form, community development, extension work and the provision of irrigation and fertilisers has made only a minor contribution to the problem. Reforms such as the abolition of the zamindari system have been half-hearted or have not changed the basic structures in the village. There have been resolu- tions by Congress on the limitation. of land holdings and the need to encourage agricultural co-operation but there is little doubt that even if efforts were made to implement them. centrally opposition at the local level would be sufficient to block real change. One-seventh of India’s peasants are landless, but the holdings of the great majority are too small or the rents and crop shares exacted by the jandlords too great to give an adequate diet.15 Something like a third of the gross product of the land goes in rent (in money or in kind) and interest payments to the rural gentry and bourgeoisie. To meet their payments the peasants have to sell a large part of the harvest as soon as it is brought in at low prices and are in the market to buy grain—if they have the money—as prices rise before the next harvest.!° Such is the typical peasants’ lot in a backward economy with a commercial sector and a parasitic rural ruling class. As yet there has not been a pro- 15 ‘Dietary statistics suggest that the majority of Indians are slowly dying of malnutrition: the expecta- tion of life is still under forty years.’ I. M. D. Little, op. cit. 16 This, of course, is the main reason for the resort to the usurer. °

[p039] 118 found and widespread awakening of the peasantry; peasant movements against landlordism have been partial and limited. There seems little doubt that by and large the rural gentry has retained its leader- ship in the village and that the mass of the peasants have acquiesced, or, after brief and unsuccessful struggles lapsed into apathy.!7 At the same time this class has ‘effectively delayed or (through in- fluence on local administration) effectively negated legislation creating ceilings on land ownership’. A sentimental and platonic kind of populism expressed by urban politicians tends to obscure the real balance of forces, for Congress is based, in the vil- lages, upon the landlord and usurer elements and obviously cannot promote rural reform which would destroy their power. Thus, when ‘The Economist’ laments the low level of rural taxation,!8 it is not the peasantry which is getting away with it but a substantial section of the Indian ruling class. There is virtually no more prospect of the government being able to raise taxation as a means of providing means for investment in, say, new fertiliser plants 17 These ‘power relations are described by Dumont and in, detail for a particular area, in ‘Changing Pat- terns of Political Leadership In West Bengal’, ‘Pacific Affairs’, September, 1959, by M. Weiner, from which the quotation in the next sentence comes. 18In special section devoted to India, March 26, 1960. This may be a good point to note that the view was there expressed that ‘India does not need to emulate China’s extreme and agonised processes of accumula- tion. But a sound(?) and steady(!) degree of pro- gress(!?) in India there must be if under-developed countries generally are to feel(?) that the economic benefits of development and the political benefits of the open society can be combined in the modern world’. Can it be said that India—or at any rate the bulk of India’s 480 million enjoy either of these? LABOUR REVIEW—October-November, 1960 than there is of it carrying through even the kind of agrarian change associated with bourgeois revo- lutions in the past. ft is easy to suggest what should be done. Economists and agronomists have given detailed ad- vice, but for such precepts to be carried out an effective social force is required which can break the power of thé ruling class in the village; that is what they often overlook or wish aside.!9 Every- body can see, for example, that India has a great reservoir of labour in the countryside, that the food situation is acutely serious and deteriorating and that if this labour could be put to work, the level of agriculture raised and a will to improvement in- duced, the prospects would improve. It can be said quite plainly, however, that there will be no transformation of the rural economy as long as the bourgeoisie rules. The problem is not one of tech- nique or education; it is one of social forces. That tension exists in the village is clear enough. The spell of tradition will not last for ever. The example of China, however distasteful it may be to Western observers who have never had an empty belly or seen their children starve, cannot fail to grow in potency. A peaceful agrarian revolution by consent is out of the question; nor is it con- ceivable that a spontaneous, purely peasant move- ment can do the trick. The great unfinished task of the bourgeois revolution devolves inevitably upon the organized working class of India. 19 Dumont poses the question: ‘Is a real non-totali- tarian reform possible? The whole future of our civil- ization depends upon the reply which will be given to this question by the backward countries’. ‘Cahiers de la Republique’, May-June, 1960. The question is not one of totalitarianism or ‘our civilization’ but is more like that which is put in the text. Foreign Aid Discussion of Indian economic problems inevit- ably reverts to the question of external aid. The drawing down of accumulated balances overseas and external loans, private or public, or grants from foreign governments have furnished an important part of the funds for the Second Five-Year Plan. At least £1,700 million is expected to come from this source for the next plan. Indeed, the Second Plan required a bigger drain on foreign exchange than had been expected—largely owing to the tood crisis of 1957-58—and emergency toreign aid warded off disaster and enabled the major cuts in invest- ments to be restored. Since then, in view of the overall deficit in foodgrain production, the grain supplies from the United States under Public Law 480 have been a vital part of the country’s unk with world capitalism. These supplies, when sold by the Indian government, give rise to counterpart funds which, while initially under the control of the American ambassador, are then secured for use in financing certain internal projects. Generally speaking it is India’s urgent depend- ence upon foreign assistance that her “well-wishers’ In the ‘free world’ see as a means of preventing a revolution which might tip the scales agaist capital- isrh throughout the world. ‘Foreign assistance’, writes one of the more liberal observers, is a major tool of foreign policy. its aim 1s to acnteve cer- tain objectives of the supplying country which in- volve decisions by the recipient country—decisions

[p040] er, 1960 the kind yis revo- re done. ailed ad- out an in break 3, that is Every- a great the food ting and the level ment in- can be il be no ig as the of tech- 2s. That gh. The er. The lay be to in empty it fail to evolution s it- con- nt move- shed task tbly upon © non-totali- our civil- e given to Cahiers de ion is not ut is more { j itry’s unk when sold 4 ounterpart control of 2d for use it. depend- 2[-wishers’ eventing a ist capital- assistance’, is a major smleve cCer- which 1n- —decisions NEHRU’S INDIA IN THE PLAN ERA pearing on the form and content of that nation’s own internal and foreign policies’.2? The language is recondite, but the meaning is unambiguous. Some writers point to the fact that the stake of ‘the West’ is economic as well as political: thus India contributes raw materials to the world market and -with the foreign exchange earned from the sale of tnese products, the underdeveloped countries pur- chase manufactured commodities from Western countries and thus stimulate employment in the ex- port industries of the latter’2! India, for example, is an important market for British industry, if no longer a source of tribute on the old scale. But private investment is still important. Thus, as a business editor puts it: ‘For the lending govern- ments of the West it (foreign help) represents an investment in the political stability of the uncom- mitted Afro-Asian world. For the foreign investor it offers an opportunity according to his judgment, to secure a footing in an economy which is mani- festly expanding, despite errors on the part of the planning authority and the political hazards to come’.?2 It is true that there are some discordant voices in ‘the West’ on this question, mainly among those who take Nehru’s spurious ‘socialism’ for good coin. According to them, before aid is accorded guaran- tees should be obtained that it is not going to be used to the detriment of Western capitalism. It is argued by a leading exponent of this view that foreign aid ‘would be much more likely to retard the rise of general living standards in India than to accelerate it, and to obstruct rather than pro- mote the emergence of a solid resistance to totali- tarian appeal’.23 Such a view is probably to be regarded as eccentric, at any rate in the circles nearest to the governments of the United States and Britain. The views expressed by ‘The Econom- ist’, which seems positively to want to encourage the Indian government to ask for more aid, are more typical. Certainly, assuming that Indian economic growth is a sure safeguard against so- called totalitarianism, provided of course, that it is not preceded or accompanied by a social revolu- tion, then this view is correct. As yet growth in India has still to outstrip population increase; even more ambitious plans are clearly required to do this. Present plans, and even more bigger ones, inevitably involve a yawning balance of payments deficit and thus dependence upon loans and grants 20 Mandelbaum, W. “East and West In India’s De- velopment’, page $2. 21 Berliner, J. S. version), page 9. 22 Tyson, G. (former editor of the Indian business journal ‘Capital’), in Lloyd's Bank Review, April, 1960. 23 Bauer, P. A. ‘United States Aid and Indian ‘Soviet Economic Aid’ (abridged Economic Development’ 119 from the advanced countries. More aid rather than less is thus indicated; and, if the aid is not forth- coming from ‘the West’ then it is clear that more offers will come from Russia and her allies. The great fear of the 60s is an India ‘going totalitarian’. However, there is no certainty that more aid will prevent this. It is not a simple case of so much aid equals so much investment equals so much in- crease in output. It is also a qualitative question involving the relation between social forces work- ing themselves out in an involyed and, let it be said, unpredictable combination. The issues raised by the Western advocates of more aid provoke two additional comments. The first of these concerns the fear that economic pressures may lead Nehru or his successors to re- sort to totalitarian or authoritarian methods in pre- sumed emulation of the Russians or Chinese. It is true, as impartial observers have pointed out, that parliamentary democracy [n India exists on the sufferance of the ‘educated elite’, i.e., the bour- geoisie. But it is also true that observers with no taint of Marxism have made another comparison which will only startle the starry-eyed. ‘After a decade of power’, writes one, ‘the Congress is in decline. For many it appears to have alarming similarities with the Kuomintang under Chiang Kai-Shek after the Second World War’.*4 If further decay should set in, for example, after Nehru's de- mise, a slide into military-bureaucratic dictatorship seems the most likely possibility, as has happened in Pakistan and Indonesia.245 Such a regime, bona- partist in character, is unlikely to be unkind to business interests, whether national or foreign. Many of those who now praise Indian parliamentar- ism and ‘democracy’ would be able to accommo- date themselves to such a change, notwithstanding any totalitarian implications it might have. After all, Congress has itself used such methods as pre- ventive detention, restrictions on press freedom, in- terference with State government (Kerala) and open repression (Calcutta food riots, Jamshedpur strike). A move to the right would undoubtedly be wel- come by some of its supporters and would corres- pond to a mood which is quite widespread 24From a review of a biography of Nehru, by Brecher in ‘Far Eastern Survey’, September, 1959. 25Tanya Zinkin’s view that because India has a large middle class (which she says, is also the ruling class), which is also Hindu, and that this ‘makes a military dictatorship impossible’, can only be regarded as an act of faith. So can her assertion that India has discovered ‘the poor man’s alternative to Com- munism’ and ‘with each day is moving more and more towards Socialism’. See ‘Pacific Affairs’, March, 1959, page 90. As the Guardian correspondent she is an im- portant source of information on Indian affairs for British ‘public opinion’ (i.e., of the liberal middle class)!

[p041] 120 among the bourgeoisie, both in business and in the bureaucracy—-a mood of élitism and contempt of the masses from whick could issue a form of fascism. In such an event property rights would be respected. It is difficult to envisage an Indian government based on the bourgeoisie using the methods of Stalinism as appears in the nightmare visions of some commentators in the West. The second point is that the remarks made about foreign aid do not imply that it is believed that such aid can be dispensed with. For a bourgeois India it is obviously indispensable for political as well as economic reasons; it is a lifeline in time of Stress as well as. a vital component of the plans. It is foreign aid, more than any other single factor, which has enabled the ruling class to retain com. mand of the situation. Even a popular socialist government could not dispense with outside assist- ance. It is true that foreign trade is a small part of the gross national income; but this small partici- pation in the international division of labour is in Part a reflection of low living standards. Certainly ‘socialism in one country’ is even more illusory in India than in Russia. Taking the view that India needs more investment—which is common to all LABOUR REVIEW—October-November, 1960 schools of thought—a socialist plannea economy would concentrate on building up the ingustries pro- ducing means of production; and here again this emphasis is also seen in the Plans of the 50s. The reason for this is that the possibility of raising con- sumption level in the longer period, say 15 years, will be greater than if major emphasis was placed on investment which would raise consumption more in the short term. Such an emphasis may, in the longer run, reduce Indian dependence on external sources of supply and more particularly of aid. Its immediate effect is to require large imports of machinery and equipment, which can only come from the more advanced countries. The existing governments of capitalist countries could be ex. pected to display hostility to the kind of Indian government we have envisaged: the task of render- ing assistance to the successful revolution in India would thus devolve upon the working class in other countries. It is true that such a government could, and would, turn to the Sino-Soviet bloc for econo- mic and technical aid: but it is not certain that what would be available from this source would be adequate or that the conditions attached to such aid would be acceptable, Prospects In any case, the crucial factor would be that such a government could only come into being as the result of a full and direct participation of large masses of the people under the leadership of the working class. In the course of such a movement enthusiasm and energies would be released, leaders found and new organizations formed which would make possible an unprecedented mobilization of India’s human resources and a more or less rapid breaking down of the barriers to growth which the bourgeoisie has been unable to remove. Clearly the major task of capital formation, in the sense of an increase in the stock of productive equipment of all kinds, must come from domestic sources. There is n0 reason why such a task should involve the distortions and authoritarianism which have accom- panied the upsurge of the New China: but there are clearly lessons to be learned from the Chinese experi- ence from which, in the nature of things, a bourgeois regime cannot profit at all. Evervbody talks about the need for labour-intensive Projects (i.e., under- takings in which there is a low ratio of capital to labour) and about the need to stir the peasantry into improving the output from the land. But to mobilize millions and organize such schemes on a nation-wide scale to evoke the willing par- ticipation of the peasants in all the desirable steps indicated for them by the agronomists can only become practicable when they are given a lead and can see that they are working in unison for their own future. They cannot be mobilized by the caste-conscious or the lily-handed, but only by people from their own ranks or who are close to them and understand their problems, after the style of the vitally important local cadres in China. There must be discipline to co-ordinate effort and to deal with resistance and obstruction: that is understood. But this does not mean inevit- able totalitarianism and bureaucratic degeneration. What it does offer is the only prospect for India’s teeming millions to lift themselves out of their pre- Sent poverty and apathy and to win a new dignity as well as material improvement. To make this hope reality is the practical task of the socialist movement in India in the coming years; a task which can only be realised if the working class of the other countries play their part by breaking the power of capitalism at home.

[p042] THE LIBRARY of no student or active member of the working-class movement can be considered anywhere near complete if it lacks a copy of Trotsky’s classic work. When it first appeared, in 1925, it was the subject of sharp controversy, in which Bert- rand Russell, George Lansbury, H. N. Brailsford, R. Palme Dutt and others took part. Norman Angell wrote a whole book—‘Must Britain Travel The Mos- cow Road?’—in reply to it. After 35 years, an increasing number of socialists think that Trotsky’s book stands up a lot firmer than the ideas of his opponents. Among the questions discussed in ‘Where Is Britain Going?’ are: the basis of reformism and opportunism in Britain, and its undermining by 20th-century changes in the world: the role of Fabianism and other bourgeo's BL influences in the shaping of the British labour movement; the revolutionary tradition in our history; the prob- lem of force in British politics (a ‘British road to socialism’?); the part played by religion in the life of the workers of Britain (Methodism, not Marxism’?); and the crucial significance for the and the Ca EDITORS: BRIAN PEARCE, Isaac De British Labour Party of changes within the trade unions. Even those who disagree with his conclusions have paid tribute to the acuteness of Trotsky’s ob- ' servation, his exceptional grasp of the peculiarities of the British movement and the (sometimes cruelly accurate pointedness of his characterizations of certain trends and types in our political life. 0 29 Lenin a Price: Seven Shillings and Sixpence (or 7s. 11d. post free). Obtainable from— P if Printed by PLOUGH PRESS LTD. (TU). ro. 180 Clapham High St, London §$