Book excerpt | '#Tata Stories': When eight men drew up a Rs10,000 crore economic plan for free India - in 1944

India Post issued a stamp in 1994, to commemorate J.R.D. Tata's contributions to industry and the nation. (Image: Wikimedia Commons)

In January 1944, just three years before Indian Independence, a document was published that caused great consternation and concern amongst the British rulers of India. This pamphlet was priced at exactly Re 1 and immediately attracted a lot of attention. Indeed, it had to be reprinted a couple of times in India during the same year. And soon, Penguin published it in the United Kingdom. What was this document and why did it create all these ripples?

This was a comprehensive plan for the economic development of India, soon to be called the ‘Bombay Plan’, and it was authored by eight people. Because two of the authors were J.R.D. Tata and G.D. Birla, it would also be nicknamed in some circles the Tata–Birla Plan. It was a bold plan that called
for massive investments in the industrial development of the country. In fact, it was the first-ever national economic plan for the Indian nation.

Lord Wavell, the then viceroy of India, was disturbed enough by this plan to write immediately to the Secretary of State in London. In his first letter, sent immediately after the plan had been published, he said: ‘A considerable stir has been created by the Rs 10,000 crore economic plan
for India.’

Thereafter, in May 1944, in a ‘Private and Secret’ letter, he added: ‘I see the Bombay Plan has come out in the Penguin series. Sir Gregory, who takes criticism very much to heart, thought we should at once produce a rival pamphlet and broadcast it through the India office . . .’

Clearly, the British had been stung. Stung by the fact that Indians had moved far ahead of them in thought leadership for the future of India. This thought leadership emanated from a stellar cast of eight Indian industrialists and technocrats who came together to build a plan for their beloved nation. Let’s take a quick look at who they were.

There was J.R.D. Tata, who had taken charge as chairman of the Tata Group eight years earlier. G.D. Birla, head of the Birla Group of industries, ten years older than J.R.D., and already a well-respected senior leader. Lala Shri Ram, chairman of the DCM Group of Delhi, also a progressive Indian businessman. Kasturbhai Lalbhai, Ahmedabad-based industrialist and
educationist. Purshottamdas Thakurdas, a Mumbai-based businessman, credited with building business associations.

Joining these five industrialists were three technocrats with fine minds, all from the Tata Group. Sir Ardeshir Dalal, A.D. Shroff and Dr John Matthai.

But why had this group of eight stalwarts decided to come together to build the Bombay Plan? As J.R.D. Tata has said, ‘I knew Independence [for our country] was bound to come . . . I knew the country’s economy would have to be tackled . . . that economic prosperity needed to reach not only the few but the many . . . businessmen and not only the Government should play a role.’

The committee initially engaged in broad deliberations on the economic future of the nation but later decided to articulate their views sharply and publicly as well through a published plan. J.R.D. Tata has credited this shift in approach to G.D. Birla. Here are J.R.D.’s words of praise for Birla (extracted from J.R.D. Tata’s biography by R.M. Lala):

G.D. Birla was a man of high intelligence and knowledge. When we were floundering to find a structure in the first few meetings, it was he who suggested—It is difficult to forecast what India should do after being free ... so let’s do it this way—first estimate to get the people the kind of standard of living they want. What is needed? So many calories of food requiring so many tons of grain, so many metres of cloth, housing, schools, etc.

This quantitative approach to planning could be seen throughout the pages of the Bombay Plan. For instance, the plan pointed out that a large proportion of Indians were not getting enough food to eat despite the fact that India was an agricultural country. It then built a plan for food supplies which took into account a well-balanced nutritive diet of 2600 calories per adult person per day—and actually went on to detail the weight of cereals
(16 ounces), pulses (3 ounces), vegetables (6 ounces), fruits (2 ounces), milk (8 ounces) that would hence be needed for this purpose. And finally, it calculated that an annual expenditure of Rs 2100 crore would be required to deliver this nourishment to India’s population of 389 million people at the time.

Having set out a total requirement of Rs 10,000 crore for food, clothing, housing, education and industry, the Bombay Plan then outlined the various sources of funds which could be used. Interestingly, the first source of funds it highlighted was the hoarded wealth of the country, mainly gold.

In addition, it called for funding from sterling securities held by the Reserve Bank of India, favourable balance of trade, foreign borrowings, national savings, heavier taxation of unearned income, and, finally, new money to be printed by the government.

Very importantly, the Bombay Plan put forward a framework for rapid development of basic industries such as power, mining, engineering, armaments and transport; as well as consumer industries such as textiles, glass, leather and oil. This was the first systematic approach to the economic development of free India.