Was The Bombay Plan ill conceived?

Probably! First of all, how many people in India are aware of ‘The Bombay Plan’? It was published in January 1944 and was the brain-child of JRD Tata (Jehangir Ratanji Dadabhoy Tata). The presumption was that the Indian economy could not grow without government intervention and regulation. The Bombay Plan had the underlying assumption that the fledgling Indian industries would not be able to compete in a free-market economy. Tata passionately believed that future Indian government must protect indigenous industries against any foreign competition.

In this endeavor, JRD Tata was able to enlist the support of GD Birla (Ghanshyam Das Birla), Lala Shri Ram of DCM (Delhi Cloth Mills), Kasturbhai Lalbhai (Lalbhai Group) and the likes of Ardeshir Dalal (of Tatas & Viceroy’s Council), Ardeshir Darabshaw Shroff (Tatas Financial Adviser) and John Mathai (India’s first Railway Minister). The Plan had the blessings of Viceroy Lord Wavell and therefore the British Government. The First Prime Minister of India, Jawaharlal Nehru, did not officially accept the plan. The Bombay Plan had the Russian flavor.

Notwithstanding stout denials by the bureaucrats of that time, the Bombay Plan had a profound impact on India’s National Industrial Policy. Although not sounding socialist, the plan led to the first “Five Year Plan” in 1950. The principle flaw in the plan originated from the fact that the promoters were a small group of industrialists who not only had self-interest at the core, but had limited knowledge about the rest of India. During the first fifty years of the 20th century, India had upward of 100 major industrial houses, spread across the length and breadth of the country. No one was consulted by this group. The problem was not the fear of foreign competition, but the tendency to impose high-taxes on business. It was not just Nehru and his advisers, but the Tatas and the Birlas who stunted the growth of Indian industry.