Bombay Plan

The Bombay Plan is the name commonly given to a World War II-era set of proposals the development of the post-independence economy of India. The plan, published in 1944/1945 by eight leading Indian industrialists, proposed state intervention in the economic development of the nation after independence from the United Kingdom (which occurred in 1947).

Titled A Brief Memorandum Outlining a Plan of Economic Development for India, the signatories of the Plan wereJehangir Ratanji Dadabhoy Tata, Ghanshyam Das Birla, Ardeshir Dalal, Sri Ram, Kasturbhai Lalbhai, Ardeshir Darabshaw Shroff, Sir Purshottamdas Thakurdas and John Mathai. The Plan went through two editions: the first was published in January 1944. This first edition became "Part I" of the second edition, published in 2 volumes in 1945 under the editorship of Purushottamdas Thakurdas.

Although Jawaharlal Nehru, the first Prime Minister of India, did not officially accept the plan, "the Nehruvian era witnessed [what was effectively] the implementation of the Bombay Plan; a substantially interventionist state and an economy with a sizeable public sector." Its perceived influence has given it iconic status, and "it is no exaggeration to say that the Bombay Plan has come to occupy something of a mythic position in Indian historiography. There is scarcely a study of postwar Indian economic history that does not point to it as an indicator of the developmental and nationalistic aspiration of the domestic capitalist class."

The basic objectives were a doubling of the (then current) output of the agricultural sector and a five-fold growth in the industrial sector, both within the framework of a 100 billion Rupee (£72b, $18b) investment (of which 44.8% was slated for industry) over 15 years.

A key principle of the Bombay Plan was that the economy could not grow without government intervention and regulation. Under the assumption that the fledgling Indian industries would not be able to compete in a free-market economy, the Plan proposed that the future government protect indigenous industries against foreign competition in local markets. Other salient points of the Bombay plan were an active role by government in deficit financing and planning equitable growth, a transition from an agrarian to an industrialized society, and—in the event that the private sector could not immediately do so—the establishment of critical industries as public sector enterprises while simultaneously ensuring a market for the output through planned purchases.

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