Free Enterprise in India — A Call For Leadership

Summary

Delivered as A. D. Shroff’s presidential address at the fifth annual general body meeting of the Forum of Free Enterprise in Bombay on 25 October 1961, this pamphlet mounts a sustained critique of India’s Third Five-Year Plan as a ‘carbon copy of the Soviet Communist model of planning.’ Shroff argues that doctrinaire socialism is unsuited to India’s democratic life, citing converging evidence from the Soviet Union (Khrushchev’s cautions on wages and incentives), China (the Big Leap Forward’s failure and the emergence of ‘small freedoms’), Yugoslavia, Poland, and France that even communist and socialist economies are quietly shifting toward market signals, price formation, and private initiative. He marshals Wilhelm Roepke on the time horizon of economic activity, Arthur Larson on consumer sovereignty, and Colin Clark on the human—not capital—factor in growth to argue that state-led investment without legal-institutional foundations wastes resources and lowers public morals.

Shroff then turns to a detailed indictment of the Indian state sector: profiteering and bungling by the State Trading Corporation, rupee-payment scandals with communist countries, half-percent returns on state investment, the unilateral hike of telephone and platform-ticket rates, the H.M.T. watch scandal recounted by the columnist ‘Beachcomber,’ and the Maharashtra Land Ceiling Act’s takeover of Deccan sugar-factory farms despite a four-times-national-average yield. Vituperative press attacks on the ‘jute Press’ and the steady erosion of Article 31 property rights, he warns, show that ‘those who frown on free enterprise and free society are the grave-diggers of the free Press.’

The most arresting passages reframe socialism as the practice by which ‘politics has become an industry of major proportions’—a perquisite-driven class of professional politicians whose unregulated industry has lowered standards of public conduct, while private enterprise alone faces the discipline of market and regulation. Shroff calls not for a ceiling over enterprise but for a ceiling over ‘arbitrary political and bureaucratic power.’

He closes with a call to leadership: private enterprise must step beyond its commercial role into education, civic amenities, social service, and flood-relief work, taking ‘the mischief of politics’ out of every sphere of life. He invokes Acharya Vinoba Bhave’s 1959 warning and Mahatma Gandhi’s caution against a government that ‘did everything for the people’ while people did nothing—anchoring the case for free enterprise in India’s own democratic and Gandhian inheritance.

Key points

• Frames the Third Five-Year Plan as a ‘carbon copy of the Soviet Communist model’ and as eminently unsuited to India’s democratic structure.

• Marshals comparative evidence from the USSR, China, Yugoslavia, Poland, and France that communist and socialist economies are themselves drifting toward market incentives and private initiative.

• Cites Jayaprakash Narayan’s reported disillusionment with the nationalisation of big industries as evidence that even socialist founders are abandoning doctrinaire positions.

• Indicts the State Trading Corporation for bungling, profiteering in cement, and a rupee-payment regime that shrinks Indian exports to Western markets and may finance subversion of the Constitution.

• Catalogues failures of state enterprises: half-percent returns on state investment, ad-hoc hikes of telephone and platform-ticket rates, the H.M.T. ‘Sujata’ watch scandal, and inadequate telegraphic and telephonic infrastructure.

• Argues that erosion of Article 31 property rights and the Maharashtra Land Ceiling Act’s takeover of high-yield Deccan sugar-factory farms penalise success and chill entrepreneurial initiative.

• Reframes socialism as ‘politics as an industry,’ a perquisite economy of professional politicians whose unregulated profession lowers standards of public conduct.

• Calls on private enterprise to assume leadership beyond commerce—in education, civic life, and social service—citing Indian Chamber of Commerce, Indian Merchants’ Chamber, and Andhra Chamber initiatives as encouraging signs.