Fresh Thinking on Planning and Prices

Summary

Published by the Forum of Free Enterprise in Bombay and dated June 1977, “Fresh Thinking on Planning and Prices” is a compilation pamphlet rather than a single-author essay. It brings together two important planning documents that appeared in the second half of April 1977 — a moment of political and economic transition in India following the end of the Emergency — and frames them as essential reading for citizens concerned with growth, social justice, and the persistent problem of rising prices.

The first half of the pamphlet reproduces substantial extracts from “People’s Plan II,” prepared by a Planning Committee of the Indian Renaissance Institute (a society founded by the late M. N. Roy) under the convening leadership of V. M. Tarkunde and including economists Amlan Datta, G. R. Dalvi, G. D. Parikh, and Amrutananda Das. People’s Plan II builds on the original People’s Plan prepared in 1944 by a committee of the Indian Federation of Labour under M. N. Roy’s inspiration. The document articulates four core planning objectives: satisfying minimum primary consumption needs, maximising employment through productive involvement rather than mere welfare transfers, achieving distributive justice by reversing the accrual of growth benefits to rentiers and traders, and eliminating the poverty afflicting the bottom 40 percent of the population. On investment priorities it makes a decisive break with Nehruvian orthodoxy by subordinating heavy-industry allocations to agricultural development, small industry, social services, and basic wage-goods production — arguing that heavy industry should be a tool of development, not an end in itself.

The second half reproduces a summary of FULLMANGAL (Five per cent Upper Linear Limit on Money’s Annual Growth rate As per Law), a scheme submitted to the Prime Minister in April 1977 by Prof. C. N. Vakil and Prof. P. R. Brahmananda of Bombay University. Building on the earlier SEMIBOMBLA memorandum that 140 economists had submitted in February 1974 — and which the authors credit for the fall in prices witnessed from September 1974 — FULLMANGAL proposes a monetarist anti-inflation programme of 22 specific measures. Its centrepiece is a constitutional amendment placing a 5 percent annual ceiling on money supply growth, combined with a 5 percent reduction in money stock in 1977–78, a target WPI reduction of 10 percent over two financial years from the March 1977 level of 182, a budgetary surplus of Rs. 750 crores, a 5 percent across-the-board cut in government disbursements, a reduction of subsidies by 50 percent, and a comprehensive 8-point interest-rate reform.

Key points

• A Forum of Free Enterprise compilation pamphlet, June 1977, presenting extracts from two documents released in April 1977 at a moment of post-Emergency political transition.

• People’s Plan II (Indian Renaissance Institute, inspired by M. N. Roy’s tradition) sets four planning objectives: primary needs satisfaction, employment through productive involvement, distributive justice, and elimination of poverty in the bottom 40 percent.

• Rejects Nehruvian heavy-industry-first orthodoxy: argues industrialisation is a tool not an end, and that investment priorities should flow from the requirements of primary needs, agriculture, small industry, and social services.

• Calls for minimum necessary controls only — foreign exchange, rationing/distribution of basic wage goods, and luxury consumption restrictions — scrapping the rest as counterproductive.

• Advocates decentralised indicative planning with managerial autonomy, productivity orientation, and parallel treatment of public and private sector enterprises in credit and contract allocation.

• FULLMANGAL (Vakil and Brahmananda, April 1977) proposes a constitutional amendment capping money supply growth at 5 percent per annum as the centrepiece of a 22-measure anti-inflation programme.

• Near-term FULLMANGAL targets: WPI to fall 10 percent from the index level of 182 over two years; money stock to contract 5 percent in 1977–78; budgetary surplus of Rs. 750 crores; 5 percent across-the-board cut in government disbursements; subsidies reduced by 50 percent.

• Precedent cited: the 1974 SEMIBOMBLA memorandum signed by 140 economists was credited with the fall in prices from September 1974 over the subsequent 18 months, establishing the authors’ credibility for this follow-on scheme.