PITFALLS IN OUR INDUSTRIAL POLICY

By M. A. MASTER

Summary

M. A. Master uses this Forum of Free Enterprise pamphlet — reprinted from the Free Press Journal Republic Day Number, 1959 — to argue that India’s post-1948 industrial policy, and especially the 1956 Industrial Policy Resolution that followed the Avadi Resolution, has steadily relegated private enterprise to a subordinate role behind a state sector destined, in the Prime Minister’s own words, to ‘grow and become the dominant feature of the landscape’. Master concedes that even before independence the Bombay Plan of 1944 accepted the need for planning, but contends that the ‘first radical shift’ came in August 1953 with the nationalisation of air services, followed by the Imperial Bank in 1955, life insurance in 1956, and the constitutional amendment making the compensation question unjusticiable. The First Five-Year Plan’s promise that the public sector would enter only where private enterprise was ‘unable or unwilling’ has, on his reading, been replaced by an ideological doctrine that gives the public sector ‘a basic sector, a strategic, important and advancing sector’ status across the economy.

The second half of the pamphlet builds a case study indictment. Master draws on the State Trading Corporation’s monopolisation of cement trade, the price hike to fund road construction at consumer expense, the rate discrimination favouring nationalised airlines and ferries, and the Merchant Shipping Act’s near-dictatorial powers over private shipping to show that the rhetoric of ‘no policy of discrimination’ is hollow. He marshals tax and capital data — Rs. 137 crores collected from business in 1955-56 rising past Rs. 157 crores in 1957-58, against a paid-up private capital of only Rs. 80 crores — to argue that the Second Plan’s expectation of Rs. 300 crores from private internal resources is fiscally impossible. The pamphlet closes by invoking Acharya Vinoba Bhave’s warning that power has concentrated in ‘a handful of people’, and asserts that the present trajectory of ‘liquidating private enterprise’ will lead democracy to give way to dictatorship. A boxed quotation from A. D. Shroff — ‘Free Enterprise was born with man and shall survive as long as man survives’ — frames the publisher’s editorial stance.

Key points

• Master traces an ‘onward revolutionary march’ from the 1948 Industrial Policy Resolution through the nationalisation of air services (1953), the Imperial Bank (1955), the life insurance companies (1956), and the 1956 Industrial Policy Resolution that placed twelve schedule ‘B’ industries under State leadership.

• He treats the Avadi Resolution and Nehru’s 1954-55 Lok Sabha statements as the ideological turning point, citing the PM’s claim that under planning the public sector ‘must grow and become the dominant feature of the landscape’.

• He argues that the First Five-Year Plan’s ‘public sector where private is unable or unwilling’ principle has been quietly overturned in favour of the public sector as a ‘basic, strategic, important and advancing sector’.

• He attacks the State Trading Corporation’s cement monopoly (a Rs. 10 crore profit raised at the consumer’s cost) and the rate-fixing rules that let nationalised airlines and railways raise fares while barring private ferry operators from doing the same — what he calls one law for the public sector, another for the private.

• He criticises the new Merchant Shipping Act and the Industries (Development and Regulation) Act for handing officials ‘extraordinary power’ that, he warns, will breed ‘corruption and overpowering dictatorship’.

• He uses tax and capital-issues data — Rs. 137 crores in business taxes for 1955-56, Rs. 157 crores for 1957-58, against Rs. 80 crores of fresh paid-up capital and only Rs. 37.28 crores raised in 1956 — to argue that the Second Plan’s demand for Rs. 300 crores from private internal resources is arithmetically impossible.

• He invokes Acharya Vinoba Bhave’s warning about power concentrating in the hands of ‘not more than 5 or 6’ people to argue that the constitutional concentration of wealth and power is shifting from industrialists to ‘ministers and the bureaucracy’.

• He closes with a prophetic warning that the policy of ‘liquidating private enterprise’ will end in dictatorship, and the booklet pairs his polemic with framing pull-quotes from Eugene Black of the World Bank and A. D. Shroff.

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