Tata, Birla and the Bombay Plan

In January 1944, just three years before Indian Independence, a document was published, that caused great consternation and concern amongst the British rulers of India. This pamphlet was priced at exactly One Rupee, and immediately attracted a lot of attention. Indeed, it had to be reprinted a couple of times in India during the same year. Within a few months, Penguin also published it in the United Kingdom. What was this document, and why did it create all these ripples ?

This was a comprehensive plan for the economic development of India, soon to be called the “Bombay Plan”, and it was authored by eight people. Because two of the authors were JRD Tata and G.D. Birla, it was also nicknamed in some circles as the Tata-Birla Plan. It was a bold plan that called for massive investments in the industrial development of the country. In fact, it was the first ever national economic plan for India.

Lord Wavell, the then Viceroy of India, was disturbed enough by this plan to write immediately to the Secretary of State in London. In his first letter, sent immediately after the plan had been published, he said – “A considerable stir has been created by the Rs. 10,000 crores economic plan for India.”

Thereafter, in May 1944, in a “Private and Secret” letter, he added – “I see the Bombay Plan has come out in the Penguin series. Sir Gregory, who takes criticism very much to heart, thought we should at once produce a rival pamphlet and broadcast it through the India office…”

Clearly, the British had been stung. Stung by the fact that Indians had moved far ahead of them, in thought leadership for the future of India.

This thought leadership emanated from a stellar cast of eight Indian Industrialists and technocrats, who came together to build a plan for their beloved nation. Let’s take a quick look at who they were.

There was JRD Tata, who had taken charge as Chairman of the Tata Group, eight years earlier. G.D. Birla, head of the Birla Group of industries, ten years older than JRD, and already a well-respected senior leader. Lala Shri Ram, Chairman of the DCM Group of Delhi, also a progressive Indian businessman. Kasturbhai Lalbhai, Ahmedabad based industrialist and educationist. Purushottamdas Thakurdas, a Mumbai based businessman and also a Tata Director, credited with building business associations.  

Joining these five industrialists were three technocrats with fine minds, all from the Tata Group. Sir Ardershir Dalal, A.D. Shroff and Dr. John Mathai.

And why did this group of eight stalwarts decide to come together to build the Bombay Plan? As JRD Tata has said – “I knew Independence (for our country) was bound to come…I knew the country’s economy would have to be tackled…that economic prosperity needed to reach not only the few but the many…businessmen and not only the Government should play a role.”

In addition, two other factors must have been at play in JRD’s mind. First, the constant British refrain that Indians would not be able to plan for themselves, or govern their own country. And second, the fact that the British Government did not have a long-term economic plan for India’s future.   

The committee initially engaged in broad deliberations on the economic future of the nation, but later decided to articulate their views sharply and publicly as well, through a published plan. JRD Tata has credited this shift in approach to GD Birla. Here are JRD’s words of praise for Birla (extract from JRD Tata’s biography, by RM Lala) :

“G.D. Birla was a man of high intelligence and knowledge. When we were floundering to find a structure in the first few meetings, it was he who suggested – It is difficult to forecast what India should do after being free….so let’s do it this way – first estimate to get the people the kind of standard of living they want. What is needed ? So many calories of food requiring so many tons of grain, so many metres of cloth, housing, schools, etc.”

This quantitative approach to planning is found throughout the pages of the Bombay Plan. For instance, the plan points out that a large proportion of Indians were not getting enough food to eat, despite India being an agricultural country. It then builds a plan for food supplies which takes into account a well balanced nutritive diet of 2,600 calories per adult person per day – and actually goes on to detail the weight of cereals (16 ounces), pulses (3 ounces), vegetables (6 ounces), fruits (2 ounces), milk (8 ounces) that would hence be need for this purpose. And finally, it calculates that an annual expenditure of Rs. 2,100 crores would be required to deliver this nourishment to India’s then population of 389 million people.

Having set out a total requirement of Rs. 10,000 crores for food, clothing, housing, education and industry, the Bombay Plan then outlines the various sources of funds which could be used. Interestingly, the first source of funds it highlights is the hoarded wealth of the country, mainly gold ! 

In addition, it calls for funding from sterling securities held by the Reserve Bank of India, favourable balance of trade, foreign borrowings, national savings, heavier taxation of unearned income, and, finally, new money to be printed by the Government.

Very importantly, the Bombay Plan put forward a framework for rapid development of basic industries such as power, mining, engineering, armaments and transport ; as well as consumer industries such as textiles, glass, leather and oil. Here was the first systematic approach to the economic development of free India.

Overall, this was a bold, imaginative and radical plan, with a 15-year time horizon. It was bold because the underlying assumption was that as soon as World War-2 concluded, the British would hand over power to a popular Government, which would have the economic freedom to implement this plan, independent of any colonial ruler. In other words, these Indian Industrialists were, in effect, telling the British to hand over power to Indians, and quit the country.

No wonder the plan made the British jittery and uncomfortable. But, quite interestingly, it also created a storm amongst various segments of Indians. Gandhians thought the plan was against Gandhi’s ideology. Conservative Indian businessmen considered it too far-fetched. Leftists found it reactionary and a half-hearted compromise, and soon published their own plan in response.

JRD Tata was unfazed by all these reactions. Addressing the Rotary Club of Bombay on 15th February 1944, he launched a bold defence of the Bombay plan, and why it was needed. Concluding his speech, he said – “That there should be wide-spread poverty and misery, in a country so naturally endowed by providence with manpower, talent and natural resources, is an intolerable paradox, and a disgrace which should fill us with shame and anger, and a burning desire to wipe out this terrible wrong done to our people. The obstacles, doubts and setback which may have to be faced (in taking forward this plan) should not deflect us from our task, but rather arouse us to greater endeavour.”

In many ways, the Bombay plan, pioneering in its intent and incredibly broad in its sweep, provoked the political leadership, and it also conditioned the nation to the post-Independence economic plans which were to follow. Unfortunately, there is no evidence that Jawaharlal Nehru, the first Prime Minister of India, ever regarded the Bombay Plan seriously enough. But what was exemplary and unique was the coming together of so many industrialists, perhaps fierce rivals in the marketplace, to sit together, and create an economic plan for the country. I wish I could have attended those meetings, or atleast have been a fly on the wall, to see those legendary minds working together !

Many years later, in 1986, R. Venkataraman, the then Vice President of India (he would soon go on to become President), recalled the Bombay Plan as one of JRD Tata’s key contributions to India. JRD, now 82 years of age, responded quite simply – “My only contribution to it was to arrange for the Bombay Plan to be written. It (the drafting of the plan) was done mainly by Dr. John Mathai, but after considerable discussion.”  

Those graceful words do not take away from the fact that the Bombay Plan is the first-ever instance, anywhere in the world, of leaders of industry stepping out of their boundaries, and collaborating amongst themselves, to prepare a national economic plan. And then, they also did their best to educate people that systematic planning was essential for rapid economic development. 

Were they merely leaders of industry, these great men, or were they much more? (Harish Bhat, Brand Custodian, Tata Sons.)