The Socialistic Pattern

Nehru in Avadi session of Congress (1955) flanked by volunteers of Congress Seva Dal
By Jawaharlal Nehru

Address at the 60th session of the Indian National Congress at Avadi, January 22, 1955.

Yesterday I had the honour to present a resolution before you, which you passed. In it, we stated that we wanted it to be clearly understood that we aim at a socialistic pattern of society. In the present resolution which deals with the economic policy, we have to give effect to that decision of yours, because ultimately it is the economic policy which is going to shape that picture of India which you call the 'socialistic pattern'. This resolution is therefore of the highest importance. 

In a resolution of this kind, however long-drawn-out it might be, one cannot enter into the details of policies. There is a danger in such resolutions, and that is that you may use striking words and vague phrases and imagine that you have given a great lead to the country. That does not help us, because we have to grapple with the problems of India. 

How to deal with those problems is itself a problem. The problems of unemployment and of raising the level of our people are not solved by broad decisions or slogans. I say this without any disrespect to those who wield striking words, because I myself have been a wielder of words all my life, drafting resolutions, getting them passed and so on. But a time comes when you have to forget words and deal with hard actualities. This applies more especially to Congressmen because they have much more responsibility than others in running the Government and deciding the Government’s policy. For us merely to write resolutions is not good enough. What, then, must we do? The only thing to be done is to sit down and draw up a plan, a detailed plan. That is the function of the Planning Commission and of the Government and of those whom they consult. Obviously, a Congress session cannot sit down and draw up a five-year plan. But in a resolution of this kind we have to indicate the type of thinking needed in drawing up that plan. 

This resolution contains a brief reference to the objective to be achieved. First of all, after expressing appreciation of what has been done, the resolution says that the time has now come for substantially increasing production, for raising the standards of living and for having progressively fuller employment so as to achieve full employment within a period of ten years. 

The first thing to note about this resolution is that it does not merely repeat what we have said before. It points out that the time has come for us to advance on the economic and social plane. In a sense we have been doing it, but we have not been doing it adequately. The time has come to put an end to unemployment in ten years. By ten years we mean two Five-Year Plan periods. I wish you to appreciate that we try not to word our resolution in what might be called bombastic language. We are an old and mature organization with a great deal of experience. It is not desirable, therefore, that we should use words which are vague or bombastic. On the whole we understate what we propose to do. If we really give effect to this resolution it means bringing about a revolution in this country, an economic revolution bigger than any that has taken place in our times. Take the simple fact of putting an end to unemployment within ten years. Just try to think what it means in this country with its population growing year by year. It is a terrific job, the like of which has not been done in these circumstances in any other country. 

Yesterday, we had the President of Yugoslavia here. It was a great privilege to have had amidst us such a great revolutionary, soldier of freedom and builder. Whatever Yugoslavia’s troubles, unemployment has never been one of them. In fact, they are short of human beings to do their work. 

For us to compare ourselves with Yugoslavia in the matter of unemployment will not therefore lead us anywhere. Take the Soviet Union — a great big country, four or five times the size of India, with a population which is only about one-third of India’s. The problem is different for them — a vast area with a small population. Our problem is different — a big country, heavily populated, and under-developed. Similarly, we cannot compare our problems with those of America, England and Western Europe where they have had two hundred years of industrial growth. These comparisons may sometimes be helpful but they mislead. We have to understand our problem as it is in India, no doubt learning from what has been done in America, England, Yugoslavia, Russia or China, but at the same time bearing in mind that the conditions in India are special and particular. Further, we have also to understand that our background is in many ways peculiar, particularly the Gandhian background. 

We talk about planning. As you all know, planning is essential, and without it there would be anarchy in our economic development. About five years ago, planning was not acceptable to many people in high places but today it has come to be recognized as essential even by the man in the street. Our First Five-Year Plan is now about three years old, and we are now thinking about our Second Five-Year Plan. 

A phrase in this resolution says that the Second Five-Year Plan must keep the national aims of a Welfare State and a socialistic economy before it. These can only be achieved by a considerable increase in national income, and our economic policy must, therefore, aim at plenty and equitable distribution. The Second Five-Year Plan must keep these objectives in view and should be based on the physical needs of the people. These are really the important and governing words of the resolution and ought to be the controlling factors in drawing up the Second Five-Year Plan. 

Before going on to other aspects of the question may I say that a Welfare State and a socialistic pattern of economy are not synonymous expressions? It is true that a socialistic economy must provide for a Welfare State but it does not necessarily follow that a Welfare State must also be based on a socialistic pattern of society. Therefore the two, although they overlap, are yet somewhat different, and we say that we want both. We cannot have a Welfare State in India with all the socialism or even communism in the world unless our national income goes up greatly. 

Socialism or communism might help you to divide your existing wealth, if you like, but in India, there is no existing wealth for you to divide; there is only poverty to divide. It is not a question of distributing the wealth of the few rich men here and there. That is not going to make any difference in our national income. We might adopt that course for the psychological good that might come out of it. But from the practical point of view, there is not much to divide in India because we are a poor country. We must produce wealth, and then divide it equitably. How can we have a Welfare State without wealth? Wealth need not mean gold and silver but wealth in goods and services. Our economic policy must therefore aim at plenty. Until very recently economic policies have often been based on scarcity. But the economics of scarcity has no meaning in the world of today. 

Now I come to this governing clause which I just referred to with regard to the Second Five-Year Plan, namely, that the Second Five-Year Plan should be based on the physical needs of the people. You will remember that yesterday the President also emphasized the necessity for basing planning on the people’s physical needs. Our First Five-Year Plan was based on the data and the material we had at our disposal as well as on things that were actually being done at the time. 

Take these big river valley schemes. All these things were being done at the time and we had no choice but to continue them. We had to accept what had been done. Of course, we added one or two new schemes and rearranged the priorities. That is to say, our Plan was largely based on the finances available and consisted in taking up those schemes which were most useful. But it was limited planning, not planning in the real sense of the word. 

The conception of planning today is not to think of the money we have and then to divide it up in the various schemes but to measure the physical needs, that is to say, how much of food the people want, how much of clothes they want, how much of housing they want, how much of education they want, how much of health services they want, how much of work and employment they want, and so on. We calculate all these and then decide what everyone in India should have of these things. Once we do that, we can set about increasing production and fulfilling these needs. It is not a simple matter because in calculating the needs of the people, we have to calculate on the basis not only of an increasing population but of increasing needs. I shall give you an instance. Let us take sugar. Our people now consume much more sugar than they used to, with the result that our calculations about sugar production went wrong. 

Now, why do they eat more sugar? Evidently because they are better off. If a man getting a hundred rupees finds his income increased to a hundred and fifty, he will eat more sugar, buy more cloth, and so on. Therefore, in making calculations, we have to keep in mind that the extra money that goes into circulation because of the higher salaries and wages, affects consumption. So we find out what in five years time will be the needs of our people, including even items needed by our Defence Services. Then we decide how to produce those things in India. In order to meet a particular variety of needs we have now to put up a factory which will produce the goods that we need five years hence. Thus, planning is a much more complicated process than merely drawing up some schemes and fixing a system of priorities. 

Behind all this is another factor — finance. Finance is important but not so important as people think. What is really important is drawing up the physical needs of the people and then working to produce things which will fulfil such needs. If you are producing wealth, it does not matter very much if you have some deficit financing because you are actually putting money back through goods and services. Therefore it does not matter how you manipulate your currency so long as your production is also keeping pace with it. Of course there is the fear of inflation. We must avoid it. But there is no such fear at present in India. On the other hand, there is deflation. Nevertheless, we have to guard against inflation. We have to produce the equivalent of the money pumped in. 

Sometimes there is a gap between investment and production, when inflation sets in. For example, let us say we put in a hundred crores of rupees in a river valley scheme which takes seven or eight years to build. During the years it is being built we get nothing out of it but expenditure. This can be balanced in cottage industries, in which the gap in time is not large. The additional money that you have put in is not locked up for long. Therefore in planning we have to balance heavy industry, light industry, village industry and cottage industry. We want heavy industry because without it we can never really be an independent country. Light industry too has become essential for us. So has cottage industry. I am putting forward this argument not from the Gandhian ideal, but because it is essential in order to balance heavy industry and to prevent the big gap between the pumping in of money and production. 

But production is not all. A man works and produces something because he expects others to consume what he produces. If there is no consumption, he stops production. Therefore whether it is a factory or a cottage unit, consumption of what is produced should be taken care of. Mass production inevitably involves mass consumption, which in turn involves many other factors, chiefly the purchasing power of the consumer. Therefore planning must take note of the need to provide more purchasing power by way of wages, salaries and so on. Enough money should be thrown-in to provide this purchasing power and to complete the circle of production and consumption. You will then produce more and consume more, and as a result your standard of living will go up. 

I have ventured to take up your time in order to give you some idea of the approach that is intended in this resolution when we say that the Second Five-Year Plan should be based on the physical needs of the people. I hope it has helped you to understand the way we are thinking. I myself do not see any other way of rapid progress. The financial approach to planning is not rapid enough. I should like you to explain this to people when you go home to your respective towns and districts. We are responsible for giving effect to this resolution. We have to fulfil our promise. 

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