Policies Meant to Change the Structure of the Economy

May 21

That poverty and unemployment are closely related to the structure of the economy and hence can be dealt with effectively only through appropriate structural transformations has been recognised from the time when serious discussions of the problems were started. A report maintained that under the planned economy envisaged for the future, no rights of property or inheritance in any form of national wealth, for example, land, mines, forests, etc. should be allowed, and that the ultimate property in these forms of wealth must vest in the people collectively.

It insisted that all cultivation should ordinarily be in common and that industries which are under private ownership, but which are or become national importance, owing to the scale of their operations, the labour employed, the nature of commodities or services supplied, or for any other reason connected with the local or foreign trade of the country, its credit or finance, must be put under rigid control by the state. Further, new industries where no private vested interest now exists must be established and conducted as public enterprises. All key industries must be State-owned and State-managed. Foreign trade was also to be completely nationalised.

It is clear that the structure of the economy envisaged was substantially common ownership of the means of production and social control over the use of resources. But the attitude towards common ownership underwent major changes. The Industrial Policy resolution gave first indications of retreat. It mentioned that only redistribution of present wealth would not make significant difference to the citizens and implies only the distribution of poverty. A dynamic national policy must therefore be directed to a continuous increase in production by all possible means, side by side with measures to secure its equitable distribution. That assertion laid the foundation for all subsequent statements and policy formulations which looked at the structure of the economy purely in static terms, did not recognise the dynamic forces that would be generated by the interaction of the structure and working of the economy and visualised that it would be possible to deal with the problem of equitable distribution without reference to the pattern of production.

After independence national policy formulations came into the hands of those for whom increase in production along existing patterns and within the given structure of the economy were more important than any fundamental transformation of that structure. From then on working within the existing institutional structure of the economy, preserving the regime of private property etc have become the basic principles of economic policy. All subsequent attempts to bring about changes in the ownership pattern of the economy through various measures such as limited nationalisation, land redistribution etc have been within the overall frame of an essentially privately owned and privately operated economic system. The concept of the mixed economy has provided ideological, legal and economic sanction for making private ownership and the principles of the want-based economy the essential features of the economic order even when these can be shown to be the root cause of major economic problems.

Leave a Reply

Your email address will not be published. Required fields are marked *