Minimum standard of living for all Indians

Lump sum income distribution would have been India’s basic income programme well before it was thought of and implemented anywhere else


Photo: Mint
Photo: Mint

In 1938, the president of the Indian National Congress, Subhas Chandra Bose, constituted a national planning committee under the chairmanship of Jawaharlal Nehru. As described by Nehru: “...it was a remarkably representative committee cutting across...the high barrier between official and non-official India—except for the fact that the Government of India was not represented and took up a non-cooperative attitude….

“It was obvious also that any comprehensive planning could only take place under a free national government, strong enough and popular enough to be in a position to introduce fundamental changes in the social and economic structure. Thus, the attainment of national freedom and the elimination of foreign control became an essential prerequisite for planning. (See: The Discovery Of India, centenary edition 1989, sixth impression 1994, page 395)

“Obviously we could not consider any problem, much less plan, without some definite aim and social objective. That aim was declared to be to ensure an adequate standard of living for the masses, in other words, to get rid of the appalling poverty of the people. The irreducible minimum, in terms of money, had been estimated (as varying from) Rs15 to Rs25 per capita per month. (These are all pre-war figures.) Compared to Western standards this was very low, and yet it meant an enormous increase in existing standards in India (with)… an average annual income per capita Rs65.

“These figures bring home the terrible poverty of the people and the destitute condition of the masses. There was lack of food, of clothing, of housing and of every other essential requirement of human existence. To remove this lack and ensure an irreducible minimum standard for everybody the national income had to be greatly increased, and in addition to this increased production there had be a more equitable distribution of wealth…a ready progressive standard of living would necessitate the increase of the national wealth by 500 or 600 per cent. That was, however, too big a jump for us, and we aimed at a 200 to 300 per cent increase within ten years. We fixed a ten-year period for the plan, with control figures for different periods and different sectors of economic life.” (See: The Discovery Of India, page 397)

The committee completed most of its work before its chairman and other members were arrested in 1941 when they joined the Quit India Movement started by Mahatma Gandhi. Besides, World War II was in full swing. The committee’s planning and its plan had to wait until—as it said—there was a free national government. Freedom came on 15 August 1947. A Planning Commission to plan for the development of India was set up in March 1950. The Commission’s first Five-Year Plan (1951-56) was a success—and as its far more ambitious second plan was being completed, its perspective planning division (PPD), headed by Pitambar Pant, revived the national planning committee’s plan to provide an adequate standard of living for the masses.

For formulating an adequate standard of living for the 1960s, the PPD drew from a report submitted in July 1962 by a working group with an impressive membership of distinguished economists, politicians, planners, social activists and Gandhians. Quoting V.K.R.V. Rao, its member, “This group consisted of D.R. Gadgil, B.N. Ganguli, P.S. Lokanathan, M.R. Masani, Ashok Mehta, Pitambar Pant, Shriman Narayan, Anna Saheb Sahasrabuddhe and myself… we submitted our report in July 1962 on what should be the national minimum for each household of 5 persons or 4 adult consumption units. Our figures… were arrived at after considerable discussion on a minimum standard of living, taking into account nutritional requirements, other requirements such as clothing, fuel and light, housing and miscellaneous items. Our calculations excluded expenditure on health and education which we expected would be met by the state according to the Constitution. Unfortunately, no records are available of the details of our calculations nor did I keep any personal records of the same.

“The figure we recommended was that the national minimum for each household of 5 persons (4 adult consumption units) should be not less than Rs100 per month in terms of 1960-61 prices or Rs20 per capita. As this figure was for urban and rural areas put together and as we had also recommended a higher figure of Rs125 in urban areas, the minimum per capita expenditure in the rural areas would be Rs18.9.”

The details of the group’s discussion of a national minimum standard of living are unfortunately unavailable and only aggregate per capita monetary figures are available. These and the working group’s report have tended to be associated with poverty lines ever since. Pant used the committee’s report to arrive at a plan similar in its objective to Nehru’s national planning committee. An elaborate paper, Notes On Perspective Of Development: India 1961 To 1975-76, was distributed by the PPD in 1964. A shorter version is reproduced in Poverty And Income Distribution in India (1974) by Srinivasan Thirukodikaval Nilakanta and Pranab Bardhan. The paper argued, echoing Nehru, “that the central concern of our planning has to be the removal of poverty as early as possible. The stage has come when we should sharply focus our efforts on providing an assured minimum income to every citizen of the country within a reasonable period of time. Progressively this minimum itself should be raised as development goes apace.”

Obviously, such a lump sum income distribution would have been India’s Basic Income programme before it was thought of and implemented anywhere else.

Acceleration of World War II and the arrest of the authors of the national planning committee’s plan put it in cold storage. The PPD’s 15-year Perspective Plan was considered and provisionally accepted by the Planning Commission shortly before Nehru’s death. Even though on the day before his death, Nehru discussed the implications of the perspective plan with Pant in Dehradun, Nehru’s death, the two consecutive droughts in 1965 and 1966, and the war with Pakistan, put the very idea of planning in cold storage for several years.

T.N. Srinivasan is Samuel C Park, Jr Professor Emeritus of economics at Yale University.

Published with permission from Ideas For India (www.ideasforindia.in), an economics and policy portal.

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