Chapter 2

1. See Partha Chatterjee, ’Development Planning and the Indian State’, in T.J. Byres (ed.), The State, Development Planning and Liberalisation in India, New Delhi: Oxford University Press, 1999, p. 85.

2. It was established by the Indian National Congress in 1938 with Jawaharlal Nehru as an important ideologue.

3. Proposed in 1944, it represented the capitalist position regarding post-Independence development strategy. The leading proponents were Purshottamdas Thakurdas, J. R. D. Tata, G. D. Birla, Shri Ram Kasturbhai Lalbhai, A. D. Shroff, Ardeshir Dalal and John Mathai.

4. Prabhat Patnayak, Some Indian Debates on Planning, in T.J. Byres (ed.), The State, Development Planning and Liberalisation in India, p. 157.

5. These concerns were reflected in the pattern of external economic relations with the UA, UK, USSR, and the East European Countries in the following years.

6. Jawaharlal Nehru, India’s Foreign Policy: Selected Speeches, New Delhi: Government of India, Publication Division, 1961. Cited in R. Chakrabarti, The Political Economy of India’s Foreign Policy, Calcutta: K. P. Bagchi and Co., 1982, p. 18.

7. Ibid., p. 22.

8. J.N. Dixit, India’s Foreign Policy 1947–2003, New Delhi: Picus Books, 2003.

9. The immediate economic problems that India faced after Independence were primarily concerned with the massive refugee influx, burgeoning food crisis, weak industrial infrastructure and massive unemployment.

10. S. Mansingh and C. H. Heimsath, A Diplomatic History of Modern India, Calcutta: Allied Publishers, 1971, p. 366.

11. P N. Dhar, ‘Achievements and Failures of the Indian Economy’, as cited in A. Appadorai, National Interests and India’s Foreign Policy, New Delhi: Kalinga Publishers 1992.

12. Mansingh and Heimsath, A Diplomatic History of Modern India.

13. For an insight into Nehru’s conception of socialism, see B. Chandram (ed.), India After Independence, 1947–2000, New Delhi: Penguin Books, 2000.

14. Jawaharlal Nehru, India’s Foreign Policy: Selected Speeches, New Delhi: Government of India, Publication Division, 1961, p. 35.

15. Mansingh and Heimsath, A Diplomatic History of Modern India, p. 366.

16. Ibid., p. 63.

17. The text of the final communiqué of Asian African Conference issued in Bandung on 24 April 1955. See Foreign Policy of India: Texts of Documents, 1947–1958; Lok Sabha Secretariat, New Delhi, 1958.

18. The assistance from the East European countries became even more crucial during the second Plan period in the form of technological assistance for heavy industries, especially from Rumania and Czechoslovakia.

19. A. Appadorai, National Interests and India’s Foreign Policy, New Delhi: Kalinga Publishers, 1992, p. 442.

20. Sukhmoy Chakravarty, Development Planning: The Indian Experience, New Delhi: Oxford University Press, 1987, p. 23.

21. Appadorai, National Interests and India’s Foreign Policy, p. 116.

22. Prabhat Patnayak, ‘Some Indian Debates on Planning’, in T.J.Byres (ed.), The State, Development Planning and Liberalisation in India, p. 160.

23. Jayati Ghosh, Liberalization Debates, in T.J. Byres (ed.), The State, Development Planning and Liberalisation in India, p. 300.

24. Mansingh and Heimsath, A Diplomatic History of Modern India, p. 366.

25. Amiya Kumar Bagchi, Private Investment in India, 1900–1939 Delhi: Cambridge University Press, 1972, as cited in A. Appadorai, National Interests and India’s Foreign Policy, p. 160.

26. The combined share of the UK and the USA in India’s export earnings was 42 per cent in 1950–51. See A. Nautiyal (ed.), India and the New World Order, New Delhi: South Asian Publishers, 1996, p. 234.

27. From year 1948-1949 to 1950-1951, India had to draw Rs 583 crores in foreign exchange from reserves to meet the balance-of-payment deficit. See Mansingh and Heimsath, A Diplomatic History of Modern India, p. 367.

28. Sudip Chowdhury, ‘Debates on Industrialization’, in T.J. Byres (ed.), The State, Development Planning and Liberalisation in India, p. 249.

29. Sudip Chowdhury, ‘Debates on Industrialization’, p. 281.

30. Deepak Nayyar, Economic Liberalization in India: Analytics, Experience and Lessons, Calcutta: Orient Longman,1996.

31. Appadorai, National Interests and India’s Foreign Policy, p. 449.

32. Isher Ahluwalia, Contribution of Planning to Indian Industrialization, in A. Nautiyal (ed.), India and the New World Order, p. 234.

33. Mansingh and Heimsath, A Diplomatic History of Modern India, p. 368.

34. Appadorai, National Interests and India’s Foreign Policy, p. 114.

35. See Constituent Assembly Debates, Vol. 4, p. 2385, as cited in Mansingh and Heimsath, A Diplomatic History of Modern India.

36. For an elaboration of these two crucial points see Deepak Nayyar, Economic Liberalization in India: Analytics, Experience and Lessons.

37. See Deepak Nayyar, Economic Liberalization in India: Analytics, Experience and Lessons, p. 57.

38. Sukhmoy Chakraborty has touched on this issue in his pioneering work Development Planning: The Indian Experience.

39. According to Chakraborty, Indian planners operated on the assumption of low elasticity of export demand.

40. Chakraborty provides the example of the sluggish textile sector that provided enormous export opportunity, but was not optimally utilized. He explains this in terms of political motives behind not unevenly promoting the specific cotton-growing region of the country. Another reason was the ideological commitment to Gandhian values that sought to reserve cotton manufacturing for the cottage industries.

41. Jagdish Bhagwati, ‘Indian Balance of Payment Policy and Exchange Auctions‘, Oxford Economic Papers, February, Vol. 14, 1962, p.56, as cited in Jayati Ghosh, ‘Liberalization Debates’ in T.J. Byres (ed.), The State, Development Planning and Liberalisation in India, p. 309.

42. Government of India, Third Five-Year Plan, New Delhi: Planning Commission, 1961, p. 137.

43. Appadorai, National Interests and India’s Foreign Policy, p. 117.

44. Ibid., pp. 444–53.

45. This assistance programme sought to provide long-term, low-interest loans, payable in rupees.

46. Mansingh and Heimsath, A Diplomatic History of Modern India, p. 380.

47. Statesman, 18 June 1959, Vol. 1024, No. 26752

48. Mansingh and Heimsath, A Diplomatic History of Modern India, p. 384.

49. Ibid.

50. Deepak Nayyar, Economic Liberalization in India: Analytics, Experience and Lessons, p. 342.

51. The import license regime in independent India can be traced back to the Import and Export Control Act of 1947 and the Import Trade Control Order of 1955 that covered almost all import items. The licensing framework was supplemented by a tariff structure that provided additional protection from foreign competition. In 1966, trade liberalization measures were adopted that changed the import licensing policies to ease the import of raw materials for 59 industries. However, they were subjected to restrictions on source and licensing provisions.

52. Two famous Multinational companies that actually had to leave India for not submitting to government’s dictates were IBM and Coca Cola in 1977 under the Janata government.

53. Bimal Jalan ‘Balance of Payments,1956 to 1991’, in Bimal Jalan (ed.) The Indian Economy: Problems and Prospects, New Delhi: Penguin, 1993, p. 164.

54. Ibid., p. 166.

55. Ibid., p. 165.

56. Ibid., p. 167.

57. See the Eighth Five-Year Plan Document.

58. Bimal Jalan (ed.), The Indian Economy: Problems and Prospects, p. 183.

59. For lucid discussions on factors that lead to the adoption of liberalization policy in India, refer to V Joshi and I. M.D. Little, India’s Economic Reforms 1991–2001, New Delhi: Oxford University Press, 1998; Deepak Nayyar, Economic Liberalization in India: Analytics, Experience and Lessons; and Jayati Ghosh, ‘Liberalization Debates’.

60. Some important policy changes like those concerning public sector disinvestment, tax reforms, and banking sector reforms have been not touched upon as they do not directly effect external economic policy.

61. Economic Survey 2004–05, p. 160.

62. World Investment Report 2004.

63. Economic Survey 2004–05, p. 133.

64. Parmijit Nanda and P.S. Raikhy, ‘Performance of India’s Foreign Trade sector in the. Nineties: Implications for Second Generation Reforms’, in P.P. Arya and B.B. Tandon (eds), Economic Reforms in India: From First Generation and Beyond, New Delhi: Deep and Deep Publications, 2003.

65. Economic Survey 2004–05, p. 109.

66. Ibid.

67. Only select bilateral relations have been discussed.

68. Ibid., p. 161.

69. Government of India, India 2005, New Delhi: Ministry of Information and Broadcasting, Research, Reference and Training Division, Publications Division, 2005, p. 140.

70. Ibid., p. 125.

71. Previously, India had become a sectoral dialogue partner of ASEAN in 1992, full dialogue partner in 1995 and a member of Asian Regional Forum in 1996.

72. Economic Survey 2004–05, p. 125.

73. Government of India, India 2005, p. 145.

74. Ibid.

75. These countries include South Africa, Nigeria, Mauritius, Ivory Coast, Tanzania, Senegal, Kenya, Ethiopia, Benin and Ghana.

76. In this respect, the exploration activities of ONGC are noteworthy. The ONGC Videsh Limited has acquired 25 per cent interest in the Great Nile Oil Project (GNOP) in Sudan, besides acquiring one exploration block in Cote d’ Ivorie. The ONGC Videsh Limited is actively present in 10 countries, namely, Russia, Sudan, Vietnam, Iran, Libya, Syria, Myanmar, Iraq, Australia and Cote d’ Ivorie.

77. J.N. Dixit, India’s Foreign Policy 1947–2003, p. 316.