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  • Hike in crude oil prices and its impact on India

    Context

    The Russia-Ukraine conflict will impact India’s economy through several channels. The first order impact, emanates from the negative terms of trade shock from higher commodity prices, particularly oil.

    • Crude prices have surged well past a $110/barrel and there is a growing expectation that, as the conflict gets more entrenched, crude could remain elevated for much longer and average close to $100/barrel in 2022, vis-a-vis $70/barrel in 2021.

    Why crude oil price is increasing?

    Limited Supply:

    • Major oil-producing countries had cut oil production last year amid a sharp fall in demand due to the Covid-19 pandemic.
    • Saudi Arabia pledged extra supply cuts in February and March 2020 following reductions by other members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
    • In early January 2021, the OPEC and Russia (as OPEC+) agreed to cut back on oil production to increase prices.

    Rising Demand:

    • The production and rollout of vaccines for Covid-19 and the rising consumption post the Covid lockdowns last year have both led to a revival in international crude oil prices.

    Geopolitical reasons

    • Geopolitical tension has risen between Russia, which is the second largest oil producer in the world, and neighbouring Ukraine.
    • In January, there were drone attacks on oil facilities in UAE, another major oil producer.
    • An outage on a major oil pipeline linking Saudi Arabia and Turkey further added to the pressures.

    How it will impact India?

    • Current Account Deficit: The increase in oil prices will increase the country’s import bill, and further disturb its current account deficit (excess of imports of goods and services over exports).
      • According to estimates, a one-dollar increase in crude oil price increases the oil bill by around USD 1.6 billion per year.
    • Inflation: The increase in crude prices could also also further increase inflationary pressures that have been building up over the past few months.
      • This will decrease the space for the monetary policy committee to ease policy rates further.
      • The government had hiked central taxes on petrol and diesel by Rs. 13 per litre and Rs. 11 per litre in 2020 to boost revenues amid lower economic activity.
    • Fiscal Health: If oil prices continue to increase, the government shall be forced to cut taxes on petroleum and diesel which may cause loss of revenue and deteriorate its fiscal balance.
      • The growth slowdown in the last two years has already resulted in a precarious fiscal situation because of tax revenue shortfalls.
      • The revenue lost will erode the government’s ability to spend or meet its fiscal commitments in the form of budgetary transfers to states, payment of dues and compensation for revenue shortfalls to state governments under the goods and services tax (GST) framework.

    Why high growth impact on fiscal space leads to a greater hit to demand and growth?

    • The growth impact will manifest through constraints on fiscal space, household purchasing power being impinged and firm margins coming under pressure.
    • Why does marginal propensity to consume matter? The quantum of the growth impact will depend on how the shock is distributed across the fiscal, households and firms because of the different marginal propensities to consume.
    • For example, the excise duty cuts last November have already absorbed about one-third of the shock from oil (0.4 per cent of GDP).
    • The cost of this, however, is commensurate pressures on fiscal expenditures and growth, agnostically assuming a fiscal multiplier of 1.
    • In contrast, the marginal propensity to consume/invest out of income/earnings is typically lower than 1 for households/firms.
    • So, the greater the fraction of the shock absorbed on the fiscal, the greater the hit to demand and growth. 

    Way forward

    1] Let the rupee reach the new equilibrium

    • The widening of the CAD and associated BoP pressures will create some depreciation pressures on the rupee.
    • More fundamentally, a persistent negative terms of trade shock will argue for a weaker equilibrium real effective exchange rate.
    • Policymakers should let the rupee reach this new equilibrium – albeit in a gradual and non-disruptive manner – and not prevent this adjustment because it will facilitate the necessary “expenditure switching” to reduce imports, boost exports and help narrow an elevated CAD.

    2] Pragmatic fiscal policies

    • Cutting excise duties would buffer the impact on households and protect consumption, but potentially result in a larger hit to demand by shrinking fiscal space to spend.
    • If the government doesn’t cut duties, it has resources that can potentially be used to more directly target affected households at the bottom of the pyramid.
    • But this will mean higher retail prices that can harden inflationary expectations, increasing the challenges for monetary policy.
    • Finally, policymakers could always cut duties, not cut spending and let the deficit widen commensurately — effectively pushing out some of the terms of trade costs to the future — but negative surprises on the fiscal during periods of heightened macro uncertainty can generate significantly risk premia in markets.
    • All told, the fiscal will confront several trade-offs, and should try avoiding corner solutions.
    • What should be clear is that as soon as markets begin to stabilise, authorities must plough ahead with planned asset sales/disinvestment to create more fiscal headroom, without trying to perfectly time the market.

    3) Reduce the dependence

    • India has proposed Oil Buyer’s club. This would be a grouping of India, China, Japan and South Korea. The objective is to reduce the dependence on OPEC, have better bargains, increase the imports of crude oil imports from USA etc
    • It was put forward by Mani Shankar Ayyar in 2005
    • Create a stabilization fund or reserve account – Thailand, UK etc

    Conclusion

    A persistent adverse supply shock is complicated and challenging to respond to, and the new equilibrium will inevitably need some combination of a weaker rupee, higher rates, and judicious fiscal management.

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    Back2Basics: What is a fiscal multiplier?

    • The fiscal multiplier measures the effect that increases in fiscal spending will have on a nation’s economic output, or gross domestic product (GDP).
    • Fiscal multipliers are important because they can help guide a government’s policies during an economic crisis and help set the stage for economic recovery.

    What is Marginal Propensity to Consume?

    • In economics, the marginal propensity to consume (MPC) is defined as the proportion of an aggregate raise in pay that a consumer spends on the consumption of goods and services, as opposed to saving it.
    • Marginal propensity to consume is a component of Keynesian macroeconomic theory and is calculated as the change in consumption divided by the change in income.
    • MPC varies by income level. MPC is typically lower at higher incomes.

  • Asian Infrastructure Investment Bank (AIIB)

    The Beijing-based Asian Infrastructure Investment Bank (AIIB) said it was putting on hold and reviewing all projects in Russia and Belarus.

    About AIIB

    • The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia, began operations in January 2016.
    • It aims to stimulate growth and improve access to basic services by furthering interconnectivity and economic development in the region through advancements in infrastructure.
    • AIIB has now grown to 102 approved members worldwide. US & Japan are not its members.
    • It is a brainchild of China. It has invested in 13 member regions.

    Capital and shareholding of AIIB

    • It has authorized capital of US 100 billion dollars and subscribed capital of USD 50 billion.
    • It offers sovereign and non-sovereign finance for projects in various sectors with an interest rate of London Interbank Offered Rate (LIBOR) plus 1.15 % and a repayment period of 25 years with 5 years in grace period.
    • China is the largest shareholder in AIIB with a 26.06% voting power, followed by India with 7.62% and Russia with 5.92% voting power.

     

    Try this question from CSP 2019

    Q.With reference to Asian Infrastructure Investment Bank (AIIB), consider the following statements

    1. AIIB has more than 80 member nations.
    2. India is the largest shareholder in AIIB.
    3. AIIB does not have any members from outside Asia.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

     

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  • What is Agni Kandakarnan Theyyam?

    Ritual dance Agni Kandakarnan Theyyam performing at the Kaliyattam festival has begun in Kannur, Kerala.

    What is Theyyam?

    • Theyyam is a popular thousand-year-old ritual form of dance worship in Kerala and Karnataka, India.
    • The people of these districts consider Theyyam itself as a channel to a god and they thus seek blessings from Theyyam.
    • There are about 456 types of Theyyam.
    • Theyyam is performed by males, except the Devakoothu theyyam; the Devakoothu is the only Theyyam ritual performed by women.
    • It is performed only in the Thekkumbad Kulom temple.

    Major types of performances

    • Vishnumoorthi: It is the most popular Vaishnava Theyyam. This theyyam narrates and performs the story of Hiranyakashipu’s death by the Lord Vishnu in his avatar of Narasimham.
    • Sree Muthappan Theyyam: It consists of two divine figures is considered as the personification of two divine figures— the Thiruvappana or Valiya Muttapan (Vishnu) and the Vellatom or Cheriya Muttapan (Shiva).
    • Padikutti Amma: It is believed to be the mother of Muthapan. The Padikutti Amma Theyyam is performed in the Palaprath Temple in Kodallur near Parassini Kadavu in the Meenam (a Malayalam month)

    Thee

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  • What is WHO’s Pandemic Treaty?

    Members of the World Health Organisation (WHO) held the first round of negotiations towards the pandemic treaty on February 24, 2022.

    What is the Pandemic Treaty?

    • In December 2021, the World Health Assembly agreed to start a global process to draft the pandemic treaty.
    • The need for an updated set of rules was felt after the COVID-19 pandemic exposed the shortcomings of global health systems.
    • The Health Assembly adopted a decision titled “The World Together” at its second special session since it was founded in 1948.
    • Under the decision, the health organization established an intergovernmental negotiating body (INB) to draft and negotiate the contents of the pandemic treaty in compliance with Article 19 of the WHO Constitution.

    What is it likely to entail?

    • The pandemic treaty is expected to cover aspects like data sharing and genome sequencing of emerging viruses and equitable distribution of vaccines and drugs and related research.
    • Solutions to the COVID-19 pandemic have seen an inequitable distribution of vaccines so far, with poorer countries at the mercy of others to receive preventive medication.

    Why need such treaty?

    • Most countries have followed the “me-first” approach which is not an effective way to deal with a global pandemic.
    • A widely-accepted theory points that the novel coronavirus may have jumped from animals to humans in a wildlife market of China.
    • Many nations want a ban on wildlife markets.

    Issues in negotiations

    • While the EU wants the treaty to be legally binding, the U.S., Brazil and India have expressed reservations about the same.
    • The legal nature of the treaty is yet to be defined.

     What is Article 19 of the WHO Constitution?

    • Article 19 of the WHO Constitution gives the World Health Assembly the authority to adopt conventions or agreements on matters of health.
    • A two-third majority is needed to adopt such conventions or agreements.
    • The WHO Framework Convention on Tobacco Control was set up under Article 19 and it came into force in 2005.

     

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  • New Rules for Deputation of DIGs

    After its proposal to amend the All India Service Rules that would allow it to call any IAS, IPS or IFoS officer on central deputation with or without the state’s consent, the Centre has issued another order on central deputation of Deputy Inspector General-level IPS officers.

    What is the order?

    • The Department of Personnel and Training (DoPT) has said that IPS officers coming to the Centre at DIG level would no longer be required to be empanelled at that level with the Union Government.
    • According to existing rules, a DIG-ranked IPS officer with a minimum experience of 14 years could only be deputed to the Centre if the Police Establishment Board empanelled them as DIGs at the Centre.
    • The board chooses the panel on the basis of officers’ career and vigilance records.
    • Only Superintendent of Police-level officers do not require empanelment at the Centre.
    • The new order makes the entire pool of DIG-level officers in a state eligible for central deputation.

    Why has it been issued?

    Ans. Huge Vacancies

    • The move is aimed at increasing the pool of DIG-level IPS officers for central deputation in the backdrop of massive vacancies in central police organisations (CPOs) and the Central Armed Police Forces (CAPFs).
    • Out of 252 posts reserved for IPS officers at DIG level at the Centre, 118 (almost half) are vacant.
    • IPS officers have a quota of 40% in CPOs and CAPFs.

    How will the move help?

    • The idea is to ease up the process of central deputation as verification of records takes a long time.
    • Also, it increases the size of the pool of officers available to the Centre.

    So why would states have a problem?

    Ans. Relieving the Officers

    • States would have to be willing to relieve these officers.
    • The new order may be seen by many states as the Centre’s attempt at pushing the envelope further on increasing its powers over officers serving in the states.
    • With these orders, the Centre would have powers to demand, within a stipulated time frame, a certain quota of officers from the state for central deputation.
    • It may also call any IAS officer on central deputation in “public interest”.
    • In case the state failed to relieve the officer, he/she would be deemed relieved following the date fixed.

    Why don’t states relieve officers?

    Ans. Vacancy in states

    • There is a serious paucity of officers in the states too.
    • In a cost-cutting move during the Atal Bihari Vajpayee regime, the size of IPS batches among other government staff was reduced even though sizeable vacancies existed even then.
    • From 80-90 officers each, IPS batches were cut to 35-40 officers (in 1999-2002, the average was 36).
    • The average attrition rate of IPS officers due to superannuation is 85 per year.
    • The strength of IAS officers too had been impacted due to low intake during the 1990s.

    How has this impacted the services?

    • The anomaly in IPS recruitment adversely affected cadre management over the years.
    • At some levels, there are fewer officers than sanctioned posts, while at others there is a glut. For example, UP has a shortage of DIGs and IGs, but too many officers at the level of ADGs.

     

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  • Egypt hikes Suez Canal transit fees for ship

    Cash-strapped Egypt increased transit fees for ships passing through the Suez Canal, one of the world’s most crucial waterways, with hikes of up to 10%.

    Suez Canal

    • The Suez Canal is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to the Red Sea through the Isthmus of Suez; and dividing Africa and Asia.
    • Constructed by the Suez Canal Company between 1859 and 1869, it officially opened on 17 November 1869.
    • The canal was earlier controlled by British and French interests in its initial years but was nationalized in 1956 by Egypt’s then leader Gamal Abdel Nasser.
    • It extends from the northern terminus of Port Said to the southern terminus of Port Tewfik at the city of Suez.
    • Its length is 193.30 km including its northern and southern access channels.

    Its significance

    • The Suez Canal provides a crucial link for oil, natural gas and cargo being shipping from East to West.
    • About 10% of global trade, including 7% of the world’s oil, flows through the Suez Canal.
    • It provides a major shortcut for ships moving between Europe and Asia, who before its construction had to sail around Africa to complete the same journey.
    • As per a report, the canal is a major source of income for Egypt’s economy, with the African country earning $5.61 billion in revenues from it last year.

    Try this PYQ:

    Q.Between India and East Asia, the navigation time and distance can be greatly reduced by which of the following?

    1. Deepening the Malacca straits between Malaysia and Indonesia.
    2. Opening a new canal across the Kra isthmus between the Gulf of Siam and Andaman sea.

    Which of the statements given above is/are correct?

    (a) 1 only

    (b) 2 only

    (c) Both 1 and 2

    (d) Neither 1 nor 2

     

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  • Back in news: Visva-Bharati University

    The stalemate continues in Visva-Bharati University as students demand the reopening of hostels and conducting of online examinations.

    Visva-Bharati

    • Visva-Bharati is a central research university and an Institution of National Importance located in Shantiniketan, West Bengal, India.
    • It was founded by Rabindranath Tagore who called it Visva-Bharati, which means the communion of the world with India.
    • Until independence, it was a college.
    • Soon after independence, the institution was given the status of a central university in 1951 by an act of the Parliament.

    Its establishment

    • The origins of the institution date back to 1863 when Debendranath Tagore was given a tract of land by the zamindar of Raipur, zamindar of Kirnahar.
    • He set up an ashram at the spot that has now come to be called chatim tala at the heart of the town.
    • The ashram was initially called Brahmacharya Ashram, which was later renamed Brahmacharya Vidyalaya.
    • It was established with a view to encouraging people from all walks of life to come to the spot and meditate.
    • In 1901 his youngest son Rabindranath Tagore established a co-educational school inside the premises of the ashram.
    • From 1901 onwards, Tagore used the ashram to organize the Hindu Mela, which soon became a center of nationalist activity.

    Try this PYQ from CSP 2021:

    Q. With reference to Madanapalle of Andhra Pradesh, which one of the following statements is correct?

    (a) Pingali Venkayya designed the tricolour Indian National Flag here.

    (b) Pattabhi Sitaramaiah led the Quit India Movement of Andhra region from here.

    (c) Rabindranath Tagore translated the National Anthem from Bengali to English here.

    (d) Madame Blavatsky and Colonel Olcott set up headquarters of Theosophical Society fi rst here.

     

     

    [wpdiscuz-feedback id=”2igxgiemsy” question=”Please leave a feedback on this” opened=”1″]Post your answers here.[/wpdiscuz-feedback]

     

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  • GST revenues cross 1.3 lakh crore in Feb

    The Gross Goods and Services Tax (GST) revenue in February was 26% higher than the pre-pandemic levels at ₹1,33,026 crore.

    What is GST?

    • GST is an indirect tax that has replaced many indirect taxes in India such as excise duty, VAT, services tax, etc.
    • The Goods and Service Tax Act was passed in Parliament on 29th March 2017 and came into effect on 1st July 2017. It is a single domestic indirect tax law for the entire country.
    • It is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.
    • Under the GST regime, the tax is levied at every point of sale. In the case of intra-state sales, Central GST and State GST are charged. All the inter-state sales are chargeable to the Integrated GST.

    Answer this PYQ in the comment box:

    Q.All revenues received by the Union. Government by way of taxes and other receipts for the conduct of Government business are credited to the (CSP 2015):

    (a) Contingency Fund of India

    (b) Public Account

    (c) Consolidated Fund of India

    (d) Deposits and Advances Fund

     

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    What are the components of GST?

    There are three taxes applicable under this system:

    1. CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a transaction happening within Maharashtra)
    2. SGST: It is the tax collected by the state government on an intra-state sale (e.g., a transaction happening within Maharashtra)
    3. IGST: It is a tax collected by the Central Government for an inter-state sale (e.g., Maharashtra to Tamil Nadu)

    Advantages Of GST

    • GST has mainly removed the cascading effect on the sale of goods and services.
    • Removal of the cascading effect has impacted the cost of goods.
    • Since the GST regime eliminates the tax on tax, the cost of goods decreases.
    • Also, GST is mainly technologically driven.
    • All the activities like registration, return filing, application for refund and response to notice needs to be done online on the GST portal, which accelerates the processes.

    Issues with GST

    • High operational cost
    • GST has given rise to complexity for many business owners across the nation.
    • GST has received criticism for being called a ‘Disability Tax’ as it now taxes articles such as braille paper, wheelchairs, hearing aid etc.
    • Petrol is not under GST, which goes against the ideals of the unification of commodities.

    Take a look at the share of GST in government earnings for the previous fiscal:

    UPSC can ask about the majority component of the Revenue Receipts of the govt. See how Corporate tax is nearing the GST revenues.

    Do you think it will surpass GST revenue when the economy is fully recovered?

     

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  • Kuki Insurgency in Manipur

    Just before the first of the two phases of the Assembly Elections went underway in Manipur, all insurgent groups associated with the Kuki tribes in Manipur said they will vote for a particular political party.

    Who are the Kukis?

    • The Kukis are an ethnic group including multiple tribes originally inhabiting the North-Eastern states of India such as Manipur, Mizoram and Assam; parts of Burma (now Myanmar), and Sylhet district and Chittagong hill tracts of Bangladesh.
    • While Kuki is not a term coined by the ethnic group itself, the tribes associated with it came to be generically called Kuki under colonial rule.
    • In Manipur, the various Kuki tribes, living mainly in the hills, currently make up 30% of the total 28.5 lakh population of the State.
    • While Churachandpur is their main stronghold, they also have a sizable population in Chandel, Kangpokpi, Tengnoupal and Senapati districts.

    Their ethnicity

    • The rest of the population of Manipur is made up mainly of two other ethnic groups — the Meiteis or non-tribal, Vaishnavite Hindus who live in the valley region of Manipur, and the Naga tribes, historically at loggerheads with the Kukis, also living in the hilly areas of the State.
    • Of the 60 seats in the Manipur Assembly, 40 are held by Meiteis and the rest 20 seats are held by Kukis and Nagas.

    What led to the Kuki insurgencies in Manipur?

    • The Kuki insurgent groups have been under Suspension of Operation (SoO) since 2005, when they signed an agreement for the same with the Indian Army.
    • Later, in 2008, the groups entered a tripartite agreement with the State government and the UPA led Central government to temporarily suspend their operations and give political dialogue a chance.
    • Manipur, formerly a princely state including parts of Burma, made the accession into India after Independence, but was only made a full-fledged State in 1972.
    • The resentment over the “forceful” inclusion into India and delay in granting statehood led to the rise of various insurgent movements.

    Roots of the insurgency

    • The roots of Kuki militancy lie in conflicts of ethnic identity.
    • First was the demand for self-determination solely for groups belonging to their ethnic fabric, meaning the dream to form a Kukiland.
    • The second reason for insurgency lies in the inter-community conflicts between the Kukis and the Nagas in Manipur.
    • The Kuki-Naga conflict was started over securing identity and land as some Kuki inhabited areas coincided with Naga inhabited areas.
    • Wanting to dominate trade and cultural activities in those areas the two communities often engaged in violent standoffs, with villages being torched, civilians killed and so on.

     

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  • [Yojana Archive] Swadeshi Entrepreneurship

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    Inception of the idea

    • The idea of ‘economic swadeshi’ emerged by the second half of the 19th century.
    • Thanks to the writings of R C Dutt, Dadabhai Naoroji, and M G Ranade, the new western-educated middle class was well aware of the colonial economic exploitation.
    • Gopal Hari Deshmukh was one of the firsts to advocate economic swadeshi in 1849.
    • But the credit for translating it to a call to action goes to the ‘college faction’ of the Arya Samajists in Punjab.

    Pre-Swadeshi movement

    • A group of middle-class, western-educated Punjabis– prominent among them were Lala Lajpat  Rai, Lala Harkishan Lal, and Sir Dayal Singh Majithia came together to found the Punjab National Bank (1894). This was the first major Indian-owned bank.
    • Lala Harkishan Lal, who soon emerged as the moving force behind this venture, went on to found a series of joint-stock companies.
    • In Bombay, a Parsi lawyer Ardeshir Burjorji Sorabji Godrej (1868-1936) came to realise the importance of indigenous manufacturing. After failing in a series of ventures, he tasted business success with mechanised locks and founded Godrej & Boyce in 1897.
    • Acharya Prafulla Chandra Ray (1861-1944), a pioneering chemist, founder of Bengal Chemicals (India’s first pharmaceuticals company), and a devoted nationalist spent his entire life in promoting education and scientific research.

    Swadeshi Enterprises

    The announcement of the Partition of Bengal (1905) unleashed a surge of nationalism and rekindled the Bengali entrepreneurial spirit.

    (1) Textiles

    • Bengal’s leading landlords, businessmen, and political leaders came together to launch the most high-profile swadeshi venture – Banga Luxmi Cotton Mill (1906).
    • Two years later, Mohinimohan Chakraborti, landlord and retired Deputy Magistrate, launched a smaller Mohini Mill in East Bengal to challenge the monopoly of the only British cotton mill in Bengal.
    • The biggest beneficiary of the boycott of Manchester cloths turned out to be Bombay and Ahmedabad, where 39 mills came up between 1904 and 1910 to cater to swadeshi demands.

    (2) Promotion on Science and Tech

    • One of the great contributions of the swadeshi period was the promotion of science. Meritorious students were sent to Japan, Germany, and the USA for technical education.
    • Some of them came back to set up successful businesses like Calcutta Chemicals, Calcutta Potteries, and Bengal Waterproof.
    • The National Education Movement (1905-1938) helped set up colleges and schools, and one of the institutions associated with it metamorphosed into Jadavpur University.
    • In Madras, firebrand nationalist leader V O Chidambaram Pillai launched his Swadeshi Steam  Navigation Company from Tuticorin (1906), to challenge the British monopolies but had a short life.

    (3) Emergence of modern banking

    • Indian Bank: In Madras, a group of eminent citizens and businessmen came together under the leadership of a lawyer (later on, High Court judge), V Krishnaswamy Iyer, to set up the Indian Bank in 1907.
    • Canara Bank: Among the other smaller ventures in the Madras Presidency were the Canara Banking Corporation of Udupi (later Corporation Bank) and the Canara Hindu Permanent Fund (later Canara Bank).
    • Central Bank of India: Similar groups in Bombay founded two major banks – the Bank of India (1907) and the Central Bank of India (1911, the first Chairman was Sir Pherozeshah Mehta).
    • Bank of Baroda: In Baroda, Maharaja Sayajirao II led the way to set up the first major bank in a princely state – Bank of Baroda (1908). 
    • Punjab and Sindh Bank: Business elites in Punjab set up the Punjab and Sind Bank in the same year.

    Swadeshi and decline of consumerism

    • Boycott of foreign goods and the use of India-made products– the trend that started in Bengal in  1905, spread to the rest of the country with Mahatma Gandhi and his advocacy of khadi.
    • With rising nationalism, there was a definite change in consumer culture too.
    • Irrespective of whether they were actively participating in political movements or not, people wanted to use India-made/local products as a badge of their patriotism.

    Establishment of National Planning Commission

    • In 1938, Congress President Subhas Chandra Bose set up a National Planning Commission under the chairmanship of Jawaharlal Nehru.
    • This Commission had prominent industrialists  like Purushottamdas Thakurdas, Walchand Hirachand, A D Shroff, and Ambalal Sarabhai as  members, along with technocrat M Visvesvaraya and scientist Meghnad Saha.
    • In 1944-45, eight leading industrialists – J R D Tata, G D Birla, Ardeshir Dalal, Lala Shri Ram, Kasturbhai Lalbhai, A D Shroff, Purushottamdas Thakurdas, and John Matthai came out with a blueprint for independent India’s economic development.

    The Bombay Plan

    • This ‘Bombay Plan’ outlined the strategy for doubling of the agricultural output and five- fold increase in the industrial sector within 15 years.
    • They accepted that without State support this would not be possible.
    • Though it was never officially accepted but the post-independence economic planning did follow the same path of State interventions and a mixed economy with large-scale public sector.

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