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Read the following passage and answer the questions below:

“In the early years of Independence, two contradictory tendencies were already well advanced inside the Congress party. On the one hand, the national party executive endorsed socialist principles of state ownership, regulation and control over key sectors of the economy in order to improve productivity and at the same time curb economic concentration. On the other hand, the national Congress government pursued liberal economic policies and incentives to private investment that was justified in terms of the sole criterion of achieving maximum increase in production.” — Francine Frankel

(a) What is the contradiction that the author is talking about? What would be the political implications of a contradiction like this?
(b) If the author is correct, why is it that the Congress was pursuing this policy? Was it related to the nature of the opposition parties?
(c) Was there also a contradiction between the central leadership of the Congress party and its Sate level leaders?

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Solution

(a) The author, Francine Frankel, is referring to two main arguments that appeared while adopting economic model of development. One was the socialist commitment of the Congress party that favoured state control and regulation over economy so as to bring about social welfare and to reduce disparities and, on the other hand, the government emphasised on the private sector. The political implications of contradictions were that it resulted in debates over those who favoured state control and those who favoured capitalist model of development. In order to pacify the two viewpoints, the government adopted the middle path by accepting the mixed economy model.

(b) One would argue that the Congress supported this policy under the following circumstances:

i. There were increased political compulsions; opposition parties like the Communist Party and the Socialist Party supported the soviet model of state-led economy. Even Congress leaders like Nehru supported this strategy. On the other hand, there were political forces like the Swatantra Party that favoured economic freedom, minimal state control and encouragement to private enterprises.

ii. Economic problems that surfaced at the time of independence made it critical to bring about state intervention in the economy.

iii. Heavy industries like iron, steel, and railways required state control, capital which the private could not pool in,.

(c) We would not say that there was any contradiction between the central leadership and state level leaders as congress government existed in most of the states at this time. This was the period of one-party dominant system, except for the state of Kerala where the Communist Party had formed the government, which also supported state-led economy. There were differences within the party as there were different shades of opinions within the Congress itself, ranging from rights to leftist to centrist.


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