CONTROLS IN THE INDIAN ECONOMY 41 continues to remain more powerful in relation to the constituent classes. The contradiction of this position which for ever threatens the economy and the state is the following. This position has, on the economic side, led to an erosion of the ability and desire for planned development and resulted in the present emphasis on private enterprise and its innovativencss. But in the political arena it has? at the same time, led to the necessity for larger control over capital and industry. This contradiction may play a vital role in our politics in the future. The sections of bureaucracy and intelligentsia who are close to power, in short our "power elite", have the task of providing the rationalisation for this philosophy. The power of this stratum, it must be realised, is derived not from that of any other class in society directly but from the nature of the state and the relatively weaker position of the individual classes in relation to the state. Accordingly the new Indian power elite has developed a philosophy and an ideology that favours larger control by the state as an end in itself. The purpose of the control is left unspecified, to be provided pragmatically and differently at different junctures of economic development. Our Economic Advisory Council, in its first report of May 1983, had observed: "The apparatus of administrative controls over industry now existing was largely built up towards the middle of the 1950's at a time when other forms of indirect control were not available, Today this is not so, as we have now a vast range of financial institutions through which indirect control can, in principle, be exercised.9' The follow-up of these suggestions has been quick. The point to note here is that control through ownership of equity, by all reckoning in 'a system with private property, is the highest form of direct control imaginable, and the suggestion in the report is to substitute indirect control by more direct ones, even though by very peculiar usage, it appears to suggest a switchover from direct to indirect control. The rationalisation of the philosophy of reliance on private enterprise^and initiative, financed and controlled by the state, has taken many forms in official pronouncements that need not detain us here. But the role of doctrinal ideology in this process of rationalisation should be pointed out before we conclude. In the realm of doctrines the conspicuous recent rediscovery of Schumpeter in our country is curious in this connection. The two agents in Schumpeter's overall view of development, the innovating entrepreneur providing the initiative and the credit system providing the funds, have been highlighted in this regard to almost suggc$t that together they form the pillars of an archetype of development. If so, in India certainly we^are just re-enacting a scene from the classics of development, by allowing the private innovator his freedom of action and supplementing him with finance from the state.