Social Scientist. v 12, no. 134 (July 1984) p. 35.

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Small Enterprises and the Crisis in Indian Development

THE GOVERNMENT OF INDIA claims that it has supported the development of small enterprises, both through the creation of specific organisations which provide technical and organisational aid and through financial provisions for them in the various five year plans. To understand fully the basis and accuracy of these claims, it is important to appreciate the economic aud political background within which the Government's aid programmes were initiated. This will also allow us to understand the genesis of the Government's conception of small enterprises.

It is a widely held view that planning in India consists essentially of five year plans, which are in the nature of technical exercises. In fact, the planning process should correctly be seen as a much broader and as an emphatically political process.1 The crucial aspect of the nature of planning in India lies in the concept of the capitalist economy, in which the laws of capitalist development must inevitably make themselves felt (i e, the acceptance of private property in the means of production and the institutions based on this). It is often stated not only in government publications but in many other writings on the Indian economy and society that India has "opted" for a mixed economy, i e, the coexistence of the private sector with the pubic sector.2 It is not made clear by these writers, however, by whom and how this type of economy was "opted" for.

In fact, it had been shown that as early as 1940, the majority of the joint stock companies operating in India were in the hands of a few British and Indian managing agency houses.3 It was these powerful economic interests that effectively controlled the industrial economy of India. During the Second World War, Indian industrialists were able to accumulate substantial amounts of capital. This was used in the years leading upto Independence to buy out some British managing agencies. By the time of Independence, therefore, 121 identifiable large economic interests, including 69 Indian groups (later to become famous as the "Big Business Groups") controlled Rs 350 crores of paid up capital.4 This amounted to about 73 per cent of the total paid up capital

^Madras Institute of Development Studies, Madras.

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