DR T N JHA*
Aspirations
for more income and wealth have remained the basic human urge since time
immemorial across different civilizations, admittedly, as it allows greater
access to goods and services and offers one a better living condition. The
intensity of such urge seems to have become much stronger today than ever
before in the past in the wake of fast growing consumerism and aggressive
marketing presence in particular. The question of what means and methods
facilitate, induce and create conditions for enhancing income and wealth of
individuals and that of a nation has engaged human minds quite intensely for
ages in known history. India, a country of continental size in terms of
geographical spread, abundant natural resources and demographic vastness with diversified
socio-cultural richness, has been no exception, particularly with the beginning
of planned era since early twentieth century. Before we come to discuss the
case of development of industry and commerce in Bihar- the main focus of the
present paper, it would be desirable for general understanding to present a
glimpse of the dominant development thought streams on this larger question,
as, the prevailing thought stream, shaped by historical and political contours
of the nation in question certainly influences the policy framework to define
and outline their course of development path.
i)
Streams of Development
Thought.
2. As the development literature suggests, a
more systematic explanation to this question seem to have been addressed by the
physiocrats – a school of thought in early eighteen century Europe, for whom
the occupation of agriculture remained the main driver of economic growth. And,
hence, in their model of development, any initiative towards wealth creation
and enhancement would warrant growth in agriculture productivities. However,
for classical school of thought in the late eighteen century Europe with Adam
Smith and Ricardo in the lead, the factors / agents of production like land,
labour and capital were considered as the major contributors to a nation’s
wealth. In contrast, the neo-classists from Marshal to Keynes since early
twentieth century considered capital, including technology as the driver of
economic growth. For Marxian school, however, improving production relations
among factor of production alone would enhance the productivities and drive
economic growth. Institutional economists, on the other hand recognized the
constraining ability of prevailing socio-economic order like property rights
and, therefore, advocated for creation of appropriate institutional order for
production and distribution of economic wealth. The structuralists, a separate
school of thought went a step further to argue that it is essentially a
nation’s structural conditions, rooted basically in their social order that
pushes or pulls economic growth depending upon how favourable or unfavourable
it remains for creation of economic wealth.
3. The mid-twentieth century in the aftermath
of Second World War witnessed a paradigm shift in global concerns and
approaches towards uplifting of the poor nations and reconstruction of war
ravaged economies with state in the center of the stage. In this, the Nurksian
theory of ‘vicious circle’ of poverty found a popular explanation of why a poor
nation remains poor. Under this theoretical framework, low level of capital as
a result of low savings and high propensity to consume reinforced low equilibrium
trap for such poor nations. The ‘Big Push’ investment theory of
Rosenstein-Rodan fame was considered to be the transforming mechanism from
‘vicious circle’ to ‘virtuous circle’. How and where to start the push
investment? The “two sector growth model’ of Kuznets and Mahalnobis found
popular acceptance in the planning process of most of the poor nations and
developing countries, including India around the same time. In this model, the
industrial sector was made to lead the economic growth process with surplus
labour from agriculture.
4. The debate on development model continues
till date with giant leaps in concepts and approaches to development in the
emerging context of changing purposes and meaning as well as new tools,
technologies and sources of development. Whatever may be the tools and
technologies, argues Rosenberg and Bardzel, “it is the political plurality and
flexibility of institutions, more towards development of trade and commerce,
including manufacturing that explains unparalleled creation of wealth across
the globe, including the US and Europe in modern ages.” Richard J Eward goes a
step further and argues that “from the days of barter to our cash and credit
economy, the market places have energized villages and urban commercial centers
….. It thus becomes important to strengthen local business and commerce for
creation of wealth and overall economic development. The creation of our
cultural landscape is itself a product of the work of the generation of
entrepreneurs, business barons, bankers, investors, production managers,
factory workers, farm labourers, shop keepers, clerks, and customers.”
5. Highlighting on the specific development
needs of the developing nations characterized by scarce capital and abundant
labour, needing more of labour absorption, Annette Sulaiman argues that “with
small scale sector being more labour intensive and less capital demanding,
promotion of this sector becomes much more desirable in any policy framework
seeking employment oriented strategy of industrialization and economic
development. More important, since small scale firms are more accessible to
indigenous entrepreneurs, their promotion may contribute more to the policy
goals of poverty eradication and equitable income distribution. Satch, while
recognizing the positive link of rapid industrialization in LDCs needing
structural changes, technological diffusion, increased flow of capital and
expanding trade, found private sector to play a special role in bringing about
rapid economic growth through conducive business and investment climate and
eliminating obstacles of doing business.
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* The author wishes to thank Sh Ganesh Khetriwal and BCCI officials
at Patna for sharing their insightful views on the subject. Dr Ujjwal and Mrs
Rita also deserve a word of thanks for their encouraging words and nice co-operation.
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