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Abstract
Trevor Swan is commonly considered to be Australia’s most distinguished economist. As part of a visiting professorship at MIT during 1958–59 he spent nine months in India to assist in the formulation of India’s third five-year plan and to contribute to the development of India’s premier research institutions. This paper provides an account of his work in New Delhi. Swan’s closest associates were Pitambar Pant from the Indian Planning Commission and Ian Little who was visiting from Oxford. Swan had the view that India’s economic problems should be clearly understood and the best policy measures to address them should be devised. This varied considerably from the practice of central planning and state control being practiced in India at that time. Swan was unable to influence the direction of economic policy in India, but the economy’s subsequent performance would vindicate Swan’s views on how economic development policy should have been conducted.
Notes
Archival Materials
ANUA – Australian National University Archives
MITA – Massachusetts Institute of Technology Archives
Acknowledgements
The authors wish to thank Max Corden, Geoff Harcourt, Barbara Spencer, Peter Swan, Prema-chandra Athukorala, a referee and participants at a seminar held in the Arndt-Corden Department of Economics, ANU, on 31 January 2017 for helpful comments and the editors for encouragement. The usual caveat applies.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes on Contributors
Selwyn Cornish is an Honorary Associate Professor of Economics at the Research School of Economics, College of Business and Economics, Australian National University.
Raghbendra Jha is a Professor of Economics in the Arndt-Corden Department of Economics, Crawford School of Public Policy, College of Asia and the Pacific, Australian National University.
Notes
1 A referee has suggested that Michal Kalecki also proposed that India adopt a more pragmatic approach to planning.
2 In their Swan obituary, Butlin and Gregory (Citation1989, 375) highlight the fact that Swan’s ‘involvement with development did not progress’ after his experience in India.
3 Lists of Swan’s papers, published and unpublished, can be found in Butlin and Gregory (Citation1989) and Swan (Citation2006).
4 Narasimhan addressed an initial letter by mistake to the former Vice-Chancellor, Sir Douglas Copland, instead of to the current Vice-Chancellor, Sir Leslie Melville.
5 Rosen (Citation1985, 121) suggests that Paul Rosenstein-Rodan may also have influenced both Swan and Little to join the India Project. Rosenstein-Rodan was working at the World Bank in Washington at the time Swan was there drafting the Bank’s report on Malaya; he may have proposed to Swan at that time, or later, the possibility of spending a year with MIT’s Centre for International Studies.
6 For the central role that Rostow played in advising President Johnson on the prosecution of the war in Vietnam, see Milne (Citation2008), America’s Rasputin: Walt Rostow and the Vietnam War (New York: Hill and Wang) and Preston (Citation2006) The War Council: McGeorge Bundy, the NSC and Viet Nam, Cambridge, MA.: Harvard University Press. .
7 Rosenstein-Rodan was later to succeed Malenbaum as Head of the India Project at MIT.
8 The “big push” argument is briefly discussed in the next section.
9 P C Mahalanobis, the principal architect of the SFYP, was once quoted as saying that, whereas the FFYP was an anthology, the SFYP would be the drama.
10 This argument was later formalized by Murphy, Schleifer, and Vishny (Citation1989).
11 The First Industrial Policy Resolution (implemented in 1949) gave government a monopoly in major industries including armaments, atomic energy, and railways. The government was also given monopoly rights over new mineral explorations, shipbuilding, telephone and telegraph equipment, and some other industries. Existing private firms in these industries were given at least ten years to withdraw. Accompanying the Industrial Policy Resolution was a complex web of price and quantity controls. During the Second World War the colonial government had imposed controls over prices, production and the use of foreign exchange. Two Acts (the Industries Development and Regulation ACT of 1951 and the Essential Commodities Act of 1955) were instituted to extend price controls over a wide range of commodities. By the late 1950s the government had imposed pervasive controls on prices, investment, imports, exports and the use of foreign exchange.
12 The Bombay economist, B. R. Shenoy stands out in this regard. Some other economists were also opposed to the central planning approach.
13 Edward Mason was Professor of Economics and Dean of Harvard’s Littauer School of Economics.
14 However, Swan himself left India in June 1959.
15 On the positive side the MIT School of Industrial Management agreed to become involved in a program of research on India.
16 These research institutes were the Delhi School of Economic and Social Growth (under Rao), the National Centre for Applied Economic Research (NCAER) (under Loknathan), the Gokhale Institute of Politics and Economics (under Gadgil), and the Indian Statistical Institute (under Mahalanobis).
17 It appears that Pant, a physicist, wanted to learn from Swan the economics that was relevant to his work, while Swan found Pant an intelligent and resourceful person with access to those in authority, including the Prime Minster. Pant was Private Secretary to Prime Minister Nehru in the latter’s capacity as Chairman of the Planning Commission.
18 Raj (Citation1984) argues that the sharp increase in agricultural output during 1952–54 was partly the result of the enhanced investment in agriculture during the first five year plan and the recovery of the wheat crop from a severe rust epidemic.
19 Vaidyanathan et al. (Citation1973) argue that Pant was convinced that planning was for the long term and successive five-year plans would need to be consistent with the longer-term plan.
20 Little wrote a report on the public finance requirements of the TFYP in February 1959. See Little (1959) available from MIT Archives.
21 However, there was also apprehension that too close an identification with Pant’s views would be counter-productive and send the wrong signals.
22 Engerman (Citation2018) discusses how the influx of foreign experts, not just from the MIT Project, helped to galvanize Indian research and education in economics.
23 The exact date of Reddaway’s arrival is not entirely clear.
24 The poem is reproduced in the Appendix to this paper.
25 Among Indian economists who worked with Swan, Gadgil had deep misgivings about the planning framework being used. Gadgil argued that ‘…the plan frame laid great emphasis on certain estimates of the macro parameters and also on some projections of future requirements’. He questioned the reliability of these estimates. (Kumar Citation1997, 1328). According to Kumar (Citation1997) Gadgil made a number of constructive criticisms, the acceptance of which would have improved the credibility of the planning framework. However, Kumar does not link Gadgil’s misgivings with those of Swan.
26 For an excellent survey of Chakravarty’s life and work, see Singh and Harcourt (Citation2012).