Ardeshir Darabshaw Shroff (1899-1965) was an eminent industrialist, banker, and economist. He was one of the architects of free India’s banking and insurance business. Shroff was amongst the earliest proponents of free enterprise in India. In 1956, Shroff co-founded the Forum of Free Enterprise, a think-tank, as a means to counter the socialist tendencies of the Nehru government.
The following excerpt has been borrowed from the text of the presidential address given by AD Shroff at the fifth annual general body meeting of the Forum of Free Enterprise In Bombay on 25 October, 1961.
Knowledge shall make man free, it is said. This is illustrated by the impact of the Forum of Enterprise on national thinking since its formation a little over five years ago. An atmosphere darkened by slogans of socialism is getting brighter today, thanks to the dissemination of knowledge on economics of free enterprise which is nothing but application of common sense to problems of production, distribution and exchange. It is a matter of consolation that the intellectually honest among socialist friends have been realistic enough to grasp the significance of economic commonsense. For instance, Mr Jayaprakash Narayan, a founder of socialist movement in India, is thoroughly disillusioned about nationalisation, one of the main planks of doctrinaire socialism. He is reported as having declared at a public meeting at Srirampur on May 2, 1961, that nationalisation of big industries would not solve India’s economic problems nor would it achieve the general well-being of society. Such nationalisation would only create an “economic bureaucracy” in addition to the other administrative personnel that would get high salaries without looking after the interests of the common people, he added.
The Indian economy is dominated today by the Five Year Plans. Therefore, the Third Plan naturally forms the main theme of economic debate and discussions. Although the Plan datewise was to have commenced on April 1, 1961, the final draft was published on August 7, 1961, and Parliamentary approval was gained on August 24, 1961. This time-lag in itself is a sad commentary on the type of planning adopted at present. Committed as we are to an industrialised society, it is worth our while to know the sagacious observation of \Vilhelm Roepke, eminent economist who was in no small measure responsible for the Economic Miracle in West Germany, on the time element in such a society. Commenting on the enthusiasm of underdeveloped countries to transplant economic forms of industrialised West without examining all its bases, he warned: “Modern economic activities could thrive only when whoever says ‘tomorrow’ means tomorrow and not some undefined time in the future.”
The Third plan imitates the Second in the strategy of planning. It is a carbon copy of the Soviet Communist model of planning. On previous occasions, I have warned the country that the Soviet Communist model of planning with its emphasis on heavy industries, collectivisation of agriculture, centralisation of all ownership and power in the Government, neglect of consumer goods as well as a gross disrespect for the basic human liberties is eminently unsuited to India. As we cherish the democratic way of life, we cannot afford to imitate totalitarian planning while trying to maintain a democratic structure. Moreover, it is becoming apparent with the passage of time that the Soviet model of planning is not leading to the promised El Dorado. According to Mr. W. W. Rostow, whose theory of economic development is in vogue now, “revolutionary changes in agricultural productivity are an essential condition for successful take-off; for modernisation of a society increases radically its bill for agricultural products.” Agriculture has been described as a dead rat in the Soviet economy. The imbalance between the agricultural and industrial sector continues in an aggravated form. Recently, it has also been observed that the Soviet economy has become one of “Conspicuous Production”. If the phrase “standard of living” has to have any meaning, then there should be meaningful production of goods and services as required and desired by the people, and not production according to the concept of the State planners without any relevance to the needs of the people. Such meaningful production of goods and services required by the people, as historical experience has shown, can never be had in a collectivist economy.
As ably stated by Arthur Larson in his book, What We are For, “An economy directed by the state will ultimately always serve the ends of the state. Only an economy directed by consumers will ultimately serve the needs of the consumers…Yet totalitarian Communism not only defaults on the job of creating a prosperous modem consumer economy, but for this dismal performance still exacts the price of personal freedom.”
Read the complete speech here.
