Liberal-capitalist model of development
Also called: Capitalist model · Topic: Politics of Planned Development · NCERT: Class 12, Ch 3 "Politics of Planned Development"
Meaning
The liberal-capitalist model is the path to development followed by much of Europe and the United States. It relies on private enterprise (businesses owned by private people, not the state) and on markets (where prices and production are set by buying and selling) to drive growth. At independence in 1947, very few people in India supported this model. Most leaders wanted the state to play a large role in reducing poverty and redistributing wealth.
Example
In 1947, India's leaders weighed this model against the Soviet one. This choice was part of the Cold War. India rejected a mainly market-led path and chose five-year plans and a large public sector.
Don't confuse with
- Soviet model of development: it uses state ownership and centralised plans. The liberal-capitalist model leaves growth mainly to private firms and markets.
- Bombay Plan (1944): Indian industrialists asked for state-led investment, not a pure market model. It still did not support state ownership of industry.