This article argues that to gauge the significance of state planning in mid-twentieth century India, it is necessary to study the trajectory of what was called 'Indian political economy' during the late nineteenth century and first half of the twentieth. Through a close reading of selected texts, I demonstrate that the transmutation of Indian political economy into an abstract science of economics was a function of Indian nationalists' inability to hold together the 'social', 'economic', and 'ethical' spheres within a single conceptual framework. The separation of these three spheres was the enabling factor behind the conceptualization of planning as a purely technical process of economic management. Further, the article contends that these conceptual developments cannot be adequately explained with reference to either 'elite' interests or the insidious effects of 'colonial' discourses. Rather, the narrative demonstrates that economic abstractions can—and must—be grounded in the historical development of capitalist social forms that transformed the internal fabric of Indian society. Drawing on a theory of capitalism as a historically specific form of social mediation, I argue that a Marxian social history of Indian state planning can overcome certain limitations inherent in extant approaches. Finally, the interpretation proposed here opens up the possibility of putting Indian history in conversation with a broader development during the first half of the twentieth century, namely the separation of political economy into economics and sociology. [ABSTRACT FROM AUTHOR]