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The Congress Socialist Party was founded in 1934 as a socialist caucus within the Indian National Congress. Its members rejected what they saw as the Communist Party of India's loyalty to the USSR as well as the anti-rational mysticism of Mohandas Gandhi.

Influenced by Fabianism as well as Marxism-Leninism, the CSP included advocates of armed struggle or sabotage (such as Jayprakash Narayan and Basawon Singh (Sinha) as well as those who insisted upon ahimsa or nonviolent resistance (such as Acharya Narendra Deva). The CSP advocated decentralized socialism in which co-ops, trade unions, independent farmers, and local authorities would hold a substantial share of the economic power. As secularists, they hoped to transcend communal divisions through class solidarity. Some, such as Narendra Deva or Basawon Singh (Sinha), advocated a democratic socialism distinct from both Marxism and reformist social democracy.

In 1936, the CSP began fraternal relations with the Lanka Sama Samaja Party of Sri Lanka. It sent Mrs Kamaladevi Chattopadhyaya on a speaking tour of the island, which was highly successful and of great help in the Sri Lanka Independence Struggle.

Communists joined CSP, as part of the Popular Front strategy of the ComIntern. In some states, like Kerala and Orissa, communists came to dominate CSP. In fact communists dominated the entire Congress in Kerala through its hold of CSP at one point.

Members of the CSP were particularly active in the Quit India movement of August 1942. Although a socialist, Jawaharlal Nehru did not join the CSP, which created some rancour among CSP members who saw Nehru as unwilling to put his socialist slogans into action. After independence, the CSP broke away from Congress, under the influence of JP Narayan and Basawon Singh (Sinha), to form the Socialist Party of India. Basawon Singh (Sinha) went on to become the first leader of opposition in the state of Bihar (and assembly as well) and Acharya Narendra Deva became the first leader of opposition in U.P. sate and assembly.

• Chaudhuri, Asim Kumar, 1980. Socialist Movement in India: The Congress Socialist Party, 1934-1947. Calcutta: Progressive Publishers.
• Gupta, Asha, 1987. Socialism in Theory and Practice: Narendra Deva’s Contribution. New Delhi: Gitanjali Publishing House.
• Mahendru, K C, 1986. Gandhi and the Congress Socialist Party, 1934-48: An Analysis of their Interaction. Jalandhar, Punjab: Asian Book Services.