NDA (II) 2018 General Ability Test · Question 139 of 146

Correct — B, the Second Five-Year Plan. The Second Plan, running from 1956 to 1961, followed the model P. C. Mahalanobis had worked out in 1953, and it is often called the Mahalanobis Plan for that reason. Its logic was that a poor economy grows fastest in the long run by first building the industries that make machines — steel, heavy engineering, power — even at the cost of consumer goods in the short term. That is why the Second Plan is the one associated with the public-sector steel plants and with the Industrial Policy Resolution of 1956 that reserved the commanding heights for the state. The strategy carries Nehru's name alongside Mahalanobis's because it was the economic expression of the political vision Nehru was pursuing.

• (a)First Five-Year Plan — The First Plan, 1951 to 1956, was built on the Harrod-Domar model with modifications and put agriculture and irrigation first — the priority forced on India by the food crisis that followed Partition. Its dams and canals belong to a different strategy from the heavy-industry push.
• (c)Third Five-Year Plan — The Third Plan, 1961 to 1966, continued in the same broad direction but did not introduce the strategy; it aimed at a self-reliant, self-generating economy and was then knocked off course by the wars of 1962 and 1965 and by drought, so that three annual plans followed instead of a fourth.
• (d)Seventh Five-Year Plan — The Seventh Plan, 1985 to 1990, belongs to a much later phase, concerned with raising industrial productivity through technology, with foodgrains and with employment. By then the heavy-industry strategy was three decades old and already under criticism.

Prasanta Chandra Mahalanobis was a statistician rather than an economist by training, the founder of the Indian Statistical Institute, and he is commonly called the architect of Indian planning. His model divided the economy into a capital-goods sector and a consumer-goods sector and asked how output should be allocated between them. The answer it gave was to put a large share into capital goods, accepting slower growth in consumption now for a higher growth rate later. The practical consequences were import substitution, industrial licensing and a dominant public sector — the framework India worked within until the liberalisation of 1991.

The four options here are essentially four dates, so the task is to attach the strategy to a period. Two anchors do it. Mahalanobis published his model in 1953, which is after the First Plan began, so the First Plan cannot be the one that implemented it. And the strategy is inseparable from the public-sector steel plants and the Industrial Policy Resolution, both of 1956 — the opening year of the Second Plan. It is fair to note that the strategy has been criticised for neglecting agriculture and employment, a criticism that gathered force after the food crises of the mid-1960s.

• The Second Five-Year Plan ran from 1956 to 1961 and followed the model P. C. Mahalanobis developed in 1953.
• Its central choice was rapid industrialisation through basic and capital goods industries, with a leading role for the public sector.
• The First Five-Year Plan, 1951 to 1956, was based on the Harrod-Domar model and prioritised agriculture and irrigation.
• Mahalanobis founded the Indian Statistical Institute and is described as the architect of Indian planning.

• Attaching the strategy to the First Plan because Nehru was Prime Minister throughout; the model itself dates from 1953.
• Confusing the Mahalanobis model with the Harrod-Domar model of the First Plan.
• Assuming the Third Plan introduced import substitution; that had already begun under the Second.

Asked as a strategy-to-plan mapping item where all four options are plan numbers and the decisive information is the date of the model.

• practice — not a real PYQ

  The First Five-Year Plan of India was based on which one of the following models?

  • (a)Harrod-Domar model
  • (b)Mahalanobis model
  • (c)Wage-goods model
  • (d)Gandhian model

  Answer(a) Harrod-Domar model — applied with modifications, with agriculture and irrigation as the priority sectors.

• practice — not a real PYQ

  P. C. Mahalanobis, whose model shaped the Second Five-Year Plan, founded which institution?

  • (a)the Reserve Bank of India
  • (b)the Indian Statistical Institute
  • (c)the National Sample Survey Office's parent ministry
  • (d)the Indian Institute of Science

  Answer(b) the Indian Statistical Institute — he was a statistician by training, and is called the architect of Indian planning.