Which of the following statements about the second five-year plan is INCORRECT?

Correct — A. The Second Plan was built on the Mahalanobis model, not the Keynesian one, so this is the false statement the question wants.

P. C. Mahalanobis argued that a poor economy grows fastest by first building the industries that make machines — capital goods — accepting a squeeze on consumer goods in the short run.

Keynes was answering a different question: how to raise demand in an already industrialised economy stuck in a slump. India in 1956 had a shortage of productive capacity, not of demand.

The other three statements all describe the Second Plan accurately, which leaves option (a) as the incorrect one.

Why the others are wrong

• (b)
  Electricity, Railway, Steel etc. industries were established during the plan. — True of the Second Plan, so it cannot be the incorrect statement. The Bhilai, Rourkela and Durgapur steel plants and heavy outlays on power and railways all fall in this plan period.
• (c)
  The plan stressed the rapid industrialisation of heavy and basic industries. — This is the Second Plan's defining aim, taken straight from the Mahalanobis strategy of priority to heavy and basic industries. A true statement cannot be the answer here.
• (d)
  The socialist pattern of the society was reflected in the plan. — True. The Congress had adopted the socialist pattern of society as its goal at the Avadi session, and the Industrial Policy Resolution of 1956 gave the state the commanding heights during this plan.

Each Five-Year Plan had an economic model behind it, and that model is what SSC tests.

The First Plan (1951-56) used the Harrod-Domar model, which makes growth a function of the savings rate and the capital-output ratio, and it put its money into agriculture, irrigation and power after Partition.

The Second Plan (1956-61) used P. C. Mahalanobis's model, giving priority to capital-goods industries so the economy could later build its own machines.

Public-sector steel, power and heavy engineering followed, alongside the Industrial Policy Resolution of 1956.

Key facts

• The Second Five-Year Plan (1956-61) was based on the model of P. C. Mahalanobis.
• The First Five-Year Plan (1951-56) drew on the Harrod-Domar model and prioritised agriculture and irrigation.
• The Industrial Policy Resolution of 1956 accompanied the Second Plan and reserved the basic and heavy industries for the public sector.
• The Bhilai, Rourkela and Durgapur steel plants were established during the Second Plan period.

Common traps

• Assuming that any state-led plan must be Keynesian. Mahalanobis argued about the structure of production, not about managing demand.
• Swapping the models of the First and Second Plans.
• Reading past INCORRECT and marking the statement that sounds most true.

No directly related past PYQ was found.