Question

Explain in detail the Second Five Year Plan.

Answer 1

Answer:

1956-61

Explanation:

The Second Plan focused on the development of the public sector and "rapid Industrialisation". The plan followed the Mahalanobis model, an economic development model developed by the Indian statistician Prasanta Chandra Mahalanobis in 1953. The plan attempted to determine the optimal allocation of investment between productive sectors in order to maximise long-run economic growth. It used the prevalent state-of-the-art techniques of operations research and optimization as well as the novel applications of statistical models developed at the Indian Statistical Institute. The plan assumed a closed economy in which the main trading activity would be centred on importing capital goods.

Hydroelectric power projects and five steel plants at Bhilai, Durgapur, and Rourkela were established with the help of Russia, Britain (the U.K) and West Germany respectively. Coal production was increased. More railway lines were added in the north east.

The Tata Institute of Fundamental Research and Atomic Energy Commission of India were established as research institutes. In 1957, a talent search and scholarship program was begun to find talented young students to train for work in nuclear power.

The total amount allocated under the Second Five-Year Plan in India was Rs.48 billion. This amount was allocated among various sectors: power and irrigation, social services, communications and transport, and miscellaneous. The second plan was a period of rising prices.The country also faced foreign exchange crisis. The rapid growth in population slowed down the growth in the per capita income.

The target growth rate was 4.5% and the actual growth rate was 4.27%.

The plan was criticized by classical liberal economist B.R. Shenoy who noted that the plan's "dependence on deficit financing to promote heavy industrialization was a recipe for trouble". Shenoy argued that state control of the economy would undermine a young democracy. India faced an external payments crisis in 1957, which is viewed as confirmation of Shenoy's argument.