Model Answer
0 min readIntroduction
The Second Five Year Plan (1956-61) marked a significant shift in India’s development strategy, moving away from the agricultural focus of the First Five Year Plan towards a more industrialized economy. Formulated in the backdrop of a successful First Plan and inspired by the Soviet model of development, it aimed to accelerate economic growth through rapid industrialization. This plan was heavily influenced by the ideas of Professor P.C. Mahalanobis, emphasizing capital accumulation and heavy industry development. It laid the foundation for India’s public sector undertakings and aimed to achieve self-reliance in key sectors.
Core Objectives and Strategy
The primary objective of the Second Five Year Plan was to achieve a substantial increase in national income and per capita income through rapid industrialization. Unlike the First Plan, which focused on agriculture, the Second Plan prioritized the development of heavy industries like steel, coal, and power generation. This was based on the premise that developing these core industries would create a multiplier effect, stimulating growth in other sectors.
Key Features of the Plan
- Mahalanobis Model: The plan was based on the Mahalanobis model, a two-sector model of economic development that emphasized investment in heavy industries to create a larger capital stock. This model prioritized capital goods production over consumer goods.
- Sectoral Allocation: A significant portion of the plan’s resources (around 59%) was allocated to the industrial sector, particularly heavy industries. Agriculture and irrigation received approximately 25% of the funds.
- Public Sector Dominance: The plan witnessed a substantial expansion of the public sector, with the establishment of several large-scale industries owned and operated by the government. This included the establishment of steel plants (like Rourkela, Bhilai, and Durgapur), and expansion of railway networks.
- Role of Private Sector: While the public sector was dominant, the private sector was also encouraged to invest in industries complementary to the public sector.
- Emphasis on Scientific and Technical Education: Recognizing the need for skilled manpower, the plan invested heavily in establishing new technical institutions and expanding existing ones.
Achievements of the Second Five Year Plan
- Significant Economic Growth: The plan achieved a remarkable growth rate of 4.76% per annum, exceeding the target of 4.5%.
- Increased Industrial Production: Industrial production witnessed a substantial increase, particularly in the heavy industries sector. Steel production increased significantly with the commissioning of new plants.
- Expansion of Railway Network: The railway network was expanded, facilitating the transportation of goods and people.
- Increase in Employment: Employment opportunities increased, although not as significantly as anticipated.
Limitations and Criticisms
- Neglect of Agriculture: The excessive focus on heavy industries led to the neglect of agriculture, which experienced slower growth. This created imbalances in the economy.
- Shortage of Foreign Exchange: The import-intensive nature of heavy industry development led to a shortage of foreign exchange.
- Inflationary Pressures: Increased investment and demand without a corresponding increase in supply led to inflationary pressures.
- Regional Disparities: The benefits of industrialization were not evenly distributed across all regions, leading to increased regional disparities.
Comparison with First Five Year Plan
| Feature | First Five Year Plan (1951-56) | Second Five Year Plan (1956-61) |
|---|---|---|
| Focus | Agriculture and Irrigation | Heavy Industries and Capital Goods |
| Sectoral Allocation | Agriculture: 50%, Irrigation: 15%, Industry: 35% | Industry: 59%, Agriculture & Irrigation: 25% |
| Growth Rate | 2.5% | 4.76% |
| Model of Development | Liberal, mixed economy | Soviet-inspired, centralized planning |
Conclusion
The Second Five Year Plan was a pivotal moment in India’s economic history, laying the foundation for a modern industrial base. While it achieved impressive growth rates, its overemphasis on heavy industries and neglect of agriculture created imbalances that would become apparent in subsequent plans. The plan’s legacy remains complex, highlighting the challenges of balancing industrialization with agricultural development in a developing economy. It demonstrated the potential of centralized planning but also underscored the need for a more balanced and inclusive approach to economic development.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.