Q.Explain the significance of the Mahalanobis strategy adopted in the Second Five Year Plan.

The Mahalanobis strategy, adopted in the Second Five Year Plan, gave top priority to heavy and basic industries.

The Second Five Year Plan (1956-61) is closely associated with the strategy devised by the statistician P. C. Mahalanobis, which shaped the direction of Indian industrial planning for years afterward. The core idea of the Mahalanobis strategy was that long-run, self-sustained economic growth required India to build up its own domestic capacity to produce capital goods -- machinery, steel, heavy engineering products -- rather than continuing to rely on imports for these goods.

The reasoning was that if the economy first invested heavily in the capital-goods sector (the sector that produces machines and equipment used to produce other goods), it would create a growing base of productive capacity that could, in later years, be turned toward producing more consumer goods and raising living standards -- in effect, sacrificing some consumer-goods production in the short run for a much larger productive base in the long run. Accordingly, the Second Plan gave top priority to the public-sector-led development of heavy and basic industries such as steel plants, machine-building and power generation, with the state taking the lead role given the scale of investment and the long gestation periods involved. …

Some students confuse the Mahalanobis strategy with agricultural planning; it specifically refers to the industrial strategy of prioritising heavy/basic i …