A Note on Professor Mahalanobis' Model of Indian Economic Planning

Abstract

IN his paper Approach of Operational Research to Planning in India,' Professor Mahalanobis presented a model of Indian economic planning. The importance of this model can be seen from the fact that it is the statistical basis of his Draft Plan-Frame for the Second Five-Year Plan,2 which in turn is one of the most important working papers used in the preparation of the Indian Second FiveYear Plan.3 The purpose of the present note is to raise some questions about Professor Mahalanobis' planning model. Three problems in Professor Mahalanobis' model will be discussed from a theoretical point of view in this note. First, the model seems to neglect the demand side of economic planning (see section ii, below). Second, if Professor Mahalanobis' formulation of economic planning is accepted, then the increase in national income can be more than his solution gives, so that the latter is not necessarily, as he claims, an optimum allocation of resources (see section iii, below). Third, the model pays no attention to the problem of factor prices; and when possible patterns of factor prices are examined, a doubt is raised as to the estimates of parameters used in his model (see section iv, below). Section i summarizes Professor Mahalanobis' model of Indian economic planning.