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For most people, Professor Prasanta Chandra Mahalanobis
is best known as the architect of Independent India's
industrialisation strategy that was embodied in the Second
Five Year Plan (1956-61). This was elaborated in his celebrated
paper "The Operational Research Approach to Planning in
India" which was published in Sankhya, the Indian Journal
of Statistics, in 1955. This became famous as the
Mahalanobis model.
Three
distinct elements of this strategy influenced the course
of industrialisation in India: the autarchic approach
of self-reliance, emphasis on basic and heavy machine-building
industries to maximise long-term growth and finally, the
dominant role of the public sector in basic and heavy
industries. This was sought to be implemented through
centralised industrial investment planning in the economy.
If
Mahalanobis were alive today, how would he have evaluated
the economy? Being primarily a scientist and not a blind-folded
ideologue, he would have examined the empirical evidence
dispassionately.
On
the threshold of the next millennium, India carries the
dubious distinction of hosting the largest number of the
world's poor and illiterate mass of people. India continues
to be at the lowest end in terms of GDR per capita and
human development index. It boasts of creating the second
largest stock of technically trained manpower which is
not gainfully absorbed.
Where
did we go wrong? In each of the three elements of his
strategy, as I believe, he would have readily agreed.
International experience is unmistakable that rapid growth
is associated with competitive domestic markets and aggressive
participation in international trade. We ruled them out
through policy-induced entry restrictions and an autarchic
trade policy. Two, domestic market, with initially low-level
and later policy-induced slow growth in per capita real
income, could not have absorbed projected capacities in
basic and heavy machine- building industries. Three, political
and bureaucratic interference in indiscriminately extended
public-sector enterprises have converted them into white
elephants draining the exchequer.
Consequently,
he would have supported the economic reforms of 1991.
In his original formulation, he stressed that a model
was merely a scaffolding to be discarded as soon as the
purpose was achieved. In the present context, the purpose
not having been achieved, he would have looked for a different
scaffolding, in the empirical evidence. Two, in his review
of Gunnar Myrdal's Asian Drama in 1969 he agreed with
Myrdal's contention that "India's promised social and
economic revolution failed to materialise".
The
area where Mahalanobis really made the difference was
in statistics. He made pioneering contributions to the
then newly evolving discipline and founded the Indian
Statistical Institute in 1931.Thanks to his National Sample
Surveys and Central Statistical Organisation, India boasts
of a unique data base for tracking socio-economic changes
and a sound statistical system.
Suresh
D. Tendulkar is professor of economics, Delhi
School of Economics.
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