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Discuss the main elements of the Nehru Mahalanobis Model of Development.

Discuss the main elements of the Nehru Mahalanobis Model of Development.


1 Answer

The emphasis of Nehru Mahalanobis model of growth was on the fast development of heavy industry in order to create an industrial base of the economy to make it more self-reliant in terms of capital goods. The main elements of this strategy were narrow base of Indian industrial structure dependent on consumer goods industries, development of heavy industry was denied by the British rule deliberately, per capita productivity to be raised by an industrial economy and rapid industrialization was necessary for the development of agriculture as well as for other sectors of the economy.

Responsibility of the development of the heavy industry sector was given to the public sector as private sector was not willing to invest as it required lumpy investment, had long gestation period and low profitability. Foreign aid is very necessary for development but of reduce its burden, it is essential to increase the exports in order to pay for the bulk of imports. To avoid the effects of capital intensive heavy industry it was necessary to in-courage the production of consumer goods and generate more employment by making investment in small industry. Self-sufficiency in agriculture is must to remain advance in industries. This model recognized the importance of agriculture.


Shortcomings in the process a implementation.

Agricultural process was inadequate due to insufficient investment in irrigation, electricity, fertilizers, implements etc. small industries got neglected. This strategy failed to absorb rapidly growing labor which resulted in unemployment. The public sector expansion created the emergence of a high cost economy and failure to raise exports commensurate with import requirements lead to balance of payments difficulties.

Despite three decades of planning, this model get distorted during the process of implementation as it failed to provide a national minimum level of living. In 1978, nearly 40% of the population lived below the poverty line. Unemployment and underemployment remained at high levels and there was always an. increase with every successive plan. There was no check on the inflationary pressures and an increase in the rural-urban disparities. As every coin has two faces, this model had some achievements also even after these shortcomings. This strategy was a legitimate pride in the development of capital goods sector. In the form of irrigation, energy, transport and communication and a sharp rise in savings and investment there was an expansion in economic infrastructure.

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April 24, 2019