Question 20 from UPSC CSE 2019 - Economics

Question

With reference to India's Five-Year Plans, which of the following statements is/are correct?
1. From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital goods industries.
2. The Fourth Five-Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
3. In the Fifth Five-Year Plan, for the first time, the financial sector was included as an integral part of the Plan.
Select the correct answer using the code given below.

IASCODEX · Accepted Answer

Correct Option: A. 1 and 2 only

Strategy: - Identify keywords in each statement and link them to specific Five-Year Plans.
- Associate 'basic and capital goods industries' with the Second Plan and 'correcting concentration of wealth' with the Fourth Plan.
- Recognize that the formal integration of the financial sector into planning occurred later than the Fifth Plan, making statement 3 incorrect.
- Conclude that only statements 1 and 2 are correct.

Key Info: ## Second Five-Year Plan (1956–61)
- Based on the Mahalanobis model, it shifted focus towards Import Substitution Industrialization (ISI).
- Emphasized domestic production of basic and capital goods, such as steel and heavy machinery.
- The primary goal was economic self-reliance and rapid industrialization.

## Fourth Five-Year Plan (1969–74)
- Aimed to reduce income and wealth inequality and correct the concentration of economic power.
- Stressed social justice and distributing growth benefits to weaker and rural sections.
- Initiated policy measures like land reforms to support marginalized agricultural communities.

## Fifth Five-Year Plan (1974–79)
- Centered on the themes of 'removal of poverty (Garibi Hatao)' and self-reliance.
- Although financial resource mobilization was a focus, the formal integration of the financial sector into central planning occurred later, during the Ninth Plan (1997–2002).
- Key financial steps like bank nationalization (1969) happened before or after, but not as a formal part of the Fifth Plan's core process.

## Mahalanobis Model
- Proposed by P.C. Mahalanobis, it prioritized the growth of the capital goods sector for long-term economic development.
- This model heavily influenced India's public sector-led industrialization during the Second Plan.

## Import Substitution Industrialization (ISI)
- A development strategy to reduce dependency on foreign imports by promoting domestic production.
- It was a core policy of India's second and third Five-Year Plans.

IASCODEX · Answer

Option B: 2 only

IASCODEX · Answer

Option C: 3 only

IASCODEX · Answer

Option D: 1, 2, and 3