India’s Second Five-Year Plan started in 1956. Unlike the first plan, which focused on agriculture, this plan mainly focused on industrial development, especially heavy industries. The main idea was to make India strong in manufacturing and reduce dependence on other countries.
This plan was based on the Mahalanobis model, developed by Indian statistician P. C. Mahalanobis. This model focused on investing more in capital goods industries (like steel, machines, and equipment) so that the country could grow faster in the long run.
Main Focus of the Plan
The Second Plan aimed at:
- Rapid industrialisation
- Development of the public sector
- Building heavy industries
- Reducing dependence on imports
The plan assumed a closed economy, meaning India would rely less on foreign trade and focus more on producing goods within the country.
Industrial Development
A major achievement of this plan was the development of heavy industries. The government set up important steel plants with foreign help:
- Bhilai (with Soviet Union)
- Durgapur (with United Kingdom)
- Rourkela (with West Germany)
Other developments included:
- Increase in coal production
- Expansion of railway lines, especially in the North-East
- Growth of hydroelectric power projects
These steps helped in building a strong industrial base for India.
Development in Science and Research
The plan also focused on scientific progress. Important institutions were established:
- Tata Institute of Fundamental Research (TIFR)
- Atomic Energy Commission of India
In 1957, a talent search and scholarship program was started to identify and train students in nuclear science and technology.
Allocation of Funds
The total budget of the plan was about ₹48 billion. This money was spent on:
- Power and irrigation
- Transport and communication
- Social services
- Other sectors
Growth and Challenges
The target growth rate was 4.5%, while the actual growth achieved was 4.27%, which was close to the target.
However, the plan faced several problems:
- Prices started rising (inflation)
- India faced a foreign exchange crisis
- Rapid population growth reduced the increase in per capita income
Criticism of the Plan
Economist B. R. Shenoy criticized the plan. He argued that:
- Heavy spending through deficit financing could create economic problems
- Too much government control could harm democracy
Later, when India faced a balance of payments crisis in 1957, his concerns were considered valid by many.
Conclusion
In simple terms, the Second Five-Year Plan focused on building industries and strengthening the public sector. It helped create a strong industrial base for India, but also led to problems like inflation and foreign exchange shortages.