--- title: "Mahalanobis Model has been associated with which Five Year Plan?" description: "Mahalanobis Model has been associated with which Five Year Plan?" author: "simron shukla" published: 2018-03-11 canonical: https://answers.mindstick.com/qa/39994/mahalanobis-model-has-been-associated-with-which-five-year-plan category: "indian economy" tags: ["indian economy"] reading_time: 2 minutes --- # Mahalanobis Model has been associated with which Five Year Plan? Mahalanobis [Model](https://www.mindstick.com/articles/23265/musician-movie-songs-a-must-have-new-model) has been associated with which [Five Year](https://answers.mindstick.com/qa/32009/who-gave-the-final-approval-to-the-draft-of-five-year-plan) [Plan](https://answers.mindstick.com/qa/41931/why-were-the-colonial-assemblies-critical-of-the-albany-plan-of-union)? \ ## Answers ### Answer by Shriyam Srivastava The Mahalanobis model is associated with the **Second Five year plan in India** when it was created by Soviet economist ***Grigory Feldman in 1928*** and Indian statistician ***Prasanta Chandra Mahalanobis in 1953.*** Mr. Mahalanobis was the central economist during India’s Second Five-year plan, and he created this economic model. While Feldman provides numerical methods, Mahalanobis provides a closed-form algebraic method to arrive at the same solution of the optimal allocation of investible funds. \ When the framework of India’s Second Five-Year Plan was devised then this model provided analytical base to it. Mahalanobis **introduced his two-sector model, which he later expanded into the four-sector version.** **\** **\** **The assumptions under which the Mahalanobis model is posited are as follows:** • We assume a closed economy.\ • The economy consists of two sectors: consumption goods sector C and capital goods sector K. • Capital goods are non-shiftable. • Full capacity production. • Investment is determined by supply of capital goods. • No changes in prices. • Capital is the only scarce factor. • Production of capital goods is independent of the production of consumer goods. \ \ The model states that ***there is a shift in the pattern of industrial investment towards building up a domestic consumption goods sector.*** Thus, the strategy suggests in order to reach a high standard in consumption, investment in infrastructure is firstly needed. A high enough capacity in the capital goods sector expands in the long-run the nation's consumer-goods production capacity. \ ![Mahalanobis Model has been associated with which Five Year Plan?](https://answers.mindstick.com/questionanswer/fbbdf0f1-ddc0-4bfa-bdf4-e95898eaa3b8/images/4d734449-91be-41c9-b838-5339a290e3b1.png)\ \ \ **Practical of putting into Second Five-Year Plan:** It was put into practice in 1956 in India’s Second Five Year plan but there were many problems associated with it such as • Unexpected and unavoidable costs contributing to increased money supply and growing inflation. • fall in the foreign exchange reserve due to liberalised import policy and international tension, leading to modifications in the Second Plan in 1958. \ --- Original Source: https://answers.mindstick.com/qa/39994/mahalanobis-model-has-been-associated-with-which-five-year-plan Copyright © MindStick Software Pvt. Ltd. This Markdown version is provided for developers, AI systems, and offline reading.