Porf. P.C. Mahalanobis found that before the Second Five Year Plan India could not afford to develop all the sectors simultaneously.
It is because of the scarcity of capital and other resources that he wrote in Talks on Planning that it is suitable to invest first in heavy machinery industry.
This is turn, will proved machines and other capital equipment needed for other basic industries like steel, aluminum, fertilizers etc.
Further, he stressed on the development of industries producing synthetic raw materials. Once these industries are set-up, it would raise output of coal, electricity, steel, aluminum, transport equipment and fertilizers. This will also create climate to develop a wide range of consumer goods industries.
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This discussion is based on the views of unbalanced growth. It proves that Prof. P.C. Mahalanobis was of the confirmed view that for achieving high rate of growth, unbalanced growth was the only path. This path has largely been followed in socialistic countries with a grand success. In the socialistic countries like Russia and China, in the initial stages of this strategy, the consumption level was kept low. The state invested huge resources in capital goods industries.
On the contrary, in the mixed system like that of ours, the control of the State on production is limited. In case of rising income of the country, the demand for consumer goods increases. This can be met by setting up consumer goods industries by the private sector. The State has failed to keep consumption well in check.
Hence the strategy of unbalanced growth has failed to work in India. Recently, energy crisis in our country has further raised doubts about this strategy. Realizing this problem, the five year plans after the Second Five Years Plan stressed the need for simultaneous investments in different sectors of the economy.
In fact the best course is to follow unbalanced growth in the short-run but ultimately we should resort to balanced growth in the long run. In this context, Li Phu-Chin, Chairman of the Planning Commission of China has stated, “The course of development of national economy is always from the imbalance to balance and then again to imbalance; every time this repeats itself and raises production to a higher level and the national economy advances uninterruptedly in these wave-like movements.” In brief, we can say that for accelerating the pace of economic development, we should follow both the strategies i.e., balanced as well as unbalanced growth simultaneously.