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Question

Difficulty: EasyEconomic Planning History, NITI Aayog, and Structural Reforms

The First Five-Year Plan (1951–1956) of India was primarily based on which of the following economic development models?

  1. Harrod-Domar ModelAnswer
  2. B
    Mahalanobis Model
  3. C
    Gadgil Formula
  4. D
    Solow-Swan Model

Answer

The Harrod-Domar Model served as the primary basis for India's First Five-Year Plan.
The Harrod-Domar Model emphasizes that economic growth depends on the national savings rate and the capital-output ratio. Under the leadership of Jawaharlal Nehru and KN Raj, India adopted this framework for the First Five-Year Plan (1951–1956) to tackle food shortages and boost agricultural capital formation.

Step-by-Step Solution

1
Identify the historical context of India's First Five-Year Plan (1951–1956).
The plan aimed to rehabilitate the post-independence economy with a strong emphasis on agriculture and irrigation.
Understanding the immediate economic priorities helps connect the plan to its underlying macroeconomic growth framework.
2
Map the planning model to its economic theoretical origin.
The planners used the Harrod-Domar model, which links economic growth directly to the rate of capital accumulation and savings.
This model was chosen because post-independence India required urgent investment and capital creation in agriculture.

Key Concept

First Five-Year Plan and Harrod-Domar Model
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Topics

Economic Planning History, NITI Aayog, and Structural Reforms