a In other words the model makes a value judgement that the loss of consumpton

A in other words the model makes a value judgement

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a. In other words, the model makes a value judgement that the loss of consumpton [and thus welfare] that would occur in the short run has a low social cost and is an acceptable sacrifce 2 Downloaded by Vicky Gupta ([email protected]) lOMoARcPSD|3929542
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on the part of the people in return for a promise of an uncertain brighter future under the presumpton that more investment today would necessarily lead to a higher consumpton level [more broadly social welfare] in the future. 6. The second critcism is that model [and the strategy] was based on an ideology. This critcism begins to make sense only when one is told that the model had been inspired by the Feldman model from the Soviet planning literature, even though Mahalanobis had denied it. a. However, in the light of the quite spectacular expansion demonstrated by the former Soviet Union of that tme, such a critcism would be ideological in itself, even though into the 21st century we were to have the hindsight to deduce that whatever was happening there was not sustainable. b. In the 1950s, however, newly independent countries with ambiton could hardly have been faulted for aspiring to what the Soviets had achieved, namely rapid industrialisaton and the consequent increase in income within a remarkably quick tme. c. AlsoPB asserts that the Nehru was quite sure that India would be able to avoid the politcal suppression that accompanied the Soviet regime and that neither forced collectvisaton as a route to raising the agricultural rate of growth or the suspension of democracy as a way of quelling dissent on the chosen strategy were even conceivable to the Indian leadership. 7. So according to PB relevant critcism of the strategy would only be of its economic logic and what it leaves out rather than of its provenance (source of origin). a. Here, PB says, the comment by Desai (2007) is far more to the point that Mahalanobis’ model has in it no - i. unemployment, ii. infaton and iii. balance of payments. b. But once again, it is important to separate out the model from the strategy , and most of these except perhaps infaton were addressed by Mahalanobis in his writngs on the Second Plan. SUPPLY SIDE MODEL 8. There was, however, a faw in the model that is indeed related to where it had originated but this is far from having been consttuted by ideology. 9. As more or less an accountng scheme the Mahalanobis model was exclusively a supply-side model . There was no recogniton of a possible demand constraint to capital accumulaton and litle scope for slackening demand growth to subvert the growth process. a. However, a model based on the purely physical relatonship between inputs and outputs [accountng model] - i. made sense in the Soviet Union, the classical “command economy”. ii. Not so in India with a ubiquitous private sector that invests only in response to growing profts or its antcipaton.
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