Industrial Growth in Second Five Year Plan

The second five year plan was based on Industrial Policy Resolution of 1956  and it accorded top priority to Industrialisation. Based on the Mahalanobis model, this plan emphasised the setting up of Basic and Heavy Industries so that a strong base for rapid industrialisation, self-reliance, technological development can be established.

The plan document had outlined the below priorities under industries:

  • To increase production of iron and steel; heavy engineering and machine building industries.
  • To expand capacity in respect of producer goods such as aluminium, cement, chemical pulp, dyestuffs and phosphatic fertilisers, and essential drugs.
  • To modernize and reequip the national industries in Jute, textiles and sugar.
  • Full utilization of existing installed capacity of industries
  • Expansion of consumer goods industry

The total investment in industries during the second plan was Rs. 1810 Crore, which was 27% of the total investment during the second plan. Out of this, Rs. 870 Crore was made in organized public sector industries. This plan should be noted for

  • Establishment of Rourkela Steel Plant in Odisha, Bhilai Steel Plant in Madhya Pradesh and Durgapur Steel Plant in West Bengal.
  • Establishment of fertilizer plant at Nangal (Punjab).
  • Expansion of Hindustan Machine Tools; Sindri Fertilizers; Hindustan Shipyard; Chittaranjan locomotive factory etc.
  • Use of novel applications of statistical models developed at Indian Statistical Institute
  • Establishment of Atomic Energy Commission in 1957 with Homi J. Bhabha as the first chairman.
  • Establishment of Tata Institute of Fundamental Research.

In summary, the second five year plan attempted to determine the optimal allocation of investment between productive sectors in order to maximize long- run economic growth. India made a beginning in the development of atomic energy also during this plan.


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