Planning for Growth

The research reported in this book fulfills both a general and a specific purpose. Linear programming models are developed in order to improve the process of planning for economic development, both short-term and long-term. The models are then implemented with data taken from the Indian economy in order to gain insight into their operation and to investigate the Indian Five Year Plans and Indian economic development problems. The first chapter provides a brief description of model-building and linear programming techniques. This is designed for those readers who wish only an overall introduction rather than a detailed exposition of the techniques. Likewise, the final chapter summarizes the lessons learned from constructing and using the models. Between them, these two chapters make the approach, the techniques, and the results available to general economists and policymakers who are not adept at linear programming and are not especially concerned with Indian economic development. The main body of the book provides a detailed description of the models and of the Indian economy. All the economic data used are presented in the text. The short-term models, which can be used to test the feasibility and implications of existing plans are developed first. The computation and comparison of alternative solutions assist in the analysis and interpretation of these plans. Net, long-term planning models are developed together with a method for making the short-term plans consistent with one another and with the longer plans. The structure of these models is discussed, and the results of various trial solutions are presented and fully explained. This book is the first attempt to formulate and explain genuinely practical planning models that find consistent and optimal programs of development over time for an economy in which a number of sectors should be distinguished. Existing multisectoral models are essentially static, and available dynamic models are less aggregated. The multisectoral and intertemporal detail of the dynamic models are less aggregated. The multisectoral and intertemporal detail of the dynamic models considered in this book makes it possible to use much more information and to obtain greater insight into development problems and prospects. It is of considerable interest to note that the application of the models to Indian planning produces results strongly suggesting that the Third Five Year Plan and a proposed Fourth Five Year Plan were not feasible, though they also indicate the difficulty of arriving at such judgments due to inadequacies in Plan specifications and data. Methods like those developed in this book help provide the basis for improving economic policy in the future, in India, and around the developing world.