P.C. Mahalanobis and His Contribution

The architect of Indian economic planning, P.C Mahalanobis, is well-known. As a member of an independent India’s planning committee, he was instrumental in the drafting of a plan that would see India experience fast economic growth while also assisting in the eradication of the colonialists’ poverty.

An Indian scientist and applied statistician named Prasanta Chandra Mahalanobis (1893-1972) built the groundwork for India’s institutional economic planning. He was the first to apply statistical methods to anticipate, plan, analyze, and evaluate social and economic welfare operations in the country, as a member of the first Planning Commission of independent India. The Mahalanobis Model prioritized India’s fast industrialization in the Second Five Year Plan (1961–66). He was the founder of the Indian Statistical Institute (ISI) in Kolkata and the founder of the prestigious Sankhya Journal.

Architect of Indian Economic Planning

1. Role in Second Five Year Plan

P.C. Mahalanobis was also a key figure in the development of India’s second five-year plan (1956-1961), which laid the groundwork for the country’s industrialization and development. The heavy industries were emphasized in the Second FYP. It was written by a group of economists and planners led by P. C. Mahalanobis. If the first plan emphasized patience, the second aimed to achieve rapid structural transformation by making adjustments in all feasible directions at the same time. Before this strategy was finalized, the Congress party passed an important resolution at a meeting held in Avadi, near Madras at the time. According to the text, the goal was to create a “socialist design of society.”

To protect indigenous industry, the government levied hefty levies on imports. The growth of both public and private sector industries was aided by such a protected environment. Because savings and investment increased during this time, the public sector could build a large portion of these industries, such as electricity, railways, steel, machines, and communication. Such a push for industrialization was, in fact, a watershed moment in India’s history. The second five-year plan, based on a socialist model, aimed for a 25 percent rise in national income through rapid industrialization.

Critical Evaluation of the Second Five-Year plan

The second five-year plan was a significant step forward, with a strong focus on heavy industry. During this plan period, the Industry Policy Resolution was revised, and the Public Sector was given major responsibility for development. The private sector was largely limited to the consumer goods industry. During this plan, the small and cottage industries remained sluggish. Imports grew dramatically, exposing India’s sterling balances. India was compelled to devalue its currency twice during the third plan, as an outcome of this FYP.

2. Contributions to Statistics

Mahalanobis was a pioneering researcher in statistics and related fields, but he was also a polymath, planner, educator, and visionary, and one of the architects of India’s post-independence nation. In addition to his fundamental contributions in statistics, he made significant research contributions, thinking, and societal value in planning and economics, particularly in econometrics; our focus here is solely on his econometrics contributions. He was a founder of The Indian Econometric Society and the first Indian elected member of the Econometric Society, as well as the first fellow elected from India (1951).

Statistics and Mathematics

The main goal of the Econometric Society is “the advancement of economic theory in its relation to statistics and mathematics,” but we’ve narrowed the definition of econometrics to “the study of economic data aligned with economic reasoning and the advancement of the discipline of economics” for this special issue. As a result, we place a stronger focus on economic data measurement and statistical inference. This concentration is in line with Mahalanobis’ philosophy and Sankhya’s objectives. P.C. Mahalanobis created the Mahalanobis distance as a statistical theory for comparing data sets. He devised a technique of calculating agricultural production using random sample methods, and he used statistics to flood-control economic planning.

Mahalanobis Distance

The anthropometric research led to the development of the D2- Statistic, also known as Mahalanobis Distance in the statistical literature, which has shown to be a useful tool not only in taxonomy but also in other domains such as economics and geology. Sir Ronald Aylmer Fisher (R.A.Fisher) recognized this concept by naming it the ‘Mahalanobis D-square’ or ‘Mahalanobis distance,’ and so a rich field of research in multivariate analysis arose.

The Mahalanobis distance is a measure of comparison between two data sets created by Mahalanobis. He developed new methods for performing large-scale sample surveys and using the random sampling approach, he determined acreage and agricultural yields. He developed fractile graphical analysis, a statistical tool for comparing the socioeconomic circumstances of different groups of individuals. He also used statistics in flood control economic planning.

3. Role in the National Sample Survey

Mahalanobis organized India’s statistical efforts by establishing the National Sample Survey and the Central Statistical Organization in 1950. From 1955 until 1967, he was a member of India’s Planning Commission. The Second Five-Year Plan of the Planning Commission promoted heavy industrial growth in India and depended on Mahalanobis’ mathematical description of the Indian economy, which became known as the Mahalanobis model.