Date of Submission


Date of Award


Institute Name (Publisher)

Indian Statistical Institute

Document Type

Doctoral Thesis

Degree Name

Doctor of Philosophy

Subject Name

Quantitative Economics


Economics and Planning Unit (EPU-Delhi)


Chetty, V. K. (EPU-Delhi; ISI)

Abstract (Summary of the Work)

In developing economies, the per capita availability of essential goods and services is quite low. Hence a large section of the society cannot afford even the mininum necessities of 1ite. While human and natural resources are plenty, produced means of produetion like plant and equipment and construction materiais are soaroe. Hence the human resources are not fully utilized. Since the distribution of income and assets is highly skewed, even the snall quantity of essential goods and services is not equitably distributed. When resources 11ke land and capital are privately owned and goods and services are distributed through the narket mechanism, the pattern of production influenced by the prevalling distribution of income and wealth. Renources are devoted to the praduction of luxury goods. Under the circumstances, the governmants in developing oountries play a dominant role to promate growth and equity.The nanner in which a government can intervene depends upon the social, pol1itical and economic organization of the country. Ma jor policy instruments are taxes, subaidies, rationing and Iicensing. In addition, t he government may also directly participate in production activities. When the number of policy instruments is large, the policynaker taces the difticulty of choosing the nost etfective ones. In theory one policy may be superior to another for achleving a targeti but in praatice it may tail. Or a policy which is effective in one region of a country nay tail in another region. It is enay, tor 1 instance, to argue that cooperative or gani zations in production are superior to non-cooperative organizations. Take the example of Indian sugar cooperatives, in which cane grovers form a cooperative andcontribute fully to the equity capital of a sugar factory. They have been extremely successful in Maharashtra, Gujarat and western Uttar Pradesh (in terms of yield of sugarcane por heatare and the recovery rate), but similar organizations have totally failed in Bihar and eastern Uttar Pradesh. Another example at hand is the contraversy regarding physical and financial controls. Sone economists argue that physical controls 1ike licensing are not etfective. Again. If we look at the Indian experience in sugar and cement industeies, every plan target has been achieved in the case of sugar, while it has not been achieved even for a single year in the case of cement, until physical control wass partly relaxed a few vears ago. Thus. for olanned economte developnent. the need for a tranowork incor porating t he many policy instruments and oconomie institutions is overwhelming. The purpose of this study is to develop one such framework.A typical planning nodel in the existing 1iterature for example, the Indian plan nodel - sets about its its work in the following fashion. The objactive is to attain a target rate of growth of national income and a reduction in inequality. Assuming the base year relative prices to renain invariant, the sectoral private demandfor various goods and services are worked out using sone given incomeelastiaities. (Somet imes, to preserve the real content of resour requirenent. an 'accounting rate inflation is assumed.)


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This work is licensed under a Creative Commons Attribution 4.0 International License.


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