Strategy refers to the methods adopted for attainment of a specific objective. Strategy of development, therefore, deals with the long term policies formulated to attain the stated objectives of the Five-Year Plans.

Strategy refers to the methods adopted for attainment of a specific objective. Strategy of development, therefore, deals with the long term policies formulated to attain the stated objectives of the Five-Year Plans. This strategy also determines the pattern of investment in the economy to achieve the national objectives. In the Indian-context, the planners had to make a proper allocation limited resources among different desired sector in order to reduce the volume of poverty and increase the production and productivity of the economy.

The development strategy adopted during the initial days of planning had three principal components. These are

(i) To build a strong base for long-term growth

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(ii) To give priority to industrialization; and

(iii) To lay emphasis on the growth of capital goods industries in stead of consumer goods industries.

(iv) To assign priority to Public sector.

(i) Sound Base for Long-term growth:

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There was no strategy of development as such in the First Five Year Plan, though it emphasized the agricultural sector including irrigation and power. But the Second Five Year Plan stressed to create a sound base for long term economic development. This long term growth is very much essential to reduce the incidence of poverty in the rural sector. Prof. Mahalanobis, the real architect of the Second Plan argued to achieve a long term growth through rapid industrialization of the economy.

(ii) Top Priority to Industrialization:

Indian economy was primarily an agricultural economy at the eve of independence with a semi-­feudal structure. The basic objective was to change this structure of the economy through rapid industrialization. Hence in the Second Plan the strategy was to achieve growth through emphasizing the industrial sector. These industries are required not only to increase the volume of production and productivity but also to employ the thousands of unemployed youths of the country.

(iii) Development of Capital-goods industries:

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While advocating for industrialization, Prof. Mahalanobis preferred capital-goods industries with both forward and backward linkages to accelerate the pace of economic development. Industries like iron and steel, coal, heavy machinery heavy chemicals had to be promoted for quick industrialization. These industries would provide opportunities for further industrialization by use of their output and by-products. Growth of these heavy basic industries would help in promoting infrastructures like power, transport and communication.

(iv) Role of Public Sector:

The investment strategy assigned importance to the public sector as the huge amount required for the purpose could not be arranged by the private entrepreneurs of the country. Further, the objective of socialistic pattern of society can be achieved through this growth of public sector and the growth of monopoly power in the economy can be controlled. Hence the planners attached importance to the public sector in the investment strategy of the Second Plan.

The strategy of development adopted during the second plan is known as Nehruvian model of development. This model with minor modification continued to shape the development till the New Economic Policy announced in 1991. However, in the process of planning, special poverty alleviation programmes like integrated Rural Development Programme, Minimum Needs programme, National Rural Employment Programme were adopted to combat with rural poverty and uplift the weaker sections of the society.