The Fifth Five-Year Plan Model-A Comment

A Comment THE Approach to the Fifth Plan' considers the removal of poverty and the attainment of self-reliance as the two major tasks of the Plan. These objectives arc to be realised through a redistribution of consumption from the top 30 per cent to the bottom 30 per cent of the population and by a reduction in net foreign aid inflow to naught by the terminal year of the Fifth Plan. A "Technical Note on the Approach to the Fifth Plan"2 has now been made available which describes the framework of calculation adopted for determining the numerical magnitudes of the Plan incorporating the above objectives in the mathematical model constructed for this purpose. This Technical Note states:3 "The heart of the framework of reason- ing consists in applying an open static Leontief model for ensuring terminal year consistency amongst the output levels of different sectors. For arriving at terminal year investment levels, a macro-economic growth model ha- been used. For estimating consumption, a special consumption model has been developed which constitutes an innovation in the context of interindustry model building. Imports have been endogenously estimated through constructing suitable import co-efficient marries." This summarises the logic of the model adopted for the Fifth Plan. Thus, the model has three parts: a macro- model, primarily for estimating investment, an input-output model for estimating sectoral output levels and imports, and a consumption model for deriving sectoral consumption levels under alternative assumptions.