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VKRV
1. Eminent educationist and served as education minister under JLN
2. Institute builder:
Delhi School of Economics, Institute of Economic Growth and the Institute for Social and Economic Change. He was also instrumental in establishing the Indian Council of Social Science Research, Agro-
economic Centres and Population Research Centres.
3. National Income Accounting
1. The National Income of British India, 1931- 32 served as a benchmark for all the works aimed at estimating NI during pre- independence period
2. Novel methodological contributions
He departed for the then prevalent trend of excluding services from NIA. He presented a practical application of Marshall and Pigou’s synthesis that advocated taking everything into account that has money price
He relied on income approach. He was able to make best use of all the data available at that time. For calculating Gross Income, he used ‘ inventory method’ for agriculture and ‘income method’ for services and in
Though more sophisticated estimation techniques and more reliable data are available now, but his intelligent guesswork remains important.
4. Diagnosis on India’s growth problems in supply side bottlenecks in his famous paper- Investment, Income and the Multiplier in an Underdeveloped Economy
1. He argued that Keynesian prescription of deficit financing will lead to inflation in an underdeveloped economy. Here Classical economics will work that suggests increasing rate of savings for
accelerated growth.
2. He said in an underdeveloped economy, ‘multiplier works in money terms and not in real terms’. Conditions for working of investment multiplier real terms are- Elastic supply curve i.e. excess
capacities, Supply of working capital, raw material and power to meet increased demand, Involuntary unemployment. But in underdeveloped economy there are no excess capacities and disguised
unemployment. Hence labour will not readily supply their labour. Hence the situation is analogous to that of full employment and rise in demand will lead to inflation.

Gadgil
He laid importance on planning for development of the nation.
He criticised performance of planning in first 3 FYPs in his famous paper- Planning without a policy frame. He said that there was total absence of policy frame due to
vested interest in private industry and the belief that by achieving agate of investment economy will automatically function without an integrated regulatory framework.
Hence there are controls leading to corruption but at the same time it is operating like a laissez faire economy with benefits accruing to a small minority of rich and powerful.
Hence there is dependence on foreign assistance, rise in prices and inequality. He recommends price policy to curb inflation and income policy to augment incomes of the
disadvantaged and curb that of rich.
Price
Policy: Stabilisation of agricultural prices was advocated through regulation of prices of foodgrains, cloth, sugar, edible oil, soap, kerosene etc. needed by rural population and

1. He was a pioneer of cooperative movement in India and had setup the Maharastra sugar cooperatives.
2. He introduced the concept of decentralized planning. This concept has been included in the 74th Amendment and now Zila Parishads are required to prepare District
Development Plans.
3. In his PhD thesis, he criticized the £ policy of deindustrialising India and showed Lewis model (transition of surplus labor from agriculture to organized sector) was not
applicable to India.
4. He persuaded the bureaucracy and others about the utility of planning. He wanted to encourage local bodies and reign in bureaucrats.
5. Institution builder: Gokhale Institute of Politics and Economics
6. He gave Gadgil formula which provided base for allocation of central assistance to states during the Fourth and Fifth Five Year Plans of India

Vakil (Bombay Plan)

Q. Throw light on wage goods model of CN Vakil and PR Brahmanand. (2011, II, 15)
Features
1. Famous paper- Planning in an expanding economy.
2. Wage goods are the typical consumer goods necessary for subsistence and work. Since not all capital goods are related to wage good production, only those capital goods
should be encouraged which help in wage goods. This integrated wage goods complex should grow at a rate higher than population growth in order to absorb disguised
unemployment.
3. They explained the unemployment in underdeveloped countries as a result of wage goods gap.
4. The disguised labor earns λ.w which is the APPL in agriculture. If he is employed in the wage goods sector, he will be paid w. So increment for him will be (1-λ).w. Thus he
consumes less and produces more. So a multiplier effect comes into play.
5. This surplus is the savings which if channelized back, can fuel multiplier growth. Also since the capital-output ratio is lower, lower savings is required for growth.
6. This would lead to equal distribution of wealth. Locationally it will be defused, non inflationary. No dependence on foreign capital.
7. Since diminishing returns will creep in, population growth needs to be stabilized before output gets stabilized.

Limitations
1. It ignores TFP gains.
2. It ignores the necessity of forward and backward linkages, development of infrastructure.
3. It will only lead to short term gains.
4. It is high cost and inefficient. Contrary to modern factory system of production.

Comparison with Mahalonobis Plan

1. Mahalonobis was not concerned with employment which was central to Vakil.
2. Mahalonobis plan was inflationary since capital goods investments have long gestation period. So while AD increases, AS doesn't.
3. Vakil was more of a private venture plan, Mahalonobis was left oriented plan.
4. Vakil model was the export oriented model pursued by SE Asian countries while Mahalonobis model was an import substitution model. `

Other Contributions
1. He did a study of £ India's fiscal policy and proved that Indian interests were not always kept in mind. He then asserted that in following India's fiscal policy, Indian interests
only should matter.

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