Dr. Sinha has a garden of his economic ideas and doctrines in which many thought provoking flowers are blooming as valuable contributions to the economic literature will provide intellectual fragrance to the scholars in the years ahead, including, no doubt, some exotic ones should be ignored.

1. VIEWS ON GLOBAL RECESSION :-

1. Presentation of Crux of the Problem in India:

If we examine its retarding impact on the industrial scenario of Indian economy, it can be made obvious that our industrial sector is in the grip of recessionary trend since the initiation of economic reforms and severity of the problem may be stated as "for almost a decade industrial output grew at nearly 8 per cent per annum on average with significant contributions coming from capital goods and basic industries. All of a sudden from 1991-92 there was drastic curtailment of public expenditure in real terms which hit industrial activity dramatically. The general index of industrial production registered a fall of 0.2 per cent in 1991-92 against an increase of 8.3 per cent in 1990-91. Manufacturing output fail by 1.6 per cent, while there was a 0.6 per cent rise in mining and quarrying and a sizeable increase of 8.6 per cent in electricity generation due to substantial increase in thermal and nuclear power generation and ………….. of only 1.5 per cent in hydel sector. The second groups of industries to suffer sluggish growth were capital and investment goods – cement, steel and other metals, electrical and non-electrical engineering and commercial vehicles. Their production had suffered essentially because of the cut back in public sector investment …………… Two other major group of industries were chemicals and agriculture-based industries, both of which have seen moderate growth in output in 1992-93 …………….. Even though output of sugar and tea faced some setback during the year. Finally, the fertilizer industry was unsettled in 1992-93 because of the government’s decision on fertilizer prices and the unification of the exchange rate of the rupee that made inputs costlier for plants based on imported ammonia and phosphoric acid." (EPW-1994)

The above mentioned rate of industrial production shows that the problem of recession has been more acute and alarming and it is at the same time more dangerous than the problem of depression because most of the economists assume of depression because most of the economists assume that it is a temporary phenomenon but it could continue and turn into a depressionary stage. As it also vivid from the study of Balraj Mehta, (Alternative Economic Survey, 1998) that there was a severe industrial depression on for two years after the launching of the market-friendly economic reforms in 1991. The revival of industrial production for a year and half subsequently could not be sustained. The pompous talk that economic liberalisation-globalisation process would promote rapid industrial growth has given way to widespread dependency among even domestic business circles and provoked mass discontent among the working people. Industrial recession can no longer be regarded as a transitory phenomenon. The danger looming large is long term decline, necessarily with some short-term ups and downs, in the rate of investment and capital formation. According to reliable estimates, the growth of industrial production in 1998-99 declined to less than 4.5 per cent over that recorded in 1997-98. No reliable forecast of the performance of industry during 1998-99 can yet be made. But the indicators are dismal. Thus the industrial economy of India has been facing this problem since nineties and the steps taken by the Government are proved to be ineffective.

2. Causes of Outbreak of Recession :-

Prof. Lakshminarayan Sinha had a perception of such crisis would prevail in the global economy in near future and so he warned the captains of world economy not to give undue emphasis on faulty model of Keynes to fight out the ill-effects of depression when he says, ‘the decisions to consume and the decisions to invest between them determine incomes (General Theory, P.64)’. Otherwise, According to Dr. Sinha, this mistake is obvious in terms of his own analytical system because he failed to go deep into the cause of deficient investment and resultant deficiency in effective demand. To explain collapse of MEC in terms of market sentiments and to prescribe its revival by doses of public investment is to depend too much on elements of irrationality. There is no denying that introduction into the received analytical system of uncertainties, which bedevil anticipations, was the other great contribution be made. Profit is an outcome risk-taking and uncertainly bearing. But Keynes could not, however, succeed in developing any weapon to tackle uncertainties and without which the development of theory of profit only by income multiplying effect in the short run is lop-sided and his doctrine can’t be claimed as scientific, if it is not raised above stock market goship. In this way, Dr. Sinha has criticized the profit theory of Keynes and he has introduced an effective model to combat the problem of world’s recession based on the philosophy of Dynamic Theory of Capital.

(iii) Development of Model to Solve Recession :-

Professor L. N. Sinha of the University of Bihar has moulded a post –keynesian model of economic growth which is designed to show the way in which the simplest form of present economic system would behave during a course of capital formation with a view to evolve a tool of economic analysis to solve the macro-variable problems of a developing economy. According to him, the chief feature of the model is that it integrates the theory of value with the theories of employment, output and economic growth and places economic analysis on a surer foundation for the solution-oriented schemes of development than it has had. Many economic failures developing countries arise from policies framed in a faulty theoretical corpus are the grounds for the construction of this model, which is quite applicable not only in a developing economy but also in developed, socialist, capitalist or mixed economy. But, on balance, the author has claimed that it has more relevance for practical economics particularly in developing countries.

3. Assumption of the Model :-

1. There is an open economy of various forms where imperfect competition and increasing returns to scale exist.
2. Two commodities, consumption-goods and capital-goods are produced in the economy where additional increases in the stock of capital goods like machines are the form of capital.
3. The downward slope of the demand curve is similar to that of market demand curve. Market demand curve is an instantaneous concept. It shows the proces at which various quantities of a commodity can be sold under given conditions. Other curves are horizontal.
4. Time is an important instrument for both demand & supply but it covers long-run dynamic perspective.
5. Production is, however, more time absorbing than adjustment in consumer’s budgets.
6. Fall of the hypothesis of perfect competition came on two crucial grounds – no importance as decision – making unit and marginal and average cost diminishing.

1. Explanation of the Model :-

1. The net stock of capital goods available in the form of machines and other factor endowments.
2. The amount of available labour force.
3. The availability of land and natural resources.
4. The state of technical knowledge which continues to improve through time on large scale of investment.

This relationship is expressed in the terms of production function as :-

O = f ( K, L, N, t )

Where, O is the net output, K is existing stock of capital goods, L the Labour, N land and natural resources and t is time given for technical progress. The result is clear that assuming the amount of land and natural resources to be constant, net output would increase in any one year with the increase in K, L and t.

For the rate of economic growth the interpretation of equation is as under :-

Where g = rate of economic growth

I = amount of investment

K = additional increase in the stock of capital goods

P = relative price – level

g = increase in income

S = level of saving potential or APS

m = rate of capital depreciation

R = Standard Ratio or maximum possible rate of profit out of

technology employed.

s = Stock of capital goods

According to Professor Sinha, investment is a function of the rate of profit, the stock of capital in existence, and the Standard Ratio and Capital-Labour ratio reflecting technology. The higher the rate of profit, the larger is investment. Given the technology, the larger the stock of capital beyond the point of saturation, the lower is the rate of profit and the smaller is the investment. A change in technology may raise the rate of profit and stimulate investment. In other words, the higher is the fraction of gross income saved and the larger is the Standard Ratio, the greater is the rate of economic growth. The lower the rate of profit and the smaller the length of life of capital equipments, the higher are the rate of capital depreciation and vice-versa.

By applying such model, the problem of diffused market recession can be solved as Professor Sinha claims. To support his view point he argues that when there is an increment in the margin of Standard Ratio it provides considerable extent of incentives to the entrepreneurial class to invest more and more in the economy and the process of acceleration of economic development would start. We need human resources to be engaged and the level of employment will increase, with a corresponding increase in per capita income and creating effective purchasing power of the people, which would lead to the zone of effective demand. The crisis created by recession will over as soon as the volume of Standard Ratio increases by the application of the dynamic forces of capital accumulation initiated by the entrepreneurs in the form of rise in the level of marginal propensity to invest and on the other hand by the consumers in the form of increment in the level of marginal propensity to consume. This process will continue till the application of new technology remains in the field of production. In this way, we find that the double-edged attack on the problem of recession is going on and the phase of revival in an economy will start rapidly.

To make his model more effective, Dr. Sinha has suggested to remove the ill-effects of market imperfections from the economy where recessionary trend prevails and to search out market zones outside the country to supply huge quantities of goods and services caused by recession. He has further suggested that the policy of trade-barriers should continue in a developing country to prevent the overflow of commodities supplied by the highly industrialized countries on the policy of comparative cost advantage.

- "Value and Grorth", 5 Chapter, Page no. 85.

• To be concluded.

Professor Lakshminarayan Sinha (1925-1992) was born on the 22^nd of January, 1925 in the renowned village Bhitha-Bhagwanpur of old Darbhanga district, now comes under Madhubani district of Bihar, with a silver as well as an academic spoon in his mouth which means that he came of a fairly well-to-do and at the same time highly educated king family. His father Ranasuranarayan Sinha (1875-1948), was a man of considerable eminence as an honest landlord of the locality and a quite just personality among all the various classes of society. He received his primary and secondary education at the local Tahsil Madhepur in 1936-44, from where he passed his matriculation examination with a high position in 1944 at the age of nineteenth, he joined the T.N.J. College, Bhagalpur, for his collegiate education in 1944-46; after passing from that institution he joined the prestigious Patna College in 1946-51 for his M.A. education and he did his Ph.D. on the topic entitled ‘Land in Mithila’ in 1963 from the University of Bihar without any guide.

His scheme of life was to be a teacher of Economics and he succeeded in his aim by joining the post of lectureship in 1951 in the C.M. College, Darbhanga, the prestigious institution of Mithilanchal just like the king’s college in London and served there till his promotion to the rank of Reader in 1962 and just after this promotion, ultimately, he was transferred to the L.S. College, Reader(1962-78), eminently known as G.B.B. College in the past, a premier constituent unit of Bihar University at Muzaffarpur and he rendered his valuable services also at Rajendra College, Chapra, Professor(1978-1988), particularly in the last phase of his service life. The College was under the jurisdiction of the University of Bihar then (now in the J.P. University) and he was sent there to improve the standard of teaching in the P. G. classes of Economics and to start research courses among the inquiring minds of several researchers. After retirement he continued to render valuable services to his nation. Unfortunately, he suffered a heart attack, which ultimately caused his death on the 5^th June 1992. This was, in short, the life-sketch of India’s one of the greatest economists and the wisest men of socialist affairs.

He was a socialist by nature. He was the third of the trinity (Karpoori, Laksman and Lakshmi) who laid the foundations of a group of socialist political thinkers in Bihar with a motto to develop the most backward region of North-Bihar and to criticise the contemporary Congress Government in the State which failed to upheaval the standard of living of the people belong to the arena of social justice and disinclined to fulfil the common interest of the down-trodden and socially-economically backward classes. He was very much influenced by the works of socialist English economist J.S. Mill as stated in course of teaching in our classes. He was a true disciple of Dr. Laksman Jha who was recognised as a great socialist worker and eminent scholar of India.

Dr. Sinha was basically a teacher always following the English culture and temperament in the ordinary business of life-style. He was a karmayogi economist of India. He established his personality as the most disciplined and conduct-oriented teacher and his scholarship in the annals of economic science as indelible footprints on the firmament of economic thoughts which shall generate mental energy, guidance, sustenance and academic stimulation to several generations of the students of economics of India and abroad to come. He was a prolific writer and his main works are as under :-

SL. NO. NAME OF THE BOOKS YEAR OF PUBLICATION

1. Wealth of Mithila 1957
2. Capital and Employment 1964
3. Theory of Value 1972
4. A Critique of India’s Fifth Plan 1973
5. Value and Growth 1974
6. Indian Polity 1977
7. Planning in India 1977
8. Report on relivance of Ricardian Economics 1977
9. Capital and Demand 1986
10. Lecturer on Economics 1988
11. Land in Mithila (Ph.D. Dissertation) Unpublished
12. Process of Economic Development Unpublished
13. Tibet Mukati Shangharsh 1977
14. Liberate Tibet 1977
15. Shahar Se Gaun Ka Bhed Mitana Hoga 1979
16. History of Ganbariya 1979
17. Hindustan Ki Shiyashi Takat 1979
18. Experimental Ekonomiks 1988
19. Fraudulent Mathematics 1989
20. Bijaybbyiyea 1989
21. Criminals at bar 1990
22. Peom of Sciences 1991

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