- Understand the goals of India's five year plans.
- Learn about the development policies in agriculture and industry from 1950-1990.
- Analyze the merits and limitations of a regulated economy.
Indian Economy 1950–1990
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Learning Objectives
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Revision Notes & Summary
TopIndian Economy 1950-1990
Goals of India's Five Year Plans
- Growth
- Modernisation
- Self-reliance
- Equity
Development Policies in Different Sectors
Agriculture
- Land Reforms
- High Yielding Variety (HYV) Seeds
Industry
- Role of Public and Private Sectors
- Import Substitution Policy
Merits and Limitations of a Regulated Economy
- Merits: Protection of domestic industries
- Limitations: Inefficient functioning of public sector enterprises
Key Concepts
- Gross Domestic Product (GDP): The market value of all final goods and services produced in a country during a year.
- Marketable Surplus: The amount of agricultural produce that is available for sale after meeting the consumption needs of the producer.
- Subsidy: Monetary assistance given by the government for production activities.
Historical Context
- The Indian economy transitioned from colonial rule to independence, focusing on a mixed economy model.
- The first seven five-year plans aimed to achieve the goals of growth, modernisation, self-reliance, and equity.
Important Figures
- Prasanta Chandra Mahalanobis: Architect of Indian planning, known for his contributions to the Second Five Year Plan.
Sectoral Contribution to GDP (1950-1991)
| Sector | 1950-51 | 1990-91 |
|---|---|---|
| Agriculture | 72.1% | 34.9% |
| Industry | 10.7% | 28.0% |
| Services | 17.2% | 40.5% |
Conclusion
- The Indian economy saw significant changes from 1950 to 1990, with a focus on self-sufficiency and the development of various sectors.
Practice Test – MCQs, True/False
TopMultiple Choice Questions
A.
By providing subsidies to landowners
B.
By encouraging the use of advanced machinery
C.
By giving land ownership to the cultivators
D.
By increasing the size of landholdings
Correct Answer: C
Solution:
The policy of 'land to the tiller' was based on the idea that cultivators would have more incentive to increase output if they owned the land, as ownership would enable them to profit from increased productivity.
Chapter Concept:
Land Reforms in India
A.
Modernisation requires more labor-intensive methods.
B.
Modernisation often involves adopting new technologies that may reduce the need for labor.
C.
Modernisation focuses solely on agricultural development.
D.
Modernisation leads to increased reliance on foreign imports.
Correct Answer: B
Solution:
Modernisation involves adopting new technologies, which can reduce the need for labor, thereby conflicting with the goal of increasing employment.
Chapter Concept:
Goals of Economic Planning
A.
By focusing solely on industrial growth
B.
By including social changes such as gender equality
C.
By limiting the use of foreign technology
D.
By increasing the number of public sector undertakings
Correct Answer: B
Solution:
Modernisation in India's Five Year Plans included not only technological advancement but also social changes, such as recognizing equal rights for women.
Chapter Concept:
Five Year Plans in India
A.
Increased disparities between small and big farmers
B.
Decline in agricultural productivity
C.
Over-reliance on traditional farming methods
D.
Lack of government support for modern technology
Correct Answer: A
Solution:
The Green Revolution posed a risk of increasing disparities between small and big farmers because only the big farmers could initially afford the required inputs for the new technology.
Chapter Concept:
Green Revolution
A.
Growth
B.
Modernisation
C.
Self-reliance
D.
Privatization
Correct Answer: D
Solution:
The goals of India's Five Year Plans included growth, modernisation, self-reliance, and equity, but not privatization.
Chapter Concept:
Five Year Plans in India
A.
Subsidies are necessary to encourage the adoption of new technology among farmers, especially small farmers.
B.
Subsidies primarily benefit the fertilizer industry and should be eliminated to reduce government expenditure.
C.
Subsidies are only beneficial for large farmers in prosperous regions and do not aid small farmers.
D.
Subsidies are irrelevant as they do not impact the agricultural productivity significantly.
Correct Answer: A
Solution:
Subsidies are justified as they provide an incentive for farmers, particularly small farmers, to adopt new technologies like HYV seeds, which are perceived as risky.
Chapter Concept:
Subsidies in Agriculture
A.
India achieved self-sufficiency in food grains
B.
India became more dependent on food imports
C.
India's agricultural exports significantly declined
D.
India's reliance on traditional crops increased
Correct Answer: A
Solution:
The Green Revolution enabled India to achieve self-sufficiency in food grains, reducing its dependence on imports for meeting food requirements.
Chapter Concept:
Green Revolution
A.
To increase foreign direct investment in India.
B.
To replace imports with domestic production to protect nascent industries.
C.
To promote the export of luxury goods.
D.
To reduce the role of the public sector in the economy.
Correct Answer: B
Solution:
The import substitution strategy aimed at replacing imports with domestic production to protect nascent industries from foreign competition through tariffs and quotas.
Chapter Concept:
Import Substitution Strategy
A.
To increase exports by producing goods domestically
B.
To replace imports with domestic production to protect nascent industries
C.
To encourage foreign investment in domestic industries
D.
To reduce domestic production and rely on imports
Correct Answer: B
Solution:
The import substitution strategy aims to replace imports with domestic production to protect nascent industries from foreign competition through tariffs and quotas.
Chapter Concept:
Import Substitution Strategy
A.
Industries exclusively owned by the government.
B.
Industries where the private sector could supplement the public sector, with the government starting new units.
C.
Industries left entirely to the private sector without any government control.
D.
Industries that required foreign investment to operate.
Correct Answer: B
Solution:
The second category under the Industrial Policy Resolution of 1956 consisted of industries where the private sector could supplement the efforts of the public sector, with the government taking the responsibility for starting new units.
Chapter Concept:
Industrial Policy Resolution 1956
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Indian Economy 1950–1990
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Locked • Full Phase AssessmentStep 3: Redemption Arena
Locked • AI Weakness TrackerTrue or False
Correct Answer: True
Solution:
The Industrial Policy Resolution of 1956 indeed classified industries into three categories, with the government taking control of key industries to align with the socialist pattern of society.
Chapter Concept :
Industrial Policy Resolution 1956
Correct Answer: True
Solution:
GDP is defined as the market value of all final goods and services produced within a country during a year, serving as a measure of economic growth.
Chapter Concept :
National Income Accounting
Correct Answer: True
Solution:
In a mixed economy, decisions about what to produce, how to produce, and how to distribute are made by both the government and market forces, combining elements of socialism and capitalism.
Chapter Concept :
Mixed Economy Model
Correct Answer: True
Solution:
The policy of land reforms in India was designed to redistribute land to the tillers, thereby promoting equity and increasing agricultural productivity. This included measures such as the abolition of intermediaries like zamindars.
Chapter Concept :
Land Reforms in India
Correct Answer: True
Solution:
A mixed economy combines elements of both capitalism and socialism, where both the government and market forces play a role in economic decision-making.
Chapter Concept :
Types of Economic Systems
Correct Answer: True
Solution:
At the time of independence, Indian industrialists did not have the capital to undertake investment in industrial ventures required for the development of the Indian economy. Therefore, the government had to play an extensive role in promoting the industrial sector.
Chapter Concept :
Public Sector Undertakings (PSUs)
Correct Answer: True
Solution:
India's Five Year Plans were indeed inspired by the Soviet model, which was a pioneer in national planning.
Chapter Concept :
Five Year Plans in India
Correct Answer: False
Solution:
While growth, modernization, self-reliance, and equity are the goals of India's five-year plans, not all plans have given equal importance to these goals due to limited resources and the need to prioritize certain objectives over others.
Chapter Concept :
Goals of Economic Planning
Correct Answer: True
Solution:
Import substitution strategy is designed to protect emerging domestic industries from foreign competition by implementing tariffs and quotas, thereby encouraging domestic production.
Chapter Concept :
Import Substitution Strategy
Correct Answer: True
Solution:
In a capitalist economy, distribution of goods and services is determined by purchasing power, meaning that individuals must have the financial means to purchase what they need.
Chapter Concept :
Types of Economic Systems
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