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CHAPTER -2
INDIAN ECONOMY BETWEEN: 1950-1990
ECONOMIC SYSTEM: It is defined as an arrangement by which the common problems of an economy are
solved
...
Capitalist Economy: In this economy all the resources are utilised by the private sector and all the
economic activities are planned and organised by the private sector
...

2
...

There will be high level of welfare with very low level of growth
...
Mixed Economic system: In this economic system all the resources are controlled by both public
& private sector
...

ECONOMIC PLANNING: Economic planning refers planned utilization and co-ordination of available
resources in the economy to achieve certain pre specified social and economic objectives within a
specific period of time
...
Prime minister was
the chairman of Planning commission
...
Real planning in India started with the
second five year plan (1956-61)
...
C
...

DIFFERENCE BETWEEN PLANNING OBJECTIVE AND PLAN OBJECTIVE
Planning objectives

Plan objectives

These are the long term objectives which are
to be achieved over 15-20 years
...


They are different in different 5 year plan

OBJECTIVES OF PLANNING IN INDIA (LONG-PERIOD GOALS)
1
...

2
...

3
...
The indicator of economic growth is GDP
...

4
...


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FEATURES OF INDIAN AGRICULTURE BETWEEN 1950 TO 1990:
1
...
Farmers were not aware of new technology and new methods of
productive farming
...
Disguised unemployment: It is a situation of hidden unemployment
...

3
...
Because of this tenant
suffered deprivation
...
Backward technology: Between 1950 to 1990 backward technology or outdated technology was
used by majority of farmers because most of the farmers were small in size and most of the
farming population was poor, so the use of backward technology became a compulsive choice
...
Lack of finance: There is high level of shortage of finance with the majority of farmers
...
is still a dream for most of the
farmers, which enhanced the backwardness of agriculture
...
Dependence on rainfall: Agriculture in India is heavily dependent on rainfall
...
That is why production is highly uncertain
...
HYV seeds have caused a rise in crop productivity
...
Use of chemical fertilisers has considerably increased over time
...


d) Mechanized means of cultivation: Several steps now been taken by the government to
popularize agriculture machineries like tractors, harvesters, water pumps etc
...
This has been done with a view to stop the exploitation of cultivators, because
mediators pay lower price to the farmers and charge higher price from the customers
...
The purpose of ceiling laws was to
take away land in excess of prescribed ceilings from the landlords and distribute it among
landless labourers
...

d) Collective Bargaining / co-operating farming: Cooperative farming is encouraged to benefit the
small groups of farmers
...

GENERAL REFROMS
a) Expansion of irrigation facilities: Several major and minor irrigation projects now been launched
across the different parts of the country with a view to enhance and stabilize the productivity in
agriculture sector
...
provide credit to the poor families at cheap interest rate
...
Which guarantees minimum price to the
framers for their production
GREEN REVOLUTION OR NEW AGRICULTURE STRATEGY (NAS): The strategy of green revolution was
launched in October 1965
...
The basic objective of green revolution was the continuous expansion of farming areas, high
productivity by using HYV seeds, chemical fertilizers and chemical pesticides
...
Norman Borlaug
who developed HYV of wheat in Mexico and he is often called “the father of Green Revolution’’, and MS
Swaminathan is known as ‘’the father of Green Revolution in India’’
...
Rise in Productivity: In the initial years of green revolution, a drastic increase in production of
wheat and rice was noticed
...


2
...

3
...
With a view of growing more than one crop on a piece of land,
increased the demand of more labours throughout the year
...
Rise in Commercial Farming: With green revolution along with several other policies launched
by government to benefit poor farmers encouraged them to start commercial farming at larger
scale
...
Restricted to limited crops: Since green revolution was mainly restricted to wheat and rice
growing states like Punjab, Haryana, western UP and Andhra Pradesh
...

2
...
Farmers and workers as
well as crops suffered health problems due to heavy use of fertilizer and poisonous pesticides
...
Partial removal of poverty: Green revolution removed poverty but not from everywhere, the
benefits were taken by richer farmers and poor farmers were left out because of lack of finance
and credit to purchase fertilizers, tractors, harvesters, water pumps, etc
...
Requires more water: Farming under green revolution requires comparatively more water than
conventional farming
...

INDUSTRIAL POLICY RESOLUTION (IPR-1956) IPR is an important instrument through which government
regulates the industrial activities in an economy
...
a) To accelerate
the growth of industrialization
...
This leads to rise in employment and GDP
...

d) Reduce the inequality of income & wealth and among different regions by establishing industries
in backward areas
...

f) To reserve some items exclusively produced by only small scale industries
...
(Reservation means that these items could not be
produced by large scale industries)
g) Classification of industries according to IPR 1956 was
...
(b) Schedule ‘B’ includes 12 industries governed by public & private
sector both
...

SMALL SCALE INDUSTRY: Small scale industry is defined as a firm whose Investment does not exceed 5
crores, previously it was only rupees 1 lakh in 1951
...
Imports were
restricted by the imposition of tariffs & quotas, which protects domestic firm from foreign competition
...
b) Create a protected
market for domestic producers and increases the demand of domestically produced goods
...

d) Helps economy to become self-reliance
...

b) Import substitution leads to creation of monopolies
...

d) Irrational use of resources
...
The basic idea of licensing policy was to encourage the establishment of industries in the
backward region with a view to encourage regional equality
...
Due to which only big businessman
earn the benefits from their monopoly
...
Define economy
...
It is organization of economic activities which provides people with the means to work and
earn a livelihood
...
Who is the chairman of the planning commission in India?
Ans
...

3
...
The aim of abolition of Zamindar was to make direct link between government and real
cultivators so that cultivators can get maximum profit
4
...

Ans
...
(a)Schedule ‘A’ includes 17 industries
governed by public sector
...
(c)Schedule ‘C’ includes other residual industries under private sector
...
What do you mean
by green revolution?
Ans
...

6
...
Small scale industries are those in which the investment limit is Rs 5
crores
...
What is marketable surplus?

Ans
...

8
...
Planning commission (Now NITI Ayog)
9
...

Ans
...
Name any two Common goals of five-year plan
...
Growth and equity
11
...

Ans
...
Name three general problems of an economy
...
What to produce, how to produce and for whom to produce
...
What is import substitution?
Ans
...

TRUE OR FALSE
State with reason whether the following statements are True or False :
1
...
2
...

3
...

4
...

5
...

6
...

7
...

8
...
9
...

10
...

11
...

12
...

13
...
14
...

15
...

16
...

FILL IN THE BLANKS
Complete the following statements with appropriate answers in the blank space(s): 1
...
____________ was engaged in
the formulation of Five Year Plans in India
...
Planning Commission was established in____________(1947; 1950)
4
...

(Socialist; Capitalist, Mixed)
5
...
(self reliance; modernisation)
6
...
(success; failures) 7
...
(1951-56; 1956-61) 8
...

(fragmentation; consolidation)
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9
...
Green Revolution started in India in____________
...
____________ refers to a spurt in farm output during mid 60's as a result of a substantial rise
in crop productivity
...
____________seeds are the seeds which led to revolutionary rise in productivity per hectare
...
Public sector enterprises are driven largely by consideration of ____________ (profitability;
social welfare)
14
...
(agricultural; industrial)
15
...
(licensing; foreign exchange)
16
...
(Import substitution; Export promotion)
17
...
In the name of____________ Indian producers were protected against foreign competition
...
(2) Planning Commission, (3) 1950, (4) Mixed
...
(7)
1956 (8) Consolidation
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(10) 1967-68 (11) Green revolution
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(15) Licensing
...
(17) zamindari system
...
Common goals of Five Year Plans are
a) growth with equity
b) modernisation
c) self-reliance
d) All of the above
Ans
...
Which of the following is not a feature of Socialist Economy?

a) Government's role is important
b) Motive of production is profit
c) Public ownership of all assets
d) Centrally planned
...
(b)
3
...
(c)
4
...
(c)
5
...
(c)
6
...
(c)
7
...
(a)
8
...
(b)
9
...
(d)
10
...
(d)
11
...

c) Private sector was given an important role during Five Year Plans
...

Ans
...
Who was the architect of Indian planning?
a) P
...
Mahalanobis
b) Jawaharlal Nehru
c) Subhash Chandra Bose
d) Dr Rajendra Prasad
Ans
...
In which Five Year Plan, agriculture was the top priority?
a) First Five Year Plan
b) Second Five Year Plan
c) Third Five Year Plan
d) Fourth Five Year Plan
Ans
...
In which Five Year Plan, industry was given the top priority?
a) First Five Year Plan
b) Second Five Year Plan
c) Third Five Year Plan
d) Fourth Five Year Plan
Ans
...
Which was not the strategy of economic planning during Five Year Plans?
a) Balanced growth
b) Import substitution
c) Self-reliance
d) Liberalisation
Ans
...
Which was the main reason for Green Revolution in India?
a) HYV seeds
b) Land reforms

c) Pesticides
d) Subsidies
Ans
...
The period of 1966 to 1969 was a period of ____________:
a) No planning
b) Third Five year Plan
c) Three Annual Plans
d) Fourth Five Year Plan
Ans
...
In the First Five Year Plan, top priority was given to ____________:
a) Power
b) Forest
c) Agriculture
d) Industry
Ans
...
In the Second Five Year Plan, top priority was given to:
a) Agriculture
E C O N O M I C S B Y : U T K A R S H B H A R G A V A ( P H : 9 7 1 1 - 787 - 1 9 9 ) Page 9
b) Industry
c) Mining
d) Infrastructure
Ans
...
In India, economic planning till 1991 revolved around:
a) Private sector
b) Public sector
c) Joint sector
d) Cooperative sector
Ans
...
Which of the following was not the objective of economic plans?
a) Increase in employment
b) Increase in national income
c) Social justice
d) Spread of education
Ans
...
____________refers to the type of goods and services a country export and import
...
(c)
23
...
(c)
24
...

b) Regulated development of private sector
...

d) Focus on import substitution
...
(a)
25
...
(d)
NCERT Exercise:
Q1
...

Ans
...

E C O N O M I C S B Y : U T K A R S H B H A R G A V A ( P H : 9 7 1 1 - 787 - 1 9 9 ) Page 10
Q 2
...
India achieved independence in 1947
...
From that time efforts have been made to solve people’s problems in a sovereign
Indian republic through a system of federal parliamentary democracy
...
Planning was undertaken to sustain political independence and
generate economic prosperity
...
Why should plans have goals?
Ans
...

Without goals, the planners would not know which sector of the economy should be developed on a
priority basis
...
What are miracle seeds?
Ans
...
would result in high production levels
...
What is marketable surplus?
Ans
...

Q6
...
Ans
...
They treated
cultivators as slaves
...
to state government
...


Reorganization of Agriculture is concerned with:
(a) Redistribution of Land
(b) Consolidation of Holdings
(c) Co-operative Farming
...
What is Green Revolution? Why was it implemented and how did it benefit the farmers? Explain
in brief
...
This strategy, which was launched in October 1965, has been given different names such as, New
Agricultural Strategy (NAS), or Seed-Fertilizers Water Technology
...

India decided to get rid of this dependence on foreign aid in such a vital matter as food supply
...
e
...

Benefits of Green Revolution:
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(i) Increase in Income: Since the Green Revolution was limited to wheat and rice for a number of years,
its benefits were enjoyed by wheat and rice growing areas of Punjab, Haryana, Western Uttar Pradesh
and Andhra Pradesh
...
Green Revolution succeeded
in removing rural poverty in these States
...
The old
social beliefs and customs were destroyed and people were willing to accept changes in technology,
seeds and fertilizers
...

(iii) Increase in Employment: Green Revolution solved the problem of seasonal unemployment to a
great extent because with the possibility of growing more than one crop on a piece of land, more
working hands were needed throughout the year
...

Q8
...

Ans
...
Equity refers to reduction in inequality of income or wealth, uplifting weaker
sections of the society and equal distribution of economic power
...
When these two objectives are clubbed
together, it is called development with social justice
...
Does modernisation as a planning objective create contradiction in the light of employment
generation? Explain
...
Modernisation as a planning objective implies use of advanced technology
...
Thus, modernisation creates unemployment
...
Why was it necessary for a developing country like India to follow self-reliance as a
planning objective?
Ans
...
There were heavy imports of

foodgrains
...

Features of Self reliance are:
(a) Self-sufficiency in foodgrains
...

(c) Rise in exports
...

Q11
...
Ans
...
If the service sector or
tertiary sector contributes maximum to GDP of an economy, then the country is economically
developed
...
Why was public sector given a leading role in industrial development during the planning
period? Ans
...

(b) Development of Infrastructure
...

(d) To mobilise savings and earn foreign exchange
...

(f) To promote equality of income and wealth distribution
...

(h) To promote imprt substitution
...
Explain the statement that green revolution enabled the government to procure sufficientfood
grains to build its stocks that could be used during times of shortage
...
Green revolution refers to
the tremendous increase in agricultural production and productivity that has come about with the
introduction of new agricultural technology
...
Rise in Production and Productivity
...
It was restricted to only five crops namely, wheat, rice, jowar, bajra and maize
...
Substantial increase in wheat production was
noticed
...
1 million tonnes in the Third Plan to 93
...

Rice production initially increased slowly and later at a fast pace
...
1
million tonnes in the Third Plan to 92
...
The production of coarse cereals
(jowar, bajra and maize) fell to 26
...
5 million tonnes
in 2011-12
...
While subsidies encourage farmers to use new technology, they are a huge burden on
government finances
...
Ans
...
It helps farmers to
buy HYV seeds, fertilizers and other inputs
...

The government has to bear the burden of financing subsidies
...


Q15
...
The structural change in composition of GDP shows that India is on the path of sustained
development
...
When
nearly 60
...
2 per cent of India’s population
...

Q16
...
Discuss the usefulness of public sector
undertakings in the light of this fact
...
Though many public sector undertakings are incurring huge losses, they are still very useful in the
areas of strategic concerns and hazardous chemicals
...

Creation of a Strong Industrial Base
2
...
Development of Backward Areas
4
...
To Prevent Concentration of Economic Power
E C O N O M I C S B Y : U T K A R S H B H A R G A V A ( P H : 9 7 1 1 - 787 - 1 9 9 ) Page 13
6
...
To Provide Employment
8
...

Q17
...

Ans
...
The Mahalanobis strategy of development was based on import substitution
...
It helped to save
foreign exchange by drastically reducing import of goods
...
It created a protected
market and large demand for domestically produced goods
...
Match the following:

Ans
...
(C), 2
...
(B), 4
...
(A), 6
...


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