CBSE Class 12 Economics Indian Economy Worksheet Set A

 

 

Important Points for Chapter 2 Indian Economy 1950-1990 Class 12 Economics

♦ Introduction : India is geographically, the largest country in South Asia and seventh largest country in the world.
It is second populous country after China in the world. An average growth rate of population was 2.2% per annum during the past decade but now it is 1.7 %. Its total area is 32.9 lakh sq. kms and total present population is 130 crores.
On the other hand, Pakistan extends from the Arabian Sea 1600 kms northward. It is a neighbouring state of India.
Total area of Pakistan is 8.03 lakh sq. kms. Its population is 1/7th of India. Average growth rate of population is 2.4 % per annum.
China is located in Eastern Asia and it is the third largest country in the world in terms of total area. It has highest population in the world with an annual population growth rate of nearly 0.66% per annum.

♦ Developmental Path : India, Pakistan and China have many common points in their plans for development.
While India and Pakistan became independent nations in 1947 and the communist China came into existence in 1949, after a revolution. All these countries started their planning along similar lines. India announced its First Five Year Plan for 1951-56, Pakistan announced its Medium Term Development Plan in 1956. China announced its First Five Year Plan in 1953. Since 2013, Pakistan was working on the basis of 11th Five Year Development Plan, where as, China is working on 13th Five Year Plan (2016-21). Until March 2017, India has been following Five Year plan based development model.

♦ Demographic Indicators : India is a populous country just like China. These two countries together comprise one-third of the population of the world. As far as Pakistan is concerned, its population is much less around 10% when it is compared with China or India. The density of population in China is the lowest as compared to Pakistan and India. China has a low fertility rate but Pakistan has a high rate. Both these countries have high urbanisation rate. In India, this trend is slower (27.8%) as compared with Pakistan (33.4%) and China (36.1%). 

Source : World Development Indicator, 2017 

♦ Gross Domestic Product : Economic development of a country can be judged through GDP growth rate. GDP growth rate explains the growing rate of valuable output of the country. Per capita income was 460 US dollars in India whereas it was 420 US dollars in Pakistan. Per capita GDP (PPP) in US Dollars was 3100 in India against 2200 in Pakistan. It means per capita income and GDP both were higher in India in comparison to Pakistan. Pakistan’s GDP is roughly 12% of India’s GDP and India’s GDP is approx 40% of China’s GDP. China has impressive growth rates in recent decade. China’s growth rates have crossed 8 % per annum in recent years.

♦ Indicators of Human Development : The human Development Index is an important indicator. As far as human development indicator are concerned, China is ahead of India and Pakistan. Many indicators like the GDP per capita or proportion of population below poverty line or health indicators such as mortality rates, access to sanitation, literacy, life expectancy or malnourishment place China above the other two countries. Pakistan is ahead of India in reducing proportion of people below the poverty line. Its performance in access to water is better than that of India. So far as the proportion of people below the poverty line is concerned, situation in China is half as bad as in India and Pakistan.
♦ Annual Growth of GDP (%) 1980-2015

♦ Development Strategies : An Appraisal : The development strategies of a country serve the purpose of a model to other countries. Other countries learn a lesson from the experience of a country and try to formulate their development programmes on that basis. It is necessary to understand the reasons behind the success or failure of a plan. Only then a neighbouring country should adopt a particular plan of action. A development strategy has various phases. These should be compared and contrasted for better assessment of the entire strategy. Structural Reforms in China were introduced in1978 due to slow pace of growth and lack of modernisation. It was found that the establishment of infrastructure in the areas of education and health, land reforms, long existence of decentralised planning and existence of small enterprises had helped positively in improving the social and income indicators in the post reform period. Scholars argue that in Pakistan the reform process led to worsening of all the economic indicators. However, during last few years, Pakistan has recovered its economic growth and has been sustaining.

Question. During British period, Indian Economy was :
(a) Semi-feudal Economy
(b) Disintegrated Economy
(c) Colonial economy
(d) All the above 
Answer: D

Question. First attempt to estimate the National Income in India during British period was made by :
(a) Findley Shirras
(b) William Digbey
(c) Dada Bhai Nauroji
(d) V.K.R.V. Rao
Answer: D

Question. In livelihood agriculture, farmers :
(a) Exchange all their products with other products
(b) Produce goods for market only only
(c) Depend on market-conditions
(d) Mainly produce food crops only.
Answer: D

Question. Indian Planning Commission was constituted in :
(a) 1947
(b) 1950
(c) 1951
(d) 1971
Answer: B 

Question. National Development Council has been Constituted in :
(a) 1950
(b) 1947
(c) 1951
(d) 1952
Answer: D

Question. First Five Year Plan was started on :
(a) 15th August 1947
(b) 1st April 1951
(c) 2nd October 1956
(d) 1st July 1962
Answer: B

Question. In British India, cloth industry was concentrated at :
(a) Ahmedabad
(b) Hyderabad
(c) Bangaluru
(d) Ghaziabad
Answer: A

Question. During British regime which one of the following work was not performed ?
(a) Establishment of railways
(b) Establishment of telephone system
(c) Establishment of wire-less sysetm
(d) Establishment of Metro in Delhi
Answer: D

Question. Plan Holiday Period was :
(a) 1961-64
(b) 1966-69
(c) 1972-75
(d) 1978-81
Answer: B

Question. Chairman of Planning Commission in India is Ex-officio :
(a) Prime Minister
(b) Chief Minister
(c) Finance Minister
(d) President
Answer: A

Question. Duration of Second Five Year Plan in India was :
(a) 1950-55
(b) 1951-56
(c) 1956-61
(d) 1953-58
Answer: C

Question. Mahalanobis Model was adopted in Indian Planning in :
(a) First Plan
(b) Second Plan
(c) Third Plan
(d) Fourth Plan
Answer: B

Question. Self –reliance means avoiding:
(a) Exports
(b) imports
(c) Both (a) and (b)
(d) None of the above.
Answer: B

Question. A good indicator of growth is steady increase in the :
(a) Gross Domestic Product
(b) Net Domestic Product
(c) Population
(d) National income.
Answer: A

Question. The planning commission was set up in :
(a) 1948
(b) 1950
(c) 1951
(d) 1956
Answer: B

Question. Who is known as the architect of “Indian Planning”?
(a) Jawaharlal Nehru
(b) Dr. BR Ambedkar
(c) PC Mahalanobis
(d) Sardar Vallabhbhai Patel
Answer: C

Question. When was first five-year plan introduced? 
(a) 1st April ,1950
(b) 1st April, 1951
(c) 1st April,1952
(d) 31st March, 1950
Answer: B

Question. Green Revolution introduced during the planning process was restricted mainly to :
(a) Wheat and rice
(b) Cereals and pulses
(c) Cotton and jute
(d) Jowar and bajra.
Answer: A

Fill in the blanks:

Question. First Indian Census of population during British rule took place in the year _______.
Answer: 1881

Question. The share of workforce engaged in agriculture during British rule was ________.
Answer: 85% 

Question. Before independence, the India’s Jute industries concentrated in ______part of the country.
Answer: Bengal

Question. Under colonial rule, the cotton textile industries dominated by ________.
Answer: Indian

Question. During colonial period, India had a _____balance of trade.
Answer: favourable

Question. During British rule in India about ____of population was living in rural areas.
Answer: 72% 

Question. Literacy rate during British rule was approximately _________.
Answer: 16%, 

Question. Occupational structure refers to the distribution of _______population into various sectors of economic activity.
Answer: working population

Question. Modern postal system was introduced in _____in India.
Answer: 1837.

Question. Plans were formulated by _____in India.
Answer: Planning Commission 

Question. _____finally approves the draft of Indian Plans.
Answer: National Development Council

Question. ______means reducing dependence on imports of those goods which can be produced within the country itself.
Answer: Self-sufficiency 

Question. ____means adoption of new technology, new methods of production and changes in social outlook.
Answer: Modernisation 

Question. First Plan of India began on _______.
Answer: 1^st April 1951

Question. _______was the central objective of Indian Planning.
Answer: Growth with Stability.

True or False.

Question. First Train in Indian railways began its operation in 1953.
Answer: False

Question. Infant mortality rate refers to the number of infants living per 1000 live birth.
Answer: False

Question. Commercialisation of agriculture means production of crops for self consumption.
Answer: False

Question. During colonial period, India’s export trade was export surplus.
Answer: True

Question. Indian economy was source of raw material for British industries.
Answer: True

Question. Match the following : 

Answer: 1. (b) 1850, 2. (c) 1881, 3. (d) 1921, 4. (a) 1853

Short Answer Type Questions

Question. Explain the statement that Green Revolution enabled the government to procure sufficient food grains to build its stocks that could be used during time of shortage.
Answer: The use of modern technology, extensive use of fertilisers, pesticides and High Yielding Variety (HYV) seeds which together formed the Green Revolution led to an impressive rise in food grains production. The agricultural productivity and average yield also increased considerably. The other measures accompanying Green Revolution such as the development of marketing system, abolition of intermediaries and subsidised credit for farm investment provided greater portion of marketable surplus to farmers. All these factors contributed to high crop yield which enabled the government to procure sufficient food grains to build the buffer stock to be used in time of shortages due to scanty rainfall, delayed monsoon, drought and other natural calamities.

Question. “Subsidies provide an incentive for wasteful use of resources”. Do you accept/reject? Justify your answer.
Answer: Yes, Subsidies provide an incentive for wasteful use of resources, if they are provided free or at a subsidized rate, then they will be used wastefully i.e. without any concern for the scarcity of say water/ Electricity. Fertiliser and pesticide subsidies lead to overuse of resources like land. This inturn can be harmful to the environment. So in this way provision of subsidies may cause more than benefit, if not properly used.

Question. Why was thee a need for reform of economic policy in 1990? Explain.
Answer: The need for reform of economic policy in 1990 was widely and strongly felt in the context of the changing global economic scenario. The new economic policy was initiated in 1991, in order to enhance the efficiency of the country’s economy.

Question. Are self –Reliance and self-sufficiency the same? Explain.
Answer: No. Self-reliance is the ability to meet one’s own –development needs.
An economy must have enough resources or foreign exchange to purchase all inputs required for production. If they are not available within the country.
This is so because n economy can be self-sufficient, i.e. produce everything within the country, as costs may be high. It may be cheaper and better to purchase certain inputs from others countries, For this , an economy needs to have enough foreign exchange. This is self-Reliance. So, while it is good to be
self- sufficient, it is not the best way to develop. It is more desirable to be self- reliant.

Question. How were the industries classified according to the industrial policy Resolution,1956?
Answer: (1) Category A
(2) Category B
(3 ) Category C

Question. State the common goals of Five –Year plans.
Answer: 1. High rate of growth
2.Social justice
3. Self –reliance
4. Modernisation

Question. What were the disadvantages of the Green Revolution?
Answer: (1) Confined to food crops
(2) Limited coverage
(3) Undesirable social effects
(4) Inequality among farmers
(5) Social unrest.
(6) Regional disverities.

Question. What is achievements of plans and failures of Economic planning?
Answer: (I) Increase in national income (ii) increase in per capita income, (iii) increase in the rate of capital formation (iv)institutional and technological reforms in agriculture (v) Growth and diversification of industry (vi) Economic infrastructure ,
(vii) Social infrastructure.
(II) Failures of Economic Planning: (i) Abject Poverty (ii) Mounting inflation, (iii) Unemployment crises, (iv) Deficient infrastructure , (v) Skewed distribution.

Question. While subsidies encourage farmers to use new technology, they are a huge burden on government finances. Discuss the usefulness of subsidies in the light of this fact.
Answer: The following arguments are given in favour of subsidy:
a. Subsidy is generally provided to the poor farmers with the motive of reducing inequality of income between rich and poor farmers.
b. Subsidy was basically an incentive for the farmers to adopt modern techniques and vital inputs like fertilizers, HYV seeds etc. The subsidy was provided so that the farmers might not hesitate to use modern techniques.
c. Subsidy is very important for marginal land holders and poor farmers who cannot avail the essential farm inputs at the ongoing market rate.
The following arguments are given against subsidy:
a. Subsidies are also given to the farmers who do not need them. This often leads to the misallocation of the scarce resources.
b. It is generally argued that subsidy favours and benefits fertilizer industries more than the farmers.
c. Subsidies may lead to the wastage of precious resources.
Hence, we can conclude that although subsidies are useful and necessary for poor farmers they put an excessive burden on the scarce finances of the government. Allocation of subsidies to the farmers who need it most is required.

Question. Explain how tariffs and quotas protect the domestic industry?
Answer: Tariffs are tax imposed on imported good. They make imported goods more expensive, thus, discouraging their use. Quotas specify the quantity of goods which can be imported, thus restricting the import of foreign goods.

Question. What do you mean by Economic Reforms ? 
Answer: Economic reforms or new economic policy refers to various policy measures and changes introduced since 1991. New economic policy was to create a new economic environment for economic development by removing existing obstacles. These reforms concentrated on :
(i) Introduction of “free of control” economy.
(ii) A shift from public to private sector.
(iii) Free entry to foreign private investment. Thus, the basic pillars of new economic policy are—Liberalisation, Privatisation and Globalisation (LPG).

Question. Why despite the implementation of Green Revolution, 65% of our population continued to be engaged in the agriculture sector till 1990 ?
Answer: Although the advent of Green Revolution, Indian agricultural production increased substantially that enabled India to attain the status of self-sufficiency in food grains. This increase is substantial only in comparison to food grain production in the past. India failed to achieve structural transformation associated with the economic growth and development.
The industrial service sector in India failed to generate significant employment opportunities in order to attract and absorb excess agriculture labour. In India, between 1950 and 1990, the proportion of GDP contributed by agriculture declined significantly. This makes it evident that the industrial and service sector growth was not very significant and thus, could not provide employment opportunities to the surplus labour from agricultural sector leading to disguised unemployment in agriculture. The
slow growth of secondary and tertiary sector has been responsible for majority of population (approx. 65%) remaining in agricultural occupation till 1990.

Question. What do you mean by agriculture and what are agricultural activities.
Answer: Agriculture is the backbone of Indian economy. Agriculture is the practice and science of growing crops by cultivating the land.
Agricultural activities are as follows :
(i) Primary activities : In primary activities, agricultural activities are included such as to grow food grains, pulses, vegetables, sugarcane, cotton, oil seeds, jute, etc.
(ii) Secondary activities: Allied activities are included in it as animal husbandry, poultry farming, dairy farming, etc.

Question. What is the meaning of quantitative restrictions?
Answer: Quantitative Restrictions (QRs) are the limits imposed on the quantity of goods that are imported or exported. It includes import quotas and voluntary Export Restraints (VERs which are signed by the exporters of foreign countries). Quantitative restrictions are imposed to discourage imports and thus, protect domestic industries from competition from cheaper and technologically-advanced goods manufactured by other nations. Quantitative restrictions have been abolished by WTO in a phased manner to facilitate world trade.

Question. How is RBI controlling the Commercial Banks ?
Answer:
(i) RBI controls the Commercial Banks by various instruments like Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), Bank Rate, Prime Lending Ratio (PLR), Repo Rate, Reverse Repo Rate and fixing the interest rates and deciding the nature of lending to various sectors.
(ii) These are those ratios and rates that are fixed by RBI and it is mandatory for all the commercial banks to follow or maintain these rates.
(iii) All these measures control the commercial banks operations and also control money supply in Indian Economy.

Question. “Foreign exchange crisis was the basis of economic policies of liberalisation, privatisation and globalisation.” Justify.
Answer: During the fiscal year 1990-91, foreign exchange reserves fell to a lower level of ₹ 2400 crores. Which was just enough for the payments of three weeks imports. The crisis was so serious that Chandra Shekhar government had to mortgage gold reserves with other countries to pay off interest and foreign debts. Therefore, it forced India to adopt a new set of measures to accumulate foreign exchanges reserve by way of liberalization, privatization and globalization.

Question. What were the two main land reforms undertaken in India ?
Answer: The two main land reforms undertaken in India are as follows :
(i) Abolition of Intermediaries – The idea behind this move was that ownership would give incentives to the tillers to make improvements in agricultural output. Almost 200 lakh tenants came into direct contact with the government and were freed from exploitation.
(ii) Consolidation of Land Holdings – As scattered and fragmented agricultural land is unproductive, the farmer is given one big piece of land in lieu of small and fragmented fields.

Question. Explain the composition of India’s Foreign Trade.
Answer: The change in the composition of India’s foreign trade can be studied under two heads :
(i) Change in the composition of Exports : The share of agricultural goods was 55% in the traditional exports by India in 1950-51. It reduced to 19.4% in 1989-90 and 10% in 2007-08. The share of engineering goods was 0.05% in 1951. It increased to 24% in 2007-08.
(ii) Change in composition of Imports : The share of jute, cotton and food grains had increased too much in the composition of import trade of India after 1947 but now it has reduced, the import of petroleum, fertilizers, steel, iron, metals, machinery capital goods, edible oil and chemicals has stepped up.

Question. Why are Tariffs Imposed?
Answer: Tariffs are taxes imposed on the imports by a country for providing protection to its domestic industries. Imposition of tariffs increases the price of imported goods such as customs duty are indirect taxes the burden of which is shifted to consumers in the form of higher price. The rise in price discourages consumption of imported goods by consumers and thus, domestic industries get a level playing field to compete with imports from other countries. Tariffs may be lowered after the domestic industry has gained enough strength to face foreign competition. Tariffs may also be imposed on those imported goods which are socially undesirable.

Question. Why were the benefits of Green Revolution restricted to few states and few crops in initial stages of planning ?
Answer: The Green Revolution implied use of High Yielding Varieties (HYVs) of seeds which required reliable irrigation and financial resources to buy better inputs. Thus, Green Revolution was restricted to the more affluent states of Punjab, Andhra Pradesh and Tamil Nadu. Further, the use of HYV seeds primarily benefitted the wheat growing regions only. Thus, the benefit of the Green Revolution was initially restricted to few states and the crops of wheat and rice only.

Question. How did government ensure that the small farmers also benefit from the Green Revolution as the rich farmers ?
Answer: The new agricultural strategy implied use of better and improved inputs of agriculture which required more capital. Green Revolution would have benefitted only the rich farmers if the government had not played an important role in ensuring that the small farmers could also have gained from the new technology. The government provided loans at low rates of interests. The fertilisers and High Yielding Varieties (HYVs) of seeds were subsidised.

Question. Discuss the share of different sectors in India’s import.
Answer: The share of different sectors are as under :
(i) The share of food grains in imports has declined
(ii) The share of capital goods has reduced.
(iii) The share of petroleum in imports of India has increased. 
(iv) The share of import of intermediate goods has stepped up and the share of chemical fertilizers has decreased.

Question. State the main objectives of liberalisation policy.
Answer: The main objective of liberalisation policy are :
(i) To increase competition among domestic industries.
(ii) To increase foreign capital formation and technology.
(iii) To decrease the debt burden of the country.
(iv) To encourage export and import of goods and services.

Question. What is Green Revolution? When and why was it implemented?
Answer: Due to low productivity, frequent occurrence of famines and low levels of agricultural produce, in the latter half of the second five year plan, a team was formed to suggest various ways to counter these problems. As per the recommendations of the team, government introduced the use of HYV seeds, modern techniques and inputs like fertilizers, irrigation facilities and subsidised credit. These steps collectively are known as Intensive Area Development Programme (IADP). Consequently, in the year 1967-68, food grains production increased nearly by 25%. Due to this substantial increase of food grains production, this outcome is known as ‘Green Revolution’. The word (Green Revolution) comprises of two words ‘Green’ that is associated with crops and ‘Revolution’ that is associated with the substantial increase.

Question. Industrial development in India played a leading role. How ? 
Answer: An economy can progress only if they have a good industrial sector providing a sound capital base. Industrial development is important for an overall growth of a country due to the following reasons :
(i) Industrialisation provides a strong basis for rapid and continuous increase in the income of the people.
(ii) Industrialisation leads to higher savings, investment and capital formation, thereby creating a solid foundation for self sustaining development.
(iii) Industrialisation provides tremendous employment opportunities.

Question. Write a brief note on Trade and Investment policy reforms.
Answer: Liberalisation of trade and investment regime was initiated to increase international competitiveness of industrial production and also foreign investments and technology into the economy. In order to protect domestic industries, India was following a regime of quantitative restrictions on imports. The trade policy reforms aimed at :
(i) dismantling of quantitative restrictions on imports and exports.
(ii) reduction of tariff rates.
(iii) removal of licensing procedures for imports.

Question. ‘Indian Economy represented liberalization as a policy of laissez-faire’. Defend or refuse.
Answer: The given statement is refused on the ground that the Indian economy was liberalized, not as a policy of laissez-faire, as it had resulted into partial freedom to various economic forces.

Question. While India had immensely benefitted from the Green Revolution, the technology involved was not free from risks. Can you mention one such risk on the basis of value or importance given to farmers ?
Answer: One such risk was the possibility that it would increase the disparities between small and big farmers because only the big farmers could afford the required inputs, thereby getting most of the benefits of the Green Revolution.

Question. Differentiate between private sector and public sector. Give an example of each sector. 
Answer: Differences between private sector and public sector are : 

Basis	Private Sector	Public Sector
Concept	Private sector is that part of the economy which is occupied by the private enterpreneurs.	Public sector is that part of the economy in which state acts as an enterpreneur.
Example	Reliance Industries	Mahanagar Telephone Nigam Limited (MTNL).

Question. Green revolution in the agricultural sector in India, was actually green in results. Throw some light.
Answer: The word Green Revolution comprises of two words—Green associates with crops and ‘Revolution’ denotes the substantial increase. Indian agricultural, in the post independent period, under the Intensive Area Development Programme (IADP) introduced the use of HYV (High Yielding Variety) seeds, modern technology and technique and imports like fertilizers, pesticides etc., irrigation facilities and subsidised credit. As a result, substantial increase in food grains production occurred and thereby justifies
that the Green Revolution in the agricultural sector in India, was actually green in results.

Question. What are High Yielding Variety (HYV) seeds ?
Answer: High Yielding Variety (HYV) seeds are those which produce large quantities of crops especially wheat and rice. The use of these seeds requires regular supply of water and optimum use of fertiliser and pesticide in correct proportions. Hence, the farmers require reliable irrigation facilities as well as the financial resources to purchase fertilizers and pesticides to benefit from HYV seeds.

Question. Explain land ceiling as a policy to promote equity in agriculture.
Answer: Land ceiling mean fixing the maximum size of land which could be owned by an individual. 
The purpose of land ceiling was to reduce the concentration of land ownership in a few hands. By this, government could acquire the surplus land and redistribute them to small farmers and landless labourers to promote equity.

Question. Discuss the change in the direction of India’s foreign trade.
Answer: The change in the direction of India’s foreign trade can be explained as follows :
(i) The share of Japan and Russia in import trade of India has stepped up.
(ii) India’s foreign trade with oil exporting countries (OPEC) has raised too much.
(iii) India’s foreign trade with Eastern European countries has reduced.
(iv) India’s trade with developing countries has expanded. In this way, India’s foreign trade with develop-ing countries has increased till 1990-91 after the adoption of new economic policy has taken place.

Question. What are the objectives of WTO ?
Answer: Objectives of WTO are as follows :
(i) To ensure the reduction of tariffs and other barriers of trade.
(ii) To enlarge production and trade of services.
(iii) To ensure optimum utilization of world’s resources.
(iv) To provide greater market access to all member countries.
(v) To protect environment. 

Question. At the time of independence, agricultural production in India received a major setback. Discuss the main reasons of the setback.
Answer: Main reasons of the setback are as follows :
(i) Due to partition, irrigated and fertile land went to Pakistan. 
(ii) Jute producing area became part of Bangladesh. 
(iii) India’s jute goods industry suffered a lot due to the lack of raw material.

Question. What was the two-fold motive behind the systematic de-industrialisation effected by the British in pre-independence India ?
Answer: The following were the two-fold motives behind the systematic de-industrialisation effected by the British :
(i) Making India a Supplier of Raw Materials : The main motive of the British Government was to make India a mere supplier of cheap raw materials to feed its own rapidly expanding industrial base.
(ii) Making India a Market for Finished Goods : Another important objective of the British Government in de-industrialising Indian economy was to use India as a large and growing market to sell the finished goods produced by the British industries, so that their industries never face a demand shortage and could keep on flourishing.

Question. Explain the state of industries in India on the eve of Independence.
Answer:  State of industries in India on the eve of Independence is explained below :
(i) The role of the public sector in development of industries was restricted to the railways, power generation, communications, ports and some other departmental undertakings. There was no growth of industrial base in India. (ii) Before the advent of British in India, the traditional handicraft industries enjoyed a world wide reputation for their quality and standards of craftsmanship. But they declined after the advent of British in India.
(iii) There were hardly any capital goods industries to promote further industrialisation, since the British had no interest in the development of Indian economy.

Question. What was the stage of secondary sector (industry) on the eve of independence ?
Answer:
(i) At the time of Independence, the process of industrialisation was limited to plantation and textile industry. It was supported by imported machinery and technical know-how.
(ii) It didn’t generate employment opportunities due to their capital intensive nature. 
(iii) As a result, the percentage of work force engaged in the secondary or industrial sector declined from 12.6% in 1901 to 10.7% in 1951. As a result of this, our industrial sector was very much depressed on the eve of independence.

Question. Indicate the volume and direction of trade at the time of independence.
Answer: Volume : At the time of independence, the volume of India’s trade increased tremendously. Exports were more than imports. Its exports were wheat, rice, sugar, precious stones, etc. and the imports were wools, steel, pearls, copper, paper, perfume, etc.
Direction : With respect to direction, more than half of India’s foreign trade was made with Britain. The rest was allowed with other countries like China, Sri lanka and Persia.

Question. ‘Composition of foreign trade of any country tells us about the nature of commodities that are Exported and Imported.’ What can you state about the composition of foreign trade at the time of independence?
Answer: India’s foreign trade under the British rule is described as below :
(i) The British followed a typical colonial pattern of trade in India, where it was made to serve their interests. Britain maintained a monopoly control over India’s foreign trade.
(ii) India exported raw materials to the home country of the Britishers for their expanding industries.
(iii) India was also developed as a market for the finished goods of the British industries.
(iv) The most important characteristic of India’s foreign trade throughout the colonial period, was the generation of a large export surplus.
But this surplus came at a huge cost to the country’s economy.
Thus, India was reduced to being a source of food for the British, a supplier of raw materials for the British industries and a market for their finished products .

Question. Which year is regarded as the defining year to mark the demographic transition from its first to the second decisive stage ? 
Answer: The year 1921 is regarded as the defining .year or the ‘Year of Great Divide’, because prior to 1921, population growth in India was stagnant. India was in the first phase of demographic transition till 1921, that was characterised by high birth rate and high death rate. It implies low survival rate (or low life expectancy) which was nearly 8 per thousand people per annum. After 1921, India’s population growth never declined and showed a consistent upward trend.

Question. What was the position of basic infrastructure during British rule ? 
Answer: The basic infrastructure is explained as under :
(i) Roads and railways : The built roads served the interests of mobilising the army and shifting raw materials. The introduction of railways occurred in India in 1890. 
(ii) Water transport : Inland and oceanic water ways were also developed during the British rule. However these measures were far from satisfaction. 
(iii) Posts : During British rule, postal services were also developed but remained all through inadequate.
(iv) Telegraphs : The British government introduced expensive system of electric telegraph in India.
This system was useful for maintaining law and order.

Question. How did the construction of railways affect the structure of the Indian economy ? 
Answer: In India, railways was introduced by Britishers in 1850.
It affected the structure of the Indian economy in many ways :
(i) It enabled people to undertake long distance travel and thereby break geographical and cultural barriers.
(ii) It fostered commercialisation on Indian agriculture which adversely affected the self-sufficiency in the village economies of India.

Question. “During colonial period, India was semi-feudal economy.” Justify. 
Answer: It is true that during colonial period, India was semi-feudal economy because :
(i) At the time of independence, there were two aspects of the Indian economy. The Britishers introduced a new type of land tenure system in India which gave birth to two classes-Zamindars or landlords and landless tenants or cultivators. 
(ii) The landlords were very cruel to the cultivators.
They used to charge very high rate of rent and land revenue. That’s why feudal relations (landlord- tenant relations) appeared in this system. 
(iii) In the middle of 19th century, capital investment was made in many new sectors like cotton textile, jute, sugar, tea, rubber and coffee plantation, etc.
This created two classes-capitalists and labourers.
So, at the time of independence, features of both (feudal and capitalist) appeared in this system. 

Question. What do you understand by the drain of Indian wealth during the Colonial Period. 
Answer: Economic drain means transfer of wealth from one country to other. During the colonial period Indian wealth was remitted to England. In lieu of this, India received nothing. For example, excess exports were made to meet the deficit on current account in England but India gained nothing.

Question. What were the main causes of India’s agricultural stagnation during the Colonial Period ?
Answer: The main causes of India’s agricultural stagnation during the colonial period were :
(i) Land Revenue System—According to Zamindari system, the Zamindars were recognised as “permanent owners of the land”. The profit accruing out of the agriculture sector went to the Zamindars instead of cultivators. However, both Zamindars and colonial government did nothing to improve the condition of agriculture. Zamindars were to pay a fixed sum to the government as land revenue and they were absolutely free to extract as much from the tillers of the soil as they could.
(ii) Lacking Resources—Alongwith the land settlement system, low levels of technology, lack of irrigation facilities and negligible use of fertilisers, all added upto the bad condition of the farmers and contributed to the dismal level of agricultural productivity. Despite of some progress made in irrigation, India’s agriculture starved of investment in tracing flood control, drainage and disalimination of soil.
(iii) Commercialisation of Agriculture—Due to commercialisation of agriculture, there were some evidences of a relatively higher yield of cash crops in certain areas of the country. But this could not help in improving the conditions of Indian farmers.
Instead of producing food crops, now they were producing cash crops, which were ultimately being used by British Industries.

Question. Critically appraise some of the shortfalls of the industrial policy pursued by the British Colonial administration ?
Answer: The focus of the industrial policies pursued by the colonial government in India was to make our country a mere supplier of Britain’s own flourishing industrial base. The policies were concerned mainly with the fortification and advancement for their own country. The industrial policy pursued by the British colonial administration has the following shortfalls : 1 (i) Neglect of Indian handicraft industries : The British followed a discriminatory tariff policy under which they imposed heavy tariffs (export duties) on India’s export of handicraft products while allowed free export of India’s raw material to Britain and free import of British products to India. This made Indian exports costlier and its international demand fell drastically leading to the collapse of handicraft industries. 1½ (ii) Lack of investment in Indian Industries : The modern industries in India demanded investments in capital goods that were beyond the means of Indian investors. On the other hand, British government was least interested in investing in Indian industries. Thus, due to the lack of sufficient investment, the growth of Indian industries was hampered.

Question. Give a quantitative appraisal of India’s demographic profile during the Colonial period ?
Answer: India’s demographic profile during the Colonial period is as follows : (i) The birth rate and death rate were as high as 48 and 40 per thousand respectively. Due to high birth rate and high death rate the population growth was stagnant. 1 (ii) The infant mortality rate was also very high (about 218 per thousand live births). The life expectancy rate was as low as 32 years while presently it is 63.5 years. 1 (iii) The literacy rate was less than 16% which denotes social backwardness in the economy. 1 (iv) India was featured with massive poverty, low standard and quality of living and low survival rate in the country. The lack of health care facilities and lack of health awareness were the main causes behind such demographic conditions in India. 

Question. Why should plans have goals ?
Answer: Every plan should have specified goals which it seeks to pursue. Goals are the ultimate targets the achievement of which ensures the success of pllans. A plan specifies the means and ways to allocate scarce resources in an optimum manner so as to achieve these desired goals. Without specific goals, a plan would be directionless and resources would not be utilised in a proper manner without wastage. Following goals are focused in every plan : (i) Growth (ii) Modernisation (iii) Self-reliance (iv) Equity

Question. Why, despite the implementation of Green Revolution, 65% of our population continued to being aged in the agriculture sector till 1990.
Answer.  The reason is that the industrial sector and the service sector did not absorb the people working in the agricultural sector.

Question. Why was it necessary for a developing Country like India to follow Self reliance as a planning objective.
Answer. Self reliance as a common goal of 5 year plans means avoiding imports of those goods which could be produced in India itself. It was necessary to follow self reliance as a planning objective during the first seven5year plans in order to reduce our dependence on foreign countries especially for food. Since we were recently freed from foreign domination it was essential to give importance to self reliance.
Further, it was feared that dependence on imported food supplies, foreign technology and foreign capital make India’s sovereignty vulnerable to foreign interference in our policies.

Question. Explain the need and types of land reforms/Institutional reforms implemented in the agriculture sector in India.
Answer. Need for land reforms in India:
At the time of independence, the land tenure system was characterised by intermediaries called zamindars, jagirdars, etc. Who merely collected rent from the actual tillers of the soil without contributing towards improvements on farm. The low productivity of agricultural sector forced India to import food from USA. To promote equity in the agricultural sectors, land reforms were implemented.
Types of institutional reforms in the agricultural sector:
- Change in the ownership of the land Holdings- The idea behind this move was that ownership of land would give incentives to the tillers to invest in making improvements, provided sufficient capital was made available to them.
- Land ceiling - This means fixing the maximum size of land which could be owned by an individual. The purpose of land ceiling was to reduce the concentration of land ownership in a few hands.
- Abolition of intermediaries- About 200 lakh tenants were freed from being exploited by the zamindars .

Question. What is the role of small scale industries in industrial development in India? Why and how has Government shielded small scale industries from the large firms.
Answer. Role of small scale industries.
- Small scale industries are more Labour intensive, that is they use more labour than the large scale industries and therefore generate more employment.
- Small scale industries help in promoting rural development. In 1955, the village and small Scale Industries Committee also called the Karve Committee, noted the possibility of using small scale industries for promoting rural development.
Steps taken by the government.
- The Production of a number of products was reserved for the small scale industries.
- They were also given concessions such as lower excise duty and bank loans at lower interest rates.

Question. The goal of equity was fully served by ‘Abolition of Intermediaries'. Comment.
Answer. The given statement is incorrect. The goal of equity was not fully served by abolition of intermediaries because of the following reasons:
- In some areas, the former zamindars continued to own large areas of land by making use of some loopholes in the legislation.
- In some cases, tenants were evicted and zamindars claimed to be self cultivators.
- Even after getting the ownership of land, the poorest of the agricultural labourers did not benefit from land reforms.

Question. Green revolution enabled the government to maintain buffer stock of food grains. Do you agree?
Answer. Yes, I agree with the given statement. Green revolution raised agricultural yield per acre to incredible heights. It enabled the government to procure sufficient amount of food grains to build a stock which could be used in times of food shortage.

Question. “Subsidies put a huge burdens on government’s finances, but are necessary for poor and marginal farmers.” Do you agree that granting subsidies justify the objective of social justice?
Answer. Yes, I agree with the given statement. Subsidy means that the farmers get inputs at prices lower than the market prices. Indian government has always provided massive subsidies to farmers. Subsidies are essential because.
- Majority of the farmers are very poor and will not be able to afford the required inputs without the subsidies. Subsidies provide them the equality of opportunities to use the inputs as used by rich farmers.
- Subsidies help to reduce the income inequality gap between rich and poor farmers and help to achieve the ultimate goal of equity.
So, the government should continue the agricultural subsidies as farming in India continues to be a risky business.

Question. How do small scale industries promote rural development?
Answer.
- These industries are labour intensive, which generate more employment.
- They reduce the dependence of people on agriculture for living.
- These industries require less capital, which is deficient in India.

Question. What is import substitution policy? Why it was introduced in India?
Answer.
- import substitution policy aimed at replacing or substituting Imports with domestic production. For example, instead of importing vehicles from abroad, the industries were encouraged to produced them in India itself.
- It was introduced in India because the government wanted to protect the domestic industries from the foreign competition. It was assumed that if domestic industries are protected, they will learn to compete in the course of time.

Question. Why was public sector given a leading role in industrial development during the planning period? Explain any 2 reasons.
Answer.
- At the time of independence, as the size of market was small to lure industrialist, to invest their capital. So, the government had to play an extensive role in promoting the industrial sector.
- Secondly, to develop Indian economy on socialist lines lead to the policy of the state controlling the commanding Heights of the economy.
- Private sector was to be complementary to the public sector, with the latter leading the way.

Question. Explain ‘Growth, Equity and Self-reliance' as long-term objectives of planning.
Answer. The long-term objectives of planning are:
- Growth- It refers to increase in the country’s capacity to produce the output of goods and services within the country. GDP is a good indicator of growth.
- Equity- It refers to the benefits of economic prosperity reaching the poor sections as well, not just being enjoyed by the few rich. Everyone should be able to meet the basis needs.
- Self-reliance- It refers to avoiding imports of those commodities which could be domestically produced, that is in India itself. In the first seven five-year plans, self-reliance was considered a necessity in order to reduce our dependence on imported food supplies, foreign technology and foreign capital. It was presumed it may make India vulnerable to foreign interference in our policies.

Question. How did Green Revolution benefit the farmers?
Answer.
- Timely and adequate credit facilities to farmers helped them in procuring the package of inputs required for use on the fields, resulting in increased agricultural production.
- This increased the farmers' earnings as the agriculture now became commercial.
- It increased the productivity of land.
- India attained self-sufficiency in food grains and reduced its dependence on imports.
- The new agricultural strategy implied use of better and improved inputs of agriculture which required more capital.
- Green Revolution would have benefited only the rich farmers if the government had not played an important role in ensuring that the small farmers also gains from the new technology. The government provided loans at low rate of interest. The fertilisers and HYV seeds were subsidised.

Question. Critically explain the economic policy prior to 1991, with its achievements and failures.
Answer. Silent features of the economic policy were as follow.
- Economic growth to be achieved during five-year plAnswer.
- Public enterprises to play an important role.
- Import substitution to be the centre of the process of industrialisation.
- Domestic industries to be protected from foreign competition.
- Large scale industries to be developed along with small scale industries, etc.
Achievements:
- Economic growth, got a push due to increased agricultural production. Industrial production also increased.
- Growth of large-scale industry projected an infrastructural shift in the Indian economy.
- Growth of small-scale industries made a substantial contribution in achieving the objectives of growth with social justice.
Failures:
- Public sector industries, by incurring huge losses, caused a drain on the nations scarce resources.
- Domestic industries failed to achieve international standard of product quality.
- Foreign exchange reserves depleted to a very low level.
Briefly the growth process started showing sign of stagnation across all sectors of the economy, industry in particular. Thus, the government had to shift to new economic policy of 1991.

 

 

1. Who is known as the architect of Indian Planning

a) Jawaharlal Nehru    b) PC Mahalanobis    c) Ambedkar    d) Dadabhai Noaroji

 

2. The planning commission was set up in :

a) 1948    b) 1950    c) 1951    d) 1956

 

3. ------------- refers to the utilization countries own resources to produce goods.

 

4. ------------ were initiated to bring equity in ownership of land holdings.

 

5. What is marketable surplus?

 

6. The protection of domestic industries took the form of :

a) Tariff   b) quotas    c) a and b    d) none of these

 

7. Which of the following is not true for small scale industries?

 

a) Karve committee appointed to study about SSI

b) SSI are capital intensive so need protection

c) SSI uses locally available raw materials

d) SSI are able to provide employment for rural people.

 

 

8. Why were the land reforms not implemented successfully?

 

9. What is Green Revolution? How did it benefit the farmers?

 

10. How were the industries classified according to the Industrial Policy Resolution of 1956?

 

11. Why and how was Private sector regulated under Industrial Policy Resolution 1956?

 

12. Why Public sector was assigned greater importance than Private sector?

 

 

13. Explain the common goals of all five year plans.

 

14. ‘Subsidies encourage farmers to use new technology; they are a huge burden on government finances’. Discuss the usefulness of subsidies in the light of this fact.

 

15. Critically appraise the industrial development during 1950 – 1990