CBSE Class 11 Economics Indian Economy 1950-1990

Question. What type of economy is followed in India?
a) Communist
b) Capitalist
c) Mixed
d) Socialist
Answer: Mixed Economy

Question. Planning Commission has been established in India in year____________. ( Fill up the blank with correct answer)
Answer: 1950

Question. ______________ was the first chairman of planning commission.( Dr. Rajendra Prasad/ Pt. Jawahar lal Nehru) ( Fill up the blank with correct opton)
Answer: Pt Jawahar lal Nehru

Question. Whether the following statement is true or false? ‗Industrial Policy resolution came in 1948 and 1956
Answer: True

Question. What does HYVP stand for?
a) High Yeilding Varieties Products
b) High Yeilding Various Programme
c) High Yeilding Varieties Programme
d) High Yeilding Various Products
Answer: High Yeilding Varieties Programme

Question. State whether the following statement is true or false ‗Five Year Planning has been borrowed by India from Europe‘.
Answer: False; It is borrowed from Former Soviet Union.

Question. Our plan documents not only specify the objectives to be attained in the five years of a plan but also what is to be achieved over a period of twenty years. This long-term plan is called as ______________. ( Fill up the blank with correct answer)
Answer: perspective plan‘.

Question. What is the year of India‘s 12th 5-year plan?
a) 1997 – 2002
b) 2002 – 2007
c) 2007 – 2012
d) 2012 – 2017
Answer: 2012 – 2017

Question. Former Soviet Union, the pioneer in National Planning failed in________. ( Choose the correct answer)
a) Achieving the economic growth
b) Achieving the fixed production targets
c) fulfilling the needs of the people of the country
d) emerging the country as a super power
Answer: B

Question. Second Five Year Plan leading to rapid industrialisation was based on the ideas of_____________. ( Fill up the blank with correct answer)
Answer: Prasanta.Chandra Mahalanobis

Question. Which of the following statements are not correct about P.C. Mahalanobis?
a) he was born in 1893 in Calcutta,
b) His education was from Presidency college Calcutta and Cambridge University.
c) In 1947 he became the fellow member of Britain‘s Royal Society.
d) He established Indian Statistical Institute in Calcutta.
Answer: C

Question. State whether the following statement is true or false? ―In a capitalist society the goods produced are distributed among people not on the basis of what people need but on the basis of Purchasing Power—the ability to buy goods and services‖.
Answer: True

Question. Contribution of each sector in total GDP is called as ______________. ( Fill up the blank with correct answer)
Answer: Structural composition

Question. Which one of the following is NOT among the basic idea behind the policy of ― land to the tillers‖. ( Choose the correct alternative)
a) Increase in output
b) Incentive to cultivators
c) loss to the zamindars
d) land improvement
Answer: C

Question. What was the % of India‘s population that was dependent on agriculture in 1950-51 and 1990?
a) 75% to 70%
b) 50% to 55%
c) 85% to 70%
d)68% to 65%
Answer: D

Question. The portion of agricultural produce which is sold in the market by the farmers is known as_____________. ( Fill up the blank with correct answer)
Answer: Marketed surplus

Question. Who presented the 1st 5-year plan of the country?
Answer: Pandit Jawaharlal Nehru

Question. _______________ refers to the size (dimension) of the land that an individual or family can possess. ( Fill in the blank with correct answer)
Answer: Land ceiling. In India, this act was passed during the year 1961-62 and it was controlled by all the state governments. However, the ceiling limits vary from state to state.

Question. _____________is the father of high yielding variety seed. ( Fill up the blank with correct alternative) ( M.S. Swaminathan/ Norman Borlaug)
Answer: Norman Borlaug.

Question. High price is a signal of _____________ of goods. ( scarcity/ abundance) ( fill in the blank with correct option)
Answer: Scarcity

Question. The planning commission was set up in which year in India?
a) 5th March 1951
b) 25th April 1951
c) 20th March 1951
d) 15th March 1950
Answer: The planning commission was set up in the year 15th March 1950.

Question. What were the priorities in the 11th five-year plan?
Answer: The primary focus areas in the 11th 5-year plan was – infrastructure development, health, agriculture and education.

Question. Define small scale industries.
Answer: Small scale industries are those which have fixed investment in plant and machinery, whether hold on ownership basis or lease basis or hire purchase basis not more than Rs. 1 crore.

Question. Focus points of 1st Five year plan was __________ growth and 2nd five-year plan was __________. ( Agriculture/ Industry/ Infrastructure) ( Fill up the blank with correct alternative)
Answer: Agriculture was the focal point for the 1st five-year plan whilst Industries was the focal point for the 2nd five-year plan.

Question. Green revolution is also known as_____________. ( Fill up the blank with correct answer)
Answer: Wheat revolution

Question. __________________ is a type of economic system in which direct regulation and management of the property and enterprise and workers are done through government. ( Capitalism/ Socialism) ( Fill up the blank with the correct option)
Answer: socialism

Question. __________ seeds are called as miracle seeds. ( Fill up the blank with the correct answer)
Answer: HYV

Question. State whether the following statement is true or false?
Comprehensive planning is pursued under socialistic and mixed economy‘.
Answer: True

Question. Import substitution has replaced imports with the__________ produced goods. ( Fill up the blank with correct answer)
Answer: Domestically

Question. Industrial policy resolution lays more emphasis on ______________ sector. ( public// private) ( fill up the blank with correct answer)
Answer: Public sector

Question. Define a plan.
Answer: A plan is a long term strategy which spells out how the resources of a nation are going to be used. A plan should have some general goals and some specific goals which are to be achieved within a specified time period.

Question. Why did India opt for planning?
Answer: Indian policy makers have opted mixed economy for the country where public sector as well as private sector both coexist. Following were the reasons for opting planning. i) Poor, Backward and stagnant economy: At the time of independence, Indian economy was in very poor shape. All indicators, GDP, Per capita income, health, education etc were showing low and poor performance.
Low Private Capital: The private capital was at a low level. Private sector was not so strong to invest huge amount for the economic development of the country. So development responsibilities lies with the government Building the basic Industries and other sectors: Basic industries were very few in numbers. The whole economy was dependent on a few sectors. Government has to take up the responsibility of development , so planning was required. Agriculture was done through primitive methods and needed a lot of improvement to feed a growing population. The first Prime Minister and other thinkers of the time thought it suitable to opt for a planned economy.

Question. Why should plans have goals?
Answer: For any plan to succeed you need to have some goals. Without a goal, one does not know where to reach. It is similar to setting a destination before beginning a journey. Without a preset destination, you will reach nowhere at the end of a journey.

Question. What are High Yielding Variety (HYV) seeds?
Answer: High Yielding Variety (HYV) seeds are new variety of seeds which are produced after cross breeding or genetic engineering. As the name suggests; HYV seeds give higher yields per acreage than the conventional seeds.

Question. What is marketable surplus?
Answer: Excess of production over consumption is marketed surplus. If a farmer produces so much of farm produce that a surplus amount can be saved after his own consumption, this surplus amount can be sold in the market. This surplus amount is called market surplus.

Question. Explain the need and type of land reforms implemented in the agriculture sector.
Answer: There were some land reforms introduced in the agriculture sector.
1.Abolition of Zamindari: The first reform was related to the ownership of land. The actual tillers; who were not the owners of the land were given the ownership of land. It was assumed that ownership would give them motivation to invest in improvement of land and it would help in better farm productivity.
2.Fixing Land Ceiling: The second reform was related to the land ceiling. This put a ceiling on maximum land holding which a farmer could have. This reform helped in equitable distribution of land. Previously, a few farmers held the ownership of biggest chunks of land; while most of the farmers were marginal farmers or landless farmers.
3.Redistribution of land: excess of land which was taken from zamindars after ceiling was announced as surplus land which was distributed among the land less.
4.Consolidation of Landholdings: If a farmer has many land pieces scattered over here and there, consolidation provided one compact plot of larger size instead of many small plots.

Question. What is Green Revolution? Why was it implemented and how did it benefit the farmers? Explain in brief.
Answer: In mid 1960‘s a new agricultural strategy for agricultural development. The package of following three was used for increasing production: i)HYV Seed: Using HYV seeds for higher yield in quantity and quality both. Government has provided these seeds to the farmers for getting good quality crops. ii)Use of Chemical fertilizer: Using chemical fertilizers as per the soil conditions. Farmers are supposed to test the soil and use chemical fertilizer as per requirement. iii)Appropriate use of water: HYV seeds and chemical fertilizer need plenty of water. Modern methods of irrigation were to be used for better yield. Government has implemented Green Revolution for large increase in food grain production.
BENEFITS OF GREEN REVOLUTION:
i) High foodgrains production specially wheat & rice.
ii) India became self sufficient in food grains. The dependence of the country on other countries for foodgrains has reduced.
iii) Income of farmers increased as they have more surplus of foodgrains.
i) The risk of the small farmers being ruined when pests attack their crops was considerably reduced by the services rendered by research institutes established by the government.

Question. Explain growth with equity‘ as a planning objective.
Answer: Equity was one of the major goals of planning. Growth, modernization and self-reliance (the other goals of planning) could not be enough if the fruits of these developments did not reach a large section of the society. If the issue of equity is not taken care of, then the rich would become richer and the poor would become poorer. Prosperity would be concentrated in only a few hands and a vast section of the society would be devoid of the quality of life which a prosperous economy can give. Thus, equity should be a major objective of planned economy. Government is trying to fulfil the basic needs of every Indian like food, decent house, education, health care etc. Government imposes high tax on rich and launches various welfare schemes for the poor, deprived sections of population.

Question. Does modernisation as a planning objective create contradiction in the light of employment generation? Explain.
Answer: It is a wrong notion that modernization as a planning objective creates contradiction in the light of employment generation. Modernization not only involves adoption of new technology but also changes in social norms. Many early thinkers thought that new machines can reduce employment opportunities because one machine can do the work of hundreds of people in less time. But we should not forget that a new machine can help in opening up new employment opportunities which could not have been even thought of. Following example illustrates this in a relevant way.
When our former Prime Minister, Rajiv Gandhi talked about computerization to modernize various sectors; there were huge protest. People thought that since a computer can do the work of thousands of people in a fraction of time, it would result in mass unemployment. But current scenario tells a different story. Thanks to the advent of computer and IT, many new employment opportunities have opened up about which people could not even imagine in the past.

Question. Why was it necessary for a developing country like India to follow self-reliance as a planning objective?
Answer: This policy was considered a necessity in order to reduce our dependence on foreign countries, especially for food. It is understandable that people who were recently freed from foreign domination should give importance to self-reliance. Further, it was feared that dependence on imported food supplies, foreign technology and foreign capital may make India‘s sovereignty vulnerable to foreign interference in our policies. For a developing country, it is very important that local business grows to a size that develops the ability to compete with companies from other nations. Moreover, at the time of independence; it was feared that overdependence on other countries may lead to interference in domestic policies. Self-reliance was desirable at least in those products and services which catered to the basic needs such as food and clothing. For this government should try to increase production of the country and able to import the goods which are in short supply.

Question. What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum to GDP of an economy? Comment.
Answer: An economy can be divided into three main sectors, viz. primary, secondary and tertiary sectors. Agriculture and related activities come under primary sector, industries come under secondary sector and services come under tertiary sector. Relative share in GDP and in employment opportunities of different sectors shows the sectoral composition of an economy. Traditionally, it has been seen that an economy remains over-dependent on agriculture during initial stages of development. It gradually progresses to being dependent on the industries. In case of developed economies, dependency on services sector is the highest. This is not a rule but experience from most of the developed economies suggests that a higher contribution by services sector is an indication towards a developed economy.

Question. Why was public sector given a leading role in industrial development during the planning period?
Answer: Following were the reasons for giving leading role to public sector :-
i) Poor, Backward and stagnant economy: At the time of independence, Indian economy was in very poor shape. All indicators, GDP, Per capita income, health, education etc were showing low and poor performance. India was a totally depleted, backward, stagnant, poor and partitioned economy that required immediate revival. That was possible only when government taked initiatives.
ii) Low Private Capital: The private capital was at a low level. Private sector was not so strong to invest huge amount for the economic development of the country. So development responsibilities lies with the government. Most of the sectors which required huge investments could not be operated by private businesspersons. iii)Building the basic Industries and other sectors: Basic industries were very few in numbers. The whole economy was dependent on a few sectors. Government has to take up the responsibility of development , so planning was required. Agriculture was done through primitive methods and needed a lot of improvement to feed a growing population. The basic industries; like iron and steel and heavy machinery needed immediate infusion of capital and technology. Infrastructure needed to be built. All of this could not have been possible without the intervention of the government. Hence, public sector was given a leading role in industrial development during the planning period
iv) Welfare of the people: Our constitution described socialistic pattern of the society as the main goal, which was possible only by the public sector. Private sector works for profit, so the objective was not possible .

Question. Explain the statement that green revolution enabled the government to procure sufficient food grains to build its stocks that could be used during times of shortage.
Answer: Before the beginning of the Green Revolution, the government had to depend on American imports to fulfil the demand of food during times of shortage. Green Revolution helped in creating market surplus of food grains; especially wheat and rice. This resulted in falling prices of food grains. There was so much surplus food available that the government got enough food grains to build buffer stocks. This buffer stock could be used during the times of shortage. There was no more dependency on imports to meet the need during times of shortage.

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: Subsidies to farmers has always been a debatable issue. It is beyond doubt that subsidies result in huge financial burden on the government. But subsidies are important also in the following respects:
i) Affordable cost of cultivation for small farmers. Subsidizing HYV seeds, fertilizers, farm equipments, etc. helps even small farmers to afford the inputs for cultivation. Prices are reduced for the inputs used in cultivation that helps small farmers adopt new agricultural technology. They can also buy subsidised goods from PDS, that improves the standard of consumption of poor people.

ii) Improving Productivity of Small Farmers: Subsidy enables the farmers to improve their productivity. This helps poor farmers increase their income.In the absence of subsidy, only the rich farmers would be benefited from new technologies; like HYV, fertilizers, pesticides and irrigation facilities. This will make the rich farmers more prosperous but the poor farmers would become even worse.
iii) Benefits for the country: In the long run, good farm output benefits not only the farmers but the whole nation. Hence, in spite of putting some financial burden on the government, subsidies definitely help the farming community in particular and the whole society in general.

Question. Why, despite the implementation of green revolution, 65 per cent of our population continued to be engaged in the agriculture sector till 1990?
Answer: During 1950s, the contribution of agriculture to the GDP was 59%; which decreased substantially to 35% by 1990. Contribution of other sectors in the GDP increased sharply during this period. But employment generation in secondary and tertiary sectors did not increase at the same pace. As a result, even after about four decades of the planned economy, contribution of agricultural sector in employment generation remained more or less same. 65% of the total population still continued to be engaged in agriculture till 1990.

Question. Though public sector is very essential for industries, many public sector undertakings incur huge losses and are a drain on the economy‘s resources. Discuss the usefulness of public sector undertakings in the light of this fact.
Answer: Public Sector undertakings are useful in following respects; i)Public Welfare: Public sector undertaking‘s main goal is public welfare rather than profit making. It gives all the dues to the employees.
ii) Employment in Organised sector: The workers in PSUs are getting all benefits that organised sector gets, while private sector mostly work in unorganised sector, so does not keep the interest of workers in mind and workers are exploited. iii)Production of Public Utility goods: Public sector undertakings usually produce goods or services which are needed by people so that even the poor can afford such goods and services. In light of above benefits of PSU‘s government should continue the PSU‘s as the organised sector is only around 7% now. Excessive loss making units may be burden on the economy, so it may be sold to private sector.

Question. Explain how import substitution can protect domestic industry?
Answer: If domestic industry can grow to such a level then it will be able to substitute the imports. Imports are always costlier than locally produced goods, because importing something involves transportation costs and tariffs. Apart from reducing the cost of a particular product, import substitution also gives an opportunity to local players to gain expertise and to grow in terms of revenue. Thus, import substitution helps in protecting the domestic industry as well.

Question. Why and how was private sector regulated under the IPR 1956?
Answer: Under the IPR 1956, private sector was regulated through licensing system. To start a business, a company had to obtain a license from the government. The government also put limit on the quantity of goods produced so that production should not be more than what the economy needed. Certain sectors were exclusively reserved for small scale sector. It was believed that small scale sector would provide more employment to people. If a company wished to open a factory in backward area, then obtaining a license was very easy. Thus, opening a new venture or capacity expansion was strictly controlled by the government.

Question. Match the columns
Answer:
a. Prime Minister: Chairperson of the Planning Commission
b. Gross Domestic Product: The money value of all the final goods and services produced within the economy in one year.
c. Quota: Quantity of goods that can be imported.
d. Land Reforms: Improvements in the field of agriculture to increase its productivity.
e. HYV Seeds: Seeds that give large proportion of output.
f. Subsidy: The monetary assistance given by government for production activities.

Question. Soviet Farmers used to pack rotten fruits along with fresh fruits in the same box. Each farmer knew that the rotten fruits will spoil the fresh fruits if they are packed together.‘ Why did the Soviet farmers do something that incur loss for them?
Answer: The answer lies in the incentives facing the farmers. Since farmers in the former Soviet Union did not own any land, they neither enjoyed the profits nor suffered the losses. In the absence of ownership, there was no incentive on the part of farmers to be efficient, which also explains the poor performance of the agricultural sector in the Soviet Union despite availability of vast areas of highly fertile land.

Question. ―Development Goals may be conflicting‖ Explain the statement by giving an example. OR ―It will be unrealistic to expect all the goals of a plan to be given equal importance‖. Explain
Answer: It will be unrealistic to expect all the goals of a plan to be given equal importance in all the plans. In fact the goals may actually be in conflict. For example, the goal of introducing modern technology may be in conflict with the goal of increasing employment if the technology reduces the need for labour. The planners have to balance the goals, a very difficult job indeed. We find different goals being emphasised in different plans in India.

CHAPTER - 2: INDIAN ECONOMY 1950-1990

Very Short Answer Questions - 1 Mark Each

1. What is marketable surplus? [1 Mark]

Answer:
Marketable surplus refers to the portion of agricultural produce that is sold by the farmers in the market after keeping enough for their own family consumption.

Teacher's Note:
a) Marketable surplus measures the agricultural surplus available for the non-farming population.
b) A high marketable surplus indicates commercialized agriculture.

2. What are Capital goods Industries? [1 Mark]

Answer:
Capital goods industries are those industries which can produce machine tools and equipment that are in turn used for producing articles for current consumption.

Teacher's Note:
a) These industries form the backbone of industrialization by supplying core machinery.
b) Examples include iron and steel manufacturing and heavy machine-building plants.

3. Define a plan [1 Mark]

Answer:
A plan spells out how the resources of a nation should be put to use in order to achieve specific national goals over a given period.

Teacher's Note:
a) Economic planning involves centralized allocation of scarce resources.
b) In India, planning was carried out through five-year plans.

4. What do you mean by structural changes? [1 Mark]

Answer:
Structural changes refer to a shift in the contribution of various sectors, such as agriculture, industry, and services, to the overall Gross Domestic Product and employment of an economy.

Teacher's Note:
a) Development is typically accompanied by a decline in agriculture share and a rise in secondary and tertiary sectors.
b) Institutional changes in land ownership are also part of structural reforms.

5. What is the central objective of Planning in India? [1 Mark]

Answer:
The central objective of planning in India is to promote economic development, leading to an increase in living standards, self-reliance, reduction of poverty, and equitable distribution of income.

Teacher's Note:
a) Broad long-term goals include growth, modernization, self-reliance, and equity.
b) Every five-year plan had specific short-term goals aligned with these central objectives.

Short Answer Questions - 3 Marks Each

1. Why was it necessary for a developing country like India to follow Self Reliance as a planning objective? [3 Marks]

Answer:
1. To avoid foreign interference in domestic policies, political and economic independence was essential.
2. To reduce dependence on foreign countries for essential goods, particularly food supplies and advanced technology.
3. To promote domestic industries and conserve scarce foreign exchange reserves.

Teacher's Note:
a) Self-reliance meant utilizing domestic resources rather than relying on imports or foreign aid.
b) It was a crucial lesson learned from colonial subjugation.
c) Students often confuse self-reliance with autarky; clarify that self-reliance does not mean complete isolation from trade.

2. How did Green Revolution enable the Government to procure sufficient food grains and build buffer stocks? [3 Marks]

Answer:
1. The adoption of High Yielding Variety seeds and chemical fertilizers led to a substantial jump in agricultural productivity.
2. The marketable surplus increased significantly, giving farmers large quantities of surplus food grains to sell.
3. The government purchased these surplus grains at minimum support prices to build buffer stocks for food security.

Teacher's Note:
a) Buffer stocks help stabilize food grain prices during poor harvest years.
b) The Green Revolution made India self-sufficient in food grain production.
c) Mentioning the role of the Food Corporation of India adds value to the answer.

3. Why does small scale industry need protection from the Government? [3 Marks]

Answer:
1. Small scale industries are more labor-intensive and generate massive employment opportunities with limited capital.
2. They cannot compete with the large multinational or domestic big firms in terms of financial muscle and scale of economies.
3. Protection in the form of reservation of products and financial concessions helps them survive and grow.

Teacher's Note:
a) The Karve Committee in 1955 emphasized the role of small-scale industries for rural development.
b) Protection policies included reserved production lines and tax benefits.
c) Emphasize the employment-generating capacity of this sector.

4. How was the licensing policy misused by some industrial houses? [3 Marks]

Answer:
1. Industrial houses used licenses more to prevent competitors from entering the market than to increase production.
2. Large business houses often obtained licenses for capacity expansion and then sat on them, creating industrial monopolies.
3. Bribes and political influence were used to acquire licenses for restricted sectors, leading to resource misallocation.

Teacher's Note:
a) Industrial licensing was meant to direct investment to backward regions and monitor output.
b) Misuse of the license raj led to the 1991 economic reforms.
c) Keep the focus on market entry restrictions and monopolistic tendencies.

5. Explain how Tariffs and Quotas protect the domestic Industry? [3 Marks]

Answer:
1. Tariffs are taxes on imported goods that make them costlier, discouraging their purchase and favoring domestic goods.
2. Quotas fix the maximum limit on the quantity of goods that can be imported from abroad.
3. Together, they shield domestic producers from foreign competition by restricting international trade inflow.

Teacher's Note:
a) This strategy is part of the import substitution policy.
b) Tariffs act as a price barrier while quotas act as a quantity barrier.
c) Mentioning how this fostered domestic manufacturing is essential.

6. Distinguish between Planning objectives and Plan Objectives [3 Marks]

Answer:
1. Planning objectives refer to long-term goals that remain constant over several five-year plans, such as growth, equity, and self-reliance.
2. Plan objectives are specific short-term goals that change from one five-year plan to another depending on the immediate needs of the economy.
3. For instance, achieving food self-sufficiency was a specific plan objective during the initial plans, whereas growth is a permanent planning objective.

Teacher's Note:
a) Long-term goals are overarching, while short-term targets are tailored to current economic challenges.
b) Both must align harmoniously for successful national development.
c) Give a clear illustrative difference to secure full marks.

7. How were the industries classified according to the Industrial Policy Resolution of 1956? [3 Marks]

Answer:
1. Schedule A consisted of industries exclusively owned and operated by the state, such as defense and atomic energy.
2. Schedule B comprised industries in which the private sector could supplement the public effort, with the state taking the primary initiative.
3. Schedule C included all remaining industries left open to the private sector.

Teacher's Note:
a) This resolution formed the basis of the Second Five-Year Plan.
b) It gave the government a commanding height of the economy.
c) Ensure all three schedules are named and explained.

8. Why and how was Private sector regulated under Industrial Policy Resolution 1956? [3 Marks]

Answer:
1. The private sector was regulated to prevent concentration of economic power and ensure balanced regional development.
2. Regulation was enforced through the Industrial Licensing system, requiring government permission to start or expand industries.
3. Price controls, output quotas, and differential taxation were also used to keep private enterprises in check.

Teacher's Note:
a) State control ensured that private profits aligned with social welfare.
b) Licensing was the core tool for implementation.
c) Highlight the socialistic pattern of society goal.

9. Why were the land reforms not implemented successfully? [3 Marks]

Answer:
1. Big landlords challenged the legislation in courts, delaying implementation and finding legal loopholes to retain land.
2. Political will was lacking in many states due to the strong influence of rich landowners over the administration.
3. Poor tenants lacked the awareness, legal support, and organization to claim ownership rights effectively.

Teacher's Note:
a) Land to the tiller was the slogan, but tenancy laws had major loopholes.
b) Benami transfers were widely used to bypass ceilings.
c) Focus on administrative and legal hurdles.

10. What were the drawbacks of the Green Revolution? [3 Marks]

Answer:
1. It widened the income disparity between small and large-scale farmers because only wealthy farmers could afford the required inputs.
2. It was initially restricted to a few regions, mainly wheat and rice growing northern states like Punjab and Haryana.
3. Excessive use of chemical fertilizers, pesticides, and groundwater depleted soil fertility and led to environmental degradation.

Teacher's Note:
a) Discuss economic disparities, regional imbalances, and ecological impacts.
b) The technology package required assured irrigation.
c) Mention the risk of pest attacks associated with high-yielding varieties.

Long Answer Questions - 6 Marks Each

1. Why Public sector was assigned greater importance than Private Sector? [6 Marks]

Answer:
1. Lack of Capital: Private entrepreneurs lacked the massive capital required to invest in heavy industries and infrastructure after independence.
2. Low Market Incentive: The private sector had little incentive to invest in projects with long gestation periods and low immediate returns, such as power plants and steel mills.
3. Growth with Social Justice: State control was essential to prevent monopolies, reduce inequalities, and ensure that wealth did not concentrate in a few hands.
4. Regional Development: The public sector could establish industries in backward and remote regions to promote balanced regional growth.
5. Building Infrastructure: Developing basic infrastructure like transport, communication, and power was a prerequisite for industrialization, which only the state could undertake.
6. Strategic Independence: Government ownership of core industries protected national security and ensured self-reliance.

Teacher's Note:
a) Point out the socio-economic conditions of India in 1950.
b) Explain the socialist leanings of the policymakers.
c) Cover capital scarcity, infrastructure development, and equity together.
d) Conclude with how public enterprises formed the core of the second five-year plan.

2. How are the Long term objectives realised through Plan Objectives? [6 Marks]

Answer:
1. Definition and Linkage: Long-term objectives represent the ultimate vision of the nation, while plan objectives are short-term steps framed for every five-year plan to achieve that vision.
2. Growth Objective: To achieve the long-term goal of higher output and national income, individual plans set specific GDP growth targets and invest in productive sectors.
3. Modernization Objective: To update the economy, individual plans introduce new technology, promote industrialization, and change social outlook regarding women and work.
4. Self-Reliance Objective: Plans incorporate strategies like import substitution and domestic manufacturing to reduce foreign dependence over time.
5. Equity and Social Justice: Every plan ensures that the benefits of growth reach the poorer sections through targeted employment and poverty alleviation programs.
6. Periodic Review: By evaluating the achievements of each five-year plan, policymakers adjust subsequent plan objectives to steadily move closer to the permanent long-term national goals.

Teacher's Note:
a) Clearly distinguish between the overarching goals and the specific plan targets.
b) Show how growth, modernization, self-reliance, and equity act as bridges.
c) Emphasize that plans break down long-term dreams into manageable five-year milestones.
d) Conclude by mentioning the interdependence of all four core goals.

3. ‘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. [6 Marks]

Answer:
1. Role in Technology Adoption: Subsidies on fertilizers, seeds, and power encouraged risk-averse, poor farmers to adopt untested High Yielding Variety technology during the Green Revolution.
2. Support for Small Farmers: Without subsidies, small and marginal farmers would be priced out of modern agricultural inputs, worsening rural inequality.
3. Food Security: Subsidized inputs kept agricultural costs low, ensuring stable food grain production and affordable food prices for consumers nationwide.
4. The Burden on Exchequer: Subsidies impose a massive fiscal burden on government finances, diverting funds away from critical developmental infrastructure like health, education, and transport.
5. Misuse and Inefficiency: Subsidized electricity and water often lead to wasteful consumption, severe groundwater depletion, and environmental degradation.
6. Reforming Subsidies: While subsidies were essential to jumpstart agriculture, economists argue they should be targeted strictly to poor and needy farmers rather than being generalized.

Teacher's Note:
a) Balance both arguments in the debate on agricultural subsidies.
b) Highlight the historical necessity during the Green Revolution.
c) Discuss the modern concerns of fiscal deficit and resource wastage.
d) Conclude with the policy recommendation of rationalizing rather than abruptly removing subsidies.

NCERT text book questions - 3 Marks each

1. Explain ‘growth with equity’ as a planning objective. [3 Marks]

Answer:
1. Growth refers to an increase in the country's capacity to produce goods and services through higher output and rising national income.
2. Equity ensures that the benefits of this economic growth are shared fairly across all sections of society, reducing income inequality.
3. Growth alone is insufficient; if the poor do not share in the wealth, the fruits of development remain concentrated in few hands.

Teacher's Note:
a) Growth is the pie, equity ensures how the pie is divided.
b) Both objectives must go hand in hand for inclusive development.
c) Emphasize the reduction of poverty and inequality.

2. What is sectoral composition of an economy? Is it necessary thatthe service sector should contribute maximum to GDP of aneconomy? Comment. [3 Marks]

Answer:
1. Sectoral composition refers to the contribution of different sectors, namely agriculture, industry, and services, to the total GDP of an economy.
2. It is not strictly necessary for the service sector alone to contribute the maximum, as developing nations often transition successfully through strong industrial growth first.
3. However, modern economic development generally witnesses a structural shift where the service sector eventually becomes the largest contributor to GDP.

Teacher's Note:
a) Define primary, secondary, and tertiary sectors clearly.
b) Mention that developed nations derive a large share from services.
c) Clarify that industrialization is also vital for sustainable job creation.

3. Does modernisation as a planning objective create contradictionin the light of employment generation?Explain. [3 Marks]

Answer:
1. Modernization involves the adoption of advanced technology and machinery to increase productivity and output.
2. Advanced technology is often capital-intensive and labor-saving, which can lead to technological unemployment in a labor-abundant country like India.
3. Therefore, balancing modernization with employment generation creates a policy dilemma between labor-intensive and capital-intensive techniques.

Teacher's Note:
a) Modernization also includes social change, but economic modernization often means automation.
b) Highlight the trade-off between efficiency and job creation.
c) Mention how policymakers must support labor-intensive small-scale industries to resolve this.

4. Explain how import substitution can protect domestic industry. [3 Marks]

Answer:
1. Import substitution replaces foreign goods with domestic production, shielding local producers from external competition.
2. Tariffs and quotas are imposed on imports to make them expensive and scarce, forcing consumers to buy domestic alternatives.
3. This protected environment gives domestic infant industries time to grow, build capacity, and achieve economies of scale.

Teacher's Note:
a) Import substitution was the core trade strategy of India's first seven plans.
b) It is also known as an inward-looking trade strategy.
c) Emphasize the concept of protecting infant industries.