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.

 INDIAN ECONOMY 

Very Short Answer Questions 

1. What is marketable surplus?

2. What are Capital goods Industries?

3. Define a plan

4. What do you mean by structural changes?

5. What is the central objective of Planning in India?

Short Answer Questions 

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

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

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

4. How was the licensing policy misused by some industrial houses?

5. Explain how Tariffs and Quotas protect the domestic Industry?

6. Distinguish between Planning objectives and Plan Objectives

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

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

9. Why were the land reforms not implemented successfully?

10. What were the drawbacks of the Green Revolution?

Long Answer Questions 

1. Why Public sector was assigned greater importance than Private Sector?

2. How are the Long term objectives realised through Plan Objectives?

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.

NCERT text book questions 

1. Explain ‘growth with equity’ as a planning objective.

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

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

4. Explain how import substitution can protect domestic industry.

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