Download indian economy 1950-1990 - Indian School Al Wadi Al Kabir

INDIAN SCHOOL AL WADI AL KABIR
ECONOMICS-XI
INDIAN ECONOMY 1950 to 1990
1. How are the economic decisions taken in various economic systems?
A: Different economic systems answer these questions differently.
i.
Capitalist economies depend upon the market forces of demand and supply to
take these decisions. Only those goods will be produced in the economy which
are in demand and which give profit to the producer. If the labour is cheaper
and more easily available than capital, labour intensive technology will be
used.
The goods and services produced are distributed among the people not on the
basis of what they need but on the basis of what they pay for.
ii.
In a socialist economy the Govt decides what goods are to be produced in
accordance with the needs of the society.
The Govt decides how the goods are to be produced and how they should be
distributed.
iii.
In a mixed economy the Govt and the market together answer these questions.
The market is allowed to operate more or less freely in the private sector but is
regulated by the Govt so as to ensure the maximum social welfare.
The market provides goods which it can profitably produce and the Govt
provides goods and services which the market fails to do.
2. What was the state of agriculture in India prior to independence?
3. What is sectorial composition of an economy?
4. Is it necessary that the service sector should contribute maximum to GDP of an
economy? Comment.
A: at higher levels of development, it is essential that the tertiary sector contribute
more to the national income than the other two sectors since it shows the development
of infrastructural facilities which form the crux of development of any economy. It
helps in fostering economic growth by attracting investors and entrepreneurs.
5. Why were the land reforms not implemented successfully?
6. What structural changes do occupational undergo as the economy develops?
A: as a country develops the share of agriculture in national income declines and the
share of industry becomes dominant. The working force shifts from agricultural sector
to non-agricultural occupations i.e. to industrial and service occupations.
7. How are the long term objectives realised through plan objectives?
A: planning in India is comprehensive planning. It includes policies and programmes
for economic development as well as for institutional changes and cultural progress.
This can be achieved through long term objectives of growth and development. These
achieve the long term objective of economic growth each plan focuses on higher
agricultural and industrial production. Thus, the plan objectives are tools through
which long term objectives are achieved.
8. Explain long term objectives of 5 year plans in India.
9. What has been the impact of self- reliance on the Indian economy?
A: i. Self- sufficiency in food grains.
ii. Fall in foreign aid and reduced dependence on imports owing to growth in
domestic production.
iii.
Progress in exports
iv.
Rise in contributions of industry to GDP.
10. Is it essential that growth in agricultural output leads to growth of the economy? Give
reasons.
A: Growth in agricultural output is important but not enough. If a large part of the
increase is consumed by the farmers themselves, instead of being sold in the market,
the higher output will not make a difference to the economy as a whole. It will not
contribute to the normal process of growth.
11. How did the Govt ensure that even the small farmers benefit from the green
revolution like the rich farmers?
12. How do small scale industries promote rural development/
13. Explain how the tariffs and quotas protect the domestic industries.
14. How was the licensing policy misused by some industrial houses/
15. What were the drawbacks of the licensing policy followed by the Govt before 1991?
A: The licensing policy before 1991 discouraged small entrepreneurs to set up new
enterprises.it also encouraged favouritism and corruption. It benefited only the big
industrial houses. The big industrial house will would get a license not for starting a
firm but to prevent competitors from starting new firms. The excessive regulation of
what came to be called permit license raj prevented certain firms from becoming more
efficient.
16. How did the Govt promote regional equality in industrial development?
17. Explain the policy of ‘Land to the tiller’ and its benefits.
18. ‘Subsidies provide an incentive for wasteful use of resources.’ Comment.
A: Prices are signals of availability of goods. Rising prices reflect scarcity and lead to
a judicious use of scarce resources and goods. Subsidies do not allow the prices to
indicate the supply of a good. When goods are available at subsidised rates, it may
result in overuse of resources without any concern for scarcity. Thus subsidies
provide an incentive for wasteful use of resources.
19. Critically examine the economic policy prior to 1991, with its achievements and
failures.
20. In the 5 year plans why was more importance given to the public sector?
A: Because the private sector lacked either the will or the resources to take up
investment in a sector which was completely untouched. For e. g. heavy and basic
industries require a lot of capital and have a long gestation period. To prevent
concentration of economic wealth and power it was essential that public sector be
given a leading role in the industrial development of a country.