Indian Eco Dev-12 - Final
Indian Eco Dev-12 - Final
DEVELOPMENT
CLASS XII
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INCLUDING
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Objective Type Questions and Project Work
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[Strictly according to the latest syllabus prescribed by
the Central Board of Secondary Education, New Delhi]
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and
SHALINI KAPOOR
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PREFACE TO THE FIFTH EDITION
It is a great pleasure to present the thoroughly revised edition of the book INDIAN
ECONOMIC DEVELOPMENT. The book conforms to the latest syllabus prescribed by
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the CBSE.
The subject matter is prepared in such a way that it incorporates the recent changes
and developments in different economic sectors. The language of the book has further
been simplified. The economic terms have been explained in clear and precise form so
that the readers can understand the concepts easily.
The other key highlights of this book are:
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A brief outline of the key concepts is given in the beginning of each chapter.
order to enrich the knowledge of the learners about recent developments in
the Indian Economy, relevant and current data acquired from various sources like
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the Economic Survey – Government of India, World Bank Data reports, etc. has
been illustrated through diagrams and tables.
Adequate number of practice questions based on the core-concepts have been
provided at the end of each chapter. It will certainly prove to be a reliable tool
for revision and self-assessment.
We sincerely believe that the book provides outstanding material to excel in your
board examinations.
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We take this opportunity to thank M/s Arya Publications for their encouragement
and never ending support in bringing out this book well on time.
Any suggestions for further improvement of the book will be gladly acknowledged
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and appreciated.
Authors
PREFACE TO THE FIRST EDITION
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discussed in three chapters: Indian Economy on the Eve of Independence; Goals of
India’s Development plans; and Agriculture Industry and Foreign Trade.
It also discusses the policy of economic reforms since 1991 in the form of liberalisation,
privatisation and globalisation.
Unit VII Current challenges facing Indian Economy analyses the current challenges
such as poverty, rural development, human capital formation, employment, infrastructure,
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and environmental and sustainable development facing the Indian Economy.
Unit VIII Development Experience of India: A comparison with neighbours
explains comparative development experiences of India, Pakistan and China.
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The stress throughout the book has been given on the clear exposition of the subject
and lucid linguistic presentation. Special attention has been given to make the meaning
of economic terms and concepts understandable to the beginners with the help of
various examples. Care has been taken to use the relevant data from most authentic
and reliable sources.
Hints for revision are given towards the end of each chapter which will help
the students to review and recollect their concepts. Appended to each chapter is a
representative selection of questions on its subject matter. These will serve both as tests
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of the student’s understanding of the subject matter and as indication of the types of
questions they are likely to face in the examination.
I owe my gratitude to all textbook writers and eminent economists whose works
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have been extensively used in preparing the present book. I am also thankful to some
of my colleagues and teachers whose useful comments I received during the writing
of this book.
My special thanks to my publishers M/s. Arya Publications for presenting the book
with good printing and attractive get-up. I shall be extremely grateful to the students
and teachers for writing to me their comments and suggestions. Improvements in the
book in the light of comments received are assured. With this I solicit your cooperation
and support in adopting the book as a textbook.
Dr. B.L. Gupta
SYLLABUS
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comparison with neighbours
Theory Paper (40 + 40 = 80 Marks) 40 100
Part C : Project Work 20 20
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Unit 6: Development Experience (1947-90) and Economic
Reforms Since 1991 28 Periods
A brief introduction of the state of Indian economy on the eve of independence.
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Common goals of Five Year Plans.
Main features, problems and policies of agriculture (institutional aspects and
new agricultural strategy, etc.), industry (industrial licensing, etc.) and foreign
trade.
Economic Reforms Since 1991
Features and appraisals of liberalisation, globalisation and privatisation (LPG
policies); Concept of demonetization and GST.
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critical assessment.
Rural development: Key issues — credit and marketing — role of cooperatives;
agricultural diversification; alternative farming — organic farming.
Human Capital Formation: How people become resource; Role of human capital
in economic development; Growth of Education Sector in India.
Employment: Formal and informal growth, problems and policies.
Infrastructure: Meaning and Types; Case Studies; Energy and Health; Problems
and Policies — A critical assessment.
Sustainable Economic Development: Meaning, Effects of Economic Development
on Resources and Environment, Including Global Warming.
Unit 8: Development Experience of India:
A Comparison with Neighbours 12 Periods
India and Pakistan
India and China
Issues: growth, population, sectoral development and other developmental
indicators.
PART C: PROJECTS IN ECONOMICS 20 Periods
SUGGESTIVE LIST
Class XII
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• Micro and Small Scale Industries • Food Supply Channel in India
• C
ontemporary Employment situation • D
isinvestment policy of the
in India government
• G
oods and Services Tax Act and its • Health Expenditure (of any state)
Impact on GDP
• Self-help group
• M O
• Human Development Index
• S
arwa Siksha Abhiyan – Cost Ratio • G
olden Quadrilateral – Cost ratio
Benefits benefit
• Minimum Support Prices • R
elation between Stock Price Index
and Economic Health of Nation
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• W
aste Management in India – Need • M
inimum Wage Rate – Approach
of the hour and Application
• D
igital India – Step towards the • R
ain Water Harvesting – A solution
future to water crises
• Vertical Farming – An alternate way • Silk Route – Revival of the past
• Make in India – They way ahead • B
umper Production – Boon or Bane
for the farmer
• R
ise of Concrete Jungle – Trend • Organic Farming – Back to the Nature
Analysis
• A
ny other newspaper article and • Any other topic
its evaluation on basis of economic
principles
SUGGESTED QUESTION PAPER DESIGN
Short
Objective Short Long
S. Answer
Typology of Questions Type/ MCQ
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Answer II Answer Marks
No.
1 Mark 4 Marks 6 Marks
3 Marks
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Remembering: Exhibit memory
of previously learned material by
1. recalling facts, terms, basic concepts, 5 1 2 1 22
and answers.
Understanding: Demonstrate
understanding of facts and ideas by
2. organizing, comparing, translating, 5 1 2 1 22
interpreting, giving descriptions, and
3.
stating main ideas.
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Applying: Solve problems to new
situations by applying acquired
knowledge, facts, techniques and rules 5 1 1 1 18
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in a different way.
There will be Internal choice in questions of 1 mark, 3 marks, 4 marks and 6 marks in both sections (A and B). In
all, total 8 internal choices.
CONTENTS
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4. Liberalisation, Privatisation and Globalisation — An Appraisal 69
5. Poverty 100
6.
7.
Human Capital Formation
Rural Development
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151
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8. Employment 176
9. Infrastructure 197
APPENDIX
PROJECT WORK
Project-1 273
Project-2 280
Chapter
1
INDIAN ECONOMY ON
THE EVE OF INDEPENDENCE
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CHAPTER OUTLINE
O Indian Economy
1.10 Positive Contributions of British Rule
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1.1 INTRODUCTION
The main aim of this book, Indian Economic
HISTORICAL EVENTS THAT CHANGED THE
Development, is to familiarise students with DESTINY OF OUR NATION
the basic features of the Indian economy
• The battle of Plassey (1757) laid
and the post-independent development
the foundation of British Empire
strategies adopted by India that have
in India. The control of the Indian
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economic progress took place. As such, at the time of independence, India had a poor
and stagnant economy.
1.2 L
OW LEVEL OF INCOME AND ECONOMIC
DEVELOPMENT UNDER BRITISH RULE
The best indicator of the economic condition of a nation is its national income and per
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capita income. No systematic and sincere attempts were made by the British government
to estimate India’s national income.
Some individual attempts were made by experts in this regard. Notable among the
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estimators were: William Digby, Findlay Shirras, Dadabhai Naoroji, Wadia & Joshi, K.T.
Shah, Dr. V.K.R.V. Rao and R.C. Desai. All these estimates produced conflicting and
inconsistent results. However, the estimates given by Dr. Rao were considered very
significant.
Different estimates show that the level of national income and per capita income was
very low during colonial period. The growth of the aggregate real output (or GDP)
was less than 2 per cent during the first half of the 20th century.
The growth of the aggregate real output (or GDP) was less than 2 per cent during the
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first half of the 20th century and the growth of per capita output was just half per cent.
Not only the per capita income was low, but
Per Capita Income = National
its distribution was also inequitable. It means
Income/Total Population
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This system gave birth to two classes — landlords (or Zamindars) and landless
cultivators.
Especially under Zamindari system, Zamindars used to exploit cultivators. They
used to charge a very high rate of land revenue from the cultivators because of
which the small farmers neither had sufficient resources nor the incentive to invest
in agriculture. They could not leave agriculture despite their exploitation because
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of lack of vocational avenues outside agriculture.
Besides this, the zamindars forced the cultivators to work (or to give Begar) on
their farms. They themselves led a lavish life and hardly spent their income on
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investment in agriculture. Thus, agriculture remain backward.
2. High Degree of Vulnerability: British rulers did not give much emphasis on
improvement of irrigation facilities, drainage facilities, soil productivity and
technological upgradation in India. Agricultural production was dependent on
monsoon. Hence, production and productivity in the country’s agricultural sector
were reduced to the lowest level and farmers were forced to live in misery.
3. Commercialisation of Agriculture: British rulers initiated commercialisation of
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But this did not improve the economic condition of farmers because cash crops
were used mainly by the British industries. Thus, Britishers transformed Indian
agriculture into a raw material exporting activity.
As a result of reduction in the production of food crops and lack of proper policies,
the country had to suffer from frequent occurrence of famines.
Partition of India
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IMPACT OF PARTITION ON THE INDIAN ECONOMY
•S hortage of raw material - Partition created the serious problem of shortage of
raw material for jute mills of Kolkata and textile mills of Mumbai and Ahmedabad.
As a result of partition, the whole fertile land under jute production went to East
Pakistan (now Bangladesh). Besides this, the problem of raw materials was faced
by paper mills, leather industries and some chemical industries.
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• Food problem - West Punjab and Sindh were known as food granaries of India.
As a result of partition these areas went to Pakistan. Consequently, India had to
face the problem of food crisis.
• Loss of market - Partition had reduced the size of market which was a severe
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blow to Indian industries
• To get raw materials from India at cheap rate and thus reduce India to a mere
exporter of raw materials to the British industries.
• To sell British manufactured goods in Indian market at higher prices.
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3. Prior to the British rule the Nawabs and Rajas used to patronise handicrafts. The
advent of British rule meant the disappearance of Princely courts and consequently,
an end to the state patronage enjoyed by the handicraft industry. As a result, there
was a decline in the demand of the Indian handicrafts.
4. As a result of British influence, a new class emerged in India which was keen to
imitate western lifestyle. Consequently, indegenous goods lost their market to the
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growing demand for British products.
5. Development of means of transport accelerated the process of decline of handicrafts.
Railways were introduced in India which facilitated transportation of British
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products across different parts of the country. As a result, Indian handicrafts lost
their share of domestic market.
Decline of handicraft industries made the following adverse impacts:
1. It created large scale unemployment. The most adverse impact was on cotton textile
industry. A large number of weavers became unemployed.
2. These unemployed craftsmen migrated from urban areas to villages. This increased
the burden of population on agriculture in villages.
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3. Consumer demand in the Indian market could not be met by the supply of locally
made goods which encouraged the import of manufactured goods from Britain.
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IV. Limited State Participation
The state participation in the process of industrialisation was very limited and confined
to the areas which enhanced the size of market for the British products in India. It
focussed mainly on the construction of infrastructure like railways, development of
ports, means of communication etc.
Thus, industrial sector during British rule exhibited backwardness and lopsided
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growth. The two main drawbacks of the industrial sector during colonial rule were:
(a) The growth rate of industrial sector and its contribution to GDP was very small.
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(b) There was very limited area of operation of the public sector in the country.
Public sector in those days was confined only to the railways, power generation,
communication, ports and a few departmental undertakings.
policies of the colonial government adversely affected the composition, direction and
volume of foreign trade in India.
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a direct trade route for
ships operating between
Britain and India by doing
away with the need to sail
around Africa. Opening of
this canal in 1869 reduced
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MAP NOT TO SCALE
the cost of transportation
significantly.
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Large Export Surplus
A very significant feature of India’s foreign trade during colonial rule was the generation
of a large export surplus. Export surplus implies that the country’s total exports were
greater than its imports. But this export surplus was disadvantageous to the country’s
economy on the following grounds:
(i) More exports, implied non-availability of several commodities in the domestic
market to the common consumers. It created the problem of scarcity of certain
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Britain, expenses on wars fought by Britain and to finance the deficit in invisible
items (like tourism, transport, insurance and banking services).
Thus, in a way this export surplus led to the economic drain of India’s wealth.
The one way transfer of resources from India to England during British rule was
termed as ‘economic drain’ (or drain of wealth). In other words, economic drain
implied all those payments which were made to England and India recieved nothing
in return of them as a result of economic policies of the colonial rule. The forms of
economic drain were mainly as follows:
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India was in the first stage of demographic transition till 1921. The first stage of
demographic transition implied that there was high birth rate and high death rate in
India before the year 1921. Since in this stage, both birth rate and death rate were
high, the rate of growth of population remained very slow. Because of very slow
growth in population, this period was termed as the period of stagnant population.
The main reasons for the slow growth of population during British rule were poverty,
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malnutrition, famines, epidemics and poor health facilities.
After 1921, India entered the second stage of demographic transition and there was
a consistent rise in the population of the country.
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Thus, 1921 is regarded as the ‘Year of Great Divide’ in the history of demographic
transition in India.
POPULATION CENSUS
Population Census provides information on size, distribution, socio-economic,
demographic and other characteristics of the country’s population. It is conducted
every ten years, beginning in 1872, the first complete census was taken in the year
1881 and the fifteenth Census was conducted in India in the year 2011.
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The social development indicators were also not quite encouraging during the
British rule in India. The following observations reveal that India was a stagnant and
backward economy.
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1. High Birth Rate and Death Rate: Both birth rate and death rate were high.
Birth rate which was nearly 48 per 1000 before 1921 fell to 40 per 1000 during
1941-50. Death rate which was as high as 42 per 1000 till 1921 declined to 27
per 1000 during 1941-50. The figures are still high as compared to nearly 20 per
thousand (Birth Rate) and 6.4 per thousand (Death Rate) in the year 2016.
Low Literacy Rate: Education was not given much attention during British
2.
rule. Only a small fraction of people could get education. Hence, most of the
population remained illiterate. The average literacy rate was less than 16 per
cent of which, the female literacy rate was only 7 per cent.
Poor Health Facilities: The level of public health facilities was very poor during
3.
the British rule. There was lack of proper housing, sanitation and health care
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The overall standard of living of common people in India was very low and
there was widespread poverty in the country. Thus, as a result of British rule,
India was transformed from a vibrant economy to a stagnant and backward one.
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industries or sectors in the economy, namely, the primary sector, the secondary sector
Secondary Sector 10
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per cent of India’s working population were engaged in agriculture while 10 per
cent in manufacturing sector and 15-20 per cent were engaged in service sector. It
clearly shows that agriculture and allied activities remained the major source of
employment during the British rule.
2. Unbalanced Growth: As a result of decline of handicraft industries during the
British rule, the burden of population on agriculture increased. On the other hand,
the role of non-agricultural sector was small and limited. A country which has
dominant place of agriculture in its occupational structure is considered as a poor
and backward country. The backward character of the economy during the British
rule is very much evident from the unbalanced occupational structure. Unlike a
growing economy, where the percentage of workers in agriculture is low and that
in industry and services is high, the reverse happened in case of India.
1.8 INFRASTRUCTURE
The state of infrastructure facilities especially in the field of transport, communication
and energy was very poor in India during the British rule. However, some efforts
were made to develop basic infrastructure like roads, railways, ports, water transport,
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post and telegraphs by the British rulers. Here also, the main motive of British rulers
behind the development of transport and communication facilities was not to provide
basic amenities to the Indian people but to subserve their colonial interest.
Roads: The condition of roads was far from satisfactory before the advent of British
rule in India. Whatever roads were built, they were built primarily with a view to
mobilising the army within India and to transport raw materials from the countryside
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to the railway station or the port to send it to England. There was acute shortage of
all-weather metal roads in the village side. Hence, it was very difficult to reach out to
the rural areas. The rural people had to suffer during natural calamities, famines and
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other emergent situations.
Railways: The British rulers introduced
railways in India in 1850 and Indian Railways
began their operation in 1853.
It was considered as one of the most
important contributions of British rulers to
India. The development and construction
of railways by the British rulers had the
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(i) It provided cheap and rapid transport system especially for distant travel.
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(ii) It broke geographical and cultural barriers and thus promoted national unity and
understanding.
(iii) It created new employment opportunities.
(iv) It promoted foreign trade. The volume of India’s exports increased significantly
but it benefited the Britishers more than the Indians.
(v) Railways facilitated faster movement of food grains across the nation. Supplying
food from surplus regions to famine hit areas helped in controlling famines.
(vi) It encouraged the process of industrialisation by ensuring smooth flow of raw
material and finished goods.
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imported from Britain and facilitated export of primary goods to Britain, thereby,
contributing to the colonial exploitation of the Indian economy.
Air and Water Transport: As far as water and air transport are concerned, they
had their modest beginning during the British rule. However, their development was
far from satisfactory. The inland waterways proved uneconomical. Indian shipping
companies did not succeed because of two main reasons.
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(i) Severe competition from foreign shipping companies, and
(ii) lack of support from the British rulers in India. In India, a beginning in air
transport was made in 1920. The progress, however, was very slow. It was during
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the Second World War and later that
some progress was achieved.
Communication: In the field of
communication, modern postal system in
India started in 1837. The telecommunication
services were also introduced in India
to enhance the administrative efficiency.
However, the development of communication
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1.9 P
OLICIES OF BRITISH RULERS THAT LED TO EXPLOITATION OF
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INDIAN ECONOMY
British rulers deliberately pursued the policies with a view to exploit the Indian
economy to serve their interest. In this regard a brief outline of British policies is
given below:
(i) British rulers grossly neglected irrigation facilities and technological upgradation
in India’s agriculture.
(ii) British rulers forced the Indian farmers to pay more attention to the production
of cash crops than the food crops so that raw materials could be supplied to the
British industries at cheap rates.
(iii) Deliberate policy measures were adopted to destroy the handicraft industries of
India.
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interest rather than India’s interest. Hence foreign capital investment in India
during colonial period gave birth to the distorted economic growth pattern.
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1. Effective Administration: The British government had an efficient system of
administration which served as a ready reckoner for Indian politicians.
2. Infrastructure Development: Development of railways helped in economic and
social growth of the economy. It helped in transportation of food to drought hit
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areas and promoted cultural affinity among people.
3. Commercialisation of Agriculture: It helped in changing the outlook of Indian
farmers who started producing for sale in the market than merely for subsistence.
4. Monetary System of Exchange: There was a transition from barter system of
exchange to monetary system of exchange under the British rule. This facilitated
division of labour and expansion of production.
CONCLUSION
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On the whole, it can be said that because of exploitative policy implemented by the
Britishers, the entire state of the Indian economy had undergone a sea change on the eve
of independence. In the middle of 18th century, India which was a prosperous and self-
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reliant economy, turned into a poor, stagnant and backward economy in 1947. Hence, to
understand India’s development experience and achievements, an understanding of the
dismal state of economy inherited from the British rulers at the time of independence
is important.
• Agricultural sector exhibited features of feudal and semi-feudal institutions, surplus
labour and low productivity.
• Owing to poor technological and scientific capabilities, industrialisation was limited
and lopsided. Industrial sector also needed modernisation, diversification and
capacity building.
• Foreign trade was serving the colonial interest and had an adverse impact on the
imports and exports of the country leading to drain of India’s wealth.
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STATE OF INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
and dependence on
monsoon
• Commercialisation of O
• Lack of irrigation facilities goods
• Majority of trade was now
with Britain
• Generation of large export
sector as compared to
industry and service
sectors
• Growing regional
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agriculture variation
surplus to benefit Britishers
• Partition created shortage • Opening of suez Canal
of raw material and food reduced cost of transportation
crisis
Infrastructure
Industrial Sector Demographic Condition • Inadequate transport and
• Decline of handicraft industries • High Birth rate and Death rate communication facilities
• Slow growth of modern • Lack of education and health • Development of railways,
industries facilities post and telegraph
• Lack of capital good industries • High infant mortality rate to benefit British
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EXERCISES
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8. The opening of Suez Canal served as a direct route for ships operating between:
(a) India and America (b) India and Sri Lanka
(c) India and Pakistan (d) India and Britain
9. The opening of the Suez Canal in 1869:
(a) Adversely affected the monopoly control of India’s foreign trade
(b) Reduced the cost of transportation of goods between India and Britain
(c) Enhanced inter-state trade in India
(a) 1849
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(d) Reduced the export of goods from India to Britain
10. The British introduced railways in India in the year_________ .
(b) 1850 (c) 1851 (d) 1859
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11. The main reason for stagnation in agriculture during the British rule was:
(a) Lack of technology (b) Commercialisation of agriculture
(c) Land tenure system (d) De–industrialisation
12. The literacy rate and the female literacy rate of India at the time of independence were:
(a) 16 per cent, 7 per cent (b) 12 per cent, 7 per cent
(c) 32 per cent, 16 per cent (d) 16 per cent, 12 per cent
13. What was the principal source of occupation during the British rule?
(a) Agriculture (b) Mining
(c) Manufacturing (d) Trade and Commerce
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(c) Secondary sector, Tertiary sector, Primary sector
(d) Primary sector, Tertiary sector, Secondary sector
20. Which of the following statements is not true about the Indian economy during the
British rule?
(a) Slow growth of agricultural and industrial sector
(b) The area of operation of public sector was very limited
workforce.
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(c) Drain of India’s wealth despite export surplus.
(d) During the colonial period, the service sector accounted for the largest share of
21. Which of the following social indicators contributed to the worsening of India’s
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demographic profile during the colonial period?
(a) Low Infant Mortality rate (b) High Life expectancy
(c) Low Literacy rate (d) Low Birth rate and Death rate
22. Which of the following statements is not true about the foreign trade in context of
Indian economy during the British rule?
(a) India became exporter of primary products and an importer of finished consumer
goods and capital goods from Britain.
(b) India traded with many countries of the world despite discriminatory tariff policy
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23. Which of the following statements is not true with regard to the development of railways
by the British?
(a) It helped in breaking geographical and cultural barriers among people.
(b) It promoted commercialisation of Indian agriculture.
(c) The social benefits accruing due to development of railways outweighed the
country’s huge economic loss.
(d) It increased the volume of India’s exports.
24. The export surplus generated during the British rule was used:
(a) To meet administrative expenses of the British government
(b) To meet expenses on war fought by the British government
(c) To import invisible items
(d) All of the above
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(ii) Female literacy rate (b) Nearly 7 per cent
(iii) GDP growth rate (c) Approximately 0.5 per cent
(iv) Per capita GDP growth rate (d) Less than 16 per cent
4. (i) Subsistence farming (a) Zamindari system
(ii) Commercial farming (b) Workforce engaged in different economic
activities
5. The growth of aggregate real output was less than __________ per cent and the growth
of per capita output was just __________ per cent during the first half of the 20th century
in India.
6. The most prominent cause of the stagnation of agricultural sector was the __________
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first half of the 20th century in India.
3. What was the most prominent cause of stagnation of the agricultural sector under the
British rule?
4. What is meant by commercialisation of agriculture?
5. How did the partition of the country adversely effect India’s agriculture?
6. What was the motive behind the systematic de-industrialisation by the colonial
government in India? (NCERT)
7.
8.
9.
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What was the adverse impact of the decline of handicraft industries in India?
Which industries were adversely affected due to partition and why?
When was the Tata Iron and Steel Company (TISCO) incorporated?
Give the names of some of the main modern industries which were in operation at the
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time of independence. (NCERT)
11. What was the impact of discriminatory tariff policy on the Indian economy?
12. What does the term ‘export surplus’ imply?
13. What do you understand by the drain of India’s wealth (or economic drain) during the
colonial period?
14. When was India’s first official census conducted?
15. In context of Indian economy, which year is regarded as the defining year for the
demographic transition from its first to the second stage? (NCERT)
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Or
Why is 1921 considered as the year of great divide?
16. What were the main reasons for the slow growth of population during the British rule?
17. What was the average literacy rate in India during the British rule?
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18. How was the infant mortality rate of India during the British rule quite alarming?
19. What was the life expectancy in India during the British rule?
20. Which sector of the Indian economy accounted for the largest share of workforce during
the colonial period?
21. What was the main purpose behind construction of roads by the British?
22. When did the British introduce Railways in India?
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administration. (NCERT)
8. What was the condition of Indian industries on the eve of independence?
9. How did the British ruler’s policy adversely affect the foreign trade of India?
10. How had the export surplus proved disadvantageous to India during the colonial
period?
11. Give a quantitative appraisal of demographic profile of India during the British rule.
12.
O Or
Highlight the salient features of India’s pre-independence occupational structure.
(NCERT)
Mention two important features of India’s occupational structure during British period.
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(NCERT)
What were the main objectives of British rulers behind the development of infrastructural
13.
(especially transport and communication) facilities in India?
14. Indicate the volume and direction of foreign trade at the time of independence.
Briefly mention the effects of the development of railways by the British rulers on the
15.
Indian economy.
Which parts of British India became parts of Pakistan after partition? Why were these
16.
parts so important to India from economic point of view? (NCERT)
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17. Mention the salient features of Indian economy at the time of independence.
18. How did discriminatory tariff policy contribute to the success of Industrial revolution
in Great Britain?
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economy.
10. State some of the major economic challenges faced by India at the time of independence.
ANSWERS
I. OBJECTIVE TYPE QUESTIONS
1. (a)
9. (b)
17. (c)
2. (c)
10. (b)
18. (c) O
A. Multiple Choice Questions
3. (b)
11. (c)
19. (d)
4. (a)
12. (a)
20. (d)
5. (c)
13. (a)
21. (c)
6. (c)
14. (b)
22. (b)
7. (b)
15. (a)
23. (c)
8. (d)
16. (c)
24. (d)
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B. Match the following
1. (i) (c) (ii) (d) (ii) (a) (iv) (b)
2. (i) (d) (ii) (c) (ii) (a) (iv) (b)
3. (i) (d) (ii) (b) (ii) (a) (iv) (c)
4. (i) (c) (ii) (d) (ii) (b) (iv) (a)
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cotton textile, jute mills, iron and steel industry.
11. As a result of discriminatory tariff policy, India was reduced to an exporter of primary
products and importer of British manufactured goods.
12. Export surplus implies that the country’s total exports were greater than its imports.
13. Economic drain implied all those payments which were made to England for which
India received nothing in return.
14.
15.
16. O
India’s first official census operation was undertaken in 1881.
1921 is regarded as the great divide year in India’s demographic history because after
1921 India entered the second stage of demographic transition.
The main reasons for the slow growth of population during the British rule were
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poverty, malnutrition, famines, epidemics and poor health facilities.
17. The average literacy rate in India during British rule was less than 16 per cent.
18. Infant mortality rate was 218 per thousand.
19. Life expectancy during the British rule was nearly 32 years.
20. Agricultural sector of the Indian economy accounted for the largest share of workforce
during the colonial period.
21. (i) Mobilising the army within India
(ii) To transport raw materials from the countryside to the railway station or the port
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to send it to England
22. The British introduce Railways in the year 1850.
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Chapter
GOALS OF INDIA’S
2 DEVELOPMENT PLANS
CHAPTER OUTLINE
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2.1 E conomic System Adopted By Independent 2.2.2 Planning Commission
India 2.2.3 NITI Aayog
2.1.1 Capitalist Economy 2.3 The Goals of Planning in India
2.1.2 Socialist Economy 2.4 The Goals of Five Year Plans
2.1.3 Mixed Economy
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2.2 Economic Planning in India
2.2.1 Need for Economic Planning in India
2.5 Evaluation of Economic Planning Till 1991
2.5.1 Achievements of Planning
2.5.2 Failures of Planning
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When India became free on August 15, 1947, it got a backward and stagnant economy
in legacy. The partition of the country made the situation worse. Hence, the utmost
task before the country was its economic development. Then came the question how
can this goal be achieved? What type of economic system would be more suitable for
India which could promote the welfare of all.
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The main features of a capitalist economy are:
(i) Private ownership of property: In capitalism, all factors of production are owned
and managed by the private sector.
(ii) Price mechanism guides production decisions: The answers to the questions
what, how and for whom to produce depend on the market forces of demand
and supply or price mechanism. That is why capitalist economy is also termed
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as market economy. In this economic system, only those goods will be produced
which have their demand in the domestic or foreign market. There is no
intervention by the government.
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(iii) Production for profit: The producers are guided by the motive of profit
maximisation thus it accelerates the pace of economic growth. They will produce
goods which can be sold profitably either in the domestic market or in the foreign
market. The answer to the question, ‘how to produce’ depends on the relative
factor prices. For example, if in a country labour is cheap and capital is costly,
labour-intensive technique will be adopted. On the other hand, if capital is cheap,
capital-intensive technique will be adopted.
(iv) Consumer Sovereignty: In a capitalist economy, consumer’s preference guides
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(vi) Unequal distribution of income and wealth: The goods are distributed among
people on the basis of their income or purchasing power and not on the basis of
their need. The gap between ‘haves’ and ‘have nots’ widens. Such an economic
system would not have been suitable for our country because it does not provide
a chance to the majority of people to improve their quality of life. Therefore, our
first Prime Minister Pt. Jawaharlal Nehru did not accept the capitalist system for
our country.
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(iv) Absence of Consumer’s Sovereignty: In a socialist economy, consumer’s
preference does not guide the production of goods. They can consume only those
goods which are produced by the state.
(v) Non-existence of competition: There is no competition as incentive to earn profit
is not there.
(vi) Unequal distribution of income and wealth is greatly reduced: In this system,
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the earnings of people differ according to the nature of work and ability of the
worker. Economic inequalities are greatly reduced due to absence of ownership
of private property. Distribution of goods in a socialist economy is based not
on purchasing power but on the needs of the people. It makes arrangement to
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provide goods to each according to his need.
fails to provide. Thus, economic decisions in a mixed economy are left neither wholly on
the mercy of market forces nor thrust upon by the government. Rather these decisions
are taken and executed with the combined efforts of both the apparatuses.
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Thus, India developed a system in which we find a socialist society with a strong
public sector co-existing with the private sector.
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government in the process of growth and development which covered both economic
(agriculture, industry, infrastructure and trade) and social (which include education,
health and housing) spheres of growth. For the first time, India declared herself as the
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mixed economy through the industrial policy statement of 1948 and Directive principles
of Indian Constitution. It was further confirmed by the 1956, 1977 and other Industrial
Policy Resolutions.
Our First Five Year Plan states that “Economic Planning is essentially a way of
organising and utilising resources to the maximum advantage in terms of defined
social ends”.
Experiences the world over suggested that market forces were inadequate, insufficient
and incapable of meeting the challenges and problems of the Indian economy. It was,
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thus, realised that the solution to the problem would require an active role of state in
the economic development. It was from this view point that independent India chose
the path of economic planning to achieve the following objectives.
(i) To break the vicious circle of poverty
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contribution to development planning in India.
He laid down the basic ideas regarding the goals
of Indian planning. That is why Prof. Mahalanobis
is regarded as the Architect of Indian Planning.
He has played a vital role in putting India on the
road to economic progress.
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Immediately after the adoption of new Constitution on 26 January, 1950, the Planning
Commission came into existence. The Government of India constituted Planning
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Commission in March, 1950. The then Prime Minister, Pandit Jawaharlal Nehru was
its first Chairman.
According to Planning Commission, “Economic Planning means utilisation of
country’s resources into different development activities in accordance with national
priorities.”
The broad functions of the Planning Commission among others were assessment,
allocation and effective utilisation of material, capital and human resources according
to priorities of the nation.
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This Commission had suggested development of Five Year Plans. Till now we have
completed Twelve Five Year Plans (1951 – 2017) developed, executed, and monitored
by the Planning Commission.
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Resident India Community.
• Use urbanisation as an opportunity to create a wholesome and secure habitat through
the use of modern technology.
• Use technology to reduce opacity and potential for misadventures in governance.
• The NITI Aayog aims to enable India to face complex challenges, through the
following:
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(i) Leveraging of India’s demographic dividend, and realisation of the potential of
youth, men and women, through education, skill development, elimination of
gender bias and employment.
(ii) Elimination of poverty, and the chance for every Indian to live a life of dignity
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and self-respect.
(iii) Reddressal of inequalities based on gender bias, caste and economic disparities.
(iv) Integrate villages institutionally into the development process.
(v) Policy support to more than 50 million small businesses, which are a major source
of employment creation.
(vi) Safeguarding our environmental and ecological assets.
uhfr vk;ksx
National Institution for Transforming India
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policy research institutions.
• T
o create a knowledge, innovation and entrepreneurial support system through a
collaborative community of national and international experts, practitioners and
other partners.
• T
o offer a platform for resolution of inter-sectoral and inter-departmental issues
in order to accelerate the implementation of the development agenda.
• T
O
o maintain a state-of-the-art Resource Centre, be a repository of research on good
governance and best practices in sustainable and equitable development as well
as help their dissemination to stake-holders.
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• T
o actively monitor and evaluate the implementation of programmes and
initiatives, including the identification of the needed resources so as to strengthen
the probability of success and scope of delivery.
• T
o focus on technology upgradation and capacity building for implementation of
programmes and initiatives.
• T
o undertake other activities as may be necessary in order to further the execution
of the national development agenda, and the objectives mentioned above.
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Source: www.niti.gov.in
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The common goals of economic planning of India are the following:
1. Economic Growth: Growth refers to an increase in the nation’s capacity to produce
goods and services and is indicated by a sustained rise in the value of GDP.
GDP (Gross Domestic Product) refers to the value of all the goods and services
produced in an economy during a year. The high rate of growth characterised by a
consistent rise in the GDP and per capita GDP has been the first and foremost goal of
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all the plans in the country.
Raising the per capita GDP implies that the growth rate of GDP should be higher
than the population growth. This would ensure an improvement in the standard of
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living of people.
Various plans have attended to the development of crucial sectors of the economy
such as agriculture, industry, energy, trade, transport and communication. In short,
economic growth is measured by an increase in real per capita GDP which can be
achieved through:
• An increase in the productive capacity implying an increase in the stock of available
resources
• Use of innovative technology and supporting services like banking, transport etc.
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Per capita GDP is a measure of the total output of a country that is calculated by
dividing Gross Domestic Product (GDP) by the number of people in the country.
Increase in GDP becomes meaningless if it is offset by an increase in the population.
Thus, in order to improve quality of life of people, per capita availability of goods
and services must increase.
Different sectors of the economy, namely the agricultural sector, the industrial sector
and the service sector contribute to the GDP of a country. The contribution of various
sectors to the GDP is termed as sectoral / structural composition of the economy.
With the process of development, the share of agriculture in GDP declines whereas
the share of industry and service sectors increase. It does not mean that primary sector
is neglected. It only means that the epicenter of growth shifts from the primary to the
secondary or tertiary sectors.
28 Indian Economic Development
In India, the contribution of agricultural sector to GDP was 59 per cent in
1950-51 and it declined to nearly 35 per cent in 1990. The share of industrial sector
rose from 13 per cent in 1950-51 to 24.6 per cent in 1990-91. On the other hand, the
share of service sector rose from 28 per cent in 1950-51 to 40.5 per cent in 1990-91
which was higher than that of agriculture or industry. Thus, the sectoral composition
of Indian economy has undergone a change in the independent India. This trend has
further continued in the post 1991 period. The change in the sectoral composition has
been shown through a table and pie chart.
SECTORAL CONTRIBUTION TO GDP
(All Values in %)
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Agriculture 59.0 34.9 20.0 15.5
28%
Service
13%
59%
Agriculture O40.5%
Service
34.9%
Agriculture
20%
Agriculture
24.3%
Industry
55.7%
Service
15.5%
Agriculture
29.8%
Industry
54.7%
Service
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Industry 24.6%
Industry
They are:
(i) Reduction in Economic Inequalities: Generally economic inequalities among
different people take two forms — inequalities of income and inequalities in the
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distribution of wealth and property. Both are complementary to each other. Here,
in India, we find both types of inequalities. To remove these inequalities our
Five Year Plans have emphasised redistribution of land in villages, progressive
taxation, licensing policy, check on monopolistic tendencies and on the wealth of
large industrial houses and the like.
(ii) Curbing Concentration of Economic Power: Our plans have also emphasised the
need to see that there should not be concentration of economic power only in a
few hands. The fruits of development should trickle down to all the sections of
the society.
(iii) Uplifting the Weaker Sections of the Society: The objective of social justice
demands that we should pay special attention to the upliftment of poor and
backward sections of our society. In this regard, our plans have emphasised the
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One task of economic planning in India is, therefore, to strike a judicious balance
between these two primary objectives. To stress this line of thinking, they are now
not considered as two separate objectives but one-single objective ‘Development with
Social Justice’.
3. Self-reliance: In the early stages of development, a country might depend upon
foreign aid. But excessive dependence on external assistance has its own difficulties
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and problems. In view of this, in the first seven Five Year Plans, self-reliance came to
be accepted as a desirable objective of our planning process.
Self-reliance implies avoiding dependence on imports of those goods which could
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be produced in the country itself. The goal of self-reliance was emphasised in order
to reduce our dependence on foreign countries, especially for food. This objective has
many aspects such as expansion of exports, substitution of imports, self-reliance in food
grains, defence equipment, capital goods and other essential goods.
The importance of self-reliance could be understood in the backdrop of our freedom
from foreign domination. It is necessary to reduce our dependence on imported food
grains, foreign capital and foreign technology as it may pose a threat to our sovereignty
which may further invite interference in our policies.
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(a) Adoption of New Technology: It increases the efficiency and productivity. For
instance, Green Revolution in India helped in increasing agricultural production
by using high yielding variety seeds and new agricultural technology. Similarly,
a revolutionary growth in IT sector has helped domestic industries to increase
production. Adoption of new technology increases productivity, level of production
and consequently the level of income thereby increasing demand for goods and
services in the economy. To meet the high level of demand producers plan to
increase output level by increasing demand for inputs including labour. Hence,
modernisation and employment go hand in hand. However, one sector may release
labour force for the other sectors. For instance, labour froce from agricultural sector
may shift to industrial or service sectors.
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FULL EMPLOYMENT DOES NOT IMPLY ZERO UNEMPLOYMENT
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time till they adapt themselves to these changes. Thus, structural unemployment is
consistent with full employment in the economy.
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2.4 THE GOALS OF FIVE YEAR PLANS
The Planning Commission was charged with the responsibility of making assessment
of all resources of the country, augmenting deficient resources, formulating plans for
the most effective and balanced utilisation of resources and determining priorities.
India launched its First Five Year Plan in 1951, under the influence of the first Prime
Minister, Pt. Jawaharlal Nehru.
Severe food shortage & mounting inflation confronted the country at the onset of the
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First Five Year Plan therefore, the focus was primarily on development of agricultural
sector. It was a successful plan primarily because of good harvests in the last two years
of the plan.
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Thereafter, two subsequent Five-Year Plans were formulated till 1965, when there
was a break because of the Indo-Pakistan Conflict and two successive years of drought
which disrupted the planning process and after three Annual Plans between 1966 and
1969, the fourth Five-year plan was started in 1969.
The Eighth Plan could not take off in 1990 due to the fast changing political situation
at the Centre and severe economic crisis in the country. In the years 1990-91 and 1991-92
Annual Plans were formulated. The Eighth Plan was finally launched in 1992 after the
initiation of structural changes with a view to provide a new dynamism to the economy.
Given below is a table showing the objectives of twelve five year plans in India
which were in sync with the long term goals of planning.
Second Plan (1956 - 61) Development of the public sector and rapid industrialisation with
Target Growth: 4.5% main focus on heavy industries.
Actual Growth: 4.27%
Third Plan (1961 - 66) To make India a ‘self-reliant’ economy. Equal priority was given to
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Target Growth: 5.6% agriculture, its allied activities, and industrial sector. Reduction in
Actual Growth: 2.8% inequalities of distribution of Income and wealth.
Three Annual Plans During these plans a whole new agricultural strategy was
(1966 - 69) implemented. It involved use of high-yielding varieties of seeds,
extensive use of fertilizers, use of irrigation facilities and soil
conservation.
Fourth Plan (1969 - 74)
Target Growth: 5.7%
Actual Growth: 3.3%
O Growth of agriculture to enable the growth of other sectors, Price
stability.
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Fifth Plan (1974 - 79) Removal of poverty, attainment of self-reliance, improve the living
Target Growth: 4.4% standards of the people.
Actual Growth: 4.8 %
Rolling Plan (1978 - 80) Increase in national income, development of infrastructure,
Sixth Plan (1980 - 85) ensuring continuous reduction in poverty and unemployment.
Target Growth: 5.2%
Actual Growth: 5.4%
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Seventh Plan (1985 - 90) Rapid growth in food-grains production, increased employment
Target Growth: 5.0% opportunities.
Actual Growth: 6.0%
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Eighth Plan (1992 - 97) Rapid economic growth, high growth of agriculture, poverty
Target Growth: 5.6% reduction, employment generation, strengthening the infrastructure
Actual Growth: 6.8% and human resource development.
Ninth Plan (1997 - 2002) Improve quality of life, generation of productive employment,
Target Growth: 6.5% regional balance and self-reliance, population control, growth with
Actual Growth: 5.5% social justice, price stability.
Tenth Plan (2002 - 2007) To reduce regional inequalities and provide better health and
Target Growth: 8.1% educational facilities, reduction of poverty.
Actual Growth: 7.7%
After 2017, the decades-old Five-Year Plans will now make way for a three-year action
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plan, which will be part of a seven-year strategy paper and a 15-year vision document
prepared by the NITI Aayog.
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and evaluate the achievements of our plans in the context of development objectives.
Four decades (1950-51 to 1990-91) of planning experience witnessed achievements and
failures in different sectors of the economy. At best, the planning experience proved
to be a mixed blessing.
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2.5.1 Achievements of Planning
A detailed description of achievements of five year plans in India is given below:
1. Economic Growth: Economic growth is indicated by an increase in the National
Income. During the British rule, national income increased at the rate of 0.5 per cent
per annum resulting in a stagnant economy. Due to various programmes and policies,
some progress had indeed been made in this direction during the period of planning.
Although, the rate of growth was not satisfactory it has managed to break the cycle
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of economic stagnation.
During the First Five Year Plan, national income increased by 3.6 per cent per annum
as against the targeted growth rate of 2.1 per cent per annum. Thus, as compared to
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the target, performance of the economy during the First Plan Period was good.
Encouraged by the performance of the First Plan, bolder targets were fixed in the
Second Plan in respect of national income. In the Second Plan, however, the growth
rate actually achieved was 4.2 per cent per annum against the target of 4.5 per cent
per annum.
The analysis of the performance of different plans indicates that up to Fourth Plan
period, the performance of the economy remained poor, but Fifth Plan onwards the
growth rates surpassed the targeted level of 5 per cent.
The growth rate of Eleventh Plan has been 8 per cent as against the target of 9 per
cent.
The Twelfth Plan targeted the growth rate of 8 per cent. GDP growth averaged 7.3
per cent for the period 2014-15 to 2017-18.
Goals of India’s Development Plans 33
The aforesaid analysis clearly shows that the long-run growth rate during Pre-1991
period had been lower than the targeted growth rates. Planning in India has succeeded
in breaking the deadlock of economic stagnation and bringing down the number of
people living below the poverty line.
The base year for estimation of GDP has been changed from 2004–05 to 2011–12. This
change pushed up the economic growth rate for 2013–14 to 6.9 per cent as compared
to the earlier estimate of 4.7 per cent (on the basis of 2004–05 series).
2. Rise in the rate of Capital Formation: The rate of capital formation depends on
the rate of savings in the economy. There has been a considerable increase in the rate
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of gross savings from 9.5 per cent of GDP in 1950-51 to 33.0 per cent in 2014–15 (Based
on new series with base year 2011-12). The rate of gross capital formation has trebled
between 1950-51 and 2014-15. It increased from 10 per cent to 34.2 per cent in 2014–15.
3. Development of Agriculture: The partition of country in 1947 had created food
crisis in India. In order to meet this crisis our government was forced to import food
grains from the rest of the world.
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In 1950-51 the total production of foodgrains was only 51 million tonnes. We were
unable to meet our domestic requirement and we had to import food grains from other
nations like USA. Therefore, India decided to increase its foodgrains production.
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In this regard, new agricultural technology was initiated in 1966. It involved a
simultaneous and co-ordinated introduction of institutional and technical reforms like
use of HYV seeds, chemical fertilisers, irrigation facilities and crop protection. After the
adoption of this new technology we noticed a sudden boost in foodgrains production.
This boost was just like a revolution in the history of Indian agriculture. That is why
this significant growth in agricultural output as a result of new technology was termed
as Green Revolution. Because of this green revolution the production of foodgrains
increased to 176 million tonnes in 1990-91. The production of foodgrains became almost
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India was an industrially backward country. Hence development of industries attracted
special attention in India’s development plans.
Though the rate of growth in industrial sector remained slow, the industrial
production increased in the pre-1991 period.
Production was started in many new consumer, intermediary and capital goods
sectors. As a result of this, the industrial structure of the country became diversified.
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There had been a marked development of basic industries such as iron and steel,
machinery, fertilisers, chemicals, electricity, cement etc. in this period.
A major achievement had been the diversification and expansion of India’s industrial
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capacity. India is ranked among top ten industrial economies in the world. The twelfth
five year Plan targeted the growth rate of industrial production of 7.6 per cent per
annum.
7. Development of Economic and Social Infrastructure: Means of transport,
communication, power generation, banking and insurance facilities are the key
components of economic infrastructure. A considerable growth has been seen in the
means of transport, power generation capacity in India and IT sector. During the
planning period, a significant growth in the health and Education facilities, the key
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elements of social infrastructure can also be seen. This has led to improvement in
various dimensions of general well-being during this period.
For instance, in 1941-51 the birth rate was about 40 per thousand and death rate
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was 27.4 per thousand. These came down to 32.5 per thousand and 11.4 per thousand
respectively in 1981-91 and to 21 and 6.7 per thousand respectively, in 2014 due to
availability of better healthcare facilities. Similarly, the life expectancy at birth increased
from 32 years in 1951 to about 60 years in 1991 and further to 68 years at present.
Infant mortality rate declined from 140 per thousand in 1951 to 80 per thousand in
1991 and 37 per thousand in 2015.
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Public distribution system was initiated in order to make available the essential mass
consumption goods at affordable prices to the people living below the poverty line.
As a result of all these measures, the incidence of poverty declined from nearly 55
per cent in 1973-74 to 36 per cent in 1993-94 and 21.9 per cent in 2012. Though the
poverty ratio has declined, still, nearly 50 per cent of those who are absolutely poor
in the world live in India.
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3. Economic and Social inequalities: The benefits of development under the plans
did not trickle down to the poorest sections of the society. In the rural sector, the policy
of land reforms virtually failed. The growth of black money led to wasteful expenditure
by urban elite.
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The distribution of assets in the rural sector of India remained more or less the same.
Nearly 60 per cent of the total land holders were marginal farmers owning less than
one hectare of land.
The distribution of assets in urban areas was also very much uneven. A small group
of top industrial houses was controlling a large part of big companies in the country.
There was economic and social inequality and these widening economic disparities
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among various classes and regions caused social unrest in the country.
4. High rate of Inflation: The economic divide between haves and have nots has
widened due to a fall in the real income of the people. There has been a rise in general
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The average rate of inflation increased from 6.2 per cent in Second Plan to 7.4 per
cent in Eleventh Plan. However, the average inflation based on Wholesale Price Index
(WPI) was 1.7 per cent in 2016-17 as compared to (–) 3.7 per cent in 2015-16 and 1.2
per cent in 2014-15.
Thus, planning during the period 1951–91 had put India on a road to progress but
we failed to sustain this growth and achieve desired results due to inefficiency of public
sector enterprises, corruption and red-tapism. It was owing to the failure of planning
that India took a U–turn in its policies of License, Quota and Permits to a policy of
Liberalisation, Privatisation and Globalisation as discussed in subsequent chapters.
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• Mixed Economy - Both private and public sector co-exist
India Adopted Mixed Economy
Meaning
• A way of organising and
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utilising resources to the
maximum advantage in
•
Goals of Planning
Economic Growth - A sustained
rise in real output
Failures of Planning
• Unemployment crisis
• Poverty
• Economic and Social
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• Modernisation - Update and
terms of defined social adopt new technology and inequalities
ends change in social outlook • High rate of inflation
INSTITUTIONS FORMULATING • Self- Reliance - To reduce
PLANS dependence on imports
Planning commission • Equity - Benefits of growth are
(1950-2015) shared by all (Development with
NITI Aayog Social Justice)
(Since 2015) • Full employment - All those who
are willing to work and able to
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Achievements of Planning
Need for Economic Planning
• Increase in National Income
• To break the vicious circle of
• Rise in the rate of savings and
poverty
capital formation
• Prioritise social interest
• Development of agriculture
• Optimum utilisation of
• Self-reliance
resources
• Growth and diversification of
• Building social and economic
economic activities
infrastructure
• Employment generation
• Increase the rate of capital
• Development of economic and
formation
social infrastructure
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(a) Eighteenth (b) Ninth (c) Eleventh (d) Twelfth
5. Which of the following is not a goal of perspective plans in India?
(a) GDP Growth (b) Equity (c) Land reforms (d) Self-reliance
6. In which economy means of production are owned, controlled and operated by the
Government?
(a) Mixed Economy (b) Socialist Economy
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(c) Capitalist Economy (d) None of these
7. In a Capitalist Economy means of production are owned, controlled and operated by:
(a) Private sector (b) Public sector (c) External sector (d) Both (a) and (b)
8. Name the body/institution which was engaged in the formulation of Five Year Plans
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in India.
(a) Planning Commission
(b) Election Commission
(c) National Development Commission
(d) None of these
9. When was NITI Aayog formed?
(a) 1950 (b) 1991 (c) 2015 (d) 2012
10. Who is the ex-officio chairman of the NITI Aayog?
(a) Prime Minister (b) Home Minister
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12. Which of the following facts are associated with P.C. Mahalanobis?
(a) He is known as the architect of Indian planning.
(b) He started the journal Sankhya.
(c) He established the Indian Statistical Institute.
(d) All of the above.
13. Who is known as the architect of Indian Planning?
(a) Jawaharlal Nehru (b) Dr. B.R. Ambedkar
(c) P.C. Mahalanobis (d) Dadabhai Naoroji
14. The production decision under which economic system is based upon the market forces
of demand and supply?
(a) Capitalism (b) Socialism (c) Mixed (d) Monarchy
15. Which amongst the following are the central problems of an economy?
(a) What to produce (b) How to produce
(c) For whom to produce (d) All of the above
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(a) Decline (b) Rise
(c) Remain constant (d) First decline then increase
20. Equity as a goal of planning aims to achieve the following objectives:
(a) Reduction in economic inequalities
(b) Curbing concentration of economic power
(c) Uplifting the weaker sections of the society
(d) All of the above
B. Match the following
O
1. (i) Gross Domestic Product (a) A system under which a set of target is
defined by the central authority
BO
(ii) Long term planning (b) Architect of Indian planning
(iii) Economic planning (c) Market value of all final goods
(iv) P. C. Mahalanobis (d) Perspective plans
KS
__________ .
14. What are the three main dimensions of the objective of social and economic justice?
15. What is meant by self-reliance?
16. What is meant by modernisation?
AP
17. What is the name of the institution which is formed in place of planning commission?
18. When was NITI Aayog formed?
19. What is the main function of NITI Aayog?
20. What is the basic difference between Planning Commission and NITI Aayog?
KS
12. Write a short note on NITI Aayog.
ANSWERS
C
9. (c) 10. (a) 11. (b) 12. (d) 13. (c) 14. (a) 15. (d) 16. (a)
17. (a) 18. (d) 19. (a) 20. (d)
KS
community and all economic decisions are taken by a central authority.
4. A mixed economy is an economy in which both private and public sector co-exist and
both work under the general guidance of economic planning.
5. The post-independent India chose the path of mixed economy for her development.
6. Economic planning is essentially a way of organising and utilising resources to the
maximum advantage in terms of defined social ends.
O
7. The planning commission in India was constituted in March 1950 under the chairmanship
of Pt. Jawaharlal Nehru.
8. Prof. P.C. Mahalanobis is regarded as the architect of Indian planning.
9. Rapid economic growth, Equity; Self- reliance; Modernisation; Full employment.
BO
10. Economic growth refers to increase in country’s productive capacity and it is measured
by increase in real per capita GDP.
11. The contribution of various sectors to the GDP is termed as sectoral composition of the
economy.
12. With the process of development the share of agriculture in GDP declines whereas the
share of industry and service sectors increase.
13. The contribution of agricultural sector to GDP declined from 59 per cent in 1950-51 to
nearly 35 per cent in 1990-91.
C