CHAPTER-2-INDIAN ECONOMY 1950-1990

CASE STUDY BASED QUESTIONS

1 Read the passage given below and answer the following questions
In a command economy, the government determines what is produced, how it is
produced and how it is distributed. Private enterprise does not exist in a command
economy. The government employs all workers and unilaterally determines their
wages and job duties.
There are benefits and drawback to command economy structures. Command economy
advantages include low levels of inequality and unemployment, and the common good
replacing profit as the primary incentive of production. Command economy
disadvantages include lack of competition and lack of efficiency.
1.Which among the following is a guiding force for the capitalist economy?
A. social service
B. private property
C. competition
D. profit motive
2.In which type of economy is government interference is limited?
A. Socialist economy
B. Market economy
C. Mixed economy
D. None of the above
2 MAHALANOBIS: THE ARCHITECT OF INDIAN PLANNING
Many distinguished thinkers contributed to the formulation of India’s five year plans.
Among them, the name of the statistician, Prasanta Chandra Mahalanobis, stands out.
Planning, in the real sense of the term, began with the Second Five Year Plan. The
Second Plan, a landmark contribution to development planning in general, laid down the
basic ideas regarding goals of Indian planning; this plan was based on the ideas of
Mahalanobis. In that sense, he can be regarded as the architect of Indian planning.
Mahalanobis was born in 1893 in Calcutta. He was educated at the Presidency College in
Calcutta and at Cambridge University in England. His contributions to the subject of
statistics brought him international fame. In 1945 he was made a Fellow (member) of
Britain’s Royal Society, one of the most prestigious organisations of scientists; only the
most outstanding scientists are made members of this Society. Mahalanobis established
the Indian Statistical Institute (ISI) in Calcutta and started a journal, Sankhya, which
still serves as a respected forum for statisticians to discuss their ideas. Both, the ISI and
Sankhya, are highly regarded by statisticians and economists all over the world to this
day. During the second plan period, Mahalanobis invited many distinguished economists
from India and abroad to advise him on India’s economic development. Some of these
economists became Nobel Prize winners later, which shows that he could identify
individuals with talent. Among the economists invited by Mahalanobis were those who
were very critical of the socialist principles of the second plan. In other words, he was
willing to listen to what his critics had to say, the mark of a great scholar. Many
economists today reject the approach to planning formulated by Mahalanobis but he will
always be remembered for playing a vital role in putting India on the road to economic
progress, and statisticians continue to profit from his contribution to statistical theory.
Source: SukhamoyChakravarty, ‘Mahalanobis, Prasanta Chandra’ in John Eatwell et.al,
(Eds.) The New Palgrave Dictionary: Economic Development, W.W. Norton, New York
and London.

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3. The Mahalanobis Model is based on which five year plan?

(A) First five year plan

(B) Second five year plan
(C) Third five year plan
(D) Fourth five year plan

4. In which of the following country was he not a student?

(A) India
(B) England
(C) South Africa
(D) All of the above
5. Choose the correct option from the following statement.
Statement-1:- Mahalanobis was educated only from the Presidency College in
Calcutta.
Statement-2:- He was a professor at Cambridge University in England.

(A) Both the statement are correct

(B) Both the statement are wrong
(C) Statement 1 is correct and statement 2 is wrong
(D) Statement 1 is wrong and statement 2 is correct

6. Choose the correct option from the following statement.

Statement-1:- The economists invited by Mahalanobis were critical of the socialist

principles of the second plan.

Statement-2:- He was a great scholar because of his patience.

(A) Both the statement are correct

(B) Both the statement are wrong

(C) Statement 1 is correct and statement 2 is wrong

(D) Statement 1 is wrong and statement 2 is correct

3 GREEN REVOLUTION

Since the beginning of agriculture, people have been working to improving seed quality
and variety. But the term ‘Green Revolution’ was coined in the 1960s after improved
varieties of wheat dramatically increased yields in test plots in northwest Mexico. The
reason why these ‘modern varieties’ produced more than traditional varieties was that
they were more responsive to controlled irrigation and to petrochemical fertilizers. With
a big boost from the international agricultural research centres created by the Rockefeller
and Ford Foundations, the ‘miracle’ seeds quickly spread to Asia, and soon new strains
of rice and corn were developed as well.
By the 1970s the new seeds, accompanied by chemical fertilizers, pesticides, and, for the
most part, irrigation, had replaced the traditional farming practices of millions of farmers
in developing countries. By the 1990s, almost 75% of the area under rice cultivation in
Aisa was growing these new varieties. The same was true for almost half of the wheat
planted in Africa and more than half of that in Latin America and Asia, and more than
50% of the world's corn as well. Overall, a very large percentage of farmers in the
developing world were using Green Revolution seeds, with the greatest use found in
Asia, followed by Latin America.
7. In which other name High Yeilding variety of seeds is known as?
(A) High productive seeds
(B) Green seeds
(C) Power seeds
(D)Miracle seeds
8. Is the statement given below is true or false?
Statement:- Green Revolution was successful only in Mexico.

(A) True
(B) False

9. By the year the new seeds along with Chemical ,fertilisers,pesticides were
brought into use.
(A) 1960’s
(B) 1970’s
(C) 1980’s
(D) 1990’s

10. Choose the correct option from the following statement.

Statement-1:- By the 1990s, almost 75% of the area under rice cultivation in
Aisa was growing these new varieties.
Statement-2:- Overall, only a few percentage of farmers in the developing world
were using Green Revolution seeds.

(A) Both the statement are correct

(B) Both the statement are wrong
(C) Statement 1 is correct and statement 2 is wrong
(D) Statement 1 is wrong and statement 2 is correct
4 Read the following case study carefully and answer the questions that follows.

The progress of the Indian economy during the first seven plans was impressive Our
industries became more diversified and India became self-sufficient in food production
due to the 'Green Revolution" Land reforms resulted in the abolition of the hated
 "Zamindari System' But in the of many industrial sector there was dissatisfaction on
account of the performance of public sector enterprises Indian policies were inward-
oriented and they failed to develop a strong export sector. The need for the reform of
economic policy was widely felt in the context of the changing economic scenario The
New Economic Policy was thereby mitiated in 1991 to make India more efficient global

11. Which of the following was last plan under planning period?
(a) Sixth
(c) Eighth
(b) Seventh
(d) Ninth

12.Trade policy under planning period was more concerned with:

(a) export promotion
(b) import promotion
(c) import substitution
(d) Both (a) and (c)

13.Green revolution is an example of reform in India. (a) institutional

(b) technical
(c) Both (a) and (b)
(d) None of these

14. Which of the following is the part

of land reform in India under planning
period?

(a) Abolition of intermediaries

(b) Land ceiling

(c) Consolidation of holdings

(d) All of these

6 During the British times, the tillers of the lands were not its owners. So a farmer did
not have actual ownership of the land. The ownership was with the intermediaries, ie
the zumindars, jagidars etc. The farmer would farm the land and pay rent to these
zamindars. This did not motivate the zamindars to invest in the farm or invest in the
agricultural practices They were only focused on collecting their rent. And as you can
imagine, the farm and the farmer both suffered But after independence, government

realised that the agricultural output was not sufficient for the whole country. One way
to boost the produce was to make the tillers of the land its owner. And so efforts were
made to abolish the intermediaries and this was known as the land reforms.

15. Removal of intermediaries from agriculture is also known as:

(a) Technical reform
(b) Institutional reform
(c) Both (a) and (b)
(d) None of the above
 16. Rent collected by zamindars were used for

(a) development of land

(b) for use of own purpose of zamindars
(c) Both (a) and (b)
(d) None of these

17. One way to boost the produce of agriculture was known as:
(a) Institutional reform
(b) Land reform
(c) Both (a) and (b)
(d) None of these

7 The Green Revolution is referred to as the process of increasing agricultural production

by incorporating modern tools and techniques. Green Revolution is associated with
agricultural production. It is the period when agriculture of the country was converted
into an industrial system due to the adoption of modern methods and techniques like
the use of high yielding variety seeds, tractors, irrigation facilities, pesticides, and
fertilizers. Until 1967, the government majorly concentrated on expanding the farming
areas. But the rapidly increasing population than the food production called for a
drastic and immediate action to increase yield which came in the form of the Green
Revolution.Green Revolution has remarkably increased Agricultural Production.
Foodgrains in India saw a great rise in output. The biggest beneficiary of the revolution
was the Wheat Grain. The production increased to 55 million tonnes in the early stage of
the plan itself. Not just limited to agricultural output the revolution also increased per
Acre yield. Green Revolution increased the per hectare yield in the case of wheat from
850 kg per hectare to an incredible 2281 kg/hectare in its early stage.With the
introduction of the Green revolution, India reached its way to self-sufficiency and was
less dependent on imports. The production in the country was sufficient to meet the
demand of the rising population and to stock it for emergencies. Rather than depending
on the import of food grains from other countries India started exporting its
agricultural produce. The introduction of the revolution inhibited a fear among the
masses that commercial farming would lead to unemployment and leave a lot of the
labour force jobless. But the result seen was totally different there was a rise in rural
employment. The tertiary industries such as transportation, irrigation, food processing,
marketing, etc created employment opportunities for the workforce.The Green
Revolution in India majorly benefited the farmers of the country. Farmers not only
survived but also prospered during the revolution their income saw a significant rise
which enabled them to shift from sustenance farming to commercial farming.
18. Green Revolution in India was introduced in 20th century during decade’s
of for adopting new agricultural strategy.
A. 1960s
B. 1970s
C. 1950s
D. 1990s
19. Who among the following used the term 'Evergreen Revolution' for increasing
agricultural production in India?
A. Norman Borlaug
B. M.S Swaminathan
C. Raj Krishna
D. R.K.V Rao
 20. Who is the father of Green Revolution in the World?
A. Norman Borlaug
B. M.S Swaminathan
C. Raj Krishna
D. R.K.V Rao
21. The Green Revolution in India was an introduction of high-yielding varieties (HYV)
of seeds for .
A. Millet
B. Pulse
C. Wheat
D. Oilseed
22. Which of the following state was chosen as the initiation site in India for
Green Revolution?
A. Punjab
B. Tamil Nadu
C. Andhra Pradesh
D. Bihar
8 Industrial Policy is the set of standards and measures set by the Government to
evaluate the progress of the manufacturing sector that ultimately enhances economic
growth and development of the country. The government takes measures to encourage
and improve the competitiveness and capabilities of various firms. Industrial policy
resolution 1956 was the clear declaration of the government on the leading role of
public sector in the process of industrialization. This resolution laid the roadmap of
second five-year plan also. In IPR-1956, industries were classified into three
categories. Public sector was given primary role in the industrial development of the
country. Industries in the private sector could be established only through a license
from the government. Main idea of industrial licensing was to encourage industries in
the backward regions of the country. Private sector was offered many types of industrial
concessions for establishing industries in backward regions like tax holidays and
subsidized power supply. Karve committee (1955) also focused on the role of small-
scale industries to achieve the goal of industrial development. As far as possible,
domestic industries were protected from the foreign competition. Protection was
provided through: heavy imports tariffs and by fixing import quotas.
23. Main features of IPR 1956 are:
a) Protection to cottage and small scale industries.
b) Specific and all important role assigned to public sector.
c) Cautions approach towards foreign capital
d) All of these.

24. Schedule C industries development were left to:

a) Public sector b) Private sector
c) Both (a) and (b) d) None of these.
25. Which year Karve committee was setup to develop small scale Industries.
a) 1955 b) 1965
c) 1956 d) 1966
26. How many types Industries were classified in IPR 1956
(a) 2 (b) 3
(c) 4 (d) 5
9 The fifth five year plan laid stress on employment, poverty alleviation(Garibihatao) and
Justice. The plan also focused on self Reliance in agricultural production and defence. In 1978
the newly elected Morarji.i Desai government rejected the plan. The Electricity Supply Act was
amended in 1975, which enabled the central government to enter into power generation and
transmission.

The target growth rate was 4.4 % and the actual growth rate was 5%. The Minimum Needs
Programme( MNP) was introduced in the first year of the Fifth Five Year Plan(1974 to 1978).
The objective of the programme, is to provide certain basic minimum needs and there by
improve the living standard of the people. It is prepared and launched by D. P. Dhar. The
Indian National Highway System was introduced and many Roads where widened to
accommodate the increasing traffic .Tourism also expanded. The twenty point programme
was launched on 14th January 1982. It was followed from 1974 to 1979.

27. When was fifth five year plan started?

28.What were the main objectives of the
plan? 29.When did 20 point programme
launched?
30.What was the difference between targeted growth and actual growth rate

10 Import substitution policy is a set of measures aimed at stimulating production and

competitiveness of domestic goods, increasing of domestic demand optimisation of demand
for imports. It is determined by the need to reduce the dependence of transitive economy on
economic leaders. The main objective of the policy of import substitution is to encourage
National production, to development of the new products to stimulate demand and imports
restrictions. Actual directions: industrial restructuring, the balance of foreign trade ,protection
of the domestic market during the transition period. In the Commonwealth of independent
States import substitution is a complementary mechanism for diversification of production

31.Mahalanobis strategy of development is also known as strategy. (

import substitution/export substitution)
32.What is the meaning of import substitution strategy?
33.Give any one way how to protect import substitution in domestic industry.
11 Read the Passage given below and answer the following questions
India attained freedom after a prolonged struggle. British authority had completely
dwindled India’s valuable resources. India which was once considered a “Golden Bird”
was now having only meagre resources at its disposal. In such a situation it became
imperative to judiciously utilized whatever available resources we had. With this
intention Planning Commission of India was constituted by an executive resolution in
1950 by government. It was a dream project of Jawaharlal Nehru who was
predominantly a socialist and was very much influenced by the success of Soviet Union
and more specifically their concept of long term planning. He wanted to channelize
the resources of the country in an organized manner and wanted to transform India
into an industrialized country. Planning Commission is entrusted with the
responsibility of making an assessment of the material, capital and human resource of
the country, to formulate a plan for the effective utilization of country’s resources and
also to indicate
 the factors that retard economic growth. In other words, Planning Commission’s task is
to determine the future course of action; how policy will be implemented and to lay
down well designed guide lines keeping in mind country’s resources.

--https//www.civilserviceinidia.com/subject/Essay/scrpping-of-the-planning-commission.

Choose the correct option:

34. Long term goals of planning are also known as:

(A) Objectives of plan

(B) Long goals
(C) Plan for long run
(D) Objectives of planning

35.Which of the following is not a Common goal of Five Year Plan pursued by India ?
(A) GDP growth
(B) Self-sufficiency
(C) Equal distribution of resources
(D) Modernisation

36.Which among the following is not true about the achievement of goals of
planning during the period 1950-1990 ?
(A)Increase in national income
(B) Eradication of poverty
(C) Growth and diversification of industry
(D) Improvement in economic infrastructure

37.Planning Commission was established under the chairmanship of:

(A) Jawaharlal Nehru
(B) NetajiSubhash Chandra Bose
(C) P.C. Mahalanobis
(D) Rajiv Gandhi
12 The economic policies pursued by the colonial government were basically aimed at
the protection and promotion of the economic interests of their home country rather
than
with the development of the Indian economy. Such policies transformed the country into
a net supplier of raw materials and consumer of finished industrial products from Britain.
During the second half of the 19th century, modern industry began to take root in
India, in the form of cotton and jute textile mills and iron and steel industry among
others.
However, the British government never supported the growth of such industries and
imported its own products to serve the market. Therefore, Mahatma Gandhi with an
objective of self-sufficiency, protested against English textile imports and demonstrated
the need of a society of small-scale agriculture and industry. During this period, the
foundation of modern industry in India as laid by number of pioneering private business
houses headed by entrepreneurs like Jamshedji Tata, WalchandHirachand, LalaSriram,
G.D. Birla and others which in spite of many obstructions imposed and nil investment by
British government, flourished and managed to earn huge profits.
---L.G.Burange, ShrutiYamini, A review of India’s Industrial policy and performance,
2011
38. refers to those business enterprises which are controlled and run by the
government.
(A) Public enterprises (B) Private enterprises
(C) Joint ventures (D) None of
these 39.Small-scale industries generate opportunities
of:
(A) employment and equity
(B) foreign investment
(C) equal distribution of income
(D) tax evasion
40.Which among the following is the primary element of IPR, 1956 ?
(A) Three-fold classification of industries
(B) Industrial licensing
(C) Industrial concessions
(D) All of these
41.Tata Iron and Steel Company (TISCO) was established by Darobji Tata on:
(A) 25 January, 1907
(B) 25 March, 1907
(C) 25 August, 1907
(D) 25 December, 1907
 ANSWERS

CBQ NO Answer
1 1-D. profit motive

2 2. B. Market economy
3 (B) Second five year plan
4 (C) South Africa
5 (B) Both the statement are wrong
6 (A) Both the statement are correct
7 (D) Miracle seeds
8 (B) False
9 (B) 1970’s
10 (C) Statement 1 is correct and statement 2 is wrong
11 B
12 C
13 B
14 D
15 B
16 B
17 C
18 B )1970S

19 B) M.S. Swaminathan
20 A) Norman Borlaug
21 C) Wheat
22 A)Punjab
23 D)All of these
24 B) Private Sector
25 A) 1955
26 B) 3
27 a 1974
28 b.Employment and poverty alleviation
29 c.1975
30 d.0.6%
31 a Mixed economy
32 b.More than 500
33 c.Small scale industries are important for a country in the role in the
industrial and economic development of a country.
34 (d) Objectives of planning
35 (c) Equal distribution of resources
36 (b) Eradication of poverty
37 (a) JawaharLal Nehru
38 (a) Public enterprises

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39 (a) Employment and equity
40 (d) All of these
41 (c) 25 August, 1907

PREPIRED BY : PGT ECONOMICS OF BHUBANESWAR, GUWAHATI,

KOLKATA, RANCHI, SILCHAR AND TINSIKIA REGION.

11 | P a g e 8 October 2021,ZIET BHUBANESWAR