DEVELOPMENT EXPERIENCE OF INDIA (1950-1990)

CHAPTER – INDIAN ECONOMY ON THE EVE OF INDEPENDENCE

1. Explain how colonial rule impacted the state of economic infrastructure in

India.
2. What do you mean by Systematic De-Industrialisation? What was the
rationale behind the

policy? How did britishers deindustrialised the Indian handicrafts?

CHAPTER - ECONOMIC PLANNING (1950-1990)

3. Define the following long-term objectives of Indian Economic Planning.

1. Economic growth
2. Equity
3. Full employment
4. Modernisation
5. Self sufficiency
4. State the principal elements of Indian Economic Planning strategy 1950-
1990.

CHAPTER - AGRICULTURE

5. Explain the steps taken by government in 1960s to increase the

agriculture production and productivity.
6. Agricultural subsidies have always been a topic of debate. Discuss.
7. Explain how equity was attained in the Indian Agriculture during the period
1950-1990.

CHAPTER - INDUSTRIAL STRATEGY (1950-1990)

8. What do you mean by IPR- 1956? State its components.

9. What was the rationale behind the introduction of Industrial Licensing
System?

CHAPTER - INDIA’s FOREIGN TRADE

10. What is Import Substitution Trade policy? How is it different from the Export
promotion trade Policy?

CHAPTER - NEW ECONOMIC POLICY 1991

11.Explain how the role of RBI changed in 1990s? Discuss the liberalisation
reforms introduced in the following sectors:
1. Industrial Sector
2. External Sector
3. Fiscal Sector
12.Define Privatisation. Is it always desirable to privatise the PSUs? Give
reasons in support of your answer.
13.What do you mean by Globalisation? Discuss the policy components.
14.Critically appraise the new economic reforms 1991.
CHAPTER – INDIAN ECONOMY ON THE EVE OF INDEPENDENCE

1. How colonial rule impacted the state of economic infrastructure in India.

Colonial rule in India led to the exploitation of its resources for the benefit of Britain. India's
economic infrastructure was largely shaped to serve British interests. This resulted in the
destruction of traditional industries, like handicrafts and textiles, and a focus on producing
raw materials for British industries. The railway system, while extensive, was primarily
designed to extract resources rather than to promote domestic development. Agriculture was
oriented towards the production of cash crops like cotton, tea, and indigo, rather than food for
local consumption. There was little investment in infrastructure that could have supported
industrial growth or social welfare.

2. What do you mean by Systematic De-Industrialisation? What was the rationale

behind the policy? How did Britishers deindustrialise the Indian handicrafts?

Systematic de-industrialisation refers to the deliberate policies adopted by the British to

reduce India’s industrial capacity and prevent the growth of indigenous industries. The
rationale was to keep India as a supplier of raw materials and a consumer of British
manufactured goods. The British undermined Indian handicrafts by flooding the Indian
market with cheap British goods, especially textiles, which made local products
uncompetitive. Additionally, the colonial government imposed high tariffs on Indian exports
and encouraged the import of British goods, making it difficult for Indian artisans to thrive.

CHAPTER - ECONOMIC PLANNING (1950-1990)

3. Define the following long-term objectives of Indian Economic Planning.

 Economic Growth: The sustained increase in the output of goods and services in the
economy, aimed at raising the standard of living.
 Equity: Ensuring a fair distribution of income and wealth, reducing disparities among
different regions and social groups.
 Full Employment: Achieving a situation where all those who are able and willing to
work can find employment, leading to reduced poverty.
 Modernisation: Upgrading agricultural, industrial, and social practices using
technology, innovation, and improved infrastructure.
 Self-Sufficiency: Achieving independence from foreign countries in critical areas like
food, defense, and technology.

4. Principal elements of Indian Economic Planning strategy (1950-1990)

The key elements of India's economic planning from 1950 to 1990 were:

 Public Sector Dominance: The government played a central role in key industries
(e.g., steel, energy, transportation).
 Import Substitution: Focus on reducing dependency on foreign goods by
encouraging domestic production.
 Green Revolution: Increased agricultural production through high-yielding variety
(HYV) seeds, fertilizers, and irrigation.
 Industrialisation: Focused on heavy industries and infrastructure development.
 Five-Year Plans: The planning process aimed at setting economic targets and
strategies to foster growth.

CHAPTER - AGRICULTURE

5. Steps taken by the government in the 1960s to increase agricultural production and
productivity.

The government undertook several initiatives in the 1960s to boost agricultural production:

 Green Revolution: Introduction of HYV seeds, chemical fertilizers, and pesticides,

particularly for wheat and rice.
 Irrigation Development: Expansion of irrigation facilities through large projects.
 Subsidies and Loans: Providing subsidies for fertilizers and giving credit to farmers
to purchase modern inputs.
 Research and Extension Services: Strengthening agricultural research and extending
knowledge of new farming techniques to farmers.

6. Agricultural subsidies have always been a topic of debate. Discuss.

Agricultural subsidies are controversial because they have both positive and negative effects:

 Positive Aspects:
o Support to Farmers: Helps farmers, especially small ones, by reducing their
input costs.
o Increased Productivity: Subsidies on fertilizers, seeds, and irrigation promote
higher agricultural output.
 Negative Aspects:
o Inefficiency: Subsidies often lead to overuse of resources like water and
fertilizers, causing environmental harm.
o Fiscal Burden: The cost of subsidies is a significant drain on the
government’s finances.
o Inequity: Large farmers often benefit more from subsidies than small farmers.

7. Explain how equity was attained in the Indian Agriculture during the period 1950-
1990.

Equity in agriculture was pursued through:

  Land Reforms: Implementation of land ceiling laws and redistribution of land to
reduce inequalities.
 Cooperative Farming: Encouraging cooperative societies to pool resources and
improve productivity.
 Targeted Schemes: Financial support and subsidies aimed at benefiting small and
marginal farmers.
 Green Revolution: Though initially benefiting large farmers more, efforts were made
to extend benefits to small farmers through extension services and credit facilities.

CHAPTER - INDUSTRIAL STRATEGY (1950-1990)

8. What do you mean by IPR- 1956? State its components.

The Industrial Policy Resolution (IPR) of 1956 outlined the strategy for industrial
development in India. Its key components included:

 Public Sector Expansion: The government was given the responsibility to develop
key industries like heavy industries, defense, and infrastructure.
 Private Sector Participation: The private sector was allowed to develop industries,
but under strict control and regulations.
 Regulation of Monopolies: Efforts to control monopolies and ensure competition
through regulatory frameworks.
 Balanced Regional Development: Ensuring industrial development across all
regions, not just in urban centers.

9. What was the rationale behind the introduction of the Industrial Licensing System?

The Industrial Licensing System was introduced to:

 Control Industrial Growth: To prevent over-concentration of industries and ensure

balanced regional development.
 Focus on Priority Areas: To direct industrial development towards sectors of
national importance (e.g., defense, energy).
 Encourage Public Sector: To ensure that strategic industries were under government
control, promoting self-reliance.
 Prevent Uncontrolled Competition: By limiting the number of licenses, the
government could better regulate industrial output and avoid market saturation.

CHAPTER - INDIA’s FOREIGN TRADE

10. What is Import Substitution Trade Policy? How is it different from the Export
Promotion Trade Policy?

 Import Substitution: A trade policy aimed at reducing imports by encouraging the

domestic production of goods that were previously imported. It focuses on protecting
local industries through tariffs and quotas.
  Export Promotion: A policy that focuses on increasing exports by providing
incentives like subsidies, tax breaks, and devaluation of currency to make Indian
goods cheaper in international markets.

The primary difference lies in their focus: import substitution aims to reduce imports and
build domestic industries, while export promotion aims to increase foreign exchange earnings
through exports.

CHAPTER - NEW ECONOMIC POLICY 1991

11. Explain how the role of RBI changed in 1990s? Discuss the liberalisation reforms
introduced in the following sectors:

 Industrial Sector: The government introduced de-licensing and deregulation of

industries, allowing private firms to enter many sectors previously reserved for the
public sector.
 External Sector: The exchange rate was allowed to float, and there was a push to
liberalize trade by reducing tariffs and removing quantitative restrictions on imports.
Foreign direct investment (FDI) was encouraged.
 Fiscal Sector: Tax reforms were introduced to widen the tax base, and measures to
reduce fiscal deficits were adopted.

RBI's Role: The RBI's role changed to focus on monetary stability, managing inflation, and
controlling exchange rates. It introduced reforms to improve the banking sector, such as
interest rate deregulation and greater autonomy for commercial banks.

12. Define Privatisation. Is it always desirable to privatise the PSUs? Give reasons in
support of your answer.

Privatisation refers to transferring the ownership and management of state-owned

enterprises (PSUs) to the private sector.

Desirability:

 Advantages:
o Efficiency: Private ownership tends to improve management efficiency and
productivity.
o Reduced Fiscal Burden: The government can reduce its financial burden by
selling loss-making PSUs.
o Increased Investment: Privatization can attract more investment, both
domestic and foreign.
 Disadvantages:
o Social Objectives: PSUs often serve broader social goals like employment
generation and providing goods at affordable prices, which may not be
prioritized by private companies.
o Monopoly Risks: Privatization can lead to the creation of monopolies, which
may harm consumers.
13. What do you mean by Globalisation? Discuss the policy components.

Globalisation refers to the increasing integration of national economies through trade,

investment, and technology, leading to greater interconnectedness.

Policy components include:

 Trade Liberalization: Reduction of tariffs and barriers to international trade.

 Financial Integration: Encouraging foreign investments and capital flows.
 Cultural Exchange: Facilitating the flow of information, technology, and culture
across borders.
 Regulation of Foreign Investments: Creating an environment that is attractive to
foreign direct investment (FDI).

14. Critically appraise the new economic reforms of 1991.

The 1991 economic reforms led to:

 Positive Impact:
o Economic growth accelerated, foreign investments increased, and the
economy became more integrated into the global market.
o The liberalization of industries reduced the control of the state, leading to
increased efficiency and competitiveness.
 Negative Impact:
o Income Inequality: The benefits of growth were unevenly distributed,
widening the income gap.
o Unemployment: Some sectors, especially traditional industries, faced job
losses due to increased competition.