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Indian Economic Development > Indian Economy (1950-90) > Flashcards

Indian Economy (1950-90) Flashcards

1
Q

What is an economic system?

A

an arrangement by which central problems of an economy are solved

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2
Q

What are the central problems of an economy?

A

what to produce: deciding the final combination of goods and services to be produced i.e selection and quantity
how to produce: deciding technique of production i.e more labour less capital or less labour more capital
for whom to produce: deciding distribution of output among people i.e those who will consume

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3
Q

What is meant by labour intensive and capital intensive technique?

A

labour intensive is a technique with more usage of labour and less capital
capital intensive is a technique with more usage of capital and less labour

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4
Q

What are the types of economic systems?

A

capitalist economy
socialist economy
mixed economy

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5
Q

What is capitalist economy? How does it solve the central problems?

A

one in which the means of production are owned, controlled and operated by the private sector

what to produce - goods that can be sold profitably in domestic/foreign market
how to produce - cheaper techniques (cheap labour - labour intensive, cheap capital - capital intensive)
for whom to produce - goods are distributed on the basis of income and purchasing power, not on the basis of needs

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6
Q

What is a socialist economy? How does it solve the central problems?

A

one in which the means of production are owned, controlled and operated by the govt

what to produce - govt decides in accordance to needs of society
how to produce - govt decides techniques
for whom to produce - distributed on the basis of need, not income eg: free healthcare

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7
Q

What is a mixed economy?

A

one in which the public and the private secotr are alloted respective roles for solving central problems of the economy

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8
Q

Why couldn’t India adopt a socialist economy system?

A

in a democratic country like India, complete dilution of private ownership was impossible

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9
Q

Why couldn’t India adopt a capitalist economy system?

A

there would be less chances of improvement in quality of life of majority of people

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10
Q

India adopted the _____

India’s society is ______

A

mixed economy system

socialist

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11
Q

What is economic planning?

A

it is making major economic decisions by the conscious decision of a determinate authority on the basis of an comprehensive survey of the economy as a whole

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12
Q

The ______ and the ________ assigned a leading role in economic planning to the public sector

A

Industrial Policy Resolution of 1948 and the Directive Principles of the Indian Constitution

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13
Q

When was Planning Commission set up?

A

1950

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14
Q

Why was the Planning Commission set up?

A

to carefully assess the human and physical resources of the country and to prepare the Plans for the effective use of resources

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15
Q

What was the planning period set up by the Planning Commission and what was it called?

A

planning period - 5 years

it was called five year plans

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16
Q

What is the meaning of plan? What is the reason for making plans?

A

Plan is a document showing detailed scheme, program and strategy, worked out in advance for fulfilling an objective
Purpose - to achieve a pre determined goal within a specific period of time

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17
Q

The concept of Five Year Plan was borrowed from ______

A

the former Soviet Union

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18
Q

What is the ‘Perspective Plan”

A

it is a long term plan that specifies the objectives to be attained over a period of 20 years.

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19
Q

The _______ are supposed to be a basis for the Perspective Plan

A

five year plans

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20
Q

When was the first Five Year Plan launched?

A

It started from 1st April 1951 and ended on 31st March 1956

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21
Q

What are the basic guiding principles of Indian Planning?

A

growth
modernisation
self-reliance
equity

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22
Q

What is growth?

A

increase in country’s capacity to produce the output of goods and services within the country

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23
Q

What does growth imply?

A

either a larger stock of productive capital
or a larger size of supporting services (transport, banking)
increase in efficiency of productive capital and services

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24
Q

A good indicator of economic growth is steady increase in ___

A

GDP

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25
Q

What is GDP?

A

market value of all final goods and services produced in the country during a period of one year

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26
Q

The contribution of each sector makes up the _______ of the economy

A

structural composition

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27
Q

What was the significance of the share of service sector in GDP in 1990?

A

it was 40.59% more than agri and/or industry

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28
Q

What marked the beginning of the globalisation in the country?

A

the phenomenon of growing share of service sector in post 1991 period

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29
Q

What does modernisation include?

A

the increase in production of goods and services through new use of technology
changing social outlook to enhance societal prosperity

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30
Q

Modernisation transforms a feudal and colonial economy into a ______ and _______ economy

A

modern and independent

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31
Q

What does self-reliance mean?

A

it means overcoming the need for external assistance

32
Q

Policy of self-reliance is considered a necessity. Why?

A

to reduce foreign dependence

to avoid foreign interference on policies of country

33
Q

What does achieving equity entail?

A

ensuring benefits of economic prosperity to all sections of society
every indian should be able to meet his/her basic needs
inequality in distribution of wealth should be reduced

34
Q

What does equity aim to do?

A

raise the standard of living of all people and promote social justice

35
Q

What were the problems faced by the agricultural sector between 1950-90?

A 
low productivity
disguised unemployment
high dependency on rainfall
subsistence farming
outdated tech
conflicts between tenants and landlords
36
Q

What is subsistence farming?

A

practice of growing crops only for one’s own use and not for trade

37
Q

What were the policies undertaken for growth of agriculture?

A

land reforms - change in ownership of landholdings

green revolution - large increase in production of food grains due to use of HYV seeds

38
Q

Land reforms includes ______ and ________

A

abolition of intermediaries (to incentivize improvement and better output) and land ceiling

39
Q

Abolition of intermediaries brought ____ farmers in direct contact with the govt

A

200 lakh

40
Q

Abolition of intermediaries was not very successful because of three reasons. What are they?

A

former zamindars continued to own acres through loopholes
zamindars claimed to be self-cultivators
poorest of farmers did not benefit from land reforms

41
Q

What is land ceiling?

A

fixing specified limit of land that can be owned by an individual

42
Q

What is the purpose of land ceiling?

A

reduce concentration of land in the hands of a few

43
Q

How did big landlords evade this policy?

A

delayed implementation

land was registered to close relatives

44
Q

Land reforms were successful in _____ and ______

A

Kerala and West Bengal

45
Q

What was the aim of Green Revolution?

A

raise agri production and productivity

46
Q

________ is a spectacular advancement in the field of agriculture

A

Green Revolution

47
Q

When was High Yielding Varieties Programme adopted?

A

in the kharif season of 1966

48
Q

To derive benefit from HYV seeds, farmers had to have

A

good irrigation facilities

financial resources to purchase fertilisers and pesticides

49
Q

What were the effects of the first phase of green revolution?
What were the effects of the second phase of green revolution?

A

first phase - mid 60s to mid 70s (benefited wheat growing regions only like Punjab, Andhra Pradesh)
second phase - mid 70s to mid 80s (spread to larger no of states

50
Q

What were the imp effects of Green Revolution?

(MAIN - attained self- sufficiency (self-reliance)

A

attained marketable surplus (part of agri produce that is sold in the market after meeting their consumption requirement)
buffer stock of food grains were used in times of food shortage
benefit to low income groups

51
Q

What were the risks involved with green revolution? How were they solved?

A

risk of pest attack
risk on increase in income inequalities

loans at low interest rate to have access to pesticides and other inputs

52
Q

What is subsidy?

A

farmers get inputs at prices lower than market price

53
Q

What were arguments against and for subsidies?

A

against - after wide acceptance, purpose was served
it benefits fertiliser comp and prosperous
farmers more
for - farming is risky so it should continue
majority of farmers can’t otherwise afford it
increase income inequalities

54
Q

What was the role of public sector in industrial development?

A

shortage of capital with private sector (govt invested through public sector undertakings (PSU))
lack of incentive for private sector
objective of social welfare

55
Q

What is the Industrial Policy essential for?

A

devising various procedures, principles, rules and regulations for controlling industrial enterprises
adopted on 30th April 1956

56
Q

What are industries are classified into?

A

Schedule A - owned by state (17) eg: arms and ammunition, oil, aircraft
Schedule B - set up by state but carried on by private sector (12) eg: mining, fertilisers
Schedule C - owned by private sector (remaining)

57
Q

Industries are controlled by ________ through ______

A

the state through licenses under Industries (Development and Regulation) Act 1951

58
Q

What is industrial licensing?

A

written permission from govt to an industrial unit

govt can issue licenses for setting up industries, expanding industries and diversifying products

59
Q

The purpose of licensing was to promote ______

A

regional equality

60
Q

What was the Karve committee and what did they do?

A

The Karve Committee or the Village and Small-Scale Industries Committee saw the possibility of small scale industries promoting rural development in 1955

61
Q

A small-scale industry defined with reference to ________-

A

the max investment allowed on the assets of the unit.

62
Q

What is the limit allowed on the assets of small scale industries?

A

it changed from 5 lakh to 1 crore in 1950

63
Q

What are the main features of small-scale industries?

A

it helps in employment generation (labour intensive)
it needs to be protected from big firms
steps taken by the govt: reservation of products
various concessions

64
Q

In the 1950s, ___________ was a major element of India’s Trade and Industrial Policy

A

Import substitution

65
Q

India’s share in world trade was

A

1.78%

66
Q

What is import substitution?

What was the basic aim?

A

it refers to the policy of replacement or substitution of imports by domestic production
inward looking strategy
basic aim - protect domestic industries from foreign competition/self reliance

67
Q

What are the 2 definite objectives of import substitution?

A

savings of precious foreign exchange

achieving self-reliance

68
Q

How were domestic goods protected from imports?

A

tarrifs: tax levied on imported goods
aim - make it more expensive and discourage use

quotas: fixing the max limit on the imports of a commodity by a domestic producer

69
Q

What are the reasons for import substitution?

A

protecting domestic industries from foreign competition

saving foreign exchange

70
Q

______ was regarded as the important failure of policies of agri followed during 1950-90

A

large population employment

71
Q

The proportion of GDP contributed by the industrial sector increased from ____ in _____ to _____ in ______

A

11.8% in 1950-51 to 24.6% in 1990-91

72
Q

What is the growth rate of industrial sector?

A

6% annual growth

73
Q

What were the two drawbacks of import substitution?

A

inward looking trade strategy : inward oriented so export sector is not very developed
lack of competition : no sincere efforts to improve quality

74
Q

What were the difficulties faced by the licensing policy?

A

misuse : big industries would get a license to prevent competitors from starting new firms
time consuming

75
Q

What were the drawbacks of public sector intervention in industrial sector?

A

public sector ineffectively monopolized areas that could be handled by the private sector
precious funds are used unresourcefully
incurs huge losses
criticised by scholars

76
Q

______ was initiated in 1991 to make our economy more efficient

A

New Economic Policy (NEP)

77
Q

Public sector helped in _______

A

creating strong industrial base
developing infrastructure
promoting rural development

Indian Economic Development (3 decks)

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