post lib Flashcards
name the six features of the pre 1991 phase
1) heavy reliance on public sector
2) regulated growth of private sector
3) development of heavy and strategic industries
4) development of small scale industries
5) inward looking trade strategy
6) restrictions on foriegn capital
explain heavy reliance on public sector
public sector was assigned a greater role than the private sector in the process of economic development.
it was required to intitiate economic development + play a dominant role in shaping the entire pattern of economic development.
it was expected to play an important role in increasing investment on a massive scale to promote industrialisation.
to do so it had to undertake massive expenditure in building infrastructure like transport system and power .
this meant the state had control on said industries and infrastructure also known as commanding heights of the economy which were vital for it.
private entrepreneurs had neither the resources nor desire to take up an investment of this scale.
the government played an entrepreneurial + promotional role
explain regulated growth of private sector
private sector had subordinate role
it also had to play its part in economic development while being under the regulations of the govt so as to promote social welfare.
it had to therefore confirm to the overall strategy of economic development.
for instance:
- licensing system- license and registration to be obtained before establishing a new industry.
- price controls
- restrictions on use of foreign exchange through foreign exchange regulations
- regularions on expansion of production capacity of large industries under the monopoly and restrictive trade practices act.
explain development of heavy and strategic industries
the development of heavy industries like iron and steel or machine building was given a high priority in the development strategy. industries of strategic importance like electric power generation were to be developed on a priority basis.
explain development of small scale industries
it was encouraged in view of their contribution to-
employment generation
regional equality
income equality
promotion of exports
development of small scale industries was encourage by reserving certain areas of production exclusively for them+ meeting their financial needs by developing financial institutions exclusively for them
explain inward looking trade strategy
also called import substitution
aimed at replacing or substituting imports with domestic production
implied protecting domestic industry from foreign competition by imposing heavy import duties and import quotas
explain inward looking trade strategy
also called import substitution
aimed at replacing or substituting imports with domestic production
implied protecting domestic industry from foreign competition by imposing heavy import duties and import quotas
explain restrictions on foreign capitals
restrictions imposed on foreign direct investment or fdi such as restricting areas and amount of fdi through foreign exchange regulation act or fera
explain liberalisation
an integral feature of new economic policy
prior to 1991, govt imposed controls like industrial licensing system, investment restrictions, foreign exchange controls, price control and more aiming to regulate economic activity,
however
controls became major hindrance to eco growth+ development
bred corruption, cause undue delays, dampened entrepreneurial spirit
THUS
policy of liberalisation introduced to put an end to these controls and restrictions to strengthen market forces for economic growth and development
explain privatisation
privatisation is essentially expanding the private sector and limiting the role of the public sector. prior to 1991, public sector was given the leading role in economic development. it is an undisputed fact that the public sector undertakings or PSUs between 1951 and 1991 led to various strategic industries and diversification of the industrial structure of the indian economy
however a lot of psu s also showed poor performance
low efficiency
corruption
mismanagment
excessive pol interference
SO
Psu s became more of a liability than a source of economic development
so the govt realised need for privatisation and sold of equity to private sectors
globalisation explain
opening up indian economy to other economies of the world
as a part of this policy the indian economy was integrated with other economies of the world through free flow of trade, capital and technology.
the govt realised India would benefit from free flow of goods and services between different countries through unrestricted imports and exports
it also realised that the free flow of foreign investments and technology would also benefit India
accordingly it adopted the policy of liberalisation of foreign trade by
reducing import duties
removing quantitative restrictions on trade
it also followed the policy of liberalisation of foreign investment to encourage flow foreign investment into india
agricultural policies
1- TECHNOLOGICAL MEASURES- increased supply of various agricultural inputs such as extension of irrigation facilities, increased availability of high yielding varieties of seeds (HYV), chemical fertilisers, pesticides. as a result agricultural production+ productivity increased .
2. INFRASTRUCTURAL FACILITIES- these include credit, marketing, storage, transportation, education, agricultural research etc.
institutional credit facilities have been expanded through cooperatives and commercial banks
regional rural banks set up to meet the need of agricultural credit
a national bank for agriculture and rural development(NABARD) acts as an apex institution
regulated markets set up to improve the system of agricultural marketing
efforts made to strengthen the cooperative marketing structure in the agricultural sector
storage and warehousing facilities expanded to build up adequate buffer stocks of food grains and to provide adequate storage facilities to farmers
various agricultural research institutes set up to develop new techniques and discover new high yielding varieties of seeds and to impart technical education
3. LAND REFORMS-Institutional changes for incentive
abolition of intermediaries
tenancy, reforms for fixation of rents paid by tenants, security of tenure and conferment of ownership rights to the tenants.
4.POLICY OF FIXATION OF MINIMUM SUPPORT PRICES AND PROCUREMENT PRICES
for 22 agricultural commodities
min prices fixed so prices of agricultural commodities don’t fall below these prices
procurement prices are the prices at which the government purchases the needed quantity of food grains for maintaining the public distribution system and building up buffer stocks
procurement prices are fixed at a higher level than minimum prices
this price fixation policy aims at ensuring fair returns to farmers so as to increase incentive for agriculturalproduction
5. INPUT SUBSIDIES TO AGRICULTURE
under this the govt is providing inputs such as irrigation , fertilisers and power to farmers and subsidised prices so as to reach the farmers below market prices.
this is to motivate farmers to switch over the modern inputs in agriculture to increase agricultural production and productivity thus making them known as development subsidies as well.
6. FOOD SECURITY SYSTEM
govt built elaborate food security system in the form of public distribution system of PDS over the year
its aim is to provide food at subsidised rates to poor people
PDS also helps the government in maintaining buffer stocks in the time of a food crisis or shortage of foodgrains
under PDS, the central govt is responsible for the procurement and allocation of foodgrains while state governments are responsible for its distribution to the eligible beneficiaries or ration card holders through fair price shops
features of agri development
increase in production
prod of rice and wheat increased substantially as well as cotton and oilseeds enabling India to achieve self sufficiency in food grains production
increase in productivity
increase in yield per hectare(like wheat)
increase in area under cultivation
increase in net area+ double cropping
gross area under cultivation increased for both non food crops and food crops but faster for food crops
commercialisation of agriculture
increase in output of non food crops due to increase in area under cultivation resulted in money income being generated for farmers as non food crops are exclusively for the market making a shift in farmers mindset from it being subsistence farming to commercial farming
problems
LOW GROWTH RATE
-growth rate of agriculture sector remained less that overall growth rate of indian economy
-unsatisfactory for needs of indian economy
-growth rate of agri sector very low compared to other countries
-during covid showed robust growth rate compared to overall growth rate of indian economy
LOW LEVEL OF PRODUCTIVITY
-land productivity and labour productivity
land productivity -yield per hectare- compared to other countries low but increased post green revolution
labour productivity- productivity per worker
remained low and stagnant
PRESSURE OF POPULATION ON LAND
per capita cultivable land very low
pressure of population increasing
area under cultivation increasing
but land per person or per capita cultivated land decreased
productivity low
LAND TENURE SYSTEM
large landowners increased
tenants exploited
exorbitant rent no security of tenure
adverse effect on enthusiasm andwillingness of farmers
UNECONOMIC HOLDINGS
small land holding
uneconomical
unable to use advanced and modern techniques
low production
TRADITIONAL OUTDATED TECHNIQUES
bullocks, wooden ploughs, traditional varieties of seeds and manure
industrial policy
abolition of industrial licensing
industrial entrepreneurs to get permission from government to start firm, close firm or decided production capacity was abolished except or 5 industries .
policy of dereservation
industries reserved for public sector reduced from 7 to 3 and many have now been dereserved
relaxation monopolies
large monopoly firms required to seek approval of government for investment proposals before 1991 but no more for the expansions of the production capacity of existing enterprises and establishment of new industries
importance of small scale industries
small scale industries have high priority in view of their role in diversification of industrialisation and generation of employment achievement of regional growth
development is thus encourage by providing finances, raw material ,technical expertise, infrastructural facilities
reducing role of public sector enterprises
no of industries reserved for public sector reduced
ownership and management of govt owned enterprises sold out to private sector ie the policy of disinvestment
non perform and sick PSUs sold off to private
some PSUs now have managerial autonomy and enhanced financial powers
