2ND CHAPTER

Planning in India
Q.1. Define a plan.
Ans. Plan is a document showing detailed scheme, program and strategy, worked out in
advance for fulfilling an objective.
Q.2. Why did India opt for planning?
Ans. After gaining independence, the next important step for the Indian Government was to
revive the poor, backward and stagnant economy, inherited from the British rule. So, for
the systematic and overall development of Indian economy, India opted for planning.
Q.3. Why should plans have goals?
Ans. Planning is done to achieve some predetermined goals within a specified time period.
Without goals, the planners won’t be able to know which sector of the economy needs to
be developed on the priority basis. So, plans should have goals.
Q.4. What are miracle seeds?
Ans. Miracle seeds refer to high yielding varieties (HYV) of seeds, which raised agricultural
yield per acre to incredible heights.
Q.5. What is marketable surplus?
Ans. The portion of agricultural produce, which is sold in the market by the farmers, after
meeting their own consumption requirement, is known as marketable surplus.
Q.6. Explain the need and type of land reforms implemented in the agriculture sector.
Ans. Need for land Reforms: The land reforms were needed in a country like India because:
(i) majority of its population depends on agriculture; and (ii) To achieve the objective of
equity in agriculture.
Types of land Reforms: The major measures taken under land reforms includes:
(a) Abolition of Intermediaries: Indian Government took various steps to abolish
intermediaries and to make tillers, the owners of land. The ownership rights granted
to tenants gave them the incentive to increase output and this contributed to growth
in agriculture.
(b) Land Ceiling: Land Ceiling refers to fixing the specified limit of land, which could be
owned by an individual. The purpose of land ceiling was to reduce the concentration
of land ownership in few hands. It helped to promote equity in the agricultural sector.
Q.7. What is Green Revolution? Why was it implemented and how did it benefit the farmers?
Explain in brief.
Ans. Green Revolution refers to the large increase in production of food grains due to use of
high yielding variety (HYV) seeds.
It was implemented because:
 The agricultural sector accounted for the largest share of workforce with
approximately 70-75 per cent.
 The productivity in the agricultural sector was very low due to use of outdated
technology and absence of required infrastructure and India was forced to import
food from the United States of America.
Benefits of Green Revolution
The spread of Green Revolution benefited the farmers.
 1. Attaining Marketable Surplus: Green Revolution resulted in “Marketable Surplus”.
Marketable Surplus refers to that part of agricultural produce which is sold in the
market by the farmers after meeting their own consumption requirement.
2. Buffer Stock of Food Grains: The green revolution enabled the government to procure
sufficient amount of food grains to build a stock which could be used in times of food
shortage.
3. Benefit to low-income groups: As large proportion of food grains was sold by the
farmers in the market, their prices declined relative to other items of consumption. The
low-income groups, who spend a large percentage of their income on food, benefited
from this decline in relative price
Q.8. Explain ‘growth with equity’ as a planning objective.
Ans. Growth refers to increase in the country’s capacity to produce the output of goods and
services within the country. Growth implies:
 Either a larger stock of productive capital;
 Or a larger size of supporting services like transport and banking;
 Or an increase in the efficiency of productive capital and services.
A good indicator of economic growth is steady increase in the Gross Domestic product
(GDP). Increase in GDP or availability of goods and services enables people to enjoy a
more rich and varied life.
According to Equity, every Indian should be able to meet his or her basic (food, house,
education and health care) and inequality in the distribution of wealth should be reduced.
Equity aims to raise the standard of living of all people.
So, ‘growth with equity’ helps to achieve planning objective of development with social
justice.
Q.9. Does modernization as a planning objective create contradiction in the light of
employment generation? Explain.
Ans. The given statement is correct. Modernization implies use of advanced technology.
Advanced technology requires less labour per unit of output. Thus, modernization creates
unemployment.
Q.10. Why was it necessary for a developing country like India to follow self-reliance as a
planning objective?
Ans. The policy of self-reliance was considered a necessity because of two reasons:
 To reduce foreign dependence: As India was recently freed from foreign control, it is
necessary to reduce our dependence on foreign countries, especially for food. So, stress
should be give to self-reliance.
 To avoid Foreign Interference: It was feared that dependence on imported food
supplies, foreign technology and foreign capital may increase foreign interference in
the policies of our country.
Q.11. What is sectoral composition of an economy? Is it necessary that the service sector should
contribute maximum to GDP of an economy? Comment.
Ans. Structural composition refers to contribution made by agricultural, industrial and service
sector in the gross domestic product of the country.
No, it is not necessary that the service sector contributes maximum to GDP of an
economy. However, by 1990, the share of the service sector was the maximum at 40.59
per cent. This phenomenon of growing share of the service sector marked the beginning
of globalization in the country.
Q.12 Why was public sector given a leading role in industrial development during the planning
period?
Ans. The public sector was given a leading role in industrial development during the planning
period because of following reasons:
1. Shortage of Capital with Private Sector: Private enterpreneurs did not have the capital
to undertake investment in industrial ventures, required for the development of Indian
economy. At the time of independence, Tatas and Birlas were the only well- known
Private enterpreneurs. As a result, Government had to make industrial investment
through Public Sector Undertakings (PSU’s)
2. Lack of Incentive for Private Sector: The Indian market was not big enough to
encourage private industrialists to undertake major projects, even if they had capital to
do so. Due to limited size of the market, there was low level of demand for the
industrial goods.
3. Objectives of Social Welfare: The objective of equity and social welfare of the
Government could be achieved only through direct participation of the state in the
process of industrialization.
Q.13. Explain the statement that green revolution enabled the government to procure sufficient
food grains to build its stocks that could be used during times of shortage.
Ans. The Green Revolution resulted in the manifold increase in the agricultural production
and productivity. As a result, India was able to achieve self-sufficiency in food grains.
Green revolution helped in building buffer stocks, which could be used in case of
shortage of production.
Q.14. While subsidies encourage farmers to use new technology, they are a huge burden on
government finances. Discuss the usefulness of subsidies in the light of this fact.
Ans. In India, subsidies are necessary because;
 Majority of the farmers are very poor and they will not be able to afford the
required inputs without the subsidies.
 To reduce the income inequality between rich and poor farmers and to achieve the
ultimate goal of equity.
So, the government should continue with agricultural subsidies as farming in India
continues to be a risky business. However, necessary steps should be taken to ensure
that only the poor farmers enjoy the benefits of the subsidies and not the fertilizer
industry and big farmers.
Q.15. Why, despite the implementation of green revolution, 65 per cent of our population
continued to be engaged in the agriculture sector till 1990?
Ans. 65 per cent of our population continued to be engaged in the agriculture sector till 1990
because industrial and service sectors were unable to absorb the extra people involved in
agriculture.

Q.16. Though public sector is very essential for industries, many public sector undertakings
incur huge losses and are a drain on the economy’s resources. Discuss the usefulness of
public sector undertakings in the light of this fact.
Ans. It is true that many public sector undertakings are incurring huge losses. However, they
are still very useful and crucial for the economy. They are needed:
  To create a strong industrial base. Public sector plays an important role in
development of those industries which require heavy investment and have long
gestation period.
 To develop infrastructure.
 To promote development of backward areas.
 To generate employment opportunities.
 To control and manage industries of strategic areas (like national defence, atomic
energy, etc.)
Moreover, public sector is not meant for earning profits but to promote the welfare of the
nation. So, they should be evaluated on the basis of their contribution to welfare of the
people and not on the profits they earn.
Q.17. Explain how import substitution can protect domestic industry.
Ans. The domestic industries of India were not in a position to compete against the goods
produced by more developed economics. So, the policy of import substitution helped in
protecting them in two ways:
(a) Tariffs: Tariffs refer to taxes levied on imported goods. The basic aim for imposing
heavy duty on imported goods was to make them more expensive and discourage their
use.
(b) Quotas: Quotas refer to fixing the maximum limit on the imports of a commodity by a
domestic producer.
The tariff on imported goods and fixation of quotas helped in restricting the level of imports.
As a result, the domestic firms could expand without fear of competition from the foreign
market

Q.18. Why and how was private sector regulated under the IPR 1956?
Ans. Out of these categories, the third category (Schedule C) consisted of the industries
which were to be in the private sector. These industries were controlled by the state
through a system of licenses, enforced under Industries (Development and Regulation)
Act, 1951.
According to industrial Licensing;
1. No new industry was allowed unless is obtained from the government.
2. It was easier to obtain a license if the industrial unit was established in an
economically backward area. In addition, such units were given certain concessions,
such a tax benefits and electricity at a lower tariff. The purpose of this policy was to
promote regional equality.
3. License was needed even if an existing industry wants to expand output or diversify
production.

Q.19. Match the following

1. Prime Minister A. Seeds that give large proportion of output.
2. Gross Domestic Product B. Quantity of goods that can be imported.
3. Quota C. Chairperson of the Planning Commission.
4. Land Reforms D. The money value of all the final goods and
services
produced within the economy in one year.
 5. HYV Seeds E. Improvements in the field of agriculture to
increase
its productivity.
6. Subsidy F. The monetary assistances given by government
for production activities.
Ans. 1.(C); 2. (D); 3. (B); 4. (E); 5 (A); 6 (F)

Very Short Answer Type Questions ( 1 Mark

each)
Q.1. What are the three main central problems of an economy?
Ans. The three major central problems of an economy are: (i) What to produce; (ii) How to
Produce; (iii) For whom to produce.
Q.2. What is a mixed economic system?
Ans. A mixed economic system refers to a system in which the public sector and the private
sector are allotted their respective roles for solving the central problems of the economy.
Q.3. What is meant by “Economic planning”?
Ans. Economic Planning can be defined as making major economic decisions (what, how and
for whom to produce) by the conscious decision of a determine authority, on the basis of
a comprehensive survey of the economy as a whole.
Q.4. When was the Planning Commission set up?
Ans. The planning Commission was set up in 1950.
Q.5. Name the basic goals of India development, which serve as guiding principles of Indian
Planning?
Ans. The basic goals are; (i) Growth; (ii) Modernization; (iii)Self-reliance; and (iv) Equity.
Q.6. What do you mean by growth?
Ans. Growth refers to increase in the country’s capacity to produce the output of goods and
services within the country.
Q.7. Define Gross Domestic Product?
Ans. Gross Domestic Product (GDP) refers to market value of all the final goods and services
produced in the country during a period of one year.
Q.8. What is meant by sectoral composition of an economy?
Ans. The contribution made by each sector of the economy to GDP of a country is termed as
sectoral composition.
Q.9. “Service sector contributed maximum to the GDP in 1990.” What does it indicate about a
country?
Ans. It indicates that the country is economically developed.
Q.10. What do we mean by import substitution?
Ans. Import substitution refers to a policy of replacement or substitution of imports by
domestic production.
Q.11. What are the two ways by which domestic industries can be protected from imports?
Ans. Two ways to protect goods produced in India from imports are; (i) Tariffs; (ii) Quotas.
Q.12. What are tariffs?
Ans. Tariffs refer to taxes levied on imported goods..
Q.13. What are quotas?
Ans. Quotas refer to fixing the maximum limit on the imports of a commodity by a domestic
producer.
Q.14. What was the basic aim for abolition of intermediaries?
Ans. The basic aim was to confer ownership rights of the agricultural land to the tiller to give
him incentive for improvement.
Q.15. Name the two measures undertaken to promote the growth in the growth in the
agricultural sector.
Ans. (i) Land Reforms; (ii) Green Revolution.
Q.16. What do you mean by land ceiling? 54
Ans. Land ceiling refers to fixing the specified limit of land, which could be owned by an
individual. Beyond the specified limit, all lands belonging to a particular person are
taken over by the Government and allotted to the landless cultivators and small farmers.
Short Answer Type Questions (3 – 4 Marks
each)
1. Why did India opt for mixed economy?
2. Briefly discuss “Growth” as an important goal of five year plans?
3. The objectives of growth, modernization and self-reliance may not improve the kind of life,
until and unless the fourth objective of five year plans is achieved. Identify and discuss the
fourth objective.

4. Explain “Modernization” as a goal of five year plans.

5. “Land reforms more successful only in two states.” Why?
6. How old government ensure that the small farmers also benefit from the Green Revolution?
7. The protection of domestic industries through import substitution suffered from two
drawbacks. Mention them.

8. How was the licensing policy misused by some industrial houses?

9. Discuss the role of small-scale industries in the generation of employment?
10. Why there was a need for protection of small-scale industries? State the steps undertaken by
the government for their growth.

11. Why was goal of equity not fully achieved even after abolition of intermediaries?
12. “Green Revolution experienced the success in two phases.” Comment.
13. Discuss any three achievements of Green Revolution.
14. How were the industries classified according to the Industrial Policy Resolution 1956?
Long Answer Type Question (6 Marks
each)
1. “Subsidies put a huge burden on the government’s finances, but are necessary for poor and
marginal farmers.” Comment.
2. Discuss the risks involved under green revolution. Also state the steps taken by the
Government to overcome these risks.

3. Critically appraise the development of agriculture between 1950 and 1990.

4. Briefly discuss the policy of industrial licensing.

5. Critically evaluate the industrial development during the period of 1950 to 1990.
6. Briefly discuss the progress of Indian economy during the first seven plans in the agriculture,
industrial and trade sector.