NCERT Solutions for Class 12 Economics Chapter 8 Indian Economy 1950-1990

Detailed, Step-by-Step NCERT Solutions for Class 12 Economics Chapter 8 Indian Economy 1950-1990 Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation.

Indian Economy 1950-1990 NCERT Solutions for Class 12 Economics Chapter 8

Indian Economy 1950-1990 Questions and Answers Class 12 Economics Chapter 8

Question 1.
Define a plan.
Answer:
A plan describes the way of allocating the resources of a nation to productive use. A plan should have general as well as specific objectives, which needs to be achieved within a specified period of time. In India, the duration of plans is 5 years.

Question 2.
Why did India opt for planning?
Answer:
On the eve of independence, the agricultural sector in India was burdened with surplus labour and low productivity. There was lack of modem industries, capacity building and public investment. Also, India became the net supplier of raw materials and consumer of finished industrial products from Britain.

There was a need to opt for planning to initiate the process of development with the aim of opening out new opportunities in various sector of the economy, gaining competitiveness and hence, raising the living standard of its people.

Question 3.
Why should plans have goals?
Answer:
Plans should have clearly specified goals. Plans are meant to achieve something and since goals are the ultimate targets of any plan, plans must include goals. There are different goals being emphasised in different plans in India. The major goals of the Five Year Plans are:

• Growth
• Modernisation
• Self-reliance
• Equity

However, not equal importance is given to all the goals in all the plans. Due to limited resources, a choice has to be made in each plan as to which goals needs to be given the primary importance.

Question 4.
What are High Yielding Variety (HYV) seeds?
Answer:
High Yielding Variety (HYV) seeds are better quality seeds, which help increase the production of crops significantly.

Question 5.
What is marketable surplus?
Answer:
Marketable surplus is that portion of agriculture produce which is sold in market by the farmers.

Question 6.
Explain the need and type of land reforms implemented in the agriculture sector.
Answer:
Although agricultural sector was the main source of national income and employment, it remained backward and deficient. It was burdened with defective institutions like Zamindari’ and ‘Jagirdari’. Zamindars were only interested in collecting rent-from the tillers and contributed nothing to improve the productivity of the land. Hence, it was important to implement land reforms to abolish these institutions and make the tenants or tillers, the owners of land.

Following are the different type of land reforms implemented in the agriculture sector

(i) Land Ceiling: It means fixing the maximum size of the land which could be owned by an individual. This purpose of this policy was to reduce the concentration of land in a few powerful hands.

(ii) Abolition of Intermediaries: The policy aimed to bring the tenant in direct control with government and hence, freeing them from the exploitation of zamindars. The cultivators are expected to take more interest in increasing output if they are made the owners of the land. Ownership of land enables the tiller to make profit from the increased output.

Question 7.
What is Green Revolution? Why was It implemented and how did it benefit the farmers? Explain in brief. –
Answer:
Green revolution refers to the large increase in production of foodgrains resuiting from the use of High Yielding Variety (HYV) seeds, especially for wheat, rice and maize.

Green Revolution was implemented:

• to break the stagnation in agriculture caused during the colonial rule: and
• to increase the productivity of agricultural sector.

Benefits of Green Revolution

• Self-sufficiency in foodgrains
• Marketable surplus
• Maintenance of buffer stock
• Upliftment of small farmers

Question 8.
Explain ‘growth with equity’ as a planning objective.
Answer:
Growth refers to increase in country’s domestic output in terms of goods and services. Growth alone may not improve the kind of life which the people are living. A country can have high growth, but most of its people might be living in poverty. It is important to ensure that the benefits of economic prosperity reach the poor sections as well, instead of being enjoyed only by the rich.

Thus, in addition to growth, equity is also important. Equitable distribution of income helps in narrowing the gap between the rich and poor and hence, avoids concentration of wealth in a few hands. Every Indian should be able to meet his or her basic needs such as food, decent house, education and health care. Inequality in the distribution of wealth should be reduced.

Question 9.
Does modernisation as a planning objective create contradiction in the light of employment generation? Explain.
Answer:
Modernisation refers to adoption of latest techniques in the production of goods and services. Adoption of technology tends to involve capital-intensive techniques of production. There might be increased unemployment due to fall in the demand for unskilled labour force. However, technology would encourage individuals to acquire education and training for the same thereby increasing the supply of skilled labour required to run modem machines.

Thus, it would not be correct to say that modernisation as a planning objective creates contradiction in the light of employment generation. Also, modernisation not only refers to adoption of new technology. It also includes transformation in social outlook and making the society more prosperous.

Question 10.
Why was it necessary for a developing country like India to follow self-reliance as a planning objective?
Answer:
‘Self-reliance was considered as an important planning objective to reduce our dependence on foreign countries for food. In the initial years’ of independence, it was feared that dependence .on imported food supplies, foreign technology and foreign capital may make India’s sovereignty vulnerable to foreign interference in our policies.

Question 11.
What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum to GDP of an economy? Comment.
Answer:
Sectoral composition refers to the contribution made by different sectors in the GDP of the economy. The table below shows the different sectors of Indian economy and their contribution to the country’s GDP

Sector	Share in GDP (in %) 1950-51	Share in GDP (in %) 1990-91	Share in GDP (in %) 2011-12
Agricultural (Primary)	59.0	34.9	16.1
Industrial (Secondary)	13.0	24.6	31.4
Service (Tertiary)	28.0	40.5	52.5

As observed in the case of many developed economies of the world, the share of agriculture declines while the industrial sector becomes dominant with development. Further, if a country’s service sector contributes maximum to the country’s GDP then the country is considered to be at the higher level of development. However, it may also sometimes depend upon the resources a country specialises in.

Question 12.
Why was public sector given a leading role in industrial development during the planning period?
Answer:
Public sector was given a leading role in industrial development during the planning period due to the following reasons:

• Private industrialists had limited capital to undertake investment in industrial ventures necessary to have strong industrial base in the economy.
• The state wanted to generate large scale employment opportunities through public sector.
• While private sector strives to maximise their own profits, public sector ensures equitable distribution of income and wealth.

Question 13.
Explain the statement that green revolution enabled the government to procure sufficient foodgrains to build its stocks that could be used during times of shortage.
Answer:
The spread of green revolution technology enabled India to achieve self-sufficiency in foodgrains. Our country is no longer dependant on foreign nations to meet our food requirements. Due to surplus, the price of good grains declined relative to other consumption items.

The low income groups, who used spend a large percentage of their income on food, benefited from this decline in relative price. The green revolution enabled the government to procure sufficient amount of foodgrains to build a stock that could be used at the time of food shortage.

Question 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.
Answer:
Subsidies are benefits provided by the government to the domestic producers to encourage production. Subsidies are the incentives for adoption of the new HYV technology by farmers. Some economists favour the elimination of subsidies due to the following reasons:

• The purpose of subsidies is already served.
• Subsidies are benefitting the farmers in the more prosperous region. It is no more benefitting the target groups.
• They are a huge burden on government finances.

However, some believe that the government should continue with agricultural subsidies because farming in India is a risky business. Most farmers are very poor, who would be unable to afford the required input without subsidy. Eliminating subsidies will increase the inequality between rich and poor farmers and hence, violate the goal of equity. The correct policy, therefore, would be to analyse the system and ensure that the benefits of subsidies reach the poor farmers only.

Question 15.
Why, despite the implementation of green revolution, 65 percent of our population continued to be engaged in the agricultural sector till 1990?
Answer:
Although the proportion of GDP contribution by agricultural has declined over the years, the proportion of population working in the sector has not declined considerably. This is because the industrial and service sectors have not absorbed the workforce working in the agricultural sector.

Question 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.
Answer:
The presence of public sector is important because:

• It helps in creating strong base for heavy industries.
• It contributes towards the development of infrastructure.
• It develops the backward areas.
• It mobilises savings and foreign exchange in right direction.
• It prevents concentration of economic power in a few strong hands.
• It promotes equality through equal distribution of wealth.
•  It creates large scale employment opportunities.

Question 17.
Explain how import substitution can protect domestic industry?
Answer:
Import substitution is the policy which aims to replace or substitute imported goods by domestically ; produced goods and protect the domestic industries from foreign competition, The government may restrict imports and protect domestic industries from foreign competition through tariffs and quotas,

• Tariffs are tax on imported goods. They make imported goods more expensive and discourage their use.
• Quotas specify the quantity of goods which can be imported.

The effect of tariffs and quotas is that, they restrict import and therefore, protect the domestic firms from foreign competition.

Question 18.
Why and how was private sector regulated under the IPR 1956?
Answer:
The aim of the private sector is to maximise profit. In fulfilling this aim, it tends to ignore the welfare of the people. The purpose of IPR, 1956 was to promote regional equality and to ensure that the quantity of goods produced was not more than what the economy required. According to the IPR, the private sector was under the control of the state through the system of licenses.

No new industry was allowed to set up unless a license was obtained from the government. This policy primarily aimed at promoting industries in backward regions. It was easier to obtain a license for an industrial unit to be established in an economically backward region. Moreover, such industrial units were given certain concessions such as tax benefits and electricity at a lower tariff.

Question 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 otall 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 assistance given by government for production activities

Answer:
1. (C), 2. (D.), 3. (B.), 4. (E.), 5. (A.), 6 (F.)