Karnataka 1st PUC Economics Question Bank Chapter 2 Indian Economy 1950-1990
1st PUC Economics Indian Economy 1950-1990 Textbook Questions and Answers
I. Choose the correct answers (each question carries 1 mark)
Question 1.
Which is not the goal of five-year plans?
(a) Growth
(b) Modernization
(c) Self-efficiency
(d) Self-reliance
Answer:
(c) Self-efficiency
Question 2.
The first phase of the Green Revolution was achieved approximately
(a) Mid 1960-Mid 1970
(b) 1950-1960
(c) Mid 1970—Mid 1980
(d) 1970-1980
Answer:
(a) Mid 1960 – Mid 1970
II. Fill in the blanks ‚each question carries 1 mark)
Question 1.
Chairperson of Planning Commission is__________
Answer:
Prime Minister
Question 2.
Small scale industries use more of _____________than large scale industries.
Answer:
Labour
Question 3.
Regional equality was the main purpose of____________
Answer:
Industrial Policy of 1956
III. Match the following (each question carries 1 mark)
Question 1.
| A | B |
| 1. Prime Minister | a. Seeds that give a large proportion of output |
| 2. Quota | b. Chairperson of the Planning Commission |
| 3. Land reforms | c. Quantity of goods that can be imported |
| 4. HYV seeds | d. The monetary assistance was given by the government for production activities |
| 5. Subsidy | e. Improvements in the field of agriculture to increase its productivity |
Answer:
| A | B |
| 1. Prime Minister | b. Chairperson of the Planning Commission |
| 2. Quota | c. quantity of goods that can be imported |
| 3. Land reforms | e. Improvements in the field of agriculture to increase its productivity |
| 4. HYV seeds | a. Seeds that give a large proportion of output |
| 5. Subsidy | d. The monetary assistance was given by the government for production activities |
IV. Answer the following questions in a word/sentence each, (each question carries 1 mark)
Question 1.
Define planning.
Answer:
Planning is an economic activity that guides us on how the resources of a nation should be put to use. It should have some general goals and certain specific objectives which are to be achieved within a specified period of time.
Question 2.
What do you mean by land reforms?
Answer:
Land reforms refer to changes in the ownership of land holdings which include a ceiling on land holdings, abolition of intermediaries, etc.
Question 3.
What is marketed surplus?
Answer:
Marketed surplus is that portion of agricultural produce which is sold in the market b\ the fanners after keeping for domestic consumption.
Question 4.
Give the meaning of land ceiling.
Answer:
Land ceiling refers to the fixation of the maximum size of land which could be owned by an individual.
Question 5.
Mention any one public sector industry.
Answer:
Hindustan Aeronautics Limited (HAL).
Question 6.
Give the meaning of the gross domestic product.
Answer:
Gross domestic product (GDP) is the total money value of all the final goods and services produced within the country during a year.
V. Answer the following questions in four sentences (each question carries 2 marks)
Question 1.
What are the goals of five-year plans?
Answer:
The main goals of five-year plans are:
(a) Growth
(b) Modernization
(c) Self-reliance
(d) Equity.
Question 2.
What is the meaning of modernization?
Answer:
The adoption of new technology is called modernization. To increase the production of goods and services, producers have to adopt new technologies. For example. a farmer can increase the output on-farm by using new seed varieties instead of using the old ones. Similarly, a factory can increase its output by busing new types of machinery.
Question 3.
Why do farmers need subsidies and what are their purposes?
Answer:
Ans: it is generally agreed that it was necessary to use subsidies to provide an incentive for adoption of the new high yielding varieties technology by farmers in general and small farmers in particular.
Subsidies were, therefore, needed to encourage farmers to test the new technology. The government should continue with agricultural subsidies because farming in India continues to be a risky business. Most of the farmers are very poor and they will not be able to afford the required inputs without subsidies.
Question 4.
Write the meaning of the land ceiling and mention its purpose.
Answer:
Land ceiling refers to fixing the maximum size of land which could be owned by an individual.
The purpose of the land ceiling was to reduce the concentration of land ownership in only a few hands.
Question 5.
Write any two advantages of small scale industries.
Answer:
The advantages of small scale industries are as follows:
(a) Small scale industries are labour intensive i.e. they use more labour than large scale industries.
(b) They create employment.
(c) They require less capital.
Question 6.
What do you mean by the green revolution? How was it possible?
Answer:
Green revolution refers to the large increase in production of food grains resulting from the use of high yielding variety seeds, particularly for wheat and rice.
We could achieve a green revolution with a high yielding variety of seeds better irrigation facilities and financial resources to purchase fertilizer and pesticides. The benefits of the green revolution were restricted to only a few states like Punjab. Andhra Pradesh and Tamil Nadu.
Question 7.
Why the state had to play an extensive role in promoting the industrial sector?
Answer:
At the time of independence, Indian industrialists did not have die capital to undertake investment in industrial ventures required for the development of our economy. There was no market base to encourage industrialists to undertake major projects even if they had the capital to do so.
It is because of these reasons that the state had to plan an extensive role in promoting the industrial sector.
Question 8.
Give the meaning of tariffs and quotas.
Answer:
Tariffs refer to the taxes on imported goods imposed by the government. Tariffs make imported goods more costly and discourage their usage.
Quotas refer to quantitative restrictions imposed by the government by specifying the number of goods that can be imported during a specified time.
The effect of tariffs and quotas is that they restrict imports and thereby protect domestic firms from foreign competition.
VI. Answer the following questions in twelve sentences (each question carries four marks)
Question 1.
Growth with equity is one of the objectives of planning. Justify.
Answer:
Growth with equity is one of the objectives of planning. A country can have high economic growth, the most modem technology developed within the country itself and still have most of its people living in poverty. It is important to ensure that the benefits of economic prosperity reach the poorer sections as well, instead of being enjoyed only by the rich. So, in addition to growth, modernization and self-reliance, equity is also important.
Every Indian should be able to meet his or her basic needs such as food, a decent house, education and health care and so inequality in the distribution of wealth should be reduced.
Question 2.
Write a short note on land reforms in India. (Board Paper)
Answer:
Land reforms refer to changes in the ownership of landholdings. At the time of independence, the land tenure system was characterized by intermediaries like zamindars Jagirdars etc., who were just indulged in just collecting rent from the actual cultivators without contributing towards improvements on the agricultural land. The low productivity of the agricultural sector forced India to import food from the USA. At this juncture, land reforms were introduced.
After the introduction of land reforms. steps were taken to abolish intermediaries and to make the tillers the owners of the land. The idea behind this move was that ownership of land would give incentives to the tillers to invest in making improvements provided sufficient capital was made available to them. Abolition of the zamindari system and ceiling on land holdings were the major land reforms introduced immediately after independence.
Question 3.
Give the meaning and the importance of small scale industries.
Answer:
A small scale industry is defined with reference to the maximum investment allowed on the assets of a production unit. A small scale industry is one where the investment is less than one crore rupees.
Small scale industries play a very important role in the economic development of India. It is a known fact that small scale industries are more labour intensive i.e., they use more labour than large scale industries and therefore, generate more employment.
Apart from the above, the small scale industries require less capital as they are small units. They are free from industrial unrest. They also depend on indigenous resources and need not depend on foreign resources. Small scale industries were also given concessions like lower excise duty and bank loans at lower interest rates.
VII. Answer the following questions in twenty sentences (each question carries six marks)
Question 1.
Write a short note on the green revolution.
Answer:
The green revolution refers to the spectacular increase in agricultural production during the 1960s. There was a large scale production of food grains resulting from the use of high yielding. variety seeds especially wheat and rice. The use of these seeds required the use of fertilizer and pesticides in correct quantities as well as a regular supply of water. The application of these inputs in correct proportions is very vital.
Tire farmers who could benefit from HYV seeds required reliable irrigation facilities as well as the financial support to purchase chemical fertilizers and pesticides. As a result, in the first phase of the green revolution during the 1960s and 1970s. the use of HYY seeds was restricted to the more affluent states such as Punjab. Andhra Pradesh and Tamil Nadu.
Further, the use of high yielding variety seeds primarily benefitted the wheat-growing regions only. During the mid-1970s to mid-1980s. the HYV technology spread to a larger number of states and benefited more variety of crops. The spread of green revolution technology enabled India to achieve self-sufficiency in food grains; we no longer had to be at the mercy of America or any other country for meeting our nation’s food requirements.
Question 2.
Write the economic justification of the policy of subsidies.
Answer:
Subsidies refer to the monetary assistance given by the government for production activities. The economic justification of subsidies in agriculture is a highly debatable issue. It is generally- agreed that it was necessary- to use subsidies to provide an incentive for adoption of the new HYV technology by farmers in general and small farmers in particular.
Any new technology will be looked upon as being risky by farmers. Subsidies were, therefore, needed to encourage farmers to test the new technology. Some economists believe that once the technology is found profitable and is widely adopted, subsidies should be phased out since their purpose has been served.
Further, subsidies are meant to benefit the farmers but a substantial amount of fertilizer subsidy also benefits the fertilizer industry and among farmers, the subsidy largely benefits the fanners in the more prosperous regions. Therefore, it is argued that there is no need for continuing with fertilizer subsidies; it does not benefit the target group and is a huge burden on the government’s finances.
Some economist believes that the government should continue with agricultural subsidies because farming in India continues to be a risky business. Most farmers are very poor and they will not be able to afford the required inputs without subsidies. Eliminating subsidies will increase the inequality between rich and poor farmers and violate the goal of equity. These experts argue that, if subsidies are largely benefiting the fertilizer industry and big farmers, the correct policy is not to abolish subsidies but to take steps to ensure that only the poor farmers enjoy the benefits.
Question 3.
Briefly explain the goals of five-year plans.
Answer:
The main goals of the five-year plans are Growth, modernization, self-reliance and equity. They can be illustrated as follows:
(a) Growth: It refers to the increase in the gross domestic product. It also implies that the increase in the country’s capacity to produce the output of goods and services within the country. It includes 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 land services.
A good indicator of economic growth, in the language of economics, is a steady increase in the gross domestic product (GDP). The GDP is the market value of all the goods and services produced in the country during a year. The GDP of a country is derived from the different sectors of the economy, namely the agricultural sector, the industrial sector and the service sector.
(b) Modernization: Adoption of new technology is called modernization. To increase the production of goods and services producers have to adopt new technologies. For example, a farmer can increase the output on his farm by using new seed varieties instead of using the old ones. Similarly, a factory can increase output by using a new type of machinery. Modernisation does not refer only to the use of new technology but also to changes in social outlook such as the recognition that women should have the same rights as men. In a traditional society, women are supposed to remain at home while men work.
(c) Self-reliance: The first seven five year plans gave importance to self-reliance. Self-reliance refers to avoiding imports of those goods which could be produced in India itself. This policy was considered a necessity in order to reduce our dependence on foreign countries, especially for food. It is a well-known fact that people who were recently freed from foreign domination should give importance to self-reliance.
(d) Equity: Growth with equity is one of the objectives of planning. A country can have high economic growth, the most modem technology developed within the country itself but still have most of its people living in poverty. It is important to ensure that the benefits of economic prosperity reach the poorer sections as well instead of being enjoyed only by the rich. So, in addition to growth, modernization and self-reliance, equity is also important. Every Indian should be able to meet his or her basic needs such as food, a decent house, education and health care and so inequality in the distribution of wealth should be reduced.
Question 4.
Briefly explain the Trade Policy of the government during 1950-1990.
Answer:
During tire first seven five year plans, trade was characterized by what is commonly called as Inward looking trade strategy. It is called import substitution. This policy was aimed at replacing imports with domestic production. For example, instead of importing vehicles made in a foreign country’, industries would be encouraged to produce them in India itself. By this policy, the government protected domestic industries from foreign competition.
Protection from imports took two types, tariffs and quotas. Tariffs are the taxes on imported goods; they make imported goods more expensive and discourage their use. Quotas specify the number of goods which can be imported.
The impact of tariffs and quotas is that they restrict imports and protect domestic industries from foreign competition.
The protectionist policy was adopted by the developing countries including India as they are unable to compete with the goods produced by more developed countries. It is assumed that if the domestic industries are protected, they will learn to compete in course of time.
Question 5.
Explain the effects of economic policies on industrial development.
Answer:
The proportion of GDP contributed by the industrial sector increased in the period from 11.8% in 1950-51 to 24.6 % in 1990-91. The rise in the industry’s share of GDP is an important indicator of development. The following points prove that the industrial growth was good during 1950-90:
(a) The 6% annual growth rate of the industrial sector during the period is commendable.
(b) Industrial sector became more diversified by 1990 mainly because of the public sector.
(c) The promotion of small scale industries gave opportunities to those people who did not have the capital to start large firms to get into business.
(d) Protection from foreign competition enabled the development of indigenous industries in the area of electronics and automobile sectors.
But, some economists are critical of the performance of the many public sector enterprises. Following are few points which highlight incompetent performances:
(a) State enterprises continued to produce certain goods and services although this was no longer required. For example, telecommunications. This industry continued to be reserved for the public sector even after it was realized that the private sector can also provide it.
(b) Even after four decades, no proper distinction was made between what the public sector alone can do and what the private sector can also do. For instance, only the public sector supplied equipment meant for the products towards national defence.
(c) Many public sector firms incurred huge losses but continued to function because it is difficult to close a government undertaking even if it is a drain on the nation’s limited resources.
(d) The need to obtain a licence to start an industry was misused by industrial houses, a big industrialist would get a licence not for starting a new firm but to prevent competitors from starting new firms. More time was spent by industrialists in trying to obtain a licence or lobby with the concerned ministries.
(e) The protection from foreign competition is also being criticized on the ground that it continued even after it proved to do more harm than good.
(f) Some economists say that the public sector is not meant for earning profits but to promote the welfare of the nation. The public sector, on this view, should be evaluated on the basis of the extent to which they contribute to the welfare of people and not on the profits they earn.