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Question-1

Why did India opt for planning?

Solution:
After India attained her independence, the leaders had to decide on the kind of economic system which will suit and promote the interests of the masses of India and not just a few individuals. Hence the government had to opt for planning for the economic development of the country.

Question-2

What are plans? Why should plans have goals?

Solution:
Plans are strategies drawn in order to achieve some results. Plans should have some goals so that the plans can be made according to the goals and be aimed at fulfilling them.

Question-3

Explain about the need and types of land reforms introduced.

Solution:
The agricultural sector neither had growth nor had equity. The policies made by Independent India had to consider and address these issues. They did this by promoting ‘miracle seeds’ and through land reforms, thereby bringing in a revolution in Indian agriculture.

Land Reforms : During the time of independence, intermediaries otherwise called zamindars and jagirdars characterized the land tenure system. The agricultural sector had low productivity because of which we had to import food from USA. After just a year of independence, steps were taken to pack off the intermediaries and give ownership of the lands to the cultivator of the lands ie the farmer. The objective of this land reform was that the ownership of land would give the cultivator an incentive to invest in making improvements and increasing productivity if they are provided with sufficient capital.

Land Ceiling: This was another policy that was adopted in newly independent India in order to promote and establish equity in the agricultural sector. Land ceiling fixed the maximum size of land that could be owned by an individual. The objective was to reduce the concentration of land ownership in the hands of a very few people. The ownership of land made provided these tenants with the urge to increase the output and hence contributed to agricultural growth.

Question-4

Explain the Green Revolution in brief.

Solution:
The lack of growth and stagnation in the agricultural sector caused by the colonial rule was broken by the coming of Green Revolution.
  This refers to the increase in the productivity of food grains by using High Yielding Variety (HYV) seeds, especially for rice and wheat.
  To use these seeds, the use of pesticides and fertilizers in correct quantities was essential. Apart from that, regular supply of water was also needed.
  Hence during the first phase of the Green Revolution (around mid 1960s to mid 1970s) the use of HYV seeds was restricted to farmers from comparatively richer states like Tamilnadu, Punjab and Andhra Pradesh.
  During the second phase (mid 1970s to mid 1980s) the technology spread to a greater number of states and HYV seeds of a greater number of crops were available and hence a wider section of farmers reaped the benefits.
  The Green Revolution helped us achieve self sufficiency in food grains and we could meet the requirements of our population without having to import from any foreign nation.

 

Question-5

What were the drawbacks of the Green Revolution?

Solution:
The drawbacks of green revolution were: One major drawback was the increase in the disparity between small and big farmers because only the bigger farmers could afford the HYV seeds and hence reaped more benefits and profits.
  The HYV seeds were prone to pest attacks and hence in case of attacks a small farmer couldn’t afford the loss.

 

Question-6

What were the methods adopted to overcome the drawbacks of the Green Revolution?

Solution:
The methods adopted were: The government gave small farmers loans at very low interest rates and provided them with subsidies so that they could also buy the HYV seeds and benefit.

 

The risk of the small farmer losing his crops to the pest was considerably reduced by the services given by the research organizations set up by the government.

 

Question-7

Explain ‘growth with equity’ as a planning objective.

Solution:
Growth refers to the increase in the production capacity of our country i.e production of output goods and also the increase of services within the country. This means a large stock of productive capital or a large quantity of supporting services like transport and banking or an increase in the efficiency of the productive capital and services of the country. In economics, the Gross Domestic Product(GDP) is a good indicator of the economic growth of a nation. The GDP is the market value of all the goods and services produced in a country during a year. GDP can be thought of as a bar of chocolate or piece of cake. Growth is the increase in the size of the chocolate or cake. If the chocolate or cake is bigger, more people can have and enjoy it. In the words of the first five year plan, it is necessary to produce more goods and services if the people of India are to enjoy a more rich and varied life.

Growth, modernization and self reliance would not lead to the betterment of the standard of living of the people of a nation unless there is equality. If modernization, growth and self –reliance does not reach the poorer sections of a country, then only the rich would enjoy the benefits of economic prosperity. So apart from modernity, growth and self-reliance, every Indian should be able to meet his or her basic needs like food, clothing, housing, education and healthcare. Inequality in the distribution of wealth and economic prosperity had to be reduced.

Question-8

Does modernization as a planning objective create contradiction in the light of employment generation? Explain.

Solution:
In order to increase the production of goods and services, the producers have to use new technology. Adoption of new technology is modernization. For example, farmers can use a new hybrid seed variety instead of the old ones to increase crop yield.

Modernization just not refer to just adoption of new technology, it also refers to changes in the thinking and social outlook of the people of our country. Giving equal rights to women is an example of modernization. In a traditional society, women are restricted to do only household chores, whereas in a modern society they are given opportunities to work in all the sectors like banking, schools, factories etc. This kind of modernization makes a society more civilized and prosperous.

Question-9

Why was it necessary for a developing country like India to follow self-reliance as a planning objective?

Solution:
The first seven five year plans stressed and gave a lot of weightage to self reliance meaning avoiding import of goods which can be produced in our country itself. This policy was considered essential in a bid to reduce our dependence on other nations, mostly for food. A newly independent nation would obviously stress on the need for self reliance. It was also feared that a dependence on foreign nations would make our sovereignty vulnerable.

Question-10

What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum to GDP of an economy? Comment.

Solution:
We know that during the colonial rule, the agricultural sector neither had growth nor had equity. The policies made by Independent India had to consider and address these issues. The GDP proportion contributed by the Industrial sector rose to 24.6% in 1990-91 from 11.8% in 1950. The 6% annual growth rate of the industrial sector and its increased share of contribution in the GDP is an important of the growth of our nation. By 1990, the Indian industry became very well diversified and was not restricted to just jute and cotton textile mills. Promoting the small-scale industries resulted in opportunities given to people who did not have sufficient capital to start an industry of their own. Protection against foreign competition promoted the growth of industries like electronics and automobiles which would not have grown otherwise.

Question-11

Why was public sector given a leading role in industrial development during the planning period?

Solution:
The role to be played by the government and the public sector in the industrial revolution was the main question confronting the policy makers of newly independent India. During that time, neither did the industrialists have enough capital to invest in industrial ventures required for economic development nor was the market encouraging enough for the financially sound industrialists to invest in big ventures. These were the main reasons which prompted the state to play a big role in fostering the growth of the industrial sector.

Apart from this, since it was decided that the Indian economy was to be developed in socialist lines, it led to the policy of the state controlling the commanding heights of economy as the Second Five Year plan states. This resulted in the state controlling the industries which would be instrumental in the growth of the economy while the private sector would adopt policies which would be complimentary to those adopted and practiced by the public sector.

Question-12

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.

Solution:
When India attained her freedom, about 3/4th of the country’s population was heavily dependent on the agricultural sector for livelihood. The productivity of this sector was very low because of lack of use of modern technology and lack of proper infrastructure. Our agriculture was dependent mainly on the monsoon and a failure in the monsoon caused the farmers a lot of trouble because they did no have access to proper irrigation facilities.

The lack of growth and stagnation in the agricultural sector caused by the colonial rule was broken by the coming of Green Revolution. This refers to the increase in the productivity of food grains by using High Yielding Variety (HYV) seeds, especially for rice and wheat. To use these seeds, the use of pesticides and fertilizers in correct quantities was essential. Apart from that, regular supply of water was also needed. Farmers who used HYV seeds had to have regular irrigation facilities as well as the financial resources. Hence during the first phase of the Green Revolution (around mid 1960s to mid 1970s) the use of HYV seeds was restricted to farmers from comparatively richer states like Tamilnadu, Punjab and Andhra Pradesh.

During the second phase (mid 1970s to mid 1980s) the technology spread to a greater number of states and HYV seeds of a greater number of crops were available and hence a wider section of farmers reaped the benefits.

The Green Revolution helped us achieve self sufficiency in food grains and we could meet the requirements of our population without having to import from any foreign nation.

Mere growth in the agricultural output is not enough if a large part of the output is consumed by the farmers themselves. Such a higher output will not make much of a difference to the growth of the economy. If a significant amount of output comes to the market consumption, then the increase in the agricultural output will result the growth of the nations economy. The portion of the agricultural output which is sold in the market by the farmers is called market surplus.

Luckily for us, as pointed out by C.H. Hanumantha Rao, a famous economist, the Green Revolution saw a large proportion of the output of rice and wheat coming into the consumer market as a market surplus which resulted in the reduction in the price of food grains as compared to other essential commodities. The low income groups greatly benefited from this fall in the food prices. The green revolution also enabled the government to obtain a sizeable amount of stock of food grain to be used incase of future short supply of food grains.

Question-13

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.

Solution:
Today, a hot topic of debate is the economic justification of subsidies in the agricultural sector. It was necessary to give subsidies in order to give the farmers an incentive to adopt the use of HYV seeds, especially the small farmers. The farmers would consider any new technology as risky and hence subsidies were required to encourage the farmers to test the new technology.

Some economists feel that once a technology has been tested and proved to be profitable and finds wide acceptance, the subsidies should be slowly removed. Further subsidies are introduced with the intention of helping the farmers, but in this process even the fertilizer industry sees a huge growth and also the farmers of the more fertile and prosperous lands flourish better than the smaller farmers. Hence arguments are put forth saying that the subsidies on fertilizers should not continue as it does not reach the targeted group and hence is a burden on the government.

There is another branch of people who argue that the subsidies in the agricultural sector should continue because there is a lot of risk involved in farming in India and many farmers are poor and need these subsidies without which they cannot try new technologies and increase their output. This set of people believe that eliminating the subsidies will only increase the disparity between the poor and the rich farmers and hence policies should be framed to ensure that the subsidies reach just the small farmer and don’t benefit the fertilizer industry or the large farmers.

By late 1960s India had achieved self sufficiency in food grains because of increase in agricultural productivity. Though this is a matter of pride, around 65% of the population was still dependent on agriculture for livelihood even till 1990. This was not very encouraging for the growth of the other sectors of the nation. The findings of economists show that a nation becomes more prosperous when the contribution of agriculture to the GDP decreases while there is a simultaneous decline in the workforce employed in the sector.

In India, between 1950 and 1990, the proportion of GDP contributed by the agricultural sector declined to a great extent but the workforce in the sector did not decrease( 67.5% in 1950 to 64.9% by 1990). The question which comes to the mind immediately is that why should such a huge portion of the population be employed in agriculture when the agricultural output could have grown with much lesser people employed in the sector? The answer is that the industrial and service sector did not absorb people working in the agricultural sector. This, according to many economists is a major failure of our policies followed during 1950-1990.

Question-14

Why, despite the implementation of green revolution, 65 per cent of our population continued to be engaged in the agriculture sector till 1990?

Solution:

One major drawback was the increase in the disparity between small and big farmers because only the bigger farmers could afford the HYV seeds and hence reaped more benefits and profits.
 

The HYV seeds were prone to pest attacks and hence in case of attacks a small farmer couldn’t afford the loss.

 

Question-15

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.

Solution:
Some economists still criticize the growth and performance of public sector enterprises, despite the contribution of the public sector in the growth of the Indian economy. Though, initially the hand of public sector was needed in a big way for the growth of economy, later on there was a wide spread view that the state owned enterprises continued to produce certain goods and services, enjoying monopoly although it was not required any more. An example of this was the telecommunication service, which the government monopolized long after private players came into the fray. This meant that till the late 1990s one had to wait for a long time for a telephone connection. Another example, is the establishment of a bread manufacturing firm called Modern Bread. This was sold to the private sector in the year 2001.

The point that these economists want to make is that there is no distinction between what the public sector alone can do and what the private sector can do. Even today, only the public sector can take care of the national security and render free medical service for the poor. Though the private sector can and does run hotels, the public sector does too. These economists felt that the government should come out of areas which the public sector can manage and should instead give more attention to important services which the private sector cannot provide.





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