Indian Economy 1950–1990 – Class 11 Economics notes, important questions and MCQs

Chapter overview

After independence India chose a mixed economy and economic planning to achieve growth with social justice. The Planning Commission (1950) prepared Five Year Plans with the goals of growth, modernisation, self-reliance and equity. Land reforms and the Green Revolution transformed agriculture, while industry grew under public sector leadership, licensing and import substitution, though with inefficiencies.

Planning and its goals

• India adopted a mixed economy in which both public and private sectors operate.
• The Planning Commission was set up in 1950; the First Five Year Plan began in 1951.
• The goals were growth, modernisation, self-reliance and equity; the Second Plan, based on P.C. Mahalanobis's ideas, stressed heavy industry.

Agriculture

• Land reforms abolished intermediaries such as zamindars and fixed land ceilings to redistribute surplus land.
• The Green Revolution from the mid-1960s used high-yielding variety (HYV) seeds, fertilisers and irrigation, sharply raising wheat and rice output and making India self-sufficient in food grains.
• Benefits were initially limited to some regions such as Punjab, Haryana and western Uttar Pradesh, and to farmers who could afford inputs.

Industry and trade

• The Industrial Policy Resolution of 1956 reserved key industries for the public sector.
• Private industry needed licences; some products were reserved for small-scale industries to promote employment.
• Import substitution with tariffs and quotas protected domestic industry, but led to inefficiency, poor quality and losses in many public enterprises.

Key terms

Mixed economy

an economy in which both the public sector and the private sector operate

Five Year Plan

a government plan setting economic goals and allocating resources for five years

Land ceiling

the maximum area of land an individual can own

Green Revolution

the large rise in food grain output from the use of HYV seeds, fertilisers and irrigation

Import substitution

producing goods at home instead of importing them, protected by tariffs and quotas

Important questions with answers

Quick revision

• Planning Commission 1950; First Plan 1951.
• Goals: growth, modernisation, self-reliance, equity.
• Land reforms and Green Revolution.
• IPR 1956, licensing, import substitution.

Exam tips

• Remember the four goals of planning as G-M-S-E: growth, modernisation, self-reliance, equity.
• For each sector, write one achievement and one weakness.

Practice MCQs

1. The Planning Commission of India was set up in

   1. 1947
   2. 1950
   3. 1951
   4. 1991
   Show answer

   Answer: (b) 1950. It prepared Five Year Plans.

2. An economy with both public and private sectors is a

   1. capitalist economy
   2. mixed economy
   3. socialist economy
   4. barter economy
   Show answer

   Answer: (b) mixed economy. India chose this model.

3. The Green Revolution mainly increased the output of

   1. cotton and jute
   2. pulses only
   3. tea and coffee
   4. wheat and rice
   Show answer

   Answer: (d) wheat and rice. HYV seeds were used.

4. The Second Five Year Plan, emphasising heavy industry, was based on the ideas of

   1. Jawaharlal Nehru alone
   2. P.C. Mahalanobis
   3. Manmohan Singh
   4. M.S. Swaminathan
   Show answer

   Answer: (b) P.C. Mahalanobis. He was a statistician.

5. Fixing the maximum land an individual can own is called

   1. licensing
   2. zamindari
   3. land ceiling
   4. subsidy
   Show answer

   Answer: (c) land ceiling. Surplus land was to be redistributed.

6. The policy that reserved key industries for the public sector was the

   1. Industrial Policy Resolution 1956
   2. New Economic Policy 1991
   3. Green Revolution
   4. Second Plan only
   Show answer

   Answer: (a) Industrial Policy Resolution 1956. It guided industry for decades.

7. Why did import substitution lead to inefficiency in industry

   1. it exposed firms to strong competition
   2. protection removed the pressure to improve quality and reduce costs
   3. it increased exports greatly
   4. it ended the public sector
   Show answer

   Answer: (b) protection removed the pressure to improve quality and reduce costs. Protected firms had captive markets.

8. Which was a limitation of the early Green Revolution

   1. its benefits were limited to certain regions and richer farmers
   2. it reduced food output
   3. it was used only for cotton
   4. it caused deindustrialisation
   Show answer

   Answer: (a) its benefits were limited to certain regions and richer farmers. Inputs were costly.