Plus One Economics – Chapter 2 Questions and Answers in English

Plus One Economics – Chapter 2 Indian Economy 1950 – 1990

1. Define economic planning.
Answer:

Economic planning means utilisation of country’s resources into different development activities in accordance with national priorities.

2. Name the chairman and deputy chairman of NITI AYOG .
Answer:

Chairman – Narendra Modi ( Prime Minister ) . Deputy Chairman – Arvind Panagaria.

3. Give the main objectives of industrial policy 1956 ?
Answer:

The main objectives of Industrial Policy 1956 are :

• i) rapid industrial development .
• ii) rapid growth of public sector .
• iii) reduction in inequalities of income and wealth .
4. What is the importance of agriculture in Indian economy ?
Answer:

Agriculture is considered as the backbone of the In dian economy . It contributes about 25 % of national income . Moreover , about 2/3 of our total population depend on agriculture for their living . Therefore , agri culture plays an important role in the economic de velopment of our country .

5. ‘ Growth with equity ‘ is an objective of Indian plan ning . Justify.
Answer:

Growth means increase in the country’s capacity to produce the output of goods and services and equity means equality . Growth with equity is an important objective of our planning . By this we mean that the government should ensure that the benefit of eco nomic growth reaches the poor sections of the soci ety . It also aims that every citizen should be able to meet the basic requirements such as food , shelter , education , health care etc.

6. Given below are some names of the countries . Classify them in to a table based on the economic system they follow .

   USA, Germany, Cuba, India, China, Srilanka, UK, Venezuela, Pakistan

Answer :

Table 2.1 Economic systems
Socialism	Capitalism	Mixed Economy
China	USA	India
Cuba	UK	Pakisthan
Venuezela	Germmany	Srilanka

7. Do you think that Land Reforms were successfully implemented in all the States of India ? Substantiate your view.
Answer:

No. Land Reforms were not successfully imple mented in all the States of India . Land reforms were successful in Kerala and West Bengal because these states had governments committed to the policy of land to the tiller . Unfortunately other states did not have the same level of commitment and vast inequal ity in landholding continues to this day.

8. Why was it necessary for a developing country like India to follow self – reliance as a planning objective ?
Answer:

Our first seven five year plans gave importance to ‘ self reliance ‘ . This means averting imports of those goods which could be produced in India itself . When India becomes self reliant , we can save foreign exchange and can promote exports .

9. Match the following columns.

Table 2.2
A	B
Capitalism	Co existence of both public and private sector
Socialism	Market mechanism
Mixed Economy	Public sector

Answer :

Table 2.3
A	B
Capitalism	Market mechanism
Socialism	Public sector
Mixed Economy	Co existence of both public and private sector

10. ” Gross Domestic Product ( GDP ) is a good indicator of economic growth of a country ” . Comment.
Answer:

A steady increase in the Gross Domestic Product is considered a good indicator of economic growth . The gross domestic product is the market value of all goods and services produced in the country during a year . If the value of GDP is more , it will be divided among the number of people . It is necessary to produce more goods and services , if people of India are to enjoy a more rich and varied life .

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 . The contribution made by each of these sectors makes up the sectoral composition of the economy .

11. Explain the need and type of land reforms implemented in the agricultural sector .
Answer:

At the time of independence , the land tenure sys tem was dominated by the intermediaries who merely collected rent from the tillers without contributing towards improvements on the farm . This resulted in low production from agriculture and forced India to import food . This called for an urgent need of a land reform system . The types of land reform implemented are :

• i) Abolition of intermediaries
• ii) Making the tillers the owners of land
• iii) Land ceiling i.e. , fixing the size of land holding .
12. What is green revolution ? How did it benefit the farmers ?
Answer:

Significant and continuous rise in agricultural pro duction with the use of fertilizers , HYV seeds and irrigation facilities is known as Green Revolution . In India , green revolution was executed in two phases . The first phase was from 1965-75 . This phase concentrated the crop wheat and was con fined to affluent states . The second phase was from 1975-85 . The phase concentrated on a variety of crops and was implemented in all Indian states . The benefits of green revolution :

• a ) Self – sufficiency in food grain .
• b ) Living standards of farmers increased
• c ) Large marketable surplus
• d ) The price of food grain fell down and consumers were benefited .
13. Prepare a debate report on the topic ” Is agriculture subsidy necessary ? “
Answer :

Table 2.4
Arguments in favour of giving subsidies	Arguments against giving subsidies
Subsidies provide an incentive for adoption of the new technology by farmers in general and small scale farmers in particular.	Subsidies very often do not benefit the target group.
Subsidies are needed to encourage farmers to test new technology.	It is a huge burden on the government’s finances.
Subsidies help small farmers to continue production so that food security of the nation can be ensured.	Subsidies provide an incentive for wasteful use of the resources.

14. Discuss the rational for import substitution as a foreign trade policy measure ?
Answer :

The industrial policy that we adopted was closely related to the trade policy . In the first seven plans , trade was characterized by what is commonly called an inward looking trade strategy . Technically , this strategy is called import substitution . This policy aimed at replacing or substituting 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 . In this policy the government protected the domestic industries from foreign competition . Protection from imports took two forms : tariffs and quotas . Tariffs are a 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 imports and , therefore , protect the domestic firms from foreign competition .

15. Small scale industries play a vital role in Indian economy . Give reasons.
Answer :

‘ Small – scale industry ‘ is defined with reference to the maximum investment allowed on the assets of a unit . This limit has changed over a period of time . In 1950 a small – scale industrial unit was one which invested a maximum of rupees five lakh ; at present the maximum investment allowed is rupees one crore . It was believed that small – scale industries are more ‘ labour intensive ‘ i.e. , they use more labour than the large – scale industries and , therefore , gen erate more employment . But these industries can not compete with the big industrial firms ; it is obvi ous that development of small – scale industry requires them to be shielded from the large firms . For this purpose , the production of a number of products was reserved for the small – scale industry ; the crite rion of reservation being the ability of these units to manufacture the goods . They were also given con cessions such as lower excise duty and bank loans at lower interest rates . Therefore it can be concluded that small scale industries play a vital role in an economy like India.

16. Land in India suffers from varying degrees and types of degradations stemming mainly from unstable use and inappropriate management practices . Identify six factors contributing to land degradation in India.
Answer :

The following are the factors responsible for land degredation in India .

• a ) loss of vegetation occuring due to deforestration .
• b ) shifting cultivation .
• c ) forest fires .
• d ) unsustainable fuel wood extraction .
• e ) over grazing .
• f ) non – adoption of soil conservation measures .
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