If you're a Class 12 Economics student studying Chapter 2 the Indian Economy from 1950-1990, you may be feeling overwhelmed by the amount of information you need to know for your board exams. To help you prepare, we've compiled a list of important questions and answers to ensure you're ready to ace the test.
| Board | CBSE and State Boards |
| Class | 12 |
| Subject | Economics |
| Book Name | Indian Economic Development |
| Chapter No. | 2 |
| Chapter Name | Indian Economy 1950-1990 |
| Type | Important Questions and Answers |
| Session | 2023-24 |
Happiness is not by chance, but by choice.
- Jim Rohn
Indian Economy 1950 to 1990 Class 12 Important Questions and Answers
Q. No. 1) Multiple Choice Questions (MCQs)
i. There are two statements given below marked as Assertion (A) and Reason (R). Read the statements and choose the correct option.
- Assertion (A): In a capitalist economy, private entities own resources, whereas, in a socialist economy, resources are owned by the state.
- Reason (R): In a socialist economy, it is assumed that the government knows the exact needs of the people.
a. A is true but R is false.
b. A is false but R is true.
c. Both A and R are true and R explains A.
d. Both A and R are true and R does not explain A.
Ans. Option (d)
ii. Identify the correct combination of the ‘Goals of Indian Five-Year Plans’:
a. Growth, Equality, Modernisation, Self-Reliance
b. Development, Equality, Modernisation, Sustainability
c. Good Health, Education, Modernisation, Sustainability
d. Growth, Equity, Modernisation, Self-Reliance
Ans. Option (d)
iii. Which of the following statements about the land ceiling policy is TRUE?
a. It led to equity in the agricultural sector.
b. Many landlords were able to escape the legislation.
c. The implementation of the legislation was challenged by small tenants.
d. It was successful in Kerala and West Bengal because it met no resistance.
Ans. Option (b)
iv. There are two statements given below, marked as Assertion (A) and Reason (R). Read the statements and choose the correct option.
- Assertion (A): Land redistribution efforts have failed in reducing levels of poverty in rural India.
- Reason (R): The per capita availability of agricultural land has steadily declined in rural India due to population growth.
a. A is true but R is false.
b. A is false but R is true.
c. Both A and R are true and R explains A.
d. Both A and R are true but R does not explain A.
Ans. Option (d)
v. Read the following statements - Assertion (A) and Reason (R):
- Assertion (A) – The goal of equitable distribution of land was fully served by the abolition of intermediaries, in post-independence India.
- Reason(R) – Big landlords challenged the land ceiling legislation, delaying the implementation and subsequently escaping from the legislation.
From the given alternatives choose the correct one:
a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
b. Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
c. Assertion (A) is true but Reason (R) is false.
d. Assertion (A) is false but Reason (R) is true.
Ans. Option (d)
vi. Before the advent of the Green Revolution in 1960s, India was primarily dependent on _________for the supply of food grains. (Fill in the blank with the correct alternative)
a. United States of America (USA)
b. Britain (United Kingdom)
c. Mexico
d. Union of Soviet Socialist Republics (USSR)
Ans. Option (a)
vii. The shackles of agriculture during the colonial rule were permanently broken by the Green Revolution that resulted from the application of ___
- High Yielding Varieties (HYV)
- Mechanization of Agriculture
- Chemical Fertilizers and Pesticides
- Organic Fertilizers and Pesticides
Alternatives:
a. 1, 2, 4
b. 1, 2, 3
c. 2, 3, 4
d. 1, 3, 4
Ans. Option (b)
viii. There are two statements given below, marked as Assertion (A) and Reason (R). Read the statements and choose the correct option.
- Assertion (A): India’s Green Revolution is an example of how the productivity of scarce land resources can be increased with improved production technology.
- Reason (R): Because of the Green Revolution, farmers produced far larger quantities of foodgrains than was possible earlier, on the same piece of land.
a. A is true but R is false.
b. A is false but R is true.
c. Both A and R are true and R explains A.
d. Both A and R are true but R does not explain A.
Ans. Option (c)
ix. Identify the correct sequence of alternatives given in Column II by matching them with respective terms in Column I:
| Column I | Column II |
| A. Land Ceiling | i. Increase in production of food grain using high yielding variety seeds |
| B. Land reforms | ii. Portion of agricultural produce sold in the market |
| C. Green Revolution | iii. Fixing the maximum limit of land holding for an individual. |
| D. Marketed Surplus | iv. Change in the ownership of land (land to tillers) |
a. A-i, B-ii, C-iv, D-iii
b. A-ii, B-iii, C-iv, D-i
c. A-iii, B-iv, C-i, D-ii
d. A-iii, B-ii, C-i, D-iv
Ans. Option (c)
x. Read the following statements - Assertion (A) and Reason (R):
- Assertion (A) – Major policy initiatives (land reforms and Green Revolution) helped India to become self-sufficient in food grains production.
- Reason(R) – The proportion of people depending on agriculture did not decline as expected after the Green Revolution.
From the given alternatives choose the correct one:
a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
b. Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
c. Assertion (A) is true but Reason (R) is false.
d. Assertion (A) is false but Reason (R) is true.
Ans. Option (b)
xi. Read the following statements carefully and choose the correct alternatives given below:
- Statement 1 – Subsidies do not add any burden on the financial health of a nation.
- Statement 2 – Complete removal of subsidies may violate the aim of equitable distribution of income.
Alternatives:
a. Both statements are true.
b. Both statements are false.
c. Statement 1 is true and Statement 2 is false.
d. Statement 2 is true and Statement 1 is false.
Ans. Option (d)
xii. Identify an argument that supports the agricultural subsidies in India.
a. reduces the gap between the rich and poor farmers
b. reduces government spending on agriculture
c. unpopularity of the HYV seeds
d. supports fertiliser industries
Ans. Option (a)
xiii. First Industrial Policy Resolution of Independent India was announced in the year______ (Fill in the blank with the correct alternative)
a. 1947
b. 1948
c. 1951
d. 1956
Ans. Option (b)
xiv. Industrial Policy Resolution (IPR) 1956 formed the basis of the_________ Five Year Plan. (Fill up the blank with the correct alternative)
a. First
b. Fourth
c. Second
d. Third
Ans. Option (c)
xv. Identify the classification that falls outside the purview of the Industrial Policy Resolution, of 1956. (Choose the correct alternative)
a. public-private industrial partnership
b. multinational corporations
c. public sector industries
d. privately owned
Ans. Option (b)
xvi. __________committee was set up for the development and promotion of small-scale industries in India.
a. Karve
b. Tapas Majumdar
c. Mahalanobis
d. TRYSEM
Ans. Option (a)
xvii. C. Rajagopalachari, a founder of the Swatantra Party, coined the term 'permit-license raj' to encapsulate the party's frustrations with Nehru's policies, writing in his magazine Swarajya: I want the corruptions of the Permit/Licence Raj to go... I want real, equal opportunities for all and no private monopolies created by the Permit/Licence Raj.
How were these private monopolies indulging in the corruption that C. Rajagopalachari talks about?
a. They led to lobbying and personal benefits for big industrial houses.
b. They continued to function even when running into losses.
c. They exploited the people by grossly increasing prices.
d. They could not compete with international products.
Ans. Option (a)
xviii. What kind of tariff policy was needed to protect domestic producers from foreign competition, after independence?
a. low import tariffs, reduced import quota
b. low import tariffs, increased import quota
c. high import tariffs, reduced import quota
d. high import tariffs, increased import quota
Ans. Option (c)
xix. There are two statements given below, about the changes in India's structural composition in the period 1950-1990.
- At the beginning of this period, the share of agriculture in the GDP was the highest.
- The increase in agricultural productivity during this period led to a further increase in the share of agriculture in the GDP by the end of this period.
Which of these statements is/are true?
A. only 1
B. only 2
C. both 1 and 2
D. neither 1 nor 2
Ans. Option (a)
Q. No. 2) Read the following hypothetical text and answer the given questions:
The performance of the Indian economy during the period of the first seven five-year plans (1950-1990) was satisfactory if not very impressive. On the eve of independence, India was an industrially backward country, but during this period of the first seven plans, our industries became far more diversified, with the stress being laid on public investments in the industrial sector.
The policy of import substitution led to the protection of the domestic industries against foreign producers but we failed to promote a strong export surplus. Although the public sector expanded to a large extent it could not bring the desired level of improvement in the secondary sector. Excessive government regulations prevented the natural trajectory of growth of entrepreneurship as there was no competition, no innovation, and no modernization on the front of the industrial sector.
Many Public Sector Undertakings (PSUs) incurred huge losses due to operational inefficiencies, red-tapism, poor technology, and other similar reasons. These PSUs continued to function because it was difficult to close a government undertaking even if it is a drain on the country’s limited resources.
On the Agricultural front, due to the measures taken under the Green Revolution, India more or less became self-sufficient in the production of food grains.
So the need for reform of economic policy was widely felt in the context of changing global economic scenarios to achieve desired growth in the country.
i. Which of the following was not a reason for the public sector to play a major role in the initial phase of Indian Economic Planning? (choose the correct alternative)
a. Private entrepreneurs lacked sufficient capital for investment.
b. Government aimed at social welfare.
c. The market was big enough to encourage private industrialists to invest.
d. The government wanted to protect the indigenous producers from foreign competition.
Ans. Option (c)
ii. Inward-looking trade strategy aimed at _________ (fill up the blank with the correct answer)
Ans. protecting domestic industries from international competition.
iii. State whether the given statement is true or false:
The mechanization of Indian agriculture was one of the causes of the Green Revolution in India.
Ans. True
iv. Read the following statements - Assertion (A) and Reason ( R)
- Assertion (A): Many public sector undertakings incurred huge losses due to operational inefficiencies.
- Reason (R): Red-tapism was one of the reasons for the continuation of such enterprises.
Select the correct alternative from the following:
a. Both Assertion (A) and Reason (R) are true.
b. Both Assertion (A) and Reason (R) are false.
Ans. Option (a)
Q. No. 3) Fill up the blank with the correct answer:
In 1955, the Karve committee was constituted for aiming the _____.
Ans. Development of small-scale industries
Q. No. 4) “The world has experienced two primary types of economic systems along with a hybrid one.” Elaborate on the given statement.
Ans. Capitalist system - This is a system dependent on market forces. Goods are produced based on demand and can be obtained only by those who have purchasing power.
Socialist system - Goods and services are provided by the government based on the needs of the society and not on who can purchase them. There is strictly no private property and everything is owned by the state.
India follows a mixed economy. The market will produce what it can, and market forces will be in play. But the government will provide what the market fails to do, and to those who cannot afford it.
Q. No. 5) Read the passage given below and answer the questions that are followed. In the early 1980s, textile mills all over the country began to close down. In some places, such as Mumbai, the mills closed rapidly. In Ahmedabad, the process of closure was long drawn out and spread over 10 years. Over this period, approximately over 80,000 permanent workers and over 50,000 nonpermanent workers lost their jobs and were driven to the informal sector. The city experienced an economic recession and public disturbances, especially communal riots. A whole class of workers was thrown back from the middle class into the informal sector, into poverty. There was widespread alcoholism and suicides, and children were withdrawn from school and sent to work.
(Source: NCERT)
How did the primary goals listed in the five-year plans aim to deal with the given crisis?
Ans. The primary goals of the five-year plans were:
- Modernization: encouraging new techniques, methodologies, social outlook, and policies. Example: modernization of informal sector enterprises and provision of social security, measures to informal sector workers.
- Self-reliance: avoiding import of goods that could be produced in India itself, optimum utilization of nation's own resources, encouraging indigenous industries.
- Equity: encouraging policies revolving around providing food, a decent house, education, and health care so that the inequality in the distribution of wealth could be reduced.
- Growth: aiming to increase the country’s capacity to produce the output of goods and services within the country by either stimulating a larger stock of productive capital, or a larger size of supporting services, etc.
Q. No. 6) Why was it necessary for a developing country like India to follow self-reliance as a planning objective?
Ans.
- This policy was considered a necessity in order to reduce our dependence on foreign countries, especially for food.
- Further, 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.
Q. No. 7) ‘Modernisation does not refer only to the use of new technology but also to changes in the social outlook.’
Source: NCERT
Analyze the above statement with reference to the core ideas that the government aimed to promote in the newly independent India.
Ans. The government wanted to increase the production of goods and services through new methods with the help of technology. But they also, through its various policies, simultaneously ensured that this progress in a socialist economy should be assessed in accordance with the –
- Equality of opportunities between men and women.
- Bridging the gap between the haves and have-nots.
- Availability of basic infrastructural facilities to all.
- Optimum utilization and distribution of resources.
Q. No. 8) Discuss briefly, how institutional reforms (land reforms) have played a significant role in transforming Indian agriculture.
Ans. After independence, the government of India took several institutional/land reforms to ensure the transformation of Indian agriculture, such as:
- Land ceiling – It ensured the reduction of the concentration of land ownership in a few hands.
- Abolition of the Zamindari system – It focused on the elimination of farmers’ exploitation and the promotion of agricultural growth.
These reforms have led to the stability of farming as an occupation and promoted equity.
Q. No. 9) “In India, after 1947 land reforms were introduced on a large scale.” In the light of the given statement, discuss any one such land reform.
Ans. Land reforms were inevitable in the post-independence era. The policymakers of independent India introduced land reforms such as land ceilings, abolition of intermediaries, etc.
Land ceiling means fixing up the maximum size of landholding which could be owned by an individual. This step was essential to promote equity in the agricultural sector so as to reduce the concentration of land ownership in a few hands.
Q. No. 10) ‘Land ceiling promotes equity.’ Support the given statement with a valid explanation.
Ans. Land ceiling means fixing the maximum size of land which could be owned by an individual, beyond which it would be taken over by the government and would be allotted to landless and small farmers. The purpose of the land ceiling was to reduce the concentration of land ownership in a few hands and promote equity.
Q. No. 11) "Green revolution transformed India from a subsistent food grain economy to a food surplus economy.” Justify the statement, giving reasons in support of your answer.
Ans.
- Before the advent of the Green Revolution, a large proportion of agricultural produce was consumed by the farmers themselves instead of being sold in the market. Green Revolution led to an increase in the growth of agricultural output.
- After the Green Revolution, a greater proportion of the agro-produce (wheat and rice) was sold by the farmers in the market. That led to the attainment of a marketed surplus and converted India into a food surplus economy from the food scarce one.
Q. No. 12) a. Why was the Green Revolution implemented and how did it benefit the farmers?
b. Justify the following statement with a valid explanation:
‘Green revolution enabled the government to procure sufficient food grains to build its stocks that could be used during the time of shortage’.
Ans. a. Green revolution was implemented in India to overcome the shortage of food-grain availability in the post-independence period. Green revolution has increased the production and productivity in the agriculture sector which was otherwise very low. It helped in improving the income of the farmers by creating a marketable surplus, and increased employment, and output.
b. The given statement is appropriate as the Green Revolution helped the government to procure and preserve more food grains through agencies like the Food Corporation of India. The increase in food grain production has been so substantial that India not only started maintaining buffer stocks of food grains but also became a dominant player in the food grain export market.
Q. No. 13) Briefly describe why the government had to intervene in the implementation of the Green Revolution, and the various steps it took to protect small farmers.
Ans.
- Farmers using HYV needed reliable irrigation facilities, pesticides, and fertilizers.
- The small farmers would not have been able to reap the benefits of HYV if not for the State.
- The government provided cheap credit and subsidies on fertilizers and pesticides.
- Research institutions provided new information and services to create varieties that were resistant to pest attacks, which reduced the risks for small farmers.
Q. No. 14) Define the following terms:
i. Quota
ii. Import Substitution
Ans. i. Quota: Quantitative restrictions on imports for the protection of domestic firms from foreign competition. Under this quantity of goods that can be imported is specified by the state.
ii. Import Substitution: The policy aimed at replacing or substituting imports with domestic production by protecting domestic industries from foreign competition is known as Import Substitution.
Q. No. 15) "In order to protect domestic industries, India followed the regime of restrictions on imports."
Briefly outline and discuss such steps taken by the government to promote import substitution policy.
Ans. In order to protect domestic industries, India followed the import substitution policy. This policy aimed at substituting imports with domestic production. The domestic industries were protected from foreign competition by using the following tools:
i. Tariffs: Tariffs are a tax on imported goods that make imported goods more expensive and discourage their usage.
ii. Quota: Quotas specify the quantity of goods that can be imported.
Q. No. 16) While subsidies encourage farmers to use new technology, they are a huge burden on government finances. Discuss the usefulness of subsidies in light of this fact.
Ans. The usefulness of subsidies:
- 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.
Q. No. 17) Why was public sector given a leading role in industrial development during the planning period?
Ans.
- At the time of independence, Indian industrialists did not have the capital to undertake investment in industrial ventures required for the development of the Indian economy
- nor was the market big enough to encourage industrialists to undertake major projects even if they had the capital to do so.
Q. No. 18) Why and how was the private sector regulated under the IPR 1956?
Ans. This policy was used for promoting industry in backward regions. It was easier to obtain a license if the industrial unit was established in an economically backward area. The purpose of this policy was to promote regional equality.
The private sector was kept under state control through a system of licenses.
- No new industry was allowed unless a license was obtained from the government.
- Even an existing industry had to obtain a license for expanding output or for diversifying production (producing a new variety of goods).
Q. No. 19) 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.
Ans. The public sector is not meant for earning profits but to promote the welfare of the nation. The public sector firms, 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.
Q. No. 20) 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 of all 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. Subsidies | F. The monetary assistance given by government for production activities. |
Ans. 1-C, 2-D, 3-B, 4-E, 5-A, 6-F.
| Also Read: Class 12 Important Questions Class 12 Notes |
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