Basic Characteristics Of Indian Economy – CS Foundation Economics Notes

Basic Characteristics Of Indian Economy – CS Foundation Economics Notes

When India became independent it had a highly backward economy. Planning was needed to increase gross domestic savings as well as to increase industrialization and take the deficit balance problem. We were suffering from low per capita income, poor health facilities, very few industries, widespread unemployment, etc. To overcome the problems that were existing India made a planning commission in March 1950 by a regulation of the Government of India.

The functions of the planning commission are
1. To make an assessment of the material, capital, and human resources of the country, including technical personnel, and investigate the possibilities of augmenting those are related resources that are found to be deficient in relation to the nation’s requirement.

2. To formulate a plan for the most effective and balanced utilization of the country’s resources.

3. To define the stages, on the basis of priority, in which the plan should be carried out and propose the allocation of resources for the due completion of each stage.

4. To indicate the factors that tend to retard economic development.

5. To determine the conditions which need to be established for the successful execution of the plan within the incumbent socio-political situation of the country.

6. To determine the nature of the machinery required for securing the successful implementation of each stage of the plan in all its aspects.

7. To appraise from time to time the progress achieved in the execution of each stage of the plan and also recommend the adjustments of policy and measures, which are deemed important vis-a-vis a successful implementation of the plan.

8. To make necessary recommendations from time to time regarding those things which are deemed necessary for facilitating the execution of these functions.

9. Such recommendations can be related to the prevailing economic conditions, current policies, measures, or development programs.

10. They can even be given out in response to some specific problems referred to the commission by the central or the state governments.
After India gained independence, a formal model of planning was adopted, and accordingly the Planning \ Commission, reporting directly to the Prime Minister of India. Planning Commission does not derive its creation from either the Constitution or statute but is an arm of the Central/Union Government.

From a highly centralized planning system, the Indian economy is gradually moving towards indicative planning where the Planning Commission concerns itself with the building of a long-term strategic vision of the future and decides on priorities of the nation. It works out sectoral targets and provides promotional stimulus to the economy to grow in the desired direction.

1. First five year Plan
In July 1951 the Planning Commission presented a draft outline of a plan of development for the period of five years from April 1951 to March 1956.
The first five-year plan had been made by the planning commission whose objective was to improve the standard of living of the people by effective use of the country’s resources. In India, the first five-year plan’s total outlay was estimated to been worth ₹ 2,069 crores. It was based on Harrod-Domar Model. In the first five-year plan, this amount was allocated to various areas. They are

  • Agriculture development
  • Energy and irrigation
  • Community development
  • Communications and transport
  • Industry
  • Power

The target of GDP growth in the first five-year plan of India was 2.1% per year and the actual growth of GDP that was achieved had been 3.6% per year. It was a successful plan because of the good harvest in the last two years of the plan.

2. Second five year Plan
The second five-year plan India (1956-1961) intends to increase and carry forward the development that had been started by the first five-year plan in India. It is also called Mahalanobis Plan named after the well-known economist The Second Five year Plan focused mainly on heavy industry as against the First Plan which was essentially an agricultural plan. This was done to boost domestic production and manufacturing of goods. The plan is aimed primarily at developing the public sector. The Second Plan started with an emphasis on the expansion of the public sector and aimed at the establishment of a socialistic pattern of society.

In the second year plan, the funds were allocated to various areas such as

  • Power and irrigation
  • Communication and transport
  • Mining and industry
  • Community and agriculture development
  • Social services
  • Miscellaneous

The second five-year plan India has, to a large extent, improved the living standards of the people. The Growth target was 4.5 percent but a growth rate of 4.0 percent was achieved. Third five year Plan It was from 1961-1966 The features of the third five-year plan were

  • To increase the national income by 5% per year
  • To increase the production of agriculture so that the nation is self-sufficient in food grains
  • To provide employment opportunities for every citizen of the country
  • To establish equality among all the people of this country
  • Complete failure in reaching the targets due to unforeseen events – Chinese aggression (1962), Indo-Pak war (1965), severe drought 1965-66

3. Annual Plans
The characteristic features of these three annual plans were

  • Prevailing crisis in agriculture and serious food shortage necessitated the emphasis on agriculture during the Annual Plans
  • During these plans, a whole new agricultural strategy was implemented.
  • Use of HYV’s seeds and extensive use of fertilizers
  • To absorb the shock of the third five-year plan.
  • It paved the path for the planned growth ahead.

4. Fourth five-year Plan It started from 1969-1974. The characteristic features of the fourth five-year plan were

  • Nationalization of 14 major Indian banks
  • The main emphasis was on the growth rate of agriculture to enable other sectors to move forward
  •  Growth with stability
  • Funds kept for industrialization were diverted to war expense
  • Performing smiling Buddha underground test in 1974
  • Target growth expected was 5.7% but actual growth was 3.30%

5. Fifth Five-year Plan It started from 1974-1979. The characteristic features of the plan were

  • Self-reliance in agriculture and defense
  • The emphasis laid on employment
  • Electricity Supply Act was enacted in 1975.
  • Promotion of high rate of growth, better distribution of income, and significant growth in the domestic rate of savings was seen as key instruments
  • Target growth expected was 4.4% and actual growth was 5%

6. Sixth Five-year Plan This was from 1980 – 1985. The characteristic feature of the plan was

  • Family planning program was extended
  • To erode out poverty
  • Emphasized on Increase in national income, modernization of technology
  • Target growth expected was 5.2% and actual growth was 5.4%

7. Seventh Five-year Plan This was from 1985-1990. The characteristic features of the plan were

  • Focus on Socialism and energy production
  • Focus on Production of food grains
  • Use of modem technology
  • Generating employment opportunities.
  • The growth target was 5% and actual growth was 6.01%

8. Eight Five year Plan This was from 1992 – 1997. From the year 1989-1991* there was instability in the Indian economy. India was facing a large foreign reserve deficit so at that time Dr. Manmohan Singh launched free-market reforms which brought the bankrupt nation back from the edge. The features of this plan were.

  • Privatization and liberalization in India
  • Modernization of industries
  • India became a member of the World Trade organization on Jan 1, 1995.
  • Controlling population, poverty
  • Employment generation
  • Can be termed as Rao and Manmohan economic development model.

9. Ninth Five year Plan
It was from 1997-2002. Features of this plan were

  • Create liberal market
  • Improve the quality of life
  • Generation of employment
  • To stabilize the prices in order to increase the growth rate
  • To stress upon the rural development
  • Expected growth was 6.5% but actual growth was 5.35%

10. Tenth five-year plan
It was from 2002-2007. Features of this plan were

  • To attain 8% GDP growth per year.
  • Stress on the education of the child
  • To reduce poverty
  • To reduce gender gaps in literacy and wage.
  • Increase in literacy rate to 72% within the plan period and to 80% by 2012.
  • Reduction of Infant Mortality Rate (IMR)
  • Increase in forest and tree cover
  • All villages to have sustained access to potable drinking water by 2012
  • Cleaning of all major polluted rivers

11. Eleventh five-year plan

  • GDP growth rate to be increased to 10% by the end of the plan.
  • Farm sector growth to be increased to 4%
  • Creation of seven crore job opportunities
  • Reduce educated unemployed youth to below 5 percent
  • Infant mortality rates to be reduced to 28 per 1000 births
  • Maternal death rates to be reduced to 1 per 1000 births
  • Clean drinking water to all by 2009
  • Improve sex ratio to 935 by 2011-12 and to 950 by 2016-17
  • Ensure electricity connection to all villages and broadband over power lines (BPL) households by 2009
  • Roads to all villages that have a population of 1000 and above by 2009
  • Increase forest and tree cover by 5%
  • Achieve the World Health Organization standard air quality in major cities by 2011-12
  • Treat all urban wastewater by 2011-12 to clean river waters
  • Increase energy efficiency by 20 percent by 2016-17

12. Agriculture
Indian Agriculture is one of the most significant contributors to the Indian economy. A brief scenario of Indian agriculture can be depicted as:

• Agriculture is the only means of living for almost 60% of the employed class in India
• Agriculture in India has a significant history. In the earlier times, India was largely dependent upon food imports, but the successive story of the agriculture sector of the Indian economy has made it self-sufficing in grain production.
• India has put a lot of effort to be self-sufficient in food production and this endeavor of India has led to the Green Revolution
• The services enhanced by the Green Revolution in the agriculture sector of the Indian economy are as follows:
– Acquiring more area for cultivation purposes;;
– Expanding irrigation facilities
– Use of an improved and advanced high-yielding variety of seeds
– Implementing better techniques that emerged from agriculture research
– Water management
– Plan protection activities through prudent use of fertilizers, pesticides. The government’s role in agriculture has mainly been providing infrastructure including research.

• The first-ever National Agriculture Policy was announced on 28th July 2000. Over the next two decades, it aims to attain:

  • A growth rate in excess of 4 percent per annum in the agriculture sector
  • Growth that is based on efficient use of resources and conserves our soil, water, and biodiversity
  • Growth with equity, i.e., growth which is widespread across regions and farmers
  • Growth that is demand-driven and caters to domestic markets and maximizes benefits from exports of agricultural products in the face of the challenges arising from economic liberalization and globalization
  • Growth that is sustainable technologically, environmentally, and economically

• Today, India ranks second worldwide in farm output. Agriculture and allied sectors like forestry and fisheries accounted for 16.6% of the GDP in 2009, about 50 % of the total workforce.
• Agriculture, with its allied sectors, is unquestionably the largest livelihood provider in India, more so in the vast rural areas.
• It also contributes a significant figure to the Gross Domestic Product (GDP).
• Sustainable agriculture, in terms of food security, rural employment, and environmentally sustainable technologies such as soil conservation, sustainable natural resource management, and biodiversity protection, are essential for holistic rural development, I
• Indian agriculture and allied activities have witnessed a green revolution.
• Despite record foodgrain production during the course of the past few years, the share of agriculture and allied sectors to India’s gross domestic product (GDP) has declined by more than 4.5% between 2004-05 and 2010-11; while the share of services in the gross domestic product has increased by more than 4.6% during the same period.
• Minimum support price scheme was announced by the government so that farmers get remunerative prices for their produce.
• A centrally sponsored scheme named ‘ Micro Irrigation’ was approved for water management
• Agriculture diversification was recognized as another important sector and thus National Horticulture Mission was approved as a step towards the agriculture diversification
Low productivity – there were several causes of low productivity in India which can be grouped as

1. General factors such as inadequate infrastructure facilities, area of land cultivation per cultivator have declined from .43 hectare in 1901 to .23 hectare in 1981 because of population increase which had a direct impact on productivity. Moreover, dependency on monsoon and traditional system of cultivation further declined the production

2. Industrial factors – Due to small holding of land by farmers and prevailing of zamindari system.

3. Technological factors – Irrigation facilities available were inadequate. Farmers were using poor quality seeds, an old techniques for farming, etc.

13. Measures to improve productivity
Some of the measures to improve agricultural productivity are

  • Farmers should be provided with stable agricultural prices for their agricultural products
  • Adequate marketing facilities
  • Increase educational opportunities
  • Good land use
  • government subsidies
  • Support measures to increase agricultural productivity
  • The land tenure system should be changed in favor of the cultivator.
  • The modem inputs like fertilizers. Pesticides and improved seeds should be made available to the farmers at reasonable prices
  • Conserving and Enhancing Soil and Water

Land reforms – At the time of independence ownership of land was concentrated in the hands of a few. This led to the exploitation of the farmers and was a major hindrance to the socio-economic development of the rural population. Land reforms, therefore, became one of the vital aspects of the agricultural development policy especially after the concept of the Five-Year Plan came to stay. Land reform legislation in India consisted of these main categories:

1. Abolition of intermediaries- The Zamindars acted as the intermediaries. The land was owned by zamindars and, the tenants were burdened with high rents, unproductive cultivation, and other forms of exploitation. By 1972, laws had been passed in all the States to abolish intermediaries. By conferring the ownership of land to the tiller, the Government provided an incentive to improve cultivation.

2. Tenancy reforms to regulate fair rent and provide security to tenure- Towards this end, the Government has taken three measures: (1) declaring tenants as owners and requiring them to pay compensation to owners in suitable installments (2) acquisition of the right of ownership by the State on payment of compensation and transfer of ownership to tenants and (3) the states’ acquisition of the landlords’ rights bring the tenants into direct relationship with the States.

3. Ceilings on holdings and distribution of surplus land among the landlords- With the help of legislation a ceiling for the holding of the agricultural land was announced on zamindars. There were only a few cases where exemptions were provided from the ceiling.

4. Consolidation of holdings and prevention of their further fragmentation – through this land was consolidated in order to give economic holding to farmers. With the help of this method, farmers got one land instead of scattered land.

5. Development of cooperative farming- The Planning Commission in the first three Five Year Plans, chalked out detailed plans for the development of cooperative farming.

14. Green revolution
It was started as a major development in 1967-68. It included the use of high yield seeds, chemicals, fertilizers, improved technology, multiple cropping, etc. This revolution made the country self-sufficient in food grains. The green revolution is still going on with a stress being made on the self-sufficiency in pulses and oilseeds.

15. Globalization and agriculture
Globalization of agriculture means that every country of the world has free access to the markets of other countries for its agricultural products. Globalization of agriculture paved a way to get finance from all over the world for agriculture, to make use of cheap labor that was available in our country, and stand in the global market as a competitor with the use of advanced technology.

Globalization can greatly enhance the role of agriculture as an engine of growth by making it possible for agriculture to grow considerably faster than domestic consumption. It also increases the potential for agriculture to increase food security through enlarged multipliers to the massive, employment-intensive, non-tradable rural non-farm sector.

16. Role of industry
Industrialization is the sharp development of industries in comparison to agriculture. The need and importance of industries can not be denied in any country. The industry supports sustainable growth, maximizes opportunity, and minimizes barriers to growth. Industry development is a key contributing tool to economic development. That is why an emphasis on industrial development was made in various five-year plans.

The planning commission favors industrialization because it is observed that the productivity of labor in industry is much higher than that in agriculture. Industries play a significant and important role for a country like India where there are good natural resources, cheap labor, vast population, etc. which are good enough for industries growth. Thus for a steady and firm development of industries Industrial policy was formed. The 1965 Industrial policy was regarded as the ‘economic constitution of India’
Objectives of the Industrial policy of 1956 were

  • To develop heavy and machine industry
  • To develop a transport system
  • To expand public sector
  • To accelerate the growth and speed of industrialization
  • Industries were divided into Schedule A industries, Schedule B industries, Schedule C industries so that it can be specified that which industries will come under private and which will come under public.
  • 17 industries were put in Schedule A which were in control of the Government
  • 12 industries were put in Schedule B which were to be owned by State
  • Rest industries were in Schedule C which was to be primarily owned by the private sector but was subject to IDRA 1951.
  • To build a cooperative sector
  • – To expand cottage, village, and small-scale industries.

17. Impact of Industries in India
The economic development of any nation totally depends on industries. Growth in the industrial sector is one of the vital figures that affect the Gross Domestic Product (GDP) in India, industrial sector is crucial to greater economic development and takes in a number of areas as a country develops. India has many favorable factors for the development of industries. The various favorable factors present in the country for the development such as country is rich in natural resources, rich in human resources, rich in commercial crops, such as sugar-cane, raw cotton, raw jute, tobacco, oilseeds, etc.
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18. Industrial policy 1948
In 1948, immediately after Independence, the Government of India introduced the Industrial Policy Resolution 1948.
Industries were grouped into three categories as follows:
(a) Exclusive State Monopoly-This includes the manufacture of arms and ammunition, production and control of atomic energy, and the ownership and management of railway transport. These industries were the exclusive monopoly of the Central Government.

(b) State Monopoly for New Units-This category included coal, iron, and steel, aircraft manufacture, shipbuilding, manufacture of telephone, telegraphs, and wireless (apparatus (excluding radio receiving sets), and mineral oils. Cement

(c) Unregulated private enterprise-the industries in this category were left open to the private sector, individual as well as cooperative such as small, medium, and cottage industries

19. Industrial policy 1977
The small scale sector was classified into three categories:

  • Cottage and small industries providing self-employment on a wide scale;
  • Tiny sectors with investment in machinery and equipment up to Rs. 1 lakh in town areas and Rs.50, 0007- in rural areas; and
  • Small scale sectors with an investment of Rs.10 lakhs and in case of ancillary units with an investment in fixed capital up to us 18 lakhs.
  • district industries center was to be established in each district
  • The Policy also proposed to revitalize the Khadi and village industries by drawing special programs in the Khadi and handloom sectors.

20. Industrial policy 1980
The basic objectives of the 1980 Policy were as follows:

  1. Optimum utilisation of the installed capacity,
  2. Maximizing production and achieving higher productivity,
  3. More employment generation,
  4. Promotion of export-oriented and import-substitution units
  5. Strengthening agricultural base by according preferential treatment to agro-based industries and promoting an inter-sectoral relationship, and
  6. Re-orientation of the public sector undertakings and assistance for the growth of private sectors and promotion of small-scale units.
  7. For setting up a unit or expansion of existing unit license from the Government was required.

21. Industrial policy 1984

  • This policy laid emphasis on liberalization from licensing policy for large enterprises.
  • In January 1986 Government de-licensed 23 industries.
  • Many of the Industries were freed from the provisions of the MRTP Act and FERA.

22. Industrial policy 1990
The features of this policy were

  • to take measures for the promotion of small-scale and agro-based industries and to change procedures for grant of industrial approvals.
  • A new scheme of Central Investment Subsidy exclusively for the small-scale sector in rural and backward areas capable of generating a higher level of employment at lower capital cost would be implemented.
  • A New bank SIDBI was established so that it can provide financial assistance to small scale and agro-based industries

23. Industrial policy 1991
The objective of the Industrial Policy Statement – 1991 was

  • to maintain sustained growth in productivity, enhance gainful employment and achieve
  • optimal utilization of human resources
  • to attain international competitiveness
  • to transform India into a major partner and player in the global arena. The characteristic features of policy were

1. industrial licensing will henceforth be abolished for all industries.

2. Compulsory licensing was required only in respect of 18 industries. These included coal and lignite, distillation and brewing of alcoholic drinks, cig; ars and cigarettes, drugs and pharmaceuticals, etc.

3. While freeing Indian industry from official controls, opportunities for promoting foreign investment in India was accorded a significant role.

4. In high-priority industries, requiring large investments and advanced technology, approval for direct foreign investment up to 51% foreign equity in such industries were given.

5. With a view to injecting technological dynamism in the Indian industry, the Government provided automatic approval for technological agreements related to high priority industries and eased procedures for the hiring of foreign technical expertise.

6. A specially empowered Foreign Investment Promotion Board has been constituted to negotiate with international forums to approve direct foreign investment in selected sectors. Restructuring of public sector units (PSUs) was initiated. In order to raise resources and ensure wider public participation in PSUs, it was decided to offer its shareholding stake to mutual funds, financial institutions, the general public, and workers.

Similarly, in order to revive and rehabilitate chronically sick PSUs, it was decided to refer them to the Board for Industrial and Financial Reconstruction (BIFR).
The MRTP Act will be amended to remove the threshold’ Hits of assets in respect of MRTP companies and dominant undertakings.

Basic Characteristics Of Indian Economy MCQ Questions

Question 1.
The number of products reserved for small scale 6. industry till October 2008 is
a. 35
b. 21
c. 81
d. 106
Answer:
b. 21

Question 2.
For 2010-11 the CSO has predicted India’s GDP growth as
a. below 7%
b. 8.6%
c. 805%
d. 9.5%
Answer:
b. 8.6%

Question 3.
Which of the following occupied the highest place in growth rate during the 10th Plan period 2002-2007?
a. Agricultural Sector
b. Service Sector
c. industrial sector
d. mining
Answer:
b. Service Sector

Question 4.
The agriculture sector registered 1.6% growth in 008-09 and it is estimated for the year 2010-11 at
a. 4.00%
b. 4.30%
c. 5.4%
d. 3.61%
Answer:
c. 5.4%

Question 5.
According to Smal and medium enterprise development Act, the maximum limit for medium enterprise is
a. Rs. 25 Lakhs
b. Rs. 1 Crore
c. Rs. 5 Crore
d. Rs. 10 crore
Answer:
d. Rs. 10 crore

Question 6.
India has
a. Socialistic economy
b. Gandhi an economy
c. Mixed economy
d. free economy
Answer:
c. Mixed economy

Question 7.
In India, the public sector is most dominant in
a. transport
b. Steel production
c. commercial banking
d. organized term lending financial institutions.
Answer:
c. commercial banking

Question 8.
One of the reasons for India’s occupation structure remaining more or less the years has been that
a. a. productivity in agriculture has beer’ high enough to induce people to stay with agriculture.
b. people are largely unaware of the significance of the transition from agriculture tA industry for economic development.
c. investment pattern has been directed towards capital intensive industries.
d ceilings on land holdings have enabled more people to own land and hence their preference to stay with agriculture
Answer:
b. people are largely unaware of the significance of the transition from agriculture tA industry for economic development.

Question 9.
Which of the following is correct regarding the gross domestic savings in India?
a. contribution of Household sector is the largest
b. contribution of the government sector is the largest
c. contribution of the corporate sector is the largest
d. none of these
Answer:
a. contribution of Household sector is the largest

Question 10.
With the development of the economy, the contribution of the primary sector in national income is
a. increasing
b. constant
c. decreasing
d. none of the above
Answer:
c. decreasing

Question 11.
Which are the correct statements?
a. Agriculture and industry are interdependent
b. Agriculture is Basic Components for industrial Development
c. Agriculture if affected by monsoon
d. all of these
Answer:
b. Agriculture is Basic Components for industrial Development

Question 12.
What are the problems of rural industrialization in India?
a. lack of Capital
b. lock of Basic infrastructure
c. The traditional technique of production
d. All of the above
Answer:
d. All of the above

Question 13.
The main features of the Indian economy is
a. Rural Poverty
b. Lack of Capital
c. Traditional Technique of production
d. None of these
Answer:
d. None of these

Question 14.
Which of the following type of employment is found in India?
a. Structural unemployment
b. quasi unemployment
c. disguised unemployment
d. All of these
Answer:
d. All of these

Question 15.
The objective of land reforms in India is
a. increase in Agriculture Production
b. Social justice with farmer
c. both a and b
d. None of the above
Answer:
b. Social justice with farmer

Question 16.
For purchasing the seeds, fertilizers, etc the loan distributed is called:
a. Short Term loan
b. long term loan
c. medium-term loan
d. none of these
Answer:
c. medium-term loan

Question 17.
Which of the following are the reasons for the food problem in India?
a. Population expulsion
b. Development of Commercial crops
c. The backwardness of Agriculture
d. All of above
Answer:
c. Backwardness of Agriculture

Question 18.
Main Source of Irrigation in India ls
a. Canals
b. Tanks
c Wells and Tube wells
d. none of these
Answer:
c Wells and Tube wells

Question 19.
The main element of the new Agriculture strategy in India is
a. Agricultural machinery and Tools
b. Finance and marketing
c. Seeds and fertilizer
d. Tenancy and hand reforms
Answer:
c. Seeds and fertilizer

Question 20.
The main Hurdle in steady industrial development in India is
a. Lack of capital
b. insufficient basic infrastructure
c. Limited market
d. technical backwardness
Answer:
c. Limited market

Question 21.
Which of the following were the long-term objectives of economic planning in India up to the 7th plan?
a. economic growth
b. self-reliance
c. Removal of unemployment
d. reduction of income inequalities and elimination of poverty
Answer:
d. reduction of income inequalities and elimination of poverty

Question 22.
In the 5th Plan, though removal of poverty was mentioned as a major objective, only a passing reference was made to the problem.
a. economic inequalities
b. population growth
c. industrial stagnation
d. None of these
Answer:
a. economic inequalities

Question 23.
Until the late 1970s decision-makers in the government and the planning commission were of the view that?
a. Trickle-down effect of growth could alleviate poverty
b. Only special programs can reduce the incidence of poverty in India
c. Land reforms and agricultural development can make a serious dent in the incidence of poverty, as most of the poor reside in rural areas.
Answer:
a. Trickle-down effect of growth could alleviate poverty

Question 24.

Modernization in agriculture implies
a. increased use of fertilizers and HYV seeds
b. extension of irrigation facilities
c. greater mechanization
d. land reforms of these statements
Answer:
c. greater mechanization

Question 25.
The 7th plan development strategy contained some substantive elements of change; these were
1. it gave priority to increasing agricultural production through greater reliance on new technology
2. It undermined the role of the public sector and induced increasing privatization of industries
3. the liberalization of imports it aimed at rearing efficiency in the manufacturing sector
4. planning and administrative procedure and institution were accordingly changed and emphasis was switched from regulate-y to facilitator procedures of this statement:
a. only 1 is correct
b. only 1 and 2
c. only 1, 2 and 3
d. all is correct
Answer:
c. only 1, 2 and 3

Question 26.
Deficit financing contributed to
a. 8.6% of public sector outlay in 8th plan
b. 6.6% of public sector outlay in 8th Plan
c. 4.6% of public sector outlay in 8th Plai
d. none of these
Answer:
a. 8.6% of public sector outlay in 8th plan

Question 27.
The highest allocation of resources in the 8th plan (26.6%) went to?
a. Energy sector
b. Transport and communication
c. S & T and Environment
d. None of these
Answer:
a. Energy sector

Question 28.
Characteristics, which do not describe a nation as underdeveloped are
a. Poor health facilities
b. Good saving
c. Mass poverty
d. Low per capita income
Answer:
b. Good saving

Question 29.
For developing mixed economy of India __________ was done
a. Active role of State was made
b. The role of public and private was established
c. Both a & b
d. Removal of poverty
Answer:
c. Both a & b

Question 30.
In India to avoid multiplicity of objectives after independence, it determined
a. Priorities in terms of economic worth
b. Socialism pattern of society
c. Adequate means of civilization
d. All of the above
Answer:
d. All of the above

Question 31.
Which is the most appropriate planning that was required to be done by India after independence?
a. Increase gross domestic saving
b. Increase gross domestic investment
c. Tackling the deficit payment problems
d. All of the above
Answer:
b. Increase gross domestic investment

Question 32.
India has ________ polity
a. Federal
b. Democratic
c. Both a&b
d. None of the above
Answer:
c. Both a&b

Question 33.
National plan in India comprises
a. Plans of state government
b. Plans for the private sector
c. Plans for public sector undertakings
d. All of the above
Answer:
d. All of the above

Question 34.
It was not the objective of plans made by the Planning Commission to
a. Increase the income of the rich
b. Increase the income of the poor
c. Decrease the income of the rich
d. None of the above
Answer:
d. None of the above

Question 35.
In a mixed economy, the common features that led to the failure of Government were
a. Decisions were guided for s,elf interest
b. They were unable to implement their plans quickly
c. There was lack of strong mechanism of economic incentives
d. Both b & c
Answer:
d. Both b & c

Question 36.
Planning commission was set up in
a. March, 1947
b. March, 1950
c. March 1948
d. None of the above
Answer:
b. March, 1950

Question 37.
Formulating five year plan is the work of
a. Government of India
b. State Government
c. Planning commission
d. Central committees
Answer:
c. Planning commission

Question 38.
As per critics the self reliance plan should have been
a. Able to pay for our imports by increasing exports
b. Able to get freedom from imports
c. Able to have a policy for import substitution
d. All of the above
Answer:
a. Able to pay for our imports by increasing exports

Question 39.
Growth rate achieve in the first five year plan was _____________ of GDP
a. 2.1%
b. 3.1%
c. 2%
d. 3.6%
Answer:
d. 3.6%

Question 40.
Five MT’s were established in
a. First five year plan
b. Second five year plan
c. Third five year plan
d. Fourth five year plan
Answer:
a. First five year plan

Question 41.
__________ was based on Mahalanobis model
a. Power & Irrigation
b. Communication & transport
c. Agriculture
d. Social service
Answer:
c. Agriculture

Question 42.
First five year plan was based on ________ model
a. Mahalanobis model
b. Harrod damodar model
c. Haron domar model
d. Damodaran model
Answer:
b. Harrod damodar model

Question 43.
Eleventh five year plan emphasized that at least __________ of women &girl children should get the benefit of Government schemes
a. 30%
b. 32%
c. 33%
d. 34%
Answer:
c. 33%

Question 44.
Agricultural based states are
a. Uttar Pradesh
b. Madhya Pradesh
c. Haryana
d. All of the above
Answer:
d. All of the above

Question 45.
Amongst below mentioned which 5 year plan achieved actual growth more than target growth
a. 3rd 5 year plan
b. 2nd 5 year plan
c. 4th 5 year plan
d. None of the above
Answer:
d. None of the above

Questions 46.
The reasons of plan holiday were
a. Lack of power and irrigation
b. Less social services
c. Decrease in savings rate
d. Less land rehabilitation
Answer:
c. Decrease in savings rate

Question 47.
Amongst the five year plans 3 annual plans were adopted and termed as plan holiday. They were
a. 1966-69
b. 1967-70
c. 1965-68
d. None of the above
Answer:
a. 1966-69

Question 48.
Distribution of HYVs of seeds were done in
a. Second five year plan
b. First five tear plan
c. Plan holiday
d. None of the above
Answer:
c. Plan holiday

Question 49.
The characteristic features of fourth five year plan were
a. Growth with stability
b. Nationalization of 14 banks
c. Bangladesh liberation war took place
d. All of the above
Answer:
d. All of the above

Question 50.
For the first time national highway was introduced as a focal work in
a. First five year plan
b. Fifth five year plan
c. Both a &b
d. None of the above
Answer:
b. Fifth five year plan

Question 51.
Rao and Manmohan economic development plan made
a. Liberalization in India
b. Privatization in India
c. Increasing productivity of small & large farmers
d. Both a & b
Answer:
d. Both a & b

Question 52.
On 1st Jan1995
a. India became self reliant for foreign exchange
b. Became member of world trade organization
c. Ninth five year plan was launched
d. Became a member of WHO
Answer:
b. Became member of world trade organization

Question 53.
The declining share of agriculture in Indian economy is an indication of
a. Scarcity of food
b. Economic progress
c. Structural changes
d. Both b & c
Answer:
d. Both b & c

Question 54.
In the current years, it has been observed that there has been a rapid increase in the manufacturing sector. Which of the statement is true?
a. Maximum employment lies with the agriculture
b. Maximum employment lies with the manufacturing sector
c. Both a & b
d. None of the above
Answer:
a. Maximum employment lies with the agriculture

Question 55.
The linkages that can be linked between agriculture and production are
a. Savings and investment linkages
b. Production linkages
c. Commodity
d. Both a & b
Answer:
d. Both a & b

Question 56.
A policy was formed by _______ for development in agriculture in such a way that it becomes demand driven and satisfies the demand of the domestic market
a. PDS
b. NAP2000
c. ACRP
d. CACP
Answer:
b. NAP2000

Question 57.
The shortage of finance available to farmers leads to ____________ factors responsible for low productivity of agriculture in India
a. Institutional
b. General
c. Technological
d. All of the above
Answer:
b. General

Question 58.
In the years 2010-11 the contribution of agriculture towards the GDP of the counts was
a. 18.5%
b. 14.2%
c. 20%
d. 14.5%
Answer:
b. 14.2%

Question 59.
Why agriculture is considered as a means of capital formation for the economy
a. It is major source of saving
b. It is a major source of earning
c. It is a large sector of economic activities
d. It has led to the economic progress
Answer:
a. It is major source of saving

Question 60.
Fast economic development of any country can generally happen only
a. When it becomes self sufficient for food
b. When agricultural land has been used to full
c. When there is rapid industrialization
d. When planning commission are set up
Answer:
c. When there is rapid industrialization

Question 61.
Industrialization involves
a. Economic analysis
b. Accountancy
c. Management technique
d. All of the above
Answer:
d. All of the above

Question 62.
Green revolution started in the year
a. 1967-69 with the production of rice and wheat
b. 1967-69 with the production of wheat and barley
c. 1967-68 with the production of rice and wheat
d. 1967-68 with the production of wheat and barley
Answer:
c. 1967-68 with the production of rice and wheat

Question 63.
Period of 1989-1995 was v
a. Idle as there was political unrest
b. Not idle but there was political unrest
c. There were many changes and there was no political unrest
d. There was political unrest so nothing happened in this period
Answer:
b. Not idle but there was political unrest

Question 64.
Some of the economic policies of Government are
a. Industrial policy
b. Fiscal policy
c. Tariff policy
d. All of the above
Answer:
d. All of the above

Question 65.
Match the following:

Name of Revolution Name of Related Commodity
1. Green Revolution (i) Sunflower
2. White Revolution (ii) Marine Products
3. Blue Revolution (iii) Agricultural Crops
4. Yellow Revolution (iv) Milk

a. 1. (iv); 2. (iii); 3. (ii); 4. (i)
b. 1. (iii); 2. (iv); 3. (ii); 4. (i)
C. 1. (ii); 2 (iii); 3. (iv); 4. (i)
d. 1. (i); 2. (ii); 3. (iii); 4. (iv)
Answer:
b. 1. (iii); 2. (iv); 3. (ii); 4. (i)
Hint
Green Revolution -The services enhanced by the Green Revolution is in the agriculture sector of Indian economy.
White Revolution – White Revolution in India made our country self-sufficient in milk and this was achieved entirely through the cooperative society.
Blue Revolution – Blue Revolution means the adoption of a programme to increase the production of fish and marine products.
Yellow revolution – This Revolution in India made our country self-sufficient in oil seeds and also net exporter.

Question 66.
The first industrial policy revolution in independent India was announced in the year-
a. 1948
b. 1949
c. 1950
d. 1951
Answer:
a. 1948
Hint
In 1948, immediately after Independence, Government of India introduced the Industrial PolicyResolution 1948.

Question 67.
The growth strategy adopted in Indias Second Five Year Plan put more emphasis on the growth of-
a. Consumer goods industries
b. Industries producing luxuries and comforts
c. Light capital goods industries
d. Heavy and basic industries
Answer:
d. Heavy and basic industries
Hint
The Second Five year Plan focused mainly on heavy industry as against the First Plan which was essentially an agricultural plan.

Question 68.
Heavy inflows of foreign direct investment to India took place during the period:
a. 1950to 1970
b. 1960to 1975
c. 1980to1995
d. 1995to2010
Answer:
c. 1980to1995
Hint
Heavy inflows of foreign direct investment to India took place during the period 1980-1995

Question 69.
Purchase of equity shares in an Indian joint stock company by a foreigner constitute:-
a. Foreign direct investment
b. Portfolio investments
c. Green investments
d. All of the above
Answer:
a. Foreign direct investment
Hint
A foreign direct investment (FDI) is an investment made by a company or entity based in one country, into a company or entity based in another country.

Question 70.
The time period which is called a “Plan Holiday” is
a. 1961 -1966
b. 1966-1969
c. 1969-1974
d. 1974-1979
Answer:
b. 1966-1969
Hint
Looking at the failures of the third five year plan the planners suspended the impending Fourth Plan, which was due in 1966, until 1969 for a revision of objectives and targets. This came to be called as the ‘Plan Holiday’ extending from 1 April 1966 to 31 March 1969.

Question 71.
The contribution of the agricultural sector to India’s national income in recent years has been about—
a. 50%
b. 30%
c. 25%
d. 15%
Answer:
a. 50%
Hint
Recently the contribution of agricultural sector in national income has been 50%.

Question 72.
Integration of domestic economy with the world economy is called as-
a. Disinvestment
b. Privatization
c. Liberalization
d. Globalization
Answer:
d. Globalization
Hint
Globalisation is the process of international integration arising from the interchange of world views, products, ideas and mutual sharing, and other aspects of culture.

Question 73.
Which one of the following is not true about the Indian economy?
a. Indian population has been rising
b. Output of cereals has been rising
c. Rate of growth of India’s population has been rising
d. The share of work force engaged in agriculture has been falling.
Answer:
b. Output of cereals has been rising
Hint
Agriculture contributes to about 50 % in national income and in year 2009-10 it has come down to 17%.

Question 74.
If the rate of inflation falls down from the current 8% to 6%, the price of your favourite ice-cream may-
a. Fall
b. Rise
c. Remain unchanged
d. None of the above
Answer:
b. Rise
Hint
Inflation is defined as a sustained increase in the general level of prices for goods and services.

Question 75.
The current economic crises in the Euro-zone and the USA have led to-
a. Serious inflation in India
b. Significant fall in the volume of exports from India
c. Heavy fall in agricultural output
d. Sharp rise in the cost of production in the Indian industry.
Answer:
b. Significant fall in the volume of exports from India
Hint
Economic crisis in Europe arise as many of the European member countries were not able to repay or refinance government debt.

Question 76.
Fiscal deficit in India, currently, is financed by
a. Selling the equity in PSUs
b. Raising the interest rates
c. Raising the rate of different taxes
d. Printing of new currency
Answer:
c. Raising the rate of different taxes
Hint
The difference between total revenue and total expenditure of the government is termed as fiscal deficit.

Question 77.
Which of the following is classified as a development bank in India?
a. IOBI Bank
b. ICICI Bank
c. Axis Bank
d. IFCI
Answer:
a. IOBI Bank
Hint
IDBI is known as Industrial Development Bank of India.

Question 78.
Which of the following does not have a fixed tenure?
a. Planning Commission
b. Finance Commission
c. Five year Plan
d. Foreign Trade Policy
Answer:
d. Foreign Trade Policy

Question 79.
NPP was started in which year?
a. 2000
b. 1994
C. 1990
d. 1895
Answer:
a. 2000

Question 80.
Who formulated the first 5 year plan?
a. Pandit Jawaharlal Nehru
b. Abdul Jamal Naseer
c. Broz Tilto
d. None of these
Answer:
d. None of these
Hint
The first five year plan had been made by the planning commission whose objective was to improve the standard of living of the people by effective use of the country’s resources.

Question 81.
Green Revolution was started in :-.
a. First five years plan
b. Second five years plan
c. Third five years plan
d. Seventh five years plan
Answer:
c. Third five years plan
Hint
Green revolution was started as a major development in 1967-68.

Question 82.
Who was the founder of Green Revolution?
a. Norman & Borlang
b. M.S. Swaminathan
c. Joseph Stalin
d. Indira Gandhi
Answer:
b. M.S. Swaminathan
Hint
M.S. Swaminathan is known as “Indian Father of Green Revolution”

Question 83.
When was planning commission started?
a. March, 1950
b. January, 1951
c. February, 1952
d. December, 1951
Answer:
a. March, 1950
Hint
India made a planning commission in March 1950 by a regulation of Government of India.

Question 84.
Which of the following statements is correct?
a. Privatization up to 100 percent has been carried out in all PSU’s in India.
b. Disinvestment never happens in India
c. The disinvestment programme has been successfully carried out in India
d. Under strategic sale market of disinvestment the government sells a major share to strategic buyer.
Answer:
d. Under strategic sale market of disinvestment, the government sells a major share to strategic buyer.
Hint
Disinvestment is an action of an organization or Government in which it liquidates its assets.

Question 85.
The area under irrigation has __________ over the years in India.
a. Remained Constant
b. Decreased
c. Increased
d. First Increased and then Decreased
Answer:
c. Increased
Hint
In 2003 agricultural irrigated land was 29.88% of total agricultural land and in 2010 it was 35.19% which shows that irrigation has increased over the years.

Question 86.
Which of the following Defines Subsistence?
a. Absence of the minimum physical quantities of food required for an individual daily.
b. Absence of good home facilities for an individual
c. Absence of basic cloth availability for an individual
d. All of these
Answer:
d. All of these
Hint
Subsistence agriculture is self-sufficiency farming in which the farmers focus on growing enough food to feed themselves and their families.

Question 87.
In India, which of the following is a reason of failure to achieve industrial production target?
a. Poor planning
b. Power, finance and labour problems
c. Technical complication
d. All are applicable
Answer:
d. All are applicable
Hint
Causes of failure to achieve industrial production targets are

  • lack of finance
  • lack of labour
  • poor planning
  • inadequate infrastructure
  • lack of technology

Question 88.
On which date the first five years plan of India was presented to the parliament?
a. 8 – Aug – 51
b. 8 -Dec-47
c. 8 – Dec – 51
d. 8 – Aug – 47
Answer:
c. 8 – Dec – 51
The first five year plan were presented by Jawahar lal Nehru on 8th December 1951 to the Parliament.

Question 89.
Which of the following was not a part of green revolution?
a. Food grain export
b. Pesticides
c. High yielding variety seeds
d. Fertilizers
Answer:
a. Food grain export
Hint
Green revolution -It was started as a major, development in 1967-68. It included use of high yield seeds, chemicals, fertilizers , improved technology, multiple cropping, etc.. This revolution made the country self-sufficient in food grains.

Question 90.
Which of the following statement is correct?
a. Disinvestment never happens in India
b. Under strategic sale method of disinvestment, the government sells a major share to strategic buyer.
c. Privatisation upto 100 percent has been carried out in allthe PSUs in India
d. The disinvestment programme has been successfully carried out in India.
Answer:
b. Under strategic sale method of disinvestment the government sells a major share to strategic buyer.
Hint
Disinvestment is an action of an organization or Government in which it liquidates its assets .

Question 91.
Which of the following is a basic objective of five year plans in India?
a. Social Justice
b. Rapid Economic growth
c. Full employment
d. All are applicable.
Answer:
d. All are applicable.
Hint
Planning Commission concerns itself with the building of a long term strategic vision of the future and decide on priorities of nation. It works out sectoral targets and provides promotional stimulus to the economy to grow in the desired direction.

Question 92.
Which of the following is a reason for the industrial sector to depend on the agriculture sector?
a. The agriculture sector provides food and other products for the consumption purposes of industrial sector
b. The agriculture sector provides raw materials for the development of agro based industries of the economy.
c. The agriculture sector provides market for the industrial products
d. All are applicable.
Answer:
d. All are applicable.
Hint
India has many favourable factors for the development of industries. The various favourable factors present in the country for the development such as country is rich in natural resources, rich in human resources. Rich in commercial crops, such as sugar-cane, raw cotton, raw jute, tobacco, oil seeds, etc. All these agricultural products are used by Industries.

CS Foundation Business Economics Notes