MCQ INDIAN ECONOMY 1950-1990

1. Read the following statements carefully:

Statement 1: The purchase of food grains made by the Government on the Minimum Support Price (MSP) is maintained as buffer stock.

Statement 2: Minimum Support Price safeguards the farmers against any sharp fall in farm product prices.

In light of the given statements, choose the correct alternative from the following:

(a) Statement 1 is true and Statement 2 is false.

(b) Statement 1 is false and Statement 2 is true.

(d) Both Statements 1 and 2 are false.

2. Identify the incorrect statement from the following:

(a) Import substitution was the strategy used to save foreign exchange.

(b) License policy ensured regional equality.

(d) Small Scale Industries are one of the essential tools for employment generation.

3. Read the following statements- Assertion (A) and Reason (R). Choose the correct alternative given below:

Assertion (A): The excessive regulation of permit license raj prevented certain private firms from becoming fairly competitive.

Reason (R): Private sector wasted huge amounts in obtaining licenses rather than on improving the product quality and international competitiveness.

Alternatives:

(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, but Reason (R) is not the correct explanation of Assertion (A).

(D) Assertion (A) is false, but Reason (R) is true.

4. Modernization is an important economic planning objective that focuses on ________.

(Choose the correct alternative to fill in the blank)

(i) Adoption of innovative technology

(ii) Equal distribution of income and wealth

(iii) Bringing positive changes in the social outlook

Alternatives:

(A) Only (i)

(B) (i) and (ii)

(D) (i), (ii) and (iii)

5. Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below.

Assertion (A): Post independence, public sector was given a prominent role, due to requirement of huge investments in the secondary sector.

Reason (R): Industrial sector is the backbone of any economy.

Alternatives:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of the Assertion (A).

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion(A).

(d) Assertion (A) is false, but Reason (R) is true.

6. From the following alternatives, identify the correct full form of 'NITI' in NITI Aayog:

(a) National Institution for Tribal India.

(b) National Institution for Technical India

(d) National Institution for Training India

7. In a _________economy, resources are owned and operated by both public and private sectors.

(Choose the correct alternative to fill up the blank)

(a) Socialist

(b) Capitalist

(d) Mixed

8. Read the following statements carefully:

Statement 1: Land ceiling was one of the Government policies to promote equity in the agriculture sector.

Statement 2: Land reforms resulted in abolition of the Zamindari system in the post-independence period.

In light of the given statements, choose the correct alternative from the following:

(A) Statement 1 is true and Statement 2 is false.

(B) Statement 1 is false and Statement 2 is true.

(D) Both Statements 1 and 2 are false.

9. Identify, which of the following alternative is not associated with goals of economic planning in India.

(a) Ensuring equitable standard of living

(b) Technological advancement

(d) Promoting imports of luxury goods

10. Read the following statements — Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): License Permit Raj was a major obstacle for growth of private sector.

Reason (R): Private sector wasted huge amount in obtaining licences, rather than on improving the product, quality and international competitiveness.

Alternatives:

(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).

(D) Assertion (A) is false, but Reason (R) is true.

11. In the first phase of Green Revolution, output was restricted mainly to _________.

(Choose the correct alternative)

(a) Cereals and Pulses

(b) Wheat and Rice

(d) Jowar and 14Bajra

12. _____________is known as the architect of Indian Planning.

(a) Jawaharlal Nehru

(b) P.C. Mahalanobis

(d) Dr. Rajendra Prasad

13. After independence, the rationale behind choosing Modernization as a planning objective for the Indian economy were ___________.

I. To bring positive changes in the social outlook

II. Equitable distribution of income

III. Technological Upgradation

IV. Increase in Economic Divide

Alternatives:

(A) I and II

(B) II and III

(D) l and IV

14. Identify the correct statement from the following:

(A) India adopted the socialistic economic system after Independence.

(B) Indian economic planning was implemented through Five Year Plans.

(D) Policy initiatives in the industrial sector were responsible for decline in Gross Domestic Product (GDP) in India.

15. __________committee was set up for the development and promotion of small-scale industries in India.

a) Karve

b) Tapas Majumdar

c) Mahalanobis

d) TRYSEM

16. 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

17. Second 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

18. 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

19. The shackles of agriculture during the colonial rule Revolution that resulted from the application of ___

I. High Yielding Varieties (HYV) II. Mechanization of Agriculture

III. Chemical Fertilizers and Pesticides IV. Organic Fertilizers and Pesticides

Alternatives:

a) I, II, IV b) I, II, III

c) II, III, IV d) I, III, IV

20. In the post-independence era, the policymakers of India adopted an economic system that fundamentally implies

the coexistence of ______ and ________. (Choose the correct option to fill up the blank)

A. small and large-scale industries

B. small and medium-scale industries

C. public and private sector

D. private and foreign sector

21. Explain briefly the rationale behind the 'License Raj' under the Industrial Policy Resolution, 1956.

Ans. The aim of License Raj under the Industrial Policy Resolution 1956, was to keep the private sector under control. No new industry was allowed unless a license was obtained from the Government. This policy was used for ensuring regional equality.

22. Elaborate the reasons owing to which the private sector was regulated under the Industrial Policy Resolution, 1956.

Ans. The Industrial Policy Resolution, 1956 regulated the private sector through a system of licenses. This policy aimed at achieving regional equality. The government made it relatively easier to obtain an industrial license, for industrial units to be established in economically backward areas. Moreover, to ensure judicious use of resources owned by the private sector, licenses were needed for expanding/diversifying output by existing industrial units.

(To be marked as a whole)

23. “Every coin has two sides - debate over farm subsidies is one such classic example of the same.” Justify the given statement with two arguments each in favour of and against the continuation of the farm subsidies.

“Farm subsidies put a huge burden on the government finances, but are necessary for the poor and marginal farmers.” Justify the given statement.

Ans. The introduction of farm subsidies had been an opinionated step taken by the Government of India. Arguments in favour of continuing farm subsidies:

• Eliminating subsidies may increase inequalities of income between rich and poor farmers.

• Most farmers (small and marginal) may not be able to afford expensive agricultural inputs without subsidies.

Arguments against farm subsidies:

• It is often argued that farm subsidies have helped the fertilizer industry much more than helping the needy farmers.

• Economists argue that subsidies are a huge burden on government’s finances.

24. State the importance of “Growth with equity” as the objective of Indian economic planning.

Ans. For a nation, both growth of Gross Domestic Product (GDP) and equity in distribution of income are equally important. Growth refers to an increase in a country’s capacity to produce goods and services. Equity refers to reductions in inequality of income and wealth. Growth with equity ensures that the fruits of economic development are enjoyed by all sections of society equitably. Hence, achieving equitable growth is an important objective that was taken into consideration in the Indian economic planning.

25. Discuss any two merits and demerits of the Green Revolution in the agricultural sector in the Indian Economy.

Ans. Merits of Green Revolution:

• Green revolution enabled India to achieve self-sufficiency in foodgrains. This led to the creation of buffer stocks in India.

• The farmers’ income increased substantially due to increase in marketed surplus.

Demerits of Green Revolution:

• As the HYV technology was easily accessible to big farmers, it increased the disparities of income between big and small farmers.

• The HYV crops were more prone to pest attacks.

(any other valid argument/explanation to be allotted marks accordingly)

26. The shackles of agriculture during the colonial rule were permanently broken by the Green Revolution that resulted from the application of ___. (Choose the correct alternative to fill up)

I. High Yielding Varieties (HYV) II. Mechanization of Agriculture

III. Chemical Fertilizers and Pesticides IV. Organic Fertilizers and Pesticides

Alternatives:

a) I, II, IV b) I, II, III

c) II, III, IV d) I, III, IV

27. Read the following text carefully:

India's industrial policy since independence has been shaped broadly in terms of the Industrial Policy Resolution of 1948. It emphasized on the sole responsibility of the government in the matter of promoting, assisting and regulating the development of industries in the national interest. It envisaged an active and dominant role of public sector. The next Industrial Policy Resolution was placed before the Parliament by the Prime Minister on 30th April, 1956. It suggested that, "There is a need for adoption of the socialist pattern of economy as the national objective, along with the need for planned and rapid development. It required that all industries of basic and strategic importance, or in public utility services, should be in the public sector. Other industries which are essential and require investment on a massive scale (which only the State could provide) have also to be in the public sector. Thus, the State has to assume direct responsibility for the future development of industries." This Resolution classifies industries into three categories:

• The first category given in Schedule A, consists of industries the future development of which will be the exclusive responsibility of the State.

• In the second category given in Schedule B, are industries which will be progressively State-owned. However, in them, private enterprise will also be expected to participate.

• The third category comprises all the remaining industries, the further development of which will be left to the initiative and enterprise of the private sector.

On the basis of the given text and common understanding, answer the following questions:

(A) “The Government of India, in the initial years of economic development, emphasized on a greater role of the public sector in the industrial development.” Justify the statement, giving reasons in support of your answer.

Ans. In the initial years of economic development, the Government of India emphasized on a greater role of the public sector in the industrial development as industrialists did not have the capital to undertake the investment in industrial ventures. The market was not big enough to encourage industrialists to undertake major projects.

(To be marked as a whole)

(B) Outline and discuss the classification of industries into various categories as per Industrial Policy Resolution, 1956.

Ans. Industrial policy Resolution 1956 classifies industries into three categories:

• The first category given in Schedule A, consists of industries the future development of which will be the exclusive responsibility of the State.

• In the second category given in Schedule B, are industries which will be progressively State-owned.

However, in them, private enterprise will also be expected to participate.

• The third category comprises all the remaining industries, the further development of which will be left to the initiative and enterprise of the private sector.

28. Read the following text carefully:

With independence, India chose the closed economy model in pursuit of its objective of industrial self-sufficiency.

As a result, industrial structure has become considerably important. In the post-independence era, the industrial growth was rapid during the first two decades, especially during the Second and Third Plan period. The Second Plan introduced ‘Industrial Revolution’ in the country. The main reasons for high rates of industrial growth witnessed during this period were due to:

(i) Emphasis on industrialisation in economic policies.

(ii) Making industrial growth the main objective in the industrial policy and planning.

(iii) Huge investments being made to support capacity creation in industrial sector (

(iv) Growing demands for a variety of new products on the part of the urban consumers and the relatively better-off sections of the society.

(v) Pace of economic expansion supported by domestic savings and inflow of resources from abroad.

On the basis of the given text and common understanding, answer the following questions:

Q1. State the time period of the Second Five Year Plan of India.

Ans. 1956 to 1961

Q2. Who is considered as the Father of the Second Five Year Plan of India?

Ans. P C Mahalnobis

Q3. Discuss briefly any two reasons behind the industrial growth during the Second and Third Five Year Plans of India.

Ans. Two reasons behind the industrial growth during the Second and Third Five Year Plans of India were: -

• Growing demands for a variety of new products on the part of the urban consumers and the relatively better-off sections of the society.

• Pace of economic expansion supported by domestic savings and inflow of resources from abroad.

(Any other valid argument to be allotted marks)

29. Discuss any two salient features of Indian industrial sector during the period of 1950-1990.

Ans. Two salient features of Indian Industrial Sector during the period of 1950-1990 are:

• Public sector was assigned a predominant role in the process of industrial development of the economy.

• Small scale industries were promoted with an objective to generate employment opportunities in the economy.

(Any other valid feature to be awarded marks)

30. Read the following text carefully: (NCERT Picture based)

Adoption of Village by Parliamentarians in October, 2014, the Government of India introduced a new scheme called Saansad Adarsh Gram Yojana (SAGY). Under this scheme, Members of India's Parliament need to identify and develop one village from their constituencies. To begin with, MPs can develop one village as a model village by 2016, and two more by 2019, covering over 2,500 villages in India. According to the scheme, the village can have a population of 3,000 - 5,000 in the plains and 1,000 -3,000 in the hills and should not be the MP's own or their spouse's village. MPs are expected to facilitate a village development plan, motivate villagers to take up activities and build infrastructure in the areas of health, nutrition and education.

On the basis of the given text and common understanding, answer the following questions:

1. State and discuss, any two objectives which the Government of India wanted to achieve through ‘Saansad Adarsh Gram Yojana (SAGY)’.

Ans. Two objectives of ‘Saansad Adarsh Gram Yojana (SAGY)’:

• Identify and develop one village: Under this scheme, Members of India's Parliament need to identify and

develop one village from their constituencies.

• Facilitate village development plan: To build infrastructure in the areas of health, nutrition and education.

2. State the yardsticks for selecting villages under the SAGY Scheme.

Ans. As per the Saansad Adarsh Gram Yojana (SAGY):

• The village can have a population of 3,000 - 5,000 in the plains and 1,000 – 3,000 in the hills.

• The village should not be the MP’s own or their spouse’s village.

(Any other valid explanation to be allotted marks)

31. Discuss briefly the role of small-scale industries in the growth Journey of India.

Ans. Small scale industries (SSIs) have played a significant role in the growth journey of India. Small-scale industries require less capital and are highly labour intensive. Thus, in a labour abundant economy like India SSIs have generated employment opportunities in both rural and urban areas. Moreover, SSIs have the potential to utilize limited funds more judiciously to generate revenue for their investors. Hence, SSIs have contributed immensely to the GDP of the India economy.

32. Goals of Equity was fully served by ‘abolition of the intermediaries’ in agriculture in the postindependence period of India. Do you agree with the given statement? Support your answer with valid arguments.

Ans. No. The goal of equity was not fully served by abolition of intermediaries, as in some areas the erstwhile zamindars continued to own large areas of land by making use of the loopholes in the legislation. There were cases where tenants were evicted and the landowners claimed to be self-cultivators. Even when the tillers got ownership of land, the poorest of the agricultural labourers did not benefit from land reforms. (To be marked as a whole)

33. Explain the need and type of land reforms implemented in the agriculture sector.

Ans. After independence, the government of India initiated several land reforms to achieve the objective of equity in the agriculture sector. Major land reforms introduced were:

• Intermediaries were abolished to make tillers the owners of the land and to save them from being exploited by Zamindars.

• Land ceiling was implemented to reduce the concentration of land ownership in few hands.

34. A) Name any one Maharatana company.

Ans. Indian Oil Corporation Limited

B) ‘Land ceiling promotes equity.’ Support the given statement with 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 land ceiling was to reduce the concentration of land ownership in few hands and promote equity.

(C) 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 transformation of Indian agriculture, such as:

i) Land ceiling – It ensured reduction of concentration of land ownership in few hands.

Ii) Abolition of Zamindari system – It focused on elimination of farmers’ exploitation and promotion of agricultural growth.

These reforms have led to stability of farming as an occupation and promoted equity.

35. “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. Justify the statement, giving reasons in support of your answer.

Ans. Before the advent of 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 marketed surplus and converted India into a food surplus economy from the food scarce one.

36. “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 policy makers of independent India introduced land reforms such as land ceiling, 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.

37. ‘Under the Industrial Policy Resolution (IPR) 1956 in India, the system of industrial licensing was introduced to promote regional equality.’ Justify the given statement with valid arguments.

Ans. Under the Industrial Policy Resolution (IPR) 1956, the policymakers reserved a category of industries for the private sector, however, the sector was kept under state control through a system of licenses. No new industry was allowed unless a license was obtained from the government. It was easier to obtain a license if the industrial unit was established in an economically backward area. In addition, such units were given certain benefits such as tax holidays and subsidised electricity. The purpose of this policy was to promote regional equality.

38.Explain the rationale behind choosing 'Self-reliance' as a central planning objective in India's development strategy.

Ans. 'Self-reliance' was adopted as a central planning objective in India's development strategy by the policymakers due to the following reasons:

• To reduce the dependence on foreign nations, the stress was laid on mobilising domestic resources.

• It was feared that the dependence on imported food supplies, foreign technology, and foreign capital may increase foreign interference in our policies.

39. “Despite the implementation of Green Revolution, 65 per cent of India’s population continued to be engaged in the agriculture sector till the 1990s.” Justify the given statement with valid explanation.

Ans. Some economists argue that Green Revolution did not make much impact on the occupational structure of the country, as 65% of India’s population continued to find its livelihood in agriculture. A major reason for this fairly large proportion of population in agricultural sector as the industrial and service sector were not able to absorb the people working in the agricultural sector.

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

Explain.

Ans. At the time of independence, the Indian industrialists lack the financial and technical resources needed for the nation to be modernized and self-sufficient. Also, the market was not big enough to encourage industrialists to undertake major projects even if they had the capital to do so. Moreover, the decision to develop the Indian economy on socialist lines made it essential for the public sector to take the leading role.

41. . _____________revolution was the harbinger of major changes in the credit system as it led to diversification

of the portfolio of rural credit towards production-oriented lending. (Choose the correct alternative to fill up the

blank) (a) White

(b) Silver

(d) Green

1. Ans. (c) Both Statements 1 and 2 are true.

2. Ans. (c) Russian economic model was the base for the Indian economic system.

3. Ans. (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion(A).

4. Ans. (C) (i) and (iii)

5. Ans. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of the Assertion (A)

6. Ans. (c) National Institution for Transforming India

7. Ans. (d) Mixed

8. Ans. (C) Both Statements 1 and 2 are true.

9. Ans. (d) Promoting imports of luxury goods.

10. Ans. (A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

11. Ans. (b) Wheat and Rice

12. Ans. (b) P.C. Mahalanobis

13. Ans. (C) I and III

14. Ans. (B) Indian economic planning was implemented through Five Year Plans.

15. Ans. a) Karve

16. Ans. b) 1948

17. Ans. d) 1956

18. Ans. d) Growth, Equity, Modernisation, Self-Reliance

19. Ans. b) I, II, III

20. Ans. C. public and private sector

26. Ans. b) I, II, III

41. Ans. (d) Green

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MCQ INDIAN ECONOMY 1950-1990

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