#IndianEconomy1950-1990 #Economic Planning #Five Year Goal Measures #Industrial Resolution

1. Kishan Lal Sharma (BBA, MBA) 1

2. Introduction: After independence it is the most important task of the government to
decide which type of economic system is suitable for India.
Economic System- arrangement by which central problems of an economy are solved.
Central Problems of an Economy:
 What to Produce
 How to Produce
 For Whom to Produce
Kishan Lal Sharma (BBA, MBA) 2

3. Capitalist Economy- means of production are owned. controlled and operated by private
sector.
 What to Produce- only those produced that can be sold profitable either in the domestic or in
the
foreign market.
 How to Produce- goods are produced using cheaper techniques of production.
 For Whom to Produce- based on income or purchasing power.
Socialist Economy- Means of production are owned, controlled and operated by
Government.
 What to Produce- govt. decides according to the society's needs.
 How to Produce- govt. decides how the goods are to be produced.
 For Whom to Produce- based on need, helping citizens.
Mixed Economy- both public and private sector are allotted respective roles for solving
economy's central problems.
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4. Economic Planning:- planning by govt. (what, how, and for whom to produce) on the
basis of survey to develop the economy.
To make planning effective govt. set up Planning Commission in 1950, with PM as chairman. In
this we do effective uses of resources. Planning commission fixed the planning period as 5
years.
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5. Mahalanobis: The Architect of Indian Planning
Prasanta Chandra Mahalanobis- Born on 29th June, 1893 in Calcutta(Kolkata). Education-
Presidency College in Calcutta and at Cambridge University in England. Establish- The Indian
Statistical Institute (ISI) in Calcutta. Studies in anthropometry. Died on 28 June, 1972.
Price Act As Signals- Higher Price-demand more than supply. Lower Price-Supply more than
demand.
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6.  Growth- it means steady increase in GDP, capital, transport and banking services.
 Modernization- new technology, equal rights to both the genders.
 Self-Reliance- use of domestic resources, avoid foreign interference.
 Equity- promote social justice, equal rights to rich and poor, equal distribution of wealth.
Agricultural Development:- During the British rule agriculture was underdeveloped.
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7.  Land Reforms- change in ownership of land holdings. Need-to achieve the objective of
equity in agriculture.
 Abolition of Intermediaries- single ownership, no lagaan, no zamindars.
 Land Ceiling- fixing limit of land, owned by an individual. Extra land will be given to
small or landless owners.
 Promote equity in agriculture.
Conclusion of Land Reforms- Successful in - Kerala, West Bengal.
Green Revolution- large increase in production of food grains due to use of HYV seeds.
Latest irrigation techniques used.
HYV Seeds: Main Reason for Agricultural Revolution- used in that places where drainage and
water supply is proper.
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8.  Attaining Marketable Surplus- farmers get large production, and by this they
can retain for their own consumption and also sold in the market and earn by this.
 Buffer Stock of Food Grains- govt. retain some stock, this can be utilized at the
time of food shortage.
 Benefit to low-income groups.
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9.  Risk of Pest Attack- HVY seeds are more prone to pest attacks. This can be controlled
only by services of research institutes.
 Risk of Increase in Income Inequalities- HYV seeds are expensive so small
farmers can't afford it. To avoid all these things govt. provided loans at low interest to small
farmers.
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10. Debate Over Subsidies to Agriculture:- firstly govt. is providing subsidies to
farmers for buying HYV seeds but later on debate start on this.
 Economists in Favour of Subsidies:
 Small farmers to adopt latest techniques.
 Reduce inequality
 Poor or small farmers not afford to buy.
 Economists against the Subsidies:
 when the purpose is completed it should be stopped.
 Burden on govt. finances.
 Not reaching the right person.
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11. Industrial Development:- a country can be called developed only when its
industrial sector is developed, it generated employment, promote modernization, overall
prosperity.
Benefits of Industrialization:
 increase in per capita income.
 increase in employment and skilled labour.
 diversification of market.
 facilities like railways, power generation etc.
 earning foreign money.
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12. Shortage of Capital with Private Sector- only two private players were at the
time of independence - Tata's and Birla's. So govt. have to borrow capital from PSU's.
Lack of Incentive for Private Sector-govt. was not encouraging private
sector.
Objective of Social Welfare-govt. directly take participation
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13. Policy essential for procedures, principles and regulations for controlling industrial sector.
After industrial policy, 1948- India faces major political and economic changes, due to this govt.
introduce a fresh policy-on 30th April, 1956 (industrial policy resolution).
 Classification of Industries:-
 Schedule A-
comprises of Industries exclusively owned by state.
 Schedule B-
comprises of 12 industries, which would be progressively state-owned.
 Schedule C-
comprises of remaining industries which were to be in the private sector.
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14. Written permission from the govt. to manufacture goods to an industrial unit.
 License for :
 Setting up new industries
 Expansion of existing industries
 Diversification of products
 According to Industrial Licensing:
 No new industry can work with license.
 Easily obtain license for industries in backward areas. Promote regional equality.
 License for expansion given, if govt. feels right.
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15. To promote rural development. Limit to 5 crores for limited things like hosiery, hand tools,
stationery items, sports goods etc.
 Points about SSI:
 Employment Generation- it is labor intensive. Provide more employment to
women, in rural areas.
 Need for Protection from Big Firms- reserve their rights of production, giving
concession and subsidies.
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16.  Trade Policy: Import Substitution- protect domestic industries from foreign competition.
 Two Objectives:
1) Savings of precious foreign exchange
2) Achieving self-reliance
 Protection from Imports through Tariffs' and 'Quotas'
 Tariffs- taxes on imported goods. Imported goods make expensive and discourage their use.
 Quotas- fixing maximum limit on imports by domestic producer. With both of these
domestic firms can work or expand without any fear of competition.
 Reason for Import Substitution:
 India is not able to compete with other countries, with this protection they can compete.
 Risk of drain of foreign exchange.
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17. Proportion of GDP increased.
Industrial sector became well diversified
Promotion of small-scale industries.
Protection from foreign competition.
Licensing Policy to control and monitor industrial production. vi) Public sector, create strong
industrial base.
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18. Thank You!
Kishan Lal Sharma (BBA, MBA) 18