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Indian Economy between 1950 to 1990, Class XII

The document outlines the Indian economy from 1950-1990, detailing economic systems, planning, and various challenges faced by agriculture and industry. It discusses the goals of five-year plans, issues in agriculture like unemployment and finance, and the reforms introduced to address these issues. Additionally, the document highlights the role of public and private sectors in industrial development, the industrial policy resolution of 1956, and trade policies aimed at import substitution.

Economy & Finance◦
Related topics:
Overview of Indian Economy•Class 11 Studies•
Indian Economy 1950-1990 Class XII Image by: Rupixen.com
Synopsis 1. Economic System 2. Types of Economic System 3. Economic planning 4. Goal of five year plans 5. Problems faced by Indian Agriculture 6. Solutions to solve problems faced by Indian Agriculture 7. Problems under Green Revolution 8. Importance of Subsidies 9. Public and Private sectors in Indian Industrial Development 10. Industrial Policy Resolution, 1956 11. Industrial License 12. Industrial Concessions 13. Small Scale Industries 14. Trade policies: Import substitution Image by: Pinterest.com
Economic System • Economic system is a system of production, resource allocation and distribution of goods and services within a society. • It solves the central problems of the economy. • Central problems includes; What to produce? How to produce? For whom to produce? Image by: Pinterest.com
Types of Economic System 1. Capitalist System: Under this, goods produced are distributed among people according to their purchasing power. 2. Socialist System: Under this, Government decides what goods are to be produced for the benefit of the entire society. 3. Mixed Economy System: Under this, some goods are provided by the market and some are provided by the Government. Image by: kailashafoundation.org
Economic Planning • A system under which set of targets are defined by Central Authority of the country which are to be achieved within a specified period of time, taking resource consideration. • It is based on the principles of mixed economy and it includes economic and social areas of planning. Image by: kailashafoundation.orgImage by: Chethan M
Goals of five year plans • Due to limited resources, a choice has to be made in each plan to give primary importance to specific goals. Image by: kailashafoundation.org Image By: toppr.com • Growth refers to increase in the country’s capacity to produce the output of goods and services within the country. • Modernisation also includes changes in the social outlook such as the recognition that women should have the same rights as men. • Self reliance policy was considered a necessity in order to reduce our dependence on foreign countries to avoid foreign interference. • Equity ensures that the benefit of economic prosperity reaches the poor section instead of being enjoyed only by the rich section. Image by: topperlearning.com
Problems faced by Indian Agriculture • Disguised Unemployment: Meaning more then required people are working on a piece of land, which reflected backwardness and poverty. • Lack of Irrigation facilities: Indian agriculture was highly dependent on rainfall which was unpredictable. • Lack of finance: Farmers were highly dependent on non-institutional sources like moneylenders who charged them very high rate of interest. • Lack of modern inputs: Inputs like chemical fertilizers, insecticides and pesticides was not used due to severe poverty. • Small and scattered holdings: It does not allow use of modern technology. Image by: kailashafoundation.org Image By: toppr.com
Solutions to solve problems faced by Indian Agriculture • Two reforms were introduced to solve the problems faced by Indian agriculturist: 1. Land Reforms: It is also termed as institutional reforms which means change in the ownership of land holdings to achieve equity in agriculture. This reform focussed on abolition of intermediaries and land ceiling. a. Under this reform ownership rights were given to those who actually cultivate the soil. b. Maximum size of land was fixed beyond that limit the land would be taken over by the government. Image by: kailashafoundation.org Image By: toppr.com
Solutions to solve problems faced by Indian Agriculture • Two reforms were introduced to solve the problems faced by Indian agriculturist: 2. Technical Reforms: It is also termed as green revolution which means large increase in production of food grains from the use of High Yielding Variety (HYV) seeds especially for wheat and rice. a. Use of HYV seeds required the use of fertiliser and pesticide in the correct quantities with regular supply of water b. This reform enabled the government to procure sufficient amount of food grains to build a stock in case of food shortage. Image by: kailashafoundation.org Image By: toppr.com
Problems under Green Revolution • Increase in disparities between small and big farmers: Only big farmers could afford the required inputs. Hence, they got the maximum benefit from green revolution and small farmers suffered. • Risk of Pest Attack: HYV seed crops were more prone to pest attack. Any small farmer who adopted this technique could lose everything in a pest attack. Image by: kailashafoundation.org Image By: toppr.com Steps Taken by Government to solve the problems associated with Green Revolution : 1. 2.
Importance of Subsidies • To encourage farmers to test the new technology. • To increase poor farmers purchasing power of required inputs. • To bring equity in agricultural sector. Image by: kailashafoundation.org Image By: toppr.com
Public and Private sectors in Indian Industrial Development • Lack of capital (money) to undertake investment: As Indian industrialist did not have the capital to invest, so public sector played a major role in promoting industrial sector. • Growth with social justice: The decision to develop the Indian Economy on socialist lines led to the state controlling the economy. • Private sector acted as complimentary unit: Public sector had complete control on the core industries required for the economic growth and private sector just played a secondary role. Image by: kailashafoundation.org Image By: toppr.com
Industrial Policy Resolution, 1956 • The IPR classified industries into three categories: Image by: kailashafoundation.org Image By: toppr.com Schedule A: Industries exclusively owned by the state. Schedule B: Industries owned by both the state & private. Schedule C: Industries exclusively owned by the private sector through License Raj. • Industrial licensing policy means rules, regulations, principles, policies and procedures laid down by government for regulating, developing and controlling industrial undertakings in the country.
Industrial Licensing • No new industry was allowed to be set up unless a license was obtained from the Government. • The policy was used for promoting industrialisation in backward regions because it was easier to obtain a license if the industrial unit was set up in an economically backward area to promote regional equality. • Even an existing industry had to obtain a license for expanding or diversifying its production. Image by: kailashafoundation.org Image By: toppr.com
Industrial Concessions • Industrial units were given industrial concessions such as tax benefits and electricity at a lower tariff to encourage establishing their units in the backward regions of the country. • Industrial Concessions promote regional equality. Image by: kailashafoundation.org Image By: toppr.com
Small Scale Industries (SSI) • SSI, is defined with reference to the maximum investment allowed on the assets of a unit. At present the maximum investment allowed is Rs 1 crore. • SSI are more labour intensive and it generate more employment. • Number of products are reserved for these industries. • SSI also get concessions such as lower excise duty and bank loan at lower rates. • In 1955, Karve committee saw the possibility of using Small Scale Industries for promoting rural development. Image by: kailashafoundation.org Image By: toppr.com
Trade Policy: Import Substitution • Import substitution or inward looking trade strategy aims at replacing imports with domestic production. • Protection from imports can be done with the following tools. 1. Through tariffs, which are taxes on imported goods. They make imported goods more expensive and discourage their use. 2. Through quotas, which specify the quantity of goods which can be imported. • Both tools help in restricting imports and protect the domestic firm from foreign competition. Image by: kailashafoundation.org Image By: toppr.com
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