Which of these statements about the Bombay Plan is incorrect ?
- It was a blueprint for India’s economic future.
- It supported state ownership of industry.
- It was made by some leading industrialists.
- It supported strongly the idea of planning.
(i) It was a blueprint for India’s economic future.
Which of the following ideas did not form part of the early phase of India’s development policy ?
- Cooperative Farming
The Idea of Planning in India was drawn from
- The Bombay Plan.
- Experiences of the Soviet bloc countries.
- Gandhian Vision of Society.
- Demand by Peasant Organisation.
- b and d only
- d and c only
- a and b only
- all the above.
(iii) (a) and (b) only.
Match the following :
- Charan Singh
- P.C. Mahalanobis
- Bihar Famine
- Verghese Kurien
1. (c) 2. (a) 3. (b) 4. (d)
What were the major differences in the approach towards development at the time of independence ? Has the debate been resolved ?
Which two models of modern development were there before India on the eve of independence ? Which model did India decide to choose and why ?
Examine the different areas of agreements and disagreements with respect to the model of economic development to be adopted in India after independence.
At the time of Independence India had before it two models of development : the Liberal-Capitalists Models and Socialist Model. Liberal-Capitalists Model was followed by Europe and the United States, whereas Socialist Model was followed by the U.S.S.R. and other communist countries. In India there were many leaders and scholars who were highly impressed by the Soviet Model of development. Communist Party, Socialist Party and even Democrate Socialists like Pt. Nehru within the Congress were supporters of Soviet Model of development. There were few supporters of Capitalists Model of development. The Nationalist leaders were very clear about the responsibility of the government. According to them, it is the responsibility of the government to remove poverty and to ensure proper economic redistribution.
What was the major thrust of the First Five Year Plan ? In which ways did the Second Plan differ from the First one ?
The objective of the First Plan was to rehabilitate the economy disrupted on account of World War II and partition of the country and to increase the production of foodgrains, Cotton and Jute. The priority was given to the development of agriculture. Target of increased production of foodgrains, Jute and Cotton was mainly achieved by bringing more land under cultivation. But in the Second Five Year Plan (1956–61) top priority was accorded to the setting up of ‘Socialistic Pattern of Society’ on the basis of Industrial Policy statement 1956. In the Second Plan major thrust was to accelerate the process of industrialisation by laying emphasis on basic and heavy industries. In the Second Plan the share of industries in the public sector outlay increased from 5 per cent to 24 per cent and that of agriculture and irrigation decreased from 37 per cent to 21 per cent.
What was Green Revolution ? Examine any two positive and two negative consequences of Green Revolution.
In 1960s, India was facing food crisis due to many reasons. India was dependent on the U.S.A. for food which was putting many limitations on India’s policies. Indian Government decided to make India self-sufficient in food. Hence the government adopted a new strategy for agriculture in order to increase food production. Since the mid 1960s, the traditional agricultural practices were gradually replaced by modern technology. Use of high-yielding variety seeds and the increased use of fertilisers and irrigation are simply called Green Revolution or modern agricultural technology. As a result of Green Revolution, area under improved seeds has gone up from about 15 million hectares during 1970–71 to nearly 75 million hectares in 1995–96. The new varieties are of a short term duration and consequently, instead of growing one crop, two crops and sometimes even three crops are grown. The major benefits of the Green Revolution were experienced mainly in northern and north western India. Unprecedented enthusiasm has prevailed among farmers in Punjab, Haryana, Delhi, Rajasthan and Western U.P. for the new wheat variety seeds and a situation developed in which the demand for seeds by farmers exceeded the supply. Economic Results/Positive Consequences of the Green Revolution.
- The major achievement of the Green Revolution was to boost the production of major cereals, viz. wheat and rice.
- As a result of the Green Revolution, the crop pattern in India has undergone significant changes.
- Green Revolution largely increased the growth of local manufacturing sector which created new jobs and contributed to the country’s GDP.
- India became self-sufficient in food and India was in a position to pay back all loans it had taken from the World Bank for the purpose of Green Revolution.
- Green Revolution has helped the growth of capitalist farming in India and has led to the concentration of wealth in the hands of the top 10 per cent of the rural population.
Political Results of the Green Revolution.
- India became self-sufficient in food and thus India’s prestige increased in the world, especially in the third world.
- Green Revolution was a big factor in making Smt. Indira Gandhi and Congress Party more powerful.
Two Negative Consequences of Green Revolution
- Green Revolution led to the concentration of wealth in the hands of top 10 per cent of the rural population. Green Revolution had widened the gap between poor and small farmers and rich landlords.
- Green Revolution has proved beneficial to the medium category peasants because they could receive the advantage of mediation between small farmers and rich landlords.
State the main arguments in the debate that ensued between industrialisation and agricultural development at the time of the Second Five Year Plan.
The Second Five Year Plan stressed on heavy industries. Indian planners, Prof. P.C. Mahalanobis, was the real architect of the Second Plan. He adopted a strategy which emphasised investment in heavy industry to achieve industrialisation which was assumed to be the basic condition for rapid economic development. For Jawaharlal Nehru, the first Prime Minister of India, the development of heavy industry was synonymous with industrialisation. For Pt. Jawaharlal Nehru industrialisation meant development of heavy industries.
In fact, there was a big debate whether more importance should be given to industries or agriculture. Many thought that the Second Plan lacked an agrarian strategy for development, and emphasis on industry caused agriculture and rural India to suffer. Ch. Charan Singh, a Congress leader who later formed Bharatiya Lok Dal, forcefully articulated the case for keeping agriculture at the centre of planning for India. He was of the view that planning was increasing the prosperity in urban and industrial sector at the cost of farmers and rural people.
However, the planners justified their strategy of rapid development through rapid industrialisation.
- The planners felt that the country with its vast natural and human resources was ideally suited for industries.
- Indian agriculture was suffering from heavy population pressure on land. One method of reducing this pressure of population on land was to shift the surplus population to industries.
- Rapid industrialisation was an essential condition for the development of not only agriculture but also for all other sectors in the country.
- Rapid increase in national and per capita income would be possible only through rapid industrialisation.
Indian policy makers made a mistake by emphasising the role of state in the economy. India could have developed much better if private sector was allowed a free play right from the beginning. Give arguments for or against this proposition.
There are two models of development, i.e. Capitalist Model or Liberal model and Socialist Model. But India did not accept any one of the two models. India adopted neither capitalistic model nor socialist model. India adopted ‘Mixed Economy.’ In ‘Mixed Economy’ public sector and private sector go together. Liberal, Rightists and many critics of Indian economy are of the view that ‘‘Indian policy makers made a mistake by emphasising the role of state in the economy. They are of the view that India could have developed much better if private sector was allowed a free play right from the beginning.’’
Inspite of the fact that India adopted a planned economy. The speed of economic development was very slow. Rate of capital formation was 6% whereas it should have been 12 per cent. Hence during the regime of Sh. Rajiv Gandhi, important changes were made in the economic policy. The policy of liberation and privatisation was adopted. Efforts were made to remove restrictions on the private sector. All restrictions were removed on cement industry. Licences were removed on 94 medicines and 27 industries were out of the M.R.T. P. Act.
Arguments in Favour of Private Sector. Following are the main arguments in favour of privatisation :
- Full Utilisation of Natural Resources.
India is a rich country but Indians are poor. In India natural resources are not fully utilised due to lack of technology and scientific means. Liberalisation and Privatisation will be helpful in utilising the natural resources.
- Production will Increase.
Liberalisation and privatisation will increase the production and there will be no shortage of commodities. In India before liberalisation there was a big shortage of cement, scooters, carts, etc. But now there is no shortage because production has increased to a large extent.
- Increase in Efficiency.
Privatisation increases efficiency in industries. In private sectors employees are selected purely on the basis of merit system. Each employee works according to his ability and competence. Lazy and inefficient employees have no place in private sector.
- High Rate of Return.
Due to privatisation there is more savings and hence there is heavy investment in industries.
Arguments Against Privatisation. Following are the main demerits of liberalisation and privatisation:
- Increase in Unemployment. Liberalisation and privatisation increase unemployment because modern machines are used to increase the efficiency. Modernisation in industries means more unemployment.
- Increase in Prices. Privatisation will increase the prices because industrialists will fix the prices of their own sweet will.
- Exploitation of Workers. Industrialists exploit the workers. Workers have to work more but they are paid less wages.
- Class Struggle. In privatisation class struggle increases between the industrialists and the workers. Conclusion. Present age is an age of globalisation and it is very essential for India to be a part of world economy. Hence India has rightly adopted liberalisation. In the beginning, Mixed Economy was the best. Even now denationalisation of all the industries is not in the interest of the nation. Public sector should be modernised and it should not be eliminated completely.
Read the following passage and answer the questions below :
‘‘In the early years of Independence, two contradictory tendencies were already well advanced inside the Congress party. On the one hand, the national party executive endorsed socialist principles of state ownership, regulation and control over key sectors of the economy in order to improve productivity and at the same time curb economic concentration. On the other hand, the National Congress Government pursued liberal sole criterion of achieving maximum increase in producion.’’ —Francine Frankel
- What is the contradiction that the author is talking about ? What would be the political implications of a contradiction like this ?
- If the author is correct, why is it that the Congress was pursuing this policy ? Was it related to the nature of the opposition parties ?
- Was there also a contradiction between the central leadership of the Congress party and its state level leaders ?
- According to Francine Frankel, there
were two contradictions :
- National party executive endorsed socialist principles of state ownership, regulation and control.
- The National Congress Government pursued liberal economic policies and incentives to private investment.
- The author is correct. The Congress was pursuing this policy under political compulsion. This was definitely related to the nature of opposition parties.
- In fact, there was a contradiction between the central leadership of the Congress party and its state level leaders.