NCERT Indian Economy (1950-1990) Solutions class 12

NCERT Solutions for Class 12 Indian Economic Development Chapter 2 Indian Economy (1950-1990) updated for new academic session 2025-26. Students of CBSE and State Board can get the important questions answers and MCQ of 12th Economics chapter 2 with explanation.

Q. 1 Define a plan

Ans.

Plan is a document showing detailed scheme, program and strategy, worked out in advance for fulfilling an objective.

Q. 2 Why did India opt for planning?

Ans:

At the moment of gaining independence, the Indian economy was experiencing severe challenges. The Gross Domestic Product (GDP), along with both National and Per Capita income, was markedly low, while unemployment rates were alarmingly high. Industrial development was minimal, and the Agricultural Sector was also underperforming. the next important step for the Indian Government was to revive it. So, for the systematic and overall development of Indian economy, India opted for planning.

Q. 3 Why should Plans have goals?

Ans:

Plan is the detailed strategy or set of steps you will take to achieve the predetermined goals, while a goal is the desired outcome or result you want to achieve.

In Short, a goal defines ‘what’ you want to accomplish, and a plan outlines ‘how you will achieve it.

without goals, the planners won’t be able to know which sector of the economy needs to be developed on the priority basis. So, plans should have goals.

Q. 4. What are High Yielding Variety (HYV) seeds?

Ans:

High Yielding Variety (HYV) Seeds are also called the miracle seeds. These seeds are more productive and need regular and adequate irrigation facilities along with proper use of fertilisers and pesticides.

HYV seeds grow faster than the normal seeds and crops can be harvested in a much shorter time period. Apart from time period agricultural yield per acre also increases.

Q. 5. What is marketable Surplus?

Ans.

The portion of agricultural produce, which is sold in the market by the farmers for earning profit, after meeting their own consumption requirement, is know as marketable surplus.

The profit earned can be reinvested into farming operations.

Q. 6. Explain the need and type of land reforms implemented in the agriculture sector.

Ans:-

Need for land reforms:

The land reforms were needed in India because of the following reasons.

(i) Majority of its population depends on agriculture.

(ii) To achieve the objective of equity in agriculture.

Types of Land REeforms:-

The major steps taken under land reforms include:

(a) Abolition of Intermediaries:

Indian Government took various steps to abolish intermediaries and to make tillers, the owners of land.

The abolition of intermediaries meant that some 200 lakh tenants came into direct contact with the government – they were thus freed from being exploited by the Zamindars.

The idea behind this move was that ownership of land would give incentives to the tillers to invest in making improvements provided sufficient capital was made available to them.

(b) Land Ceiling:

Land Ceiling was another policy to promote equity in the agricultural sector.

This means fixing the maximum size of land which could be owned by an individual. The purpose of land ceiling was to reduce the concentration of land ownership in a few hands.

Q. 7. What is Green Revolution? Why was it implemented and how did it benefit the farmers? Explain brief.

Ans:

The term Green Revolution refers to the large increase in the production of food grains resulting from the use of high-yielding variety (HYV) seeds, especially for wheat and rice.

Reasons for Implementation:

(1) At the time of independence, the largest share of workforce with approximately 70-75 % was employed in agricultural sector.

(2) The productivity in the agricultural sector was very low due to use of old outdated technology and the absence of required infrastructure for the vast majority of farmers.

(3) India’s agriculture vitally depends on the monsoon and if the monsoon falls short the farmers were in trouble unless they had access to irrigation facilities.

Benefits of Green Revolution:

(1) Attaining Marketable Surplus:

Green Revolution resulted in ‘Marketable Surplus’. Marketable surplus refers to that part of agricultural produce that is sold in the market by the farmers after meeting their own consumption requirements.

(2) Buffer Stock of Goods Grains:

the green revolution enables to produce sufficient amount of food grains to build a stock which could be used in times of food shortage.

(3) Benefit to low-income groups:

As large proportion of food grains was sold by the farmers in the market, their prices declined relative to other items of consumption. the low-income groups, who spend a large percentage of their income on food, benefited from this price decline.

Q. 8. Explain ‘growth with equity’ as a planning objective.

Ans:

The two most significant features of India’s five year plans are growth and equity.

Growth refers to increase in the country’s capacity to produce the output of goods and services within the country.

On the other hand, Equity refers to an equitable distribution of GDP so that the benefits of increased economic growth are shared equally by all segments of the country’s population.

According to Equity, every India should be able to meet his or her basic needs (food, house, education and health care). Equity aims to raise the standard of living of all people.

Growth refers to an increase in GDP, and equity means social justice.

Only growth will not be able to guarantee the welfare of the people of the country.

So, ‘growth with equity’ helps to achieve planning objective of development with social justice.

Q. 9. Does modernisation as a planning objective create contradiction in the light of employment generation? Explain.

or

“Modernisation as a planning objective shows a dichotomy with employment generation.”. Justify the statement.

Ans.

The given statement is appropriate. Modernisation implies use of advanced technology to enhance productivity at a faster pace. With application of modern technology, higher output is obtained at a relatively lower cost. However, in a labour abundant country like India modernisation may lead to an increase in unemployment as modern technology requires lesser labour per unit of output.

Q. 10. Why was it necessary for a developing country like India to follow self-reliance as a planning objective?

or

Discuss briefly the rationale behind choosing ‘Self-reliance’ as a planning objective for Indian economy.

Ans:

The main reason behind choosing ‘Self-reliance’ as a planning objective for the Indian economy were:

(i) To reduce foreign dependence:

As India was recently free from foreign control, it is necessary to reduce our dependence on foreign countries, especially for food. So, stress should be given to attain self-reliance.

(ii) To avoid Foreign Interference:

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

Q. 11. What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum to GDP of an economy? Comment.

Ans.

Structural composition refers to contribution made by agricultural, industrial and service sector in the gross domestic product of the country.

No, it is not necessary that the service sector contributes maximum to GDP of an economy. However, by 1990, the share of the service sector was the maximum at 40.59%. This phenomenon of growing share of the service sector marked the beginning of globalisation in the country.

Q. 12. Why was public sector given a leading rolin industrial development during the planning period?

Ans. The public sector was given a leading role in industrial development during the planning period because of following reasons:

1. Shortage of Capital with Private Sector:

Private entrepreneurs did not have the capital to undertake investment in industrial ventures, required for the development of Indian economy. At the time of independence, Tatas and Birlas were the only well known Private entrepreneurs. As a result, Government had to make industrial investment through Public Sector Undertakings (PSU’s).

2. Lack of Incentive for Private Sector:

The Indian market was not big enough to encourage private industrialists to undertake major projects, even if they had capital to do so. Due to limited size of the market, there was low level of demand for the industrial goods.

3. Objective of Social Welfare:

The objective of equity and social welfare of the Government could be achieved only through direct participation of the state in the process of industrialisation.

Q. 13. Explain the statement that green revolution enabled the government to procure sufficient food grains to build its stock that could be used during times of shortage.

Ans.

The Green Revolution resulted in the manifold increase in the agricultural production and productivity. As a result, India was able to achieve self-sufficiency in food grains. Green revolution helped in building buffer stocks, which could be used in case of shortage of production.

Q. 14. While subsidies encourage farmers to use new technology, they are a huge burden on government finances. Discuss the usefulness of subsidies in the light of this fact.

Ans.

In India, subsidies are necessary because:

• Majority of the farmers are very poor and they will not be able to afford the required inputs without the subsidies.
• To reduce the income inequality between rich and poor farmers and to achieve the ultimate goal of equity.

So, the government should continue with agricultural subsidies as farming in India continues to be a risky business. However, necessary steps should be taken to ensure that only the poor farmers enjoy the benefits of subsidies and not the fertiliser industry and big farmers.

Q. 15. Why, despite the implementation of green revolution, 65 percent of our population continued to be engaged in the agriculture sector till 1990?

Ans.

65 percent of our population continued to be engaged in the agriculture sector till 1990 because industrial and service sectors were unable to absorb the extra people involved in agriculture.

Q. 16. Though public sector is very essential for industries, many public sector undertakings incur huge losses and are a drain on the economy’s resources. Discuss the usefulness of public sector undertakings in the light of this fact.

Ans.

It is true that many public sector undertakings are incurring huge losses. However, they are still very useful and crucial for the economy. They are needed:

• To create a strong industrial base. Public sector plays and important role in development of those industries which require heavy investment and have long gestation period.
• To develop infrastructure.
• To promote development of backward areas.
• To generate employment opportunities.
• To control and manage industries of strategic areas (like national defense, atomic energy, etc.).

Moreover, public sector is not meant for earning profits but to promote the welfare of the nation. So, they should be evaluated on the basis of their contribution to welfare of the people and not on the profits they earn.

Q. 17. Explain how import substitution can protect domestic industry.

Ans.

The domestic industries of India were not in a position to compete against the goods produced by more developed economies. So, the policy of import substitution helped in protecting them in two ways:

(a) Tariffs: Heavy duty or tariff was imposed on imported goods in order to make them more expensive and to discourage their use.

(b) Quotas: Quotas refer to fixing the maximum limit on the imports of a commodity by a domestic producer.

The tariff on imported goods and fixation of quotas helped in restricting the level of imports. As a result the domestic firms could expand without fear of competition from the foreign market.

Q. 18. Why and how was private sector regulated under the IPR 1956?

Ans.

According to Industrial Policy Resolution (IPR0 1956, the industries were reclassfied into three categories: Schedule A, Schedule B and Schedule C. Out of the three categories, the third category (Schedule C) consisted of the industries which were to be in the private sector. These industries were controlled by the state through a system of licenses, enforced under Industries (Development and Regulation) Act, 1951.

According to Industrial Licensing:

1. No new industry was allowed unless a license is obtained from the government.
2. It was easier to obtain a license if the industrial unit was established in an economically backward area as it will promote regional equality.
3. License was needed even it an existing industry wants to expand output or diversify production.

Q. 19. Math the Following:

1. Prime Minister	A. Seeds that give large proportion of output.
2. Gross Domestic Product	B. Quantity of goods that can be imported.
3. Quota	C. Chairperson of the planning commission.
4. Land Reforms	D. the money value of all the final goods and services produced within the economy in one year.
5. HYV Seeds	E. Improvements in the field of agriculture to increase its productivity.
6. Subsidy	F. The monetary assistance given by government for production activities.

Ans:

1 – (c); 2 – (D); 3 – (B); 4 – (E); 5 – (A); 6 – (F)