QUE1- Differentiate between development and growth.

ANS1Growth
Single dimension i.e. increase in
output alone.
Quantitative change i.e. change in
national and per capita income.
Gradual and steady change in the long
run.
Growth is possible without
development.
Continuous change.

Development
Multi-dimensional i.e. more output and
changes in technical and institutional
arrangements.
Qualitative change i.e. change in
composition and distribution of national
along with per capita income.
Discontinuance and spontaneous
change.
Growth to some extent is essential for
development.
Discontinuous change.

QUE2- Discuss the role of agriculture and industry in growth and

economic development of
India.
ANS2- (a) Role of agriculture
During the five-year plans, the contribution of agriculture to the national income in
different years has been ranging between 61 per cent and 14.8 per cent. Agriculture
provides employment to 51 per cent of the workforce in India, and therefore, it is
considered the backbone of the Indian economy. Agricultural products constitute 9 per
cent of our exports and manufactures from agricultural items like cloth, sugar and
jute contribute to another 11 per cent of Indias export. Agriculture also plays an
important role in the industrial development of the economy. Raw materials like
sugar, jute, cotton, ground-nut and oilseeds are supplied by the agricultural sector to
the agro based industries. A market for the industrial products is also directly and
indirectly provided by agriculture. Agricultural sector consumes industrial products
like chemical fertilizers, pesticides, insecticides, and small tools and equipment,
directly.
Agricultural sector success indirectly increases the power of the people to purchase
industrial products. Thus, agriculture occupies an important position in the Indian
economy. An economys rapid development depends on the smooth and sustained
growth in the agricultural sector. In 2011, India had a huge and diverse agricultural
sector, and this accounted for about 16 per cent of GDP and 10 per cent of export
earnings. After United States of America, India has an arable land area of 159.7
million hectares (394.6 million acres) and this is the second largest in the world. India
has the largest gross irrigated crop area of 82.6 million hectares (215.6 million acres)
in the world. India is amongst the top three global producers of crops, like wheat, rice,
pulses, cotton, peanuts, fruits, and vegetables. In 2011, India had the highest number
of buffalo and other cattle, and was the largest producer of milk. It also has one of the

largest and fastest growing poultry industries in the world. In the last 60 years,
agriculture in India has shown an increase in average output per hectare. Over 40
years, farm productivity has increased between 40 per cent and 50 per cent and this is
due to improved roads and power generation infrastructure, knowledge gains and
reforms. Indias crop yields from around 30 per cent to 60 per cent of the best crop
yields from the farms of developed and other developing countries. However, loss of
produce after harvest because of poor infrastructure and unorganized retail has cost
India a large part of the expected revenue.
(b) Role of industry
The Gross Domestic Product (GDP) of an economy requires contribution from major
industries and in India agriculture makes a major contribution to the GDP. Though
there has been a slowdown in the Indian economy because of the global recession, it
still has huge potential for expansion.
Trends of Improvement
Automobile industry, steel industry, real estate industry, tourism industry, energy
sector, textile industry, airlines industry, medical industry, biotechnology industry,
electronics and hardware and the power industry contribute towards the Indian GDP.
Biotechnology sector, though very young, is growing at a very fast pace and is
expected to contribute in a bigger way to the GDP in the near future. By the end of FY
2012-13, the biotechnology sector generated $ 4.3 billion revenue for the Indian
economy. Even the real estate sector has made significant contributions to the Indian
GDP. The automobile industry is another sector that also makes good contribution to
the economy of India. The sectoral composition of the GDP (in terms of its relative
shares) undergoes a change depending on the relative performance of different
sectors. In India, however, the services sector became the dominant sector, without a
significant increase in the industrial sector. In fact, the share of the industrial sector in
GDP has remained in the range of 25-29 percent since the late 1960s. A decline in the
share of the agricultural sector has been offset by an increase in services sector since
then.
QUE3- Explain the objectives of economic planning in India.
ANS3- Objectives of Economic Planning in India
From the First Five-Year-Plan itself, it was very clear which objectives regarding
economic planning needed to be achievedmaximum production and full employment
and attainment of social equalityboth of which had to be pursued in conjunction
with each other and not exclusively. However, each Five-Year Plan had to implement
different policies and employ different strategies, in order to achieve these objectives,
and show an increased GDP at the same time. With the completion of each Five-Year
Plan, the government learnt new lessons
and gathered new perspectives, which it tried to implement in the next plan.
So largely, the two sets of objectives have been:
Economic planning and removal of poverty, which includes rapid economic
growth and increase in employment. The basic aim of economic planning in

India is to bring about rapid economic growth through development of

agriculture, industry, transport and communications and all other sectors of
the economy. Indian planners aim at increasing national and per capita
incomes on the assumption that the continuous increase in these would reduce
and eventually remove poverty and misery and raise the standard of living of
the masses. Unemployment and under-employment have been significant
causes of poverty in India for the last 60 years. Hence, their removal or
reduction has always figured as an objective of economic planning.
Accordingly, all the Five Year Plans had programmes of economic growth, with
increase in employment as inherent in the development programmes.

Economic planning and social justice, which included reduction of inequality of

incomes and establishment of a social society. A very small group of persons in
India are better off than the rest, such as rich landlords in villages, merchants,
industrialists, top government officials, bankers and so on. Most people
however are living in poor and squalid conditions. Even though reduction of
income inequalities has always been mentioned as one of the objectives in all the
five-year plans, in terms of priority it always got a low position. Besides this,
the Indian planners have always visualized the establishment of a social society
where everyone would have equal opportunities in terms of education,
employment etc. Accordingly, the first three plans talked of the setting up of a
socialist pattern of society. The fourth plan talked about the establishment of a
social and economic democracy and so on. However, Indias definition of
economic democracy is different from the rest of the worlds. In India, the broad
definition of economic democracy is the availability of opportunities for
education, public health, water and so on, which the other countries, like the US,
take for granted.

Due to the dual nature of its objectives, India is considered a good example of a
mixed economy. A mixed economy has the salient features of capitalism and of
socialism very clearly interwoven. For instance, the private sector industries are
based on self-interest and profit motive. At the same time, it is not free or laissez faire
capitalism but controlled capitalism, since free enterprise and initiative, the driving
forces of self-interest and profit motive and the system
of private property are all limited in the interest of the society.
QUE4- Discuss the indicators in order to explain the role of public sector in
Indian Economy.
ANS4- Role of the Public Sector in India
Public sector in India has been criticized vehemently by a number of supporters
of the private sector who have chosen to shut their eyes towards the
achievements of the public sector. To understand the role of the public sector, we must
have a comprehensive view of the entire public sector. Besides autonomous
corporations, departmental enterprises should also be included in the public sector.
While doing so, not only the enterprises owned and run by the Central Government
should be covered, but also the enterprises run by the State Governments and local

bodies. It would not be appropriate to use any single measure to estimate the role of
the public sector in the Indian economy, rather it would be desirable to use a few
indicators:
(a) Share of public sector in employment: There are two important categories of
public sector employment : (a) Government administration and defense and other
government services like health, education, research and various activities to promote
economic development; and
(b) public sector proper, i.e., economic enterprises owned by the Centre, State and
Local Governments.
(b) Share of the public sector in GDP: From 1960 onwards, the share of the public
sector in GDP has shown a steady improvement. Measured at current prices, public
sector accounted for 7.5 per cent of GDP in 1950-51, its share in 1993-1994 had risen to
23.6 per cent. However, it declined to 21.2 per cent in 2009-10. Public sector, therefore,
accounts for about one-fourth of national output. This is largely due to the rapid
expansion of the public sector enterprises.
(c) Share of the public sector in saving and capital formation: Gross
domestic capital formation has increased from 10.7 per cent of GNP during the First
Plan to 24.6 per cent during the Eighth Plan.
(d) Infrastructure development by the public sector: Rapid industrialization of
a backward but developing country like India depends upon the creation of
infrastructure or economic overheads such as transportation, communication, power
development, basic and key industries, etc. Unless the infrastructure is created, it is
not possible for other industries to come into existence or to develop fast enough. But
the development of basic and capital goods industries and creation of infrastructure
involves heavy investment, low yield and a long gestation period. These investments
were, therefore, not attractive to the private sector nor could the private sector raise
such huge resources in the Fifties and Sixties. Naturally, it was left to the Government
to develop them and most of the public enterprises were set up in these industries. The
private sector welcomed government investment in developing these industries, as it
stood to gain directly.
(e) Role of public sector in export promotion: Most of the public sector
enterprises have been started keeping in mind the requirements of the Indian economy
in the fields of production and distribution. However, some public enterprises have
done much to promote Indias exports. The State Trading Corporation (STC) and the
Minerals and Metals Trading Corporation (MMTC) have done a wonderful job of
export promotion in all parts of the world, especially in the East European countries.
The foreign exchange earnings of the public sector enterprises have been rising from
`35 crores in 1965-66 to `5,830 crores in 1984-85 and finally to `43,576 crores in
2005-06. There is no denying the fact that the export performance of the public sector
enterprises has been quite creditable.
(f) Role of the public sector in import substitution: Some public sector
enterprises were started specifically to produce goods which were formerly imported
and thus to save foreign exchange. The entry of Hindustan Antibiotics Ltd. and the
Indian Drugs and Pharmaceuticals Ltd. (IDPL) into the manufacture of drugs and
pharmaceuticals so as to remove the monopolistic stranglehold of foreign concerns in
this field helped India save foreign exchange used for importing these items.

(g) Role of public sector in raising internal resources: The generation of

internal resources by the public sector has assumed greater importance because, in
addition to financing their own planned expansion and development, they are also
expected to generate surplus for financing the needs of other priority sectors. Internal
resources consist of depreciation and retained profits. With every five year plan, the
public sector was able to mobilize larger internal resources. During the Seventh Plan,
internal resources of the order of `29,750 crores were generated. During the Eighth
Plan, PSUs generated internal resources of the order of `1, 01,212 croresa creditable
record indeed. During the Tenth Plan (2002-03 to 2006-07), total internal resources
generated by the CPSEs were of the order of `3, 95,686 crores. It is really encouraging
to note that Central public enterprises have succeeded in increasing their internal
resource generation over the years. This trend should be welcomed.
(h) Contribution to the exchequer: The Government exchequer has been receiving
significant contribution from the public in the form of payment of corporate taxes,
excise duty, customs duty and other duties. In this manner, they help in bringing
together funds for financing the needs for the planned development of the country.
QUE5- Identify various schemes launched by the government to reduce
unemployment and underemployment. Explain any 2 in detail.
ANS5- Various Schemes to Reduce Unemployment and UnderEmployment
Following the publication of the Bhagwati Committee report in 1973, the Government
took the following measures to provide employment and alleviate under-employment.
(i) Rural Works Programme:
(ii) Marginal Farmers and Agricultural Labourers:
(iii) Small Farmers Development Agencies:
(iv) Integrated Dry Land Agricultural Development:
(v) Agro-service Centres:
(vi) Area Development Schemes:
(vii) Crash Programme for Rural Employment:

Agro-service Centres: The schemes provided for assistance for self

employment to the unemployed graduates and diploma-holders in mechanical,
agricultural and electrical engineering and allied fields and graduates in
agriculture and science with experience in industry or agriculture. It aimed to
help in establishing workshops, organizing agricultural machinery, repairing
and hiring facilities and other technical services like supply of spare parts,
inputs, etc.

Crash Programme for Rural Employment: The primary objective of the scheme
was to generate additional employment through a network of rural projects of
various kinds which are labour-intensive and productive. The scheme had a
two-fold purpose. Firstly, a project in each block was to provide employment to
100 persons on an average continuously over a working season of ten months
in a year. Secondly, each project was to produce works or assets of durable
nature in consonance with the local development plans. The various types of

projects included schemes relating to minor irrigation, soil conservation and

afforestation, land reclamation, flood protection and anti-water logging,
pissiculture, drinking water and construction of roads.The various schemes
under the Fourth Five-Year Plan or the Crash Plan could not succeed in
removing rural unemployment and under-employment because efforts were
not made to organize the army of the rural unemployed into appropriate
supply camps to be shifted to places of demand at the desired minimum wage.
The Auditor-General in his report to the Lok Sabha presented in August, 1974
brought out the tragic fact that the various crash and rural employment
programmes on which the Central Government had spent `170 crores during
the Fourth Plan had been wholly ineffective.
QUE6- Write short notes on:
a. Land reforms
b. RBI
ANS6- A. Land Reforms
Efficiency in agriculture can be primarily derived from two major factors
technological and institutional. The implementation of the technological factor
includes the use of agricultural inputs and methods such as improved seeds, fertilizers,
improved ploughs, tractors, harvesters and irrigation among others which help to
improve productivity, even though no land reforms are introduced. The institutional
factors comprise of reforms introduced to redistribute land to the cultivating classes to
inculcate in them a feeling of participation in rural life, enhancing the size of farms,
providing safety of tenure and regulation of rent among others. The socialists believe
that the existence of feudal or semi-feudal relations was the real cause of
backwardness and poverty in rural communities. The emancipation of the peasantry
from the bondages of institutional depressors will unleash forces which shall
automatically raise levels of production in agriculture. It is held that technological
change can work more effectively in a congenial agrarian structure and in this way
the process of development can be accelerated.
The purpose of land reforms is, therefore, dual. On the one hand, it aspires to make
more balanced use of the limited land-resource by bringing about changes in the
condition of holdings, imposing ceilings and floors on holdings so that cultivation can
be done without any wastage of manpower and financial resources. On the other
hand, it aims at redistributing agricultural land to the low social classes, and of
improving the terms and conditions on which land is held for cultivation by the actual
tillers, with a view to ending exploitation.
B. Functions of the Reserve Bank of India:
The Reserve Bank of India Act of 1934 has handed over all the important functions
of a central bank to the Reserve Bank of India.