Short questions with answers for Class 11 CHSE Odisha students on Economic Planning and Economic Reforms, covering Planning and Economic Reforms Since 1991.
Chapter: Economic Planning and Economic Reforms
Topic: Planning – Meaning, Need, Objectives, and Achievements, Niti Aayog
Meaning and Need of Planning
Q1: What is economic planning?
A1: Economic planning is a conscious and deliberate effort by the state to shape the economy by controlling and coordinating economic activities to achieve predetermined goals within a specific time frame.
Q2: Why was planning considered necessary in India after independence?
A2: Planning was necessary to address widespread poverty, low industrial base, agricultural backwardness, and to achieve rapid and equitable economic development.
Q3: What is the primary aim of planning in a mixed economy like India?
A3: The primary aim is to guide both the public and private sectors towards achieving national economic goals.
Q4: Who was the first chairman of the Planning Commission of India?
A4: Jawaharlal Nehru was the first chairman of the Planning Commission.
Q5: Mention one key feature of a planned economy.
A5: Centralized decision-making, setting of targets, and allocation of resources by the government are key features.
Q6: How does planning help in optimal resource allocation?
A6: Planning helps by directing resources towards priority sectors and projects identified for national development.
Q7: What is the difference between indicative planning and imperative planning?
A7: Imperative planning involves direct control and commands, while indicative planning provides guidelines and incentives for the private sector. India largely followed indicative planning.
Q8: Why is long-term planning important for a developing country?
A8: Long-term planning is important to address structural issues, build basic industries, and achieve sustained growth over decades.
Q9: Name the body responsible for formulating five-year plans in India initially.
A9: The Planning Commission of India was initially responsible for formulating five-year plans.
Q10: How does planning help in reducing regional disparities?
A10: Planning helps by directing investments and development initiatives towards backward regions, promoting balanced growth.
Objectives of Planning
Q1: What was the most important long-term objective of economic planning in India?
A1: The most important long-term objective was to achieve a high rate of economic growth.
Q2: Define 'self-reliance' as an objective of Indian planning.
A2: Self-reliance meant reducing dependence on foreign aid, food imports, and foreign technology, especially for critical sectors.
Q3: Why was 'modernization' an important objective of Indian planning?
A3: Modernization was important to adopt new technologies in agriculture and industry, diversify production, and change social outlook for progress.
Q4: What does the objective of 'equity' imply in Indian planning?
A4: Equity implies reducing income and wealth inequalities, ensuring a fairer distribution of economic benefits, and providing basic necessities to all.
Q5: How did planning aim to achieve full employment?
A5: Planning aimed to achieve full employment by creating more job opportunities through industrialization, agricultural development, and infrastructure projects.
Q6: Mention one specific social objective of Indian planning apart from equity.
A6: Other social objectives included poverty alleviation, improving health and education, and empowering disadvantaged sections.
Q7: What was the objective related to industrial development in early plans?
A7: The objective was to build a strong heavy industrial base to achieve self-sufficiency in capital goods.
Q8: How did planning aim to stabilize prices?
A8: Planning aimed to stabilize prices by balancing supply and demand, managing inflation, and ensuring availability of essential goods.
Q9: What was the 'socialist pattern of society' objective?
A9: This objective aimed to establish a society where major means of production were socially owned and controlled for common benefit, reducing concentration of wealth.
Q10: Which Five-Year Plan focused heavily on poverty eradication with the slogan "Garibi Hatao"?
A10: The Fifth Five-Year Plan (1974-79) focused heavily on poverty eradication.
Achievements of Planning
Q1: Name one major achievement of Indian planning in terms of food production.
A1: India achieved self-sufficiency in food grain production, largely due to the Green Revolution, avoiding mass famines.
Q2: How did planning impact industrial diversification?
A2: Planning led to significant industrial diversification, establishing a wide range of industries including heavy industries, capital goods, and consumer goods.
Q3: Mention a significant achievement in terms of infrastructure development.
A3: India witnessed substantial growth in infrastructure like power generation, roads, railways, and communication networks.
Q4: What was the achievement in terms of human development indicators?
A4: There was an improvement in literacy rates, life expectancy, and a reduction in infant mortality rates over the planned period.
Q5: How did planning contribute to import substitution?
A5: Planning promoted import substitution by encouraging domestic production of goods previously imported, particularly capital goods.
Q6: What was the average economic growth rate achieved during the planning era (broadly)?
A6: India achieved a modest but steady economic growth rate, often referred to as the "Hindu rate of growth" (around 3.5% per annum) in the early decades, increasing later.
Q7: Did planning succeed in creating a strong scientific and technological base?
A7: Yes, planning helped in building a robust scientific and technological infrastructure and a pool of skilled manpower.
Q8: What was the achievement regarding regional development?
A8: While disparities remained, planning efforts led to some industrial development and infrastructure growth in historically backward regions.
Q9: How did the planning process lead to the development of public sector enterprises?
A9: Public sector enterprises were established across various strategic sectors to drive industrialization and provide essential services.
Q10: What was the overall impact of planning on poverty levels?
A10: While poverty remained a significant challenge, planning efforts did lead to a decline in the percentage of people living below the poverty line over time.
NITI Aayog
Q1: What is the full form of NITI Aayog?
A1: NITI Aayog stands for National Institution for Transforming India Aayog.
Q2: When was NITI Aayog established?
A2: NITI Aayog was established on January 1, 2015.
Q3: Which body did NITI Aayog replace?
A3: NITI Aayog replaced the Planning Commission of India.
Q4: What is the primary role of NITI Aayog?
A4: NITI Aayog serves as a policy 'Think Tank' of the Government of India, providing strategic and technical advice.
Q5: Who is the ex-officio Chairperson of NITI Aayog?
A5: The Prime Minister of India is the ex-officio Chairperson of NITI Aayog.
Q6: Name one key difference between NITI Aayog and the Planning Commission in terms of approach.
A6: NITI Aayog adopts a 'bottom-up' approach, involving states in policy formulation, unlike the Planning Commission's 'top-down' approach.
Q7: What is the concept of 'cooperative federalism' as promoted by NITI Aayog?
A7: Cooperative federalism means promoting cooperation between the Union government and state governments in policy-making and implementation.
Q8: Does NITI Aayog have the power to allocate funds to states?
A8: No, NITI Aayog does not have the power to allocate funds; this function rests with the Ministry of Finance.
Q9: What is the role of the Governing Council of NITI Aayog?
A9: The Governing Council, comprising Chief Ministers of all states and Lt. Governors of UTs, discusses national development priorities and strategies.
Q10: Mention one area where NITI Aayog provides strategic direction.
A10: NITI Aayog provides strategic direction on various policy issues, including sustainable development goals, innovation, and good governance.
Topic: Economic Reforms Since 1991 – need and main features of Liberalisation, Privatisation, and Globalisation.
Need for Economic Reforms Since 1991
Q1: What was the immediate trigger for the 1991 economic reforms in India?
A1: The immediate trigger was a severe balance of payments crisis and a high fiscal deficit.
Q2: Why was India facing a foreign exchange crisis in 1991?
A2: Foreign exchange reserves had depleted to dangerously low levels, barely enough to cover a few weeks of imports.
Q3: What was the 'fiscal deficit' problem in India before 1991?
A3: The government's expenditure was significantly higher than its revenue, leading to large borrowings and high fiscal deficit.
Q4: How did the performance of Public Sector Undertakings (PSUs) contribute to the crisis?
A4: Many PSUs were inefficient, loss-making, and a drain on government resources, contributing to the fiscal deficit.
Q5: What was the term used to describe the rigid regulatory framework pre-1991?
A5: The term 'License-Permit Raj' was used to describe the extensive government controls and regulations.
Q6: Why were foreign investors reluctant to invest in India before 1991?
A6: Foreign investors were reluctant due to restrictive policies on foreign investment, complex regulations, and the license-permit raj.
Q7: What was the impact of high inflation on the Indian economy before 1991?
A7: High inflation eroded the purchasing power of people and created economic instability.
Q8: Did India face pressure from international organizations for reforms?
A8: Yes, India faced pressure from the IMF and World Bank to undertake structural reforms in exchange for financial assistance.
Q9: How did the Gulf War (1990-91) exacerbate India's economic problems?
A9: The Gulf War led to a sharp increase in oil prices and reduced remittances from Indian workers in the Middle East, worsening the balance of payments.
Q10: What was the general feeling about the pace of economic growth before 1991?
A10: The pace of economic growth was generally slow, often termed the "Hindu rate of growth," indicating a need for faster development.
Main Features of Liberalisation
Q1: What is liberalisation in the context of economic reforms?
A1: Liberalisation means freeing the economy from unnecessary government controls and restrictions, allowing greater freedom for private businesses.
Q2: How did liberalisation impact industrial licensing?
A2: Industrial licensing was largely abolished for most industries, making it easier for businesses to set up, expand, and diversify.
Q3: What change did liberalisation bring to foreign direct investment (FDI) policy?
A3: It allowed automatic approval for FDI in many sectors and increased the equity limits for foreign investors.
Q4: How did liberalisation affect import duties and tariffs?
A4: Import duties and tariffs were significantly reduced to promote competition and facilitate global trade.
Q5: What was the impact of liberalisation on the Monopolies and Restrictive Trade Practices (MRTP) Act?
A5: The MRTP Act was diluted, and later replaced by the Competition Act, shifting focus from controlling monopolies to promoting competition.
Q6: How did liberalisation reform the financial sector?
A6: It allowed private sector banks, foreign banks, and greater autonomy to banks in setting interest rates.
Q7: What was the role of the capital market in liberalisation?
A7: The capital market was reformed and strengthened to facilitate resource mobilization for businesses, with SEBI playing a crucial role.
Q8: Did liberalisation aim to reduce government's role in price determination?
A8: Yes, it aimed to reduce administrative price controls in many sectors, allowing market forces to determine prices.
Q9: How did liberalisation affect foreign technology imports?
A9: It made it easier for Indian firms to import foreign technology and collaborate with foreign companies.
Q10: What was the overall goal of liberalisation regarding economic efficiency?
A10: The overall goal was to enhance economic efficiency, competitiveness, and productivity by reducing bureaucratic hurdles and promoting market forces.
Main Features of Privatisation
Q1: What does 'privatisation' mean in the context of economic reforms?
A1: Privatisation means transferring the ownership or management of public sector enterprises (PSUs) to the private sector.
Q2: What was the main objective of privatisation in India?
A2: The main objectives were to improve the efficiency and profitability of PSUs, reduce the government's fiscal burden, and generate resources for development.
Q3: What is 'disinvestment' as a form of privatisation?
A3: Disinvestment refers to the selling of government equity (shares) in Public Sector Undertakings (PSUs) to the private sector or the public.
Q4: Which sectors were earlier reserved for the public sector but were opened up for private participation after 1991?
A4: Sectors like power generation, telecommunications, civil aviation, and banking were opened up for private participation.
Q5: How did privatisation aim to reduce the government's fiscal deficit?
A5: By selling loss-making PSUs or divesting stakes, the government reduced its need to inject funds into these enterprises, thus cutting its expenditure.
Q6: Name one argument in favor of privatisation.
A6: Arguments include increased efficiency, better management, technological upgradation, and reduced political interference.
Q7: What was the impact of privatisation on competition?
A7: Privatisation often led to increased competition in sectors previously dominated by public monopolies.
Q8: What is 'strategic sale' in privatisation?
A8: Strategic sale involves selling a significant portion of a PSU's equity (often majority stake) along with management control to a strategic partner.
Q9: What was the role of the Disinvestment Commission (later Department of Disinvestment) in privatisation?
A9: It was set up to advise the government on disinvestment policies and strategies.
Q10: Mention one potential criticism of privatisation.
A10: Criticisms include potential job losses, loss of social welfare objectives, and concentration of economic power in private hands.
Main Features of Globalisation
Q1: What is globalisation in the context of economic reforms?
A1: Globalisation means integrating the domestic economy with the world economy through free flow of goods, services, capital, technology, and labor.
Q2: How did globalisation impact India's trade policy?
A2: It involved reducing tariffs, quantitative restrictions, and simplifying trade procedures to facilitate greater international trade.
Q3: What was the role of the World Trade Organization (WTO) in India's globalisation efforts?
A3: India became a founding member of the WTO (replacing GATT), committing to its rules for free and fair international trade.
Q4: How did globalisation affect foreign investment (FDI and FII)?
A4: It encouraged greater inflow of both Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) into India.
Q5: What is the impact of globalisation on technological transfer?
A5: Globalisation facilitates faster and easier transfer of advanced technology from developed to developing countries like India.
Q6: How did globalisation impact the Indian financial markets?
Q6: It led to the opening up of Indian financial markets to international capital flows and increased foreign participation.
Q7: Mention one benefit of globalisation for Indian consumers.
Q7: Consumers gained access to a wider variety of goods and services, often at competitive prices, due to increased imports and foreign brands.
Q8: What is the impact of globalisation on cultural exchange?
A8: Globalisation facilitates increased cultural exchange and interaction across borders.
Q9: What is a potential negative consequence of globalisation for domestic industries?
A9: Domestic industries may face increased competition from cheaper or higher-quality foreign goods, potentially leading to job losses or closures for uncompetitive firms.
Q10: How did globalisation affect the services sector in India?
A10: Globalisation significantly boosted India's services sector, especially IT and IT-enabled services, making it a major exporter of services globally.
