Important Questions Class 11 Economics Indian Economic Development Chapter 2

Important Questions Class 11 Economics Indian Economic Development Chapter 2- Indian Economy 1950-1990

In Economics, one of the most critical factors that independent countries decide on is the type of economic system that should be applied according to their nation. The economic system is determined based on three questions; what goods and services should be produced in the country? How should the goods and services be produced? How should the goods and services be distributed among the population? The economic system is decided based on the answers to these questions, which helps the leaders plan the future of the economy. . Chapter 2 in Class 11 Economics explains in detail the initiation of the five-year plans for India after choosing a socialist style of the economic system. 

Chapter 2 will shed light on the different developmental policies for various sectors, such as agriculture and industrial sectors from 1950-1990, the goals for the five-year plans, and also discuss the advantages and disadvantages of India being a regulated economy post-independence. 

Studying this chapter well is essential for students as this is an important chapter. With the Important Questions Class 11 Economics Indian Economic Development Chapter 2 from Extramarks, students can become proficient in understanding the various crucial concepts in the chapter. Extramarks believes in providing a joyful learning experience through its own repository of resources. Students need to register themselves to access multiple resources and begin their preparation without any further delay.

Economics is a subject that requires students to go through the study material  and understand the concepts thoroughly. At Extramarks, we know the importance of solving questions to practice the concepts learned in the lesson. The subject experts at Extramarks have collated a list of Important Questions Class 11 Economics Indian Economic Development Chapter 2 for students to practice. These questions are curated from various sources such as NCERT books, reference books, CBSE past years’ papers and so on to ensure that students get a mix of questions for a holistic study session. Furthermore, the experts’ step-by-step solutions help the students better comprehend the topic and prepare for the examinations.

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Important Questions Class 11 Economics Indian Economic Development Chapter 2 with Solutions

Subject experts with years of experience in Economics have created an extensive list of Important Questions Class 11 Economics Indian Economic Development Chapter 2 for students using various sources. The questions are included in all the crucial parts of the chapter. So that while students practice these questions, they also happen to revise the chapter along with practice. The questions include various topics such as 

Irrespective of the students’ level, important questions are designed in such a way as to clarify their doubts and clarify  their concepts, helping them to understand everything clearly and  not leave anything until the last moment. Here is a list of Important Questions Class 11 Economics Indian Economic Development Chapter 2 with solutions for students to practice:

Question 1: Which type of economy is followed by India?

1. Communist 
2. Capitalist 
3. Mixed 
4. Socialist 

Answer 1: (c) Mixed economy .

Explanation: India is a mixed economy because the private and public sectors coexist, and the country benefits from foreign trade. Agriculture employs half of India’s workforce, indicating the presence of a traditional economy. Services account for two-thirds of the country’s economic output and use one-third of its workforce. Individuals have the freedom to establish their private businesses and professions. However, the government still holds a monopoly in specific sectors of the economy, including banking, power, defence, and other industries.

Question 2. What are the years for India’s 12th five-year plan?

1. 1997–2002
2. 2002–2007
3. 2007–2012
4. 2012–2017

Answer 2: d) 2012–2017

Explanation: The Government of India’s 12th Five-Year Plan (2012–17) was the country’s last Five-Year Plan. During  this tenure, , the government aimed to reduce poverty by 10% and attract private investment to the tune of $ 1 Trillion for infrastructure growth. 

Question 3. Who is the father of a high-yielding variety seed? 

Answer 3: HYV is credited to the work of American agricultural scientist Norman Borlaug. He won the Nobel Peace Prize in 1970 for developing higher-yielding cultivars. The “Father of the Green Revolution” is another name for the scientist.

Question 4. The portion of agricultural products sold in the market by farmers is known as ______.

1. Trade deficit
2. Marketed surplus
3. Subsidy
4. Import substitution

Answer 4: b) Marketed surplus

Explanation: Marketable surplus is the difference between a farmer’s overall output and his consumption of that output. It is that portion of the total farm produce that the farmer sells in the market. 

Question 5. Match the following:

Answer 5: 

Question 6. What is a marketable surplus?

Answer 6: Marketable surplus is the difference between a farmer’s total output and on-farm consumption. In lay man’s language, , the proportion of the farmer’s entire crop sold at the market. Marketable surplus is the sum of farmers’ agricultural output less their personal use of that output.

Question 7. What is meant by import substitution in the Indian economy? 

Answer 7: Import Substitution Industrialization (ISI) is a trade and economic policy that advocates reducing the nation’s reliance on imports. It emphasises on substitution of imports with domestic production. The idea behind the import substitution policy is that governments should reduce the dependence on foreign goods by producing the same industrialised goods in our own country. Imbibing this policy would help save crores of rupees that the government has to spend on imports. As a result, many mechanical software, machines and instruments are now being produced in the country to reduce foreign reliance.  

Question 8. Explain the concept of growth with equity as a planning objective.

Answer 8: Economic growth is the collective increase in the goods and services produced in an economy in a given time. Growth with equity is a concept similar to economic growth but incorporates two significant factors; growth which means an increase in the GDP, and equity which means social justice. Hence growth with equity implies growth with equal distribution. The GDP or gross domestic product cannot alone indicate the growth and welfare of the society; therefore, GDP is not a reliable indicator of society’s development because it cannot by itself reflect social growth and welfare.   . Therefore growth along with equity would imply the development of all, which is an optimal parameter to measure economic planning, which would further help in attaining growth with social justice.

Question 9. Define a socialist economy.

Answer 9: Unlike a capitalist economy where the sole focus is on increasing sales and profits, a socialist economy functions by focusing solely on the manufacturing sector to meet the needs of the society. Since the government is believed to know what is best for the nation’s citizens, consumer preferences are not given much weightage. Socialism aims to focus distribution on what people need rather than on what they can afford to buy. Additionally, it implies government employees’ direct administration and regulation of social workers and industries. 

Question 10. Why, despite the implementation of the green revolution, 65 per cent of our population continued to be engaged in the agriculture sector till 1990?

Answer 10: Indian Agricultural production saw a tremendous increase in agriculture production which helped India to become self-sufficient in food grain production. The downfall was that this increase was only substantial compared to the past production levels.

In addition to this, India failed to change the occupational structure. The secondary and tertiary sectors, or the industry and the service sectors, could not generate optimum employment opportunities that could absorb the excess labour in agriculture.

The agricultural contribution to the GDP fell from 51% in 1960–61 to 44% in 1970-71. At the same time, the highest amount of the population was still working in agriculture. Nearly 67.5% of people worked in agriculture in 1950, which decreased to 64.5% in 1990. 

The industrial sector saw a meagre growth from 19% in 1960-61 to 23% in 1970-71. The service sector for the same period saw a nominal increase of 30% to 33%.

The excessive pressure on land and productivity pointed to lesser technological advancements; the slow growth of the industrial and service sectors led to a large number of people still dependent  on agriculture as an occupation. 

Question 11. What was the aim of the five-year plans? 

Answer 11: The leaders had to rebuild the Indian economy from the start in an independent India, free from the colonial administration. Hence in 1947, the leaders had to decide on the type of economic system that would be followed in India and focus on economic planning. For economic planning, India came up with five-year plans. The plans were made for five years with a specific goal in mind. A five-year plan contains some generalised goals with evident importance given to one or two goals in a particular period. The objectives of the five-year plans are below:

1. Growth
2. Self-reliance
3. Modernisation 
4. Equity 

Some of the achievements that were seen during the five-year plans are as below:

1. A significant rise in national and per capita income.
2. Job creation 
3. Industrial development 
4. Transportation and communication development 
5. Industrial development 
6. Good agricultural development
7. Power and price stability
8. Increased capital formation
9. Scientific and technological advancements.

Question 12. What is the Green Revolution? Why was it implemented, and how did it benefit the farmers? Explain  briefly.

Answer 12: Due to low productivity, repeated famines, and low levels of agricultural goods in the last half of the second five-year plan, a team was formed to suggest potential solutions to these problems. The government implemented the use of HYV seeds, cutting-edge methods, and inputs, including fertilisers, irrigation systems, and subsidised credit, following the team’s suggestions. These procedures are referred to collectively as the Intensive Area Development Programme (IADP). As a result, food grain production increased by almost 25% from 1967–1968. The result of this significant rise in food grain output by applying the committees’ suggestions is known as the “Green Revolution.” The phrase “Green Revolution” is made up of the two words “Green” and “Revolution,”  both of them refer to significant growth.

The following point explains the need for the green revolution:

1. Low Irrigation Facilities: The central part of the agricultural land depended on rainfall for irrigation purposes. The piece of the land that came under the well irrigated and permanent irrigated area came to only 17% of the total agricultural land in 1951. This resulted in lower production of crops.
2. Conventional and Traditional Approach: The traditional inputs used in farming and the lack of modern tools and machinery further hampered agricultural productivity.
3. Frequent Famines: India was struck by periodic famine from the 1940s to the 1970s. The farmers could not effectively meet the growing demand with a higher population growth rate.
4. Lack of Credit: Small and marginal farmers found it difficult to source cheap credit from banks and the government; hence they had to turn to moneylenders who charged high-interest rates to the already burdened farmers.
5. Self-sufficiency: Traditional farming methods resulted in low production and frequent import of food grains, which depleted already limited foreign reserves. India was believed to become self-sufficient and reliable thanks to the Green Revolution’s increasing production, allowing the government to keep buffer stocks.
6. Marketing Agriculture: Agriculture was mostly practised for subsistence; hence, fewer agricultural products were available in the market. Thus, motivating farmers to boost their output and sell a more significant proportion of their produce on the market was deemed necessary.

Question 13. The public sector is very important for industries, but many public sector undertakings suffer large losses and drain the economy’s resources. Discuss the effectiveness of public sector undertakings in this light of the fact. 

Answer 13: A public sector firm in India is one in which the national, state or regional governments possess at least 51 per cent of the equity. Currently, just three industries—railways, atomic energy, and explosive materials—remain wholly owned by the government. These industries are off limits to private businesses. Before the 1990s, the government had exclusive control over key market sections. This led to a massive loss of our country’s valuable natural resources and submerged the entire nation in a severe economic crisis. Our nation expanded on average by 3.5 per cent annually from the first five-year plan to the 1980s.

The majority of the funding for the government’s special welfare programmes comes from profitable public-sector businesses. This makes it possible for the general population to support equitable income and wealth distribution. PSUs with a social mission, including railroads, water supplies, and postal services, need to remain in the public sector. Profitable businesses should stay in the public sector because the companies can apply their resources to growth. To prevent the rise of monopolies in the private sector, the government should maintain control over strategic industries.

Role of Public Sector Enterprises in India:

• Balanced regional development
• Maximising the rate of economic growth
• Import substitution
• Increased employment opportunities
• Agricultural development

The following are the essential roles and responsibilities of the Public Sector Undertakings: 

1. General public policy.
2. The issues about the issuance of presidential directives and guidelines to public sector enterprises are the responsibility of the PSU’s
3. PSUs also work on policy guidelines for public sector companies in areas like financial management, performance improvement and evaluation personnel management, board structures, wage settlement, training, industrial relations, vigilance, and performance appraisal.
4. They work on issues concerning the reservation of positions in public-sector enterprises for specific groups of citizens.
5. All issues about the Memorandum of Understanding between Public Sector Enterprises and administrative Ministries/Departments.
6. Issues about the delegation of powers to the Board of Directors are also discussed under the purview of PSUs.
7. To conduct an in-depth analysis of key areas of central PSE operation. Study concerns about the international centre for public enterprises 
8. They monitor and evaluate the performance of PSEs, serve as a data repository, and produce an annual survey for the Parliament.
9. In addition to evaluating proposals from different administrative ministries regarding restructuring, revival, joint ventures, and other issues, there should be a permanent arbitration mechanism for settling disputes between public sector enterprises and government departments, excluding tax disputes. Increasing regional development that is balanced and agriculture advancement expands  job possibilities as much as possible to replace imports.

Question 14. Explain the need and types of land reforms implemented by the government in the agriculture sector.

Answer 14: The need for land reforms in India was necessary due to the following reasons:

1. The Land Tenure System: At the time of independence, there were three different forms of land tenure systems in India’s agricultural sector: the Zamindari System, the Mahalwari System, and the Ryotwari System. The tenants in these three systems were primarily responsible for farming the land and paid their landlords the land’s earnings. This resulted in the exploitation of tenants  by charging  exorbitant rents.
2. Size of Land Holdings: The farmers’ land holdings were extremely small. The land holdings were also scattered. This made it challenging to adopt modern technologies.
3. Lack of Initiative: Since the landlords owned most of the land, the farmers lacked initiative, and neither had the resources to use technological farming methods.
4. Traditional Approach and Low Productivity: Farmers in India used to rely on conventional inputs, techniques, and climatic factors such as rainfall for irrigation purposes, which limited the agricultural sector’s productivity.
5. Absence of Marketing System: Farmers previously relied on intermediaries to help sell their goods in the market due to the lack of an effective marketing structure. These merchants used to buy agricultural items at low prices and then sell them at higher prices in the market. As a result, the farmer did not receive the proper profit share, which prevented him from investing and raising funds for his farm.
6. Nature of Farming: The primary goal of farming was survival. That is to say; farming was primarily done to earn a living rather than to sell and make money.

Considering the above factors about Indian agriculture, there was a dire need for change to boost productivity and help farmers earn a sustainable income. Hence the government thus introduced land reforms. The land reforms comprise the following steps:-

1. 1. Abolishing Intermediaries: Eliminating intermediaries like zamindars and jagirdars, etc., was the primary goal of land reforms. The government took many initiatives to make the actual farmers the land owners.
   2. Regulation of Rent: Before the land reforms, exorbitant rents were used to take advantage of the farmers. The maximum rent fixed under the first five-year plan was one-fourth or one-fifth of the total agricultural output (except in Punjab and Haryana, where it was rd). The rent laws not only eased the tenants’ burdens but also provided them with a more considerable sum of money to invest in their farms.
   3. Consolidation of Holdings: The need to consolidate the land holdings resulted from being small and dispersed, making them unable to deploy new and technologically advanced technologies. In the place of fragmented land, the farmers were given proportionately consolidated land holdings. This made it possible for them to benefit from the advantages of large-scale production.
   4. Land Ceilings: land ceilings refer to the legally prescribed amount of land an individual may own. The primary goal of this move was to encourage equal ownership of land holdings. As a result, there were no longer many people with concentrated land ownership. The extra land over the allotted quantity of land used was to be taken by the government and distributed to farmers without land.

• Co-operative Farming: This measure was done to address issues caused by the holdings of sub-division land. Because small-scale farming carried out by a single landowner is neither profitable nor productive, these actions prompted additional farmers to combine their operations. Because of this, productivity increased, and the individual farmers saw higher revenues.

Question 15. Although subsidies encourage farmers to use new technology, they burden government finances significantly. Discuss the effectiveness of subsidies in light of this fact.

Answer 15: A subsidy implies the economic benefit given by the government directly or indirectly to the domestic producers of specific goods and services. An agricultural subsidy means making certain inputs available to farmers at concessional rates. In the 1960s, to encourage farmers to use the latest HYV seeds, modern fertilisers and insecticides, the government provided subsidies to the farmers. The public sector plays a more significant role as they have to invest heavily in grants to help increase the farmer’s incomes.

The following points highlight the importance of subsidies:

• Small and marginal farmers cannot invest in the latest technology. The subsidies give them an incentive to adopt modern production methods and take advantage of them. 
• Subsidies are necessary to ensure farmers against the risk of using new technology.
• Subsidies are typically given to poor farmers to minimise income disparity between rich and poor farmers and encourage equitable income distribution.

However, the subsidies still prove to be a burden for governments. The following points enumerate the same:

• Farmers from more affluent regions will profit from subsidies intended for farmers who need them. This frequently results in the misuse and waste of limited resources.
• The general view is that the government should offer subsidies while technology is being evaluated for its practicality and potential benefits, but afterwards, they should be discontinued. Hence, the assistance should end if the technology is broadly used.
• Another fact related to agricultural subsidies is that the farmers might not benefit as significantly as the fertilisers industry.

Using a reliable verification system, the right way to distribute subsidies is to identify the farmers who require them. By doing this, the government won’t incur high costs, and the needy will receive the grant.

Question 16. “Whenever the problems of choice and scarcity arise, economics is said to emerge”. Discuss a few of the problems of the economy.

Answer 16: The problems that an economy faces are mentioned below:

1. Central Problem of the Economy:
2. One of the most foundational problems in the economy is the scarcity of resources, leading to the problem of choice. This problem refers to making better and more efficient use of the limited resources to satisfy more significant wants. This is also known as the resource economisation problem.

The leading cause of the resource economisation problem is that there  are only limited resources, the resources have variable uses, and the society has a never-ending demand for goods and services. So the essential decision arises of resource allocation.  It is done by answering three vital questions:

• What to produce: An economy has unlimited needs but few resources that the businesses and societies could put to many other uses. Consumer goods, producer products, and other goods cannot all be produced by the economy. Therefore, the economy must choose which commodities and services to have and in what amounts.
• How to Produce: How to produce entails what enterprises and governments will use as manufacturing methods. There are two ways of manufacturing:

1. Labour intensive techniques: This production method uses the workforce more than capital.
2. Capital intensive techniques: Capital is employed more than labour in this method.

• For whom to produce: This problem distributes manufactured items among diverse social categories. It consists of two parts: –

1. Distribution to individuals and,
2. The Distribution of functionalities: occurs when the nation’s income is allocated based on who owns the production-related inputs. The allocation of national income/output among various production factors, such as land, labour, capital, and entrepreneurship for the provision of their services in terms of rent, wages, interest, and profit, is known as functional distribution.

• Problems Related to Full and Efficient Utilisation of Resources: Production efficiency implies producing as many goods and services as possible with the resources at hand. Because resources are already scarce compared to their demand, an economy must ensure that they are not being misused; underemployment is nothing more than resource waste.
•  The resource growth problem: This problem refers to the rising demand for goods and services, leading to an increase in the economy’s production capacity. The resources hence will be utilised at a faster pace. This can also lead to the exploitation of resources.

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Economics is a subject that requires the students to understand the core concepts presented in the chapters carefully. Class 11 Economics will help the students establish the basic knowledge that will be helpful for them when they study Class 12 Economics or during their higher  studies. To get a good hold over the topics, the students should diligently go through all the text materials such as NCERT books, NCERT solutions, reference books, etc. To score good grades  in their examinations, students can also practice the Important Questions Class 11 Economics Indian Economic Development Chapter 2 provided by Extramarks.

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