Here, you will find summaries, questions, answers, textbook solutions, pdf, extras etc., of (Nagaland Board) NBSE Class 12 (Arts/Commerce) Economics Part II Chapter 9: Economic Planning in India. These solutions, however, should be only treated as references and can be modified/changed.
Introduction
Economic planning is a critical tool for a nation’s development, aiming to utilize resources effectively to achieve certain goals. It involves setting targets for various sectors, such as national income, employment, industry, and agriculture, and implementing strategies to reach these targets. However, the success of economic planning is not always guaranteed and can be influenced by various factors.
One of the main objectives of economic planning is to increase national income and per capita income, leading to economic development. This is achieved by developing different sectors of the economy and reducing the population growth rate. Economic planning also aims to reduce economic and regional inequalities, stabilize prices, increase employment, and promote self-sufficiency. It also seeks to increase capital formation and modernize various economic sectors.
However, despite these objectives, economic planning has faced several challenges. For instance, it has not significantly improved poverty levels, with a significant portion of the population still living in absolute poverty. Price rise has also been a major issue, affecting the poor and low-income groups. Unemployment has increased due to the promotion of capital-intensive technology over labour-intensive technology. The agricultural sector has seen less growth than expected, with many farmers still landless. Inefficient administration, shortfall in target realization, slow capital formation, and poor development of infrastructure are other significant challenges.
Despite these challenges, economic planning has led to several achievements. National income has increased significantly during the period of Five-Year Plans, and per capita income has also seen a considerable rise. Capital formation has increased, and infrastructure has developed considerably. Employment opportunities have increased, and technological up-gradation has been achieved in almost all areas. The production of food grains has increased more than four-fold during the planning period, and the area under irrigation has also increased significantly. The country has become almost self-sufficient in consumer goods industries, and exports have increased significantly.
Video tutorial
Textual questions and answers
A. Very short-answer questions
1. What is economic planning?
Answer: Economic planning refers to the process where a central planning authority makes an attempt to regulate economic factors to achieve pre-determined objectives within a specified time period.
2. Name any two features of economic planning.
Answer: Two features of economic planning:
- Government Control: Economic planning is done under the direction of the government.
- Definite Time Period: Hach plan is of a definite time period. For instance, each plan in India is of a five-year duration.
3. Give any two objectives of planning in India,
Answer: Two objectives of planning in India:
- Price stability: Attempts are made to prevent violent changes in prices and protect the economy from inflation and deflation.
- Increase in employment: Economic planning aims to increase the opportunities for employment. Every plan seeks to provide employment to the maximum number of people.
4. What are central plans?
Answer: Central plans are formulated by the Planning Commission and are under the control of the central government.
5. What are state plans?
Answer: State plans are formulated by the State Planning Boards and are under the control of the respective state governments.
B. Short-answer questions-I
1. What is financial planning?
Answer: Financial planning refers to more emphasis being given on allocating funds for a particular sector/activity, while less emphasis is given on achieving the physical targets of the plan. Spending is given more importance rather than achieving physical targets.
2. How does the government control planning?
Answer: The government controls planning through the Planning Commission which formulates the plans. The plans are approved by the National Development Council which comprises the Prime Minister and all the Chief Ministers.
3. What is comprehensive development?
Answer: Comprehensive development refers to the balanced development of all sectors like agriculture, industry, trade, transport etc. through economic planning. Since all sectors are interdependent, balanced growth is achieved.
4. For how long is a plan formed in India?
Answer: In India, each Five Year Plan is formed for a period of 5 years.
5. What are the institutional reforms in agriculture?
Answer: The institutional reforms in agriculture during the planning period include land reforms like abolition of zamindari system, tenancy reforms, consolidation of land holdings etc. as well as promotion of modern agriculture through new technology, high yielding variety seeds, fertilizers, irrigation etc. which led to the Green Revolution.
C. Short-answer questions-II
1. Define planning. Give its three features.
Answer: Planning is the determination of a suitable way to utilize the resources of a country to achieve certain goals or objectives. Three features of planning are:
- Planning Commission: In India, plans are formulated by the Planning Commission and are finally approved by the National Development Council.
- Existence of Central Plan and State Plan: In India, there is a co-existence of both central plan and state plan.
- Financial Planning: Indian planning is a type of financial planning, meaning that more emphasis has been given on allocating funds for a particular sector/activity, while less emphasis has been given on achieving the physical targets of the plan.
2. What were the three main targets of economic planning?
Answer: The three main targets of economic planning are:
- Reduction in Inequalities of Income: Each welfare economy aims at reducing economic disparities. Economic inequalities give rise to class struggle. Economic growth), with a reduction in economic inequality is, therefore, an important objective of economic planning.
- Price Stability: Planning aims to bring about price stability. Attempts are made to prevent violent changes in prices and protect the economy from inflation and deflation.
- Increase in Employment: Economic planning aims to increase the opportunities of employment. Every plan seeks to provide employment to the maximum number of people.
3. Write three objectives of planning in India?
Answer: Three objectives of planning in India are:
- Reduction in Inequalities of Income: Each welfare economy aims at reducing economic disparities.
- Reduction in Regional Inequalities: Regional imbalances are sought to be reduced through economic planning. Special attention is paid to the development of backward and under-developed regions of the country.
- Price Stability: Planning aims to bring about price stability. Attempts are made to prevent violent changes in prices and protect the economy from inflation and deflation.
D. Long-answer questions-I
1. How successful were the Five-Year Plans? Write five points.
Answer: Five points on how successful the Five-Year Plans have been in India are:
- The Five-Year Plans led to a significant increase in national income. During the period of Five-Year Plans, national income increased at an average rate of 5.1 per cent per annum at constant prices from the period 1950-51 to 2015-16.
- There was also an increase in per capita income. Before independence, the increase in per capita income was almost negligible; but during the period of planning, it increased at the rate of around 3 per cent per annum at 200-05 prices.
- The rate of capital formation increased. Capital formation plays a significant role in the economic development of a country. During the period of planning, the rate of saving and investment increased.
- The Five-Year Plans aimed to reduce economic disparities and regional imbalances. Special attention was paid to the development of backward and under-developed regions of the country.
- The Plans also aimed to modernize various sectors, especially agriculture and industry. For the modernization of agriculture, the program of Green Revolution was launched. Similarly, for the industry sector, the use of modern and capital-intensive technology was emphasized in Indian planning.
2. What are the main features of economic planning?
Answer: The main features of economic planning are:
- Economic planning in India is formulated by the Planning Commission and is finally approved by the National Development Council. All state chief ministers are members of NDC. The NDC is headed by the Prime Minister of India.
- In India, there is co-existence of both central plan and state plan. In every Five-Year Plan, a separate outlay is made for both central plan and state plan.
- Indian planning is a type of financial planning, which means that more emphasis has been given on allocating funds for a particular sector/activity, while less emphasis has been given on achieving physical targets of the plan.
- Indian planning is both prospective and perspective, meaning it includes both short-term and long-term programmes.
- Economic planning has set objectives like rapid industrialisation, raising the standard of living of people, full employment, reduction in inequalities of wealth and income, etc. Its main objective is to maximise national income and per capita income.
3. Explain five drawbacks of planning.
Answer: Five drawbacks of planning are:
- No Increase in Standard of Living: Even 66 years of planning have not made any significant improvement in the removal of poverty.
- Rise in Prices: Our planning has failed to check price rise in India. Rise in prices has badly affected the poor and low-income group.
- Increase in Unemployment: In economic plans, use of capital-intensive technology has been promoted. Use of labour-intensive technology has not been emphasised upon. It has worsened the unemployment situation.
- Less Growth in Agricultural Sector: Agricultural development should have been given top-priority in the Plans, but it has not been done. Green Revolution has restricted itself to wheat and rice crop only.
- Inefficient Administration: The main shortcoming of Indian plans lays in its implementation. Plans are well-thought-out; their implementation is poor because of defective administration, dishonesty, corruption, vested interest, red-tapism, etc.
4. What are the achievements of economic planning?
Answer: The achievements of economic planning are:
- Economic Development or Increase in National Income: During the Five-Year Plans, national income increased at an average rate of 5.1% per annum from 1950-51 to 2015-16. In 2016-17, GDP growth rate is expected to be 7.1%.
- Increase in per Capita Income: During the planning period, per capita income increased at a rate of around 3% per annum. In the Tenth and Eleventh Plans, the growth rate of per capita income was 6.1% and 6.5% per annum respectively. In 2015-16 and 2016-17, the growth rate in per capita income was 6.7% and 5.9% respectively.
- Increase in Rate of Capital Formation: Capital formation, which depends on the rate of saving and investment, has increased during the planning period.
E. Long-answer questions-II
1. Write a short note on the features of economic planning.
Answer: The features of the economic planning are as follows:
- Planning Commission: In India, plans are formulated by the Planning Commission and are finally approved by the National Development Council. All state chief ministers are members of the NDC, which is headed by the Prime Minister of India.
- Existence of Central Plan and State Plan: In India, there is co-existence of both central plan and state plan. In every Five-Year Plan, a separate outlay is made for both the central plan and state plan.
- Financial Planning: Indian planning is a type of financial planning. It means that more emphasis has been given on allocating funds for a particular sector/activity, while less emphasis has been given on achieving physical targets of the plan.
- Prospective (Short-term) and Perspective (Long-term) Planning: Indian planning is both prospective and prospective. In other words, both short-term and long-term programmes have been incorporated in Five-Year Plans.
- Set Objectives: Economic planning has some set objectives; like rapid industrialization, raising the standard of living of people, full employment, reduction in inequalities of wealth and income, etc.
- Government Control: Economic planning is done under the direction of the government. The Planning Commission prepares the plan and presents the same to the government. The latter executes it.
- Comprehensive Development: All sectors like agriculture, industry, trade, transport, mining, etc. are sought to be developed through economic planning. Since all sectors are interdependent, balanced growth is achieved by developing each sector.
- Definite Time Period: Each plan is of a definite time-period. For instance, each plan in India is of five-year duration. Due to some exigencies, one-year plans were also made in between.
2. What are the objectives of economic planning?
Answer: The objectives of economic planning are:
- Increase in National Income and Per Capita Income: In order to increase output and national income, economic planning aims at developing different sectors of the economy like agriculture, industry, etc.
- Reduction in Inequalities of Income: Each welfare economy aims at reducing economic disparities. Economic inequalities give rise to class struggle. Economic growth, with reduction in economic inequality is, therefore, an important objective of economic planning.
- Reduction in Regional Inequalities: Regional imbalances are sought to be reduced through economic planning. Special attention is paid to the development of backward and under-developed regions of the country.
- Price Stability: Planning aims to bring about price stability. Attempts are made to prevent violent changes in prices and protect the economy from inflation and deflation.
- Economic Development: Main objective of economic planning in underdeveloped economies is to achieve all-round development of the economy. Economic development can be promoted by making balanced growth in all the sectors of economy.
- Increase in Employment: Economic planning aims to increase the opportunities of employment. Every plan seeks to provide employment to the maximum number of people.
- Self-sufficiency: Almost all countries of the world are interdependent. But too much dependence on other countries can be detrimental. Hence, one of the objectives of economic planning is to attain self-sufficiency in the economic sector.
- Increase in Capital Formation: Economic planning aims at increasing the rate of capital formation by promoting saving and investment in the economy. Increased capital formation helps increase the rate of economic development.
3. How successful is the economic planning?
Answer: The achievements of economic planning are as follows:
- Economic Development or Increase in National Income: During the Five-Year Plans, national income increased at an average rate of 5.1% per annum from 1950-51 to 2015-16. In 2016-17, the GDP growth rate is expected to be 7.1%.
- Increase in per Capita Income: During the planning period, per capita income increased at a rate of around 3% per annum. In the Tenth and Eleventh Plans, the growth rate of per capita income was 6.1% and 6.5% per annum respectively. In 2015-16 and 2016-17, the growth rate in per capita income was 6.7% and 5.9% respectively.
- Increase in Rate of Capital Formation: Capital formation, which depends on the rate of saving and investment, has increased during the planning period.
- Development of Industries: Infrastructure has developed considerably during the planning period, with significant increases in power generation capacity and improvements in transport and communication.
- Increase in Employment: Various employment generation schemes have been launched, with the government aiming to create 50 million employment avenues in the Twelfth Five-Year Plan.
- Modernisation: Technological up-gradation has been achieved in almost all areas during the planning period, promoting research and development activities in all economic sectors.
- Institutional Reforms in Agriculture and Green Revolution: The production of food grains has increased more than four-fold during the planning period, and the area under irrigation has also increased significantly.
- Development of Industries: Basic and capital goods industries have developed considerably, with the country becoming almost self-sufficient in consumer goods industries.
- Export Promotion, Diversification and Import Substitution: Exports have increased significantly during the planning period, with a diversification in the composition of exports and a reduction in the import of certain items.
- Less Cyclical Fluctuations: Economic planning has resulted in less economic fluctuations in the economy, maintaining economic stability and coordinating all economic activities.
4. Write a short note on the drawbacks of economic planning.
Answer: The drawbacks of the economic planning are:
- No Increase in Standard of Living: Despite planning, significant improvement in poverty removal has not been achieved.
- Rise in Prices: Planning has failed to control price rise, affecting the poor and low-income groups.
- Increase in Unemployment: The use of capital-intensive technology in plans has worsened unemployment.
- Less Growth in Agricultural Sector: Agricultural development was not prioritized in the plans, leading to low productivity and insufficient irrigation facilities.
- Inefficient Administration: Poor implementation due to factors like corruption and red-tapism has been a major shortcoming.
- Shortfall in Target Realisation: Most of the time, the targets for growth of national income, employment, industry, agriculture, etc. are not achieved.
- Slow Capital Formation: Planning has failed to significantly boost capital formation due to factors like slow economic growth and lack of investment facilities.
- Poor Development of Infrastructure: Infrastructure development, including power generation and transport, has been inadequate.
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