NCERT Solutions for Class 12 Economics Part B Chapter 6 Development Experience (1947-90) and Economic Reforms since 1991

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

Ans. No, modernisation as a planning objective does not contradict employment generation. In fact both modernisation and employment generation are positively correlated. While modernisation refers to the use of new and modern technology in production process that may make some people lose their jobs in the initial stages. But gradually, the use of modern technology and input will raise the productivity and, consequently, the income of the people will further raise the demand for goods and services. In order to fulfill this increased demand, there will be more job opportunities that will lead more people to be hired and, hence, more employment opportunities will be generated. Hence, both modernisation and employment generation are not contradictory but are complementary to each other.

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

Ans. It was necessary for a developing country like India to follow self-reliance as a planning objective, as otherwise, it would increase the country's dependence on foreign products. Further, it was feared that dependence on imported food supplies, foreign technology and foreign capital may make India's sovereignty vulnerable to foreign interference in our policies.

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

Ans. 'Green Revolution' refers to the large increase in production of foodgrains resulting from the use of HYV seeds, especially for wheat and rice.

  • (a) It was implemented to break the tagnation in agriculture, an outcome of colonial rate.
  • (b) It benefited the big farmers to begin with, who could afford the required inputs and technology. But the state played an extensive role in ensuring that the small farmers also benefit from the new technology. The government provided them loans at a low interest rate, and subsidised fertilisers.
  • (c) Services rendered by the research insitutes established by the government also helped in fighting pest attacks.

Q. Explain 'growth with equity' as a planning objective.

Ans. 'Growth with equity' as an objective of planning states that in addition to growth, modernisation and self-reliance, equity is also important.

  • (a) Every Indian is entitled to meet his/her basic needs such as food, a decent house, education and health care.
  • (b) Inequality in the distribution of wealth should be reduced.

Q. Agriculture sector appears to be adversely affected by the reform process, Why?

Ans. Yes, the agriculture sector appears to be adversety affected by the reform process. The growth rate in this sector has been declerating. On account of the following factors.

  • (a) Public investment in agriculture sector, especially in infrastructure has been reduced in the reform period.
  • (b) Removal of fertiliser subsidy led to an increase in the cost of production which has badly affected the small and marginal farmers.
  • (c) Reduction in import duties on agricultural products.
  • (d) Removal of minimum support price.

Q. Why has the industrial sector performed poorly in the reform period?

Ans. Industrial sector has performed poorly in the reform period because of:

  • (a) Decreasing demand of industrial products due to reasons like cheaper imports, inadequate investment in infrastructure.
  • (b) India still being a developing country does not have the access to the markets of developed countries because of non-tariff barriers.

Q. What are the major factors responsible for the high growth of the service sector?

Ans. The major factors that led to the growth of service sectors in India are as follows;

(a) High demand for services as final product:

India was a virgin market for service sector. So, when service sector started booming due to business outsourcing from the developed countries to India, there was very high demand for these services especially for banking, computer service, advertisement and communication. This high demand in turn led to a high growth rate of service sector.

(b) Liberalisation and economic reforms:

The growth of Indian service sector is also attributable to the liberalisation and various economic reforms that were initiated in 1991. Due to these reforms, various restrictions on the movement of international finance were minimised. This led to huge inflow of foreign capital, foreign direct investments and outsourcing to India. This encouraged the service sector growth.

(c) Structural transformation: Indian economy: Indian economy is experiencing structural transformation that implies shift of economic dependence from primary to tertiary sector. Due to this transformation, there was increased demand of services by other sectors which boosted the service sector.

(d) Advanced technology and growth of IT:
The advancements and innovations in the IT sector enabled the use of internet, telecommunication, mobile phone and electronic transactions across different countries. All these contributed to the growth of the service sector in India.

(e) Increased volume of trade: Low tariff and non-tariff barriers on imports by India are also responsible for high growth rate of service sector. The foreign trade reforms enabled the domestic products to interact and compete in the international markets.

(f) Cheap labour and reasonable degree of skill in India: Due to the availability of cheap labour and reasonable degree of skilled man power in India, developed countries found outsourcing to India feasible and profitable. The business outsourcing in itself provides substantial encouragements (like development of human capital that requires services like good coaching centres and reputed institutions, etc.) to the growth of service sector.