BBA MBA Indian Economy Notes Short Type Question
BBA MBA Indian Economy Notes Short Type Question :-
Short Answer Type Question Answer
Q. 1. State the meaning and characteristics of economic planning.
Ans. Economic Planning : Economic planning means the well organised utilisation of available physical, material and human resources of a country by government for the achievement of certain economic and social objectives.
Characteristics of Economic Planning
1. A System of Economic Organisation : Economic planning is a comprehensive system of economic organisation in which all the economic activities Of production, consumption, distribution, exchange and finance are defined and planned in co-ordinated manner.
2. Determination of Targets and Priorities : Economic and social targets are well defined in targets are will the process of economic planning.
3. Central Planning : All the activities of economic planning are performed by a Central the process of economic planning, authority, Planning Commission of India.
4. A Certain Period : Economic planning involves determination of economic plans for a certain period. In India, an economic plan is prepared for five years.
5. Government Regulation and Control : All the plans are determined, regulated and controlled by government.
Q. 2. How is a five year plan drafted in India?
Explain the steps of planning process in India.
Ans. Steps of Planning Process (or Five Year Plan Drafting iMndia)
1. Start of Planning Process : Planning process is started about twoyears before the period of plan planning commission studies the resources available in the country, important problems of the country, important needs and priorities of the country etc.
2. Consideration and Acceptance by National Development Council (NDC) : Date and plans collected are drafted by planning commission are presented before NDC, the council may reject or modify or accept them.
3. Plans by State Government : The data and plans and are sent to state governments. They prepare related plans for their respective states.
4. Format Memorandum : Planning Commission considers all the plans and suggestions received from central and state governments. A format memorandum is prepared on the basis of these plans, This format is sent to central government for consideration.
5. Draft (approach paper) of Plan : Considering the suggestions of central government, a draft of plan is prepared by planning commission and is presented before National Development Council. Necessary amendments are suggested and necessary directions are issued.
6. Publication of Draft (approach paper) of Plan : Planning Commission finalises the draft of plan and such draft is published for general public. Public opinions and suggestions are invited on the issue.
7. Final Draft of Plan : On the basis of opinions and suggestions collected from general public’ necessary changes are made in the draft of plan and a final draft is prepared. After getting approval of both the council of ministers and NDC, the final draft is published. It is presented before the parliament and accepted as one year plan for coming period.
Q. 3. Write a short note on National Development Council (NDC).
Ans. Organisation of National Development Council (NDC) : To guide, direct and assist planning commission in the formulation, implementation and evaluation of economic plans this council was set up. Chief Ministers of all the states, all the members of planning commission are the members of NDC. Prime Minister of India is the ex-offico Chairman of NDC.
Functions of National Development Council
1. To Guide, Direct and Assist Planning Commission : NDC is to guide, direct and assist planning commission in the formulation, implementation and evaluation of economic Plans and projects. It issues necessary directions to planning commission for the purpose.
2. To Consider and Finalise the Plan : Most important function of NDC is to consider and finalise economic plans and projects prepared by planning commission.
Indian Economy Notes
3. To Review the Plan : NDC is to review economic plans and projects. National objectives and priorities are also determined by NDC. NDC issues necessary guidelines to planning commission for the effective implementation of plans and projects.
Q. 4. Write a short note on the gchievements of economic planning in India.
Ans. Economic planning was launched in India on 1st April, 1951. Since then, nine five year plans have been completed and tenth five year plan has been launched on 1st April, 2001. It will last till 31st March, 2007. The country has recorded, and achieved considerable growth and success in all the sectors of economy during planning era. Important achievements of economic planning may be summarised as follows :
1. Increase in National Income : At current prices it has increased from 9,142 crores in 1950-51 crore in 2003-04.
2. Increase in Per Capita Income : At current prices, it has increased from? 254.7 in 1950-51 to 20,968.5 in 2003-04.
3. Increase in Agricultural Production : India has achieved creditable success in the production of agricultural products. At the time of independence, India had to depend upon imports, even for the supply of food grains. Now the country is almost self-dependent in the production of food grains.
4. Increase in Industrial Production : Almost all industries of country have recorded a tremendous growth.
5. Increase in Rate of Savings and Investments : Rate of Gross Domestic Savings has increased from 8.9% of GDP at current market prices in 1950-51 to 28.1% in 2003-04.
6. Expansion of Public Sector : Public sectorehas recorded a tremendous growth during planning era. In 1950-51, there were only 5 public sector enterprises with capital investment of? 29 crores. On 1st April, 2002, this number has increased to 240 with capital investment of 3,24,632 crores.
7. Infrastructural Development : Planned economic development has helped in the growth and expansion of transportation and communication, power and fuel, irrigation, science and technology etc.
8. Social Development : Economic planning has helped in the development facilities of education and training, research, health, housing, civic aminities etc.
9. Growth of Foreign Trade : Foreign trade of India has also recorded high rate of growth. On the eve of first five year plan, exports of India were 606 crore and imports 608 crore. These figures have increased to about 2,93,367 crore and 3,59,108 crore respectively in 2003-04.
10. Other Achievements : (i) Development of science and technology, (ii) Reduction in birth rate and death rate, (iii) Modernization and mechanisation of agriculture, (iv) Moderniza- tion and mechanisation of industry.
Q.5. Write a short note on the ‘failures of economic planning in India.
Ans. Failures of economic planning in India was due to following reasons :
1. Slow Progress of National Income and Per Capita Income : Though both the national income and per capita income have increased substantially during planning period, yet it cannot be regarded as satisfactory.
2. Increase in Unemployment : Despite best efforts, the problems of unemployment could not
be solved, rather it is increasing.
3. Inequality in the Distribution of Income and Wealth : Inequality in the distribution of income and wealth has been increasing. Rich are becoming more rich and poor are becoming more poor.
4. Dependence on Foreign Aid and Foreign Capital : We have increased our dependence on foreign aid and foreign capital. Outflow in the form of repayment of loans and interest has exceeded gross inflow of foreign aid and foreign capital in the country.
5. Increase in Population : A great failure of economic planning in India is the continuous increase in population. It has increased about 31 times during planning period.
6. Other Failures : (i) Regional imbalances, (ii) Corruption. (iii) Increasing deficit financing, (iv) Lack of political stability, (v) Lack of political willingness (v) Lack of public co-operation.
Q. 6. How can economic planning be made more effective?
Ans. The economic planning can be made more effective in the following ways :
1. To Contain the Growth of Population : Growth of population must be effectively controlled, According to an estimate, if the population of country is reduced to half, almost all the economic and social problems can be solved.
2. To Invite People’s Participation : Economic planning is for people. Therefore, it can be successful only if it gets full active co-operation of people.
3. Development in Rural Industries : India is a country of villages. Nearly 68% of its population is still living in rural areas, Poverty unemployment of these areas can be effectively solved if rural industrialisation is achieved.
4. Balanced and Co-ordinated Growth : There should be a balance between the development of agriculture and industry, rural areas and urban areas, small scale and large scale industries, private and public sector, etc.
5. Exploration and Utilisation of Resources : “India is a rich country inhabited by the poor”, is perhaps the greatest misfortune of India. Need is that available resources should be explored and utilised in the best possible manner.
6. Other Suggestions : (i) Support of monetary and fiscal policies, (ii) Practical and feasible plans and targets, (iii) Encouragement to savings, particularly small savings, (iv) Emphasis on the development of education and training, (v) Emphasis on the development of science and technolo.
Q. 7. Distinguish between capitalism and socialism.
Ans. Capitalism : In a capitalist economy, households and firms are the basic production units The capitalist system is also known as free enterprise economy and market economy. It is characterized by the private ownership of the means of production, individual decision-making and the use of the market mechanism of carry out the decision of individual participants and facilitate the flow of goods and services in markets.
According to Carl Marx, “Capitalism is a particular made of organisation of production which is characterized by (a) Wage slavery (b) Production of material and (c) Creations of surplus value.”
According to Louks and Hoots, “Capitalism is a system of economic organisation featured by the private ownership and the use for private profit of man-made and nature made capital.”
In a pure market economy all productive activities are privately owned or supposed to being
owned by the state. The good and services that a country produces and the quantity in which they are produced are not planned by anyone. Rather, production is determine by the interaction of supply and demand and signaled to produces through the price system, If demand for a product exceeds supply, prices will rise, signaling producers to produces more if supply exceeds demand’ prices will fall, signaling produces to produce less. In this system consumers are sovereign.
Socialism : Socialism is an economic system where the means of production are either owned or controlled by the state and the resource allocation, investment pattern, consumption, income distribution etc. are directed and regulated by the state.
Indian Economy Notes
Socialism is quite distinct from capitalism, which is based on the institutions of private property and private enterprise. In a socialist state there is no place for private property and private enterprise. In the socialist state, production is controlled by the state itself, which decides what to produce how to produce and how to distribute the total product among the population. Since there is no private capital, land or enterprise, there is no necessity to pay interest, rent or profit. The entire national income is distributed as wages among the workers.
Historically, socialist or command economies were found in communist countries where collective goals were given priority over individual goals. Since the demise of communism in the late 1980s the number of command economies has fallen dramatically. Some elements of a command economy were also evident in a number of democratic nations led by socialist-inclined governments. France and India both experimented with extensive government planning and state ownership, although government planning has fallen into disfavor in both countries.
While the objective of command economy is to mobilize economic resources for the public good the opposite seems to have occurred.qn a socialist economy, state owned enterprises have little incentives to control costs and be efficient, because they cannot go out of business. Also the abolition of private ownership means there is no incentive for individuals to look for better ways to serve consumer needs; hence dynamism and innovation are absent from command economies. Instead of growing and becoming more prosperous, such economies tend to be characterised by stagnation.
According to H.D. Dickinson, “Socialism is an economic organisation of society in lich the material means of production are owned by the whole community and operated by organs representative of and responsible to the community according to a general economic plan, all members of community being entitled to benefit from the results of such socialised production on the basis of equal right.”