CUET UG Economics: Indian Economic Development - Indian Economy, 1947-1991, Planning, Green Revolution, Industrial Policy

Must?Know (15–20 detailed bullets)

• India adopted a mixed economy model after independence, combining public and private sectors; first formalized in the Industrial Policy Resolution of 1948.
• The Planning Commission was established in 1950 by a government resolution (not constitutional body); chaired by the Prime Minister.
• First Five-Year Plan (1951–1956) focused on agriculture, irrigation, and power; achieved growth rate of 3.6% against target of 2.1%.
• Second Five-Year Plan (1956–1961) based on Mahalanobis Model, emphasized heavy industries like steel and machinery.
• The Industrial Policy Resolution of 1956 classified industries into three schedules:
• Schedule A (17 industries under state monopoly),
• Schedule B (private sector with state participation),
• Schedule C (left to private sector).
• Third Five-Year Plan (1961–1966) aimed at self-sustained growth but failed due to Indo-China war (1962), Indo-Pak war (1965), and droughts.
• Plan holidays were declared from 1966 to 1969 due to economic instability; three annual plans implemented instead.
• Green Revolution began in the mid-1960s (around 1966–67) with the introduction of High-Yielding Variety (HYV) seeds, especially in wheat and rice.
• Punjab, Haryana, and western Uttar Pradesh were primary beneficiaries of the Green Revolution.
• Crops under Green Revolution: wheat saw maximum success; rice adopted later with IR-8 variety.
• Food Corporation of India (FCI) established in 1965 for procurement, storage, and distribution of food grains.
• Agricultural Prices Commission (now Commission for Agricultural Costs and Prices – CACP) set up in 1965 to recommend Minimum Support Prices (MSP).
• Public Sector Undertakings (PSUs) expanded rapidly post-1956; examples include BHEL, SAIL, ONGC.
• Import substitution was a key feature of industrial policy until 1991, aiming at self-reliance through domestic production.
• Licence-Permit Raj referred to the complex system of licenses, quotas, and regulations required to start or expand industries under pre-1991 policy.
• Foreign exchange reserves fell to $1.2 billion in 1991 (verify from NCERT), triggering balance of payments crisis leading to economic reforms.
• The term "self-reliance" in early planning meant reducing dependence on foreign aid and imports, not complete autarky.
• Decadal growth of national income during 1950s was about 3.6% per annum (verify from NCERT); often called "Hindu rate of growth" pejoratively.
• The Green Revolution increased food grain production from 72 million tonnes in 1965–66 to 131 million tonnes in 1978–79 (verify from NCERT).
• Industrial licensing under the Industries (Development and Regulation) Act, 1951, controlled entry and expansion of firms in specified industries.

Difficulty Level

Intermediate — Requires understanding of policy evolution, sequencing of plans, and socio-economic outcomes; some data recall needed but fewer complex calculations.

Common CUET Traps

• Trap: Believing that the Green Revolution benefited all Indian states equally.
  Avoid: Know that it was regionally concentrated in Punjab, Haryana, and western UP; eastern and central India saw limited impact.

• Trap: Confusing the objectives of the First and Second Five-Year Plans.
  Avoid: First Plan prioritized agriculture and irrigation; Second Plan shifted focus to industrialization via the Mahalanobis model.

• Trap: Assuming the Planning Commission was a constitutional body.
  Avoid: It was created by a government resolution in 1950; not mentioned in the Constitution.

Practice MCQs

Q1. Which Five-Year Plan was based on the Mahalanobis Model?
A. First Five-Year Plan
B. Second Five-Year Plan
C. Third Five-Year Plan
D. Fourth Five-Year Plan
Answer: B
Explanation: The Second Five-Year Plan (1956–61) used the Mahalanobis Model emphasizing capital-intensive industries.
Why others fail: The First Plan focused on agriculture, making A a common guess.

Q2. When was the Planning Commission set up in India?
A. 1947
B. 1950
C. 1951
D. 1956
Answer: B
Explanation: The Planning Commission was established in March 1950 by a cabinet resolution.
Why others fail: 1951 is confused with the start of the First Plan, but setup was in 1950.

Q3. Which of the following best describes the 'Licence-Permit Raj' in pre-1991 India?
A. Free market system with minimal government intervention
B. A system requiring government licenses to start or expand industries
C. A policy promoting foreign direct investment
D. A subsidy regime for agricultural inputs
Answer: B
Explanation: Licence-Permit Raj refers to the bureaucratic system of obtaining government approvals for industrial activities.
Why others fail: Option C is associated with post-1991 reforms, tempting those who confuse timelines.

Q4. Which institution was established in 1965 to ensure procurement of food grains at Minimum Support Price?
A. NABARD
B. FCI
C. RBI
D. SEBI
Answer: B
Explanation: Food Corporation of India (FCI) was set up in 1965 for food grain procurement and distribution.
Why others fail: NABARD was established in 1982, so A distracts with a related but later institution.

Q5. Which of the following was NOT a feature of the Industrial Policy Resolution of 1956?
A. Classification of industries into three schedules
B. Emphasis on public sector dominance
C. Encouragement of foreign investment in all sectors
D. State monopoly over 17 industries
Answer: C
Explanation: The 1956 policy restricted foreign investment, contrary to encouragement in all sectors.
Why others fail: C sounds plausible due to later reforms, but 1956 policy was inward-looking.

Last?Minute Revision (15–20 one?liners)

• Planning Commission formed in 1950 – not constitutional.
• First Five-Year Plan: 1951–1956 – agriculture focus.
• Second FYP: 1956–1961 – Mahalanobis Model.
• Industrial Policy Resolution – 1948 and 1956.
• 1956 IPR – 17 industries under state monopoly (Schedule A).
• Green Revolution started – mid-1960s (1966–67).
• HYV seeds – key input in Green Revolution.
• MSP recommended by – CACP (earlier Agricultural Prices Commission).
• FCI established – 1965.
• Main crops in Green Revolution – wheat and rice.
• Core regions – Punjab, Haryana, western UP.
• Plan holidays – 1966–1969 (after Third Plan failure).
• Licence-Permit Raj – pre-1991 regulatory system.
• Import substitution – pre-1991 industrial strategy.
• BOP crisis – 1991, reserves ~$1.2 billion (verify from NCERT).
• Mixed economy – public + private sectors (adopted post-independence).
• Mahalanobis Model – prioritizes heavy industries for long-term growth.
• "Hindu rate of growth" – refers to slow ~3.5% growth in early decades.
• NABARD established – 1982 (not during 1947–1991 planning phase).
• CACP full form – Commission for Agricultural Costs and Prices.