Planning in India and Economic Reforms: UPSC Previous Year Questions (Indian Economy)

Explanation

In a report "Changing Structure of Rural Economy of India: Implications for Employment and Growth 2017," published by NITI Aayog, following observations were made:

Statement 1 is incorrect: Both rural and urban regions have seen an improvement in worker productivity as well as the absolute level of income per worker. For rural areas, it was Rs. 37273 in 2004 -05 and Rs. 101755 in 2011 -12, while for urban areas it was Rs. 120419 in 2004 -05 and Rs. 282515 in 2011 -12.

Statement 2 is incorrect: As per the 2011 Census, 68.8% of India’s population and 72.4% of the workforce resided in rural areas. However, the steady transition to urbanisation over the years has led to a decline in the rural share of the workforce, from 77.8% in 1993 -94 to 70.9% in 2011 -12.

Statement 3 is correct: About two-thirds of rural income is now generated in non -agricultural activities. Non-farm economy has increased in rural areas. The share of agriculture in the rural economy has decreased from 57% in 1993 -94 to 39% in 2011 -12.

Statement 4 is correct: After 2004 -05, the rural areas have witnessed negative growth in employment in spite of high growth in output. The growth rate of rural employment was 1.45% during

1994 -2005, which fell to -0.28% between 2005 -12.

Explanation

Statement 1 is correct: From the Second Five Year Plan(1956-61), there was determined thrust towards substitution of basic and capital goods industries. This plan focused on Rapid Industrialization with an emphasis on capital goods and heavy industries. It was based on the PC Mahalanobis Model.

Statement 2 is correct: The Fourth Plan (1969-74) provided a necessary corrective to the earlier trend which helped particularly the stronger sections in agriculture as well as in industry to enable them rapidly to enlarge and diversify the production base. It has adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power and eliminating disparities in income between different regions. Thus, it targeted Growth with Stability, progressive achievement of self-reliance and income distribution.

Statement 3 is incorrect: The Fifth plan (1974-78) aimed at removal of poverty and attaining self-reliance. The financial sector became an integral part of the plan in the Ninth five -year plan(1997-2002). Note: Details on Five Year Plans are given in Q. 17 Explanation

Explanation

Statement 1 is incorrect: India’s agriculture sector has shown a gradual decline in contribution to the Indian economy post-reform. India’s traditional occupation, agriculture, currently makes up only 15% of the GDP, down from 29% in 1991.

Statement 2 is correct: India is seen as a successful exporter of IT software, auto parts, textiles, and engineering goods in the reform period. Thus, the share of India’s exports in world trade increased after its liberalisation of economic policies in 1991. India’s share in world exports was around 0.5% in 1990 and increased to approximately 1.85% by 2023 (PwC report).

Statement 3 is correct: The Foreign investments including FDI and FII have increased from about US $ 100 million in 1990-91 to US $ 467 billion in 2012-13.

Statement 4 is correct: The opening up of the economy has led to rapid increase in foreign exchange reserves. In 1991, India had only $5.8 billion in forex reserves, which were insufficient to cover imports for even three weeks. As of 2012-13, forex re-serves had grown to over $292 billion (RBI data).The trend has continued, and as of January 2024, forex reserves are over $620 billion. The increase is due to higher exports, remittances, FDI inflows, and better economic management post-liberalization.

Explanation

Option (a) is incorrect: While inclusive growth and poverty reduction were important goals, they were not the main objective of the 12th Five-Year Plan. The plan emphasized faster and sustainable growth in addition to inclusivity.

Option (b) is incorrect: This option misses the "faster" aspect, which was a key focus of the 12th Plan. The plan aimed to accelerate economic growth while making it sustainable and inclusive.

Option (c) is incorrect: While reducing unemployment was an important goal, it was not explicitly stated in the main objective of 12th FYP.

Option (d) is correct: The Twelfth Five Year Plan (2012-2017) was launched with the objective of faster, sustainable, and more inclusive growth. It was the last five-year plan. Its growth rate target was 8%. Later, the government dissolved the Planning Commission with the creation of NITI Aayog. Major objectives of the Twelfth Five-Year Plan:

To remove gender and social gaps in school enrolment. To enhance access to higher education. To reduce malnutrition among children aged 0-3 years. To provide electricity to all villages. Create new job opportunities in non-agricultural sectors.

Explanation

Statement 1 is incorrect: Permitting Non-Banking Financial Companies (NBFCs) to engage in banking cannot be considered a part of Inclusive Governance. The primary objective of NBFCs changing into banks is to earn profits, which may not align with the principles of inclusivity. For Inclusive Governance to be successful, the government must focus on ensuring support for all citizens, regardless of their economic and social status. Instead of allowing financial entities to prioritize profit-making, the government should emphasize equitable access to financial services for all.

Statement 2 is correct: Article 243ZD of the Indian Constitution mandates the establishment of District Planning Committees (DPCs) at the district level to oversee planning at the district and sub-district levels. This aligns with the principles of Inclusive Governance, as strengthening local governance ensures better representation and promotes equitable development.

Statement 3 is correct: Increasing government spending or Investing in public health ensures that healthcare services are accessible and affordable, especially for vulnerable populations. Health plays a crucial role in promoting social justice and inclusive growth. For instance, establishing hospitals at the block and village levels ensures that even remote populations have access to necessary healthcare services.

Statement 4 is correct: The Mid-Day Meal Program (MDMP), also known as the Nutrition Support to Primary Education, aims who are enrolled in schools. It is designed to enhance enrollment, attendance, and retention rates, while also improving the nutritional status of students in primary education. Clearly, this initiative is an integral part of inclusive governance.

Explanation

The Eighth Five-Year Plan (1992-1997) marked a shift in India’s industrialization strategy by emphasizing infrastructure development and liberalization policies over traditional heavy industries. This change stemmed from the economic reforms of 1991, which aimed to boost private sector participation, attract foreign investment, and focus on services and technology-driven industries. This shift had significant implications, including the modernization of infrastructure, which improved connectivity and efficiency, and the expansion of the private sector, which became a key driver of economic growth and employment opportunities.

Explanation

As per Article 281 of the Indian Constitution, the President of India is responsible for causing the recommendations of the Finance Commission to be laid before both Houses of Parliament, along with an explanatory memorandum on the action taken on its recommendations. Options (b), (c), and (d) are incorrect:

The Speaker of Lok Sabha oversees parliamentary proceedings but does not deal with Finance Commission recommendations. The Prime Minister and Union Finance Minister play roles in policy and implementation but do not have the constitutional responsibility mentioned under Article 281.

Explanation

Strengthening of capital markets was not a core focus of the Eleventh Five-Year Plan (2007-2012). The plan emphasized inclusive growth, focusing on poverty reduction, employment generation, gender equality, education, and health.

Explanation

The India-based Neutrino Observatory (INO) was designated as a mega science project in the 11th Five-Year Plan to promote research in high-energy physics.

Option (d) is correct: Neutrinos are subatomic particles that play a key role in understanding the fundamental forces of nature. Despite their elusive nature and weak interactions, they are essential to various processes in the universe, such as stellar re-actions and cosmic phenomena. Neutrinos are chargeless elementary particles that travel near the speed of light, making them difficult to detect. Neutrinos are produced in nuclear reactions, such as beta decay, which occurs in stars, nuclear reactors, and radioactive decay processes. In beta decay, a neutron decays into a proton, emitting a beta particle (electron) and a neutrino. Neutrinos have negligible but non-zero mass, confirmed through experiments in neutrino oscillation in particle physics. Neutrinos are incredibly abundant in the universe. It is estimated that trillions of neutrinos pass through the human body every second, and they are virtually undetectable because they interact very weakly with matter.

Explanation

The Emergency (1975-1977) was declared during the Fifth Five-Year Plan (1974-1979). It was a politically turbulent period marked by restrictions on civil liberties. In 1977, general elections were held, resulting in the defeat of the Congress party and the formation of the Janata Party government, ending Indira Gandhi’s rule.