Indian Economy Before and After Independence Online Test 11th Economics Lesson 2 Questions in English

Colonialism refers to a system of political and social relations between two countries, of which one is the ruler and the other is its colony. The ruling country not only has political control over the colony, but it also determines the economic policies of the subjugated country

Indian’s sea route trade to Europe started only after the arrival of Vasco da Gama in Calicut, India on May 20, 1498. The Portuguese had traded in Goa as early as 1510.

In 1601 the East India Company was chartered, and the English began their first inroads into the Indian Ocean.

In 1614 Sir Thomas Roe was successful in getting permission from Jahangir for setting up factories and slowly moved all parts of India

Hundred years after Battle of Plassey, the rule of the East India Company finally did come to an end. In 1858, British Parliament passed a law through which the power for governance of India was transferred from the East India Company (EIC) to the British crown.

The period of merchant capital was from 1800 to 1884. The only aim of the East India Company was to develop good relationship by establishing oligopoly trade in the goods with India and the East India’s.

Railway construction policy of the British led to unimaginable as well as uneconomic. The poor Indian taxpayers had been compelled to finance for the construction of railways. The political power was handed over to the British Government by the East India Company in 1858.

The Indian handicrafts products had a worldwide market. Through discriminatory tariff policy, the British Government purposefully destroyed the handicrafts. With the disappearance of nawabs and kings, There was no one to protect Indian handicrafts. The introduction of railways in India increased the domestic market for the British goods.

Land Tenure refers to the system of land ownership and management. The features that distinguish a land tenure system from the others relate to the following: (a) Who owns the land; (b) Who cultivates the land; (c) Who is responsible for paying the land revenue to the government. Based on these questions, three different types of land tenure existed in India before Independence.

The types of land tenure existed in India before Independence were Zamindari system, Mahalwari system and Ryotwari system.

Zamindari System or the Land lord-Tenant System was created by the British East India Company, when in 1793, Lord Cornwallis introduced ‘Permanent Settlement Act’.

After introduction of Mahalwari System or Communal System, it was later extended to Madhya Pradesh and Punjab.

In Mahalwari system ownership of the land was maintained by the collective body usually the villagers which served as a unit of management. They distributed land among the peasants and collected revenue from them and pay it to the state.

Ryotwari system was initially introduced in Tamil Nadu and later extended to Maharashtra, Gujarat, Assam, Coorg, East Punjab and Madhya Pradesh.

Although the Britishers initiated industrialisation process in the 19th century, they were primarily interested in making profit and not in accelerating the economic growth in India.

During the first part of 20th century, Swadeshi movement stimulated the industrialisation process in India. The existing industries and new industries had maintained a slow but steady growth till the outbreak of the First World War in 1914.By this time more than 70 cotton mills and 30 jute mills were set up. Coal production was doubled.

India is the Asia’s third largest economy. The 70 years of Independence have brought a remarkable change in the socio – economic landscape of India.

Some efforts by the colonial British regime in developing the plantations, mines, jute mills, banking and shipping, mainly promoted a system of capitalist firms that were managed by foreigners. These profit motives led to further drain of resources from India.

The Government of India recognized the significant contribution of industrialization. Therefore, the Government of India declared its first Industrial Policy on 6th April 1948. The main importance of this policy was that it ushered in India the system of mixed economy.

Industries were classified into four groups such as public sector (strategic industries), public–cum –private Sector (key industries), controlled private sector, private and co-operative sectors.

The Government encouraged the significance of foreign capital for industrialization but the government decided that the control should remain with Indian hands.

The Industrial Policy of 1956 sought to give a dominant role to public sector. At the same time, it assured a fair treatment to the private sector.

The Government would support and encourage cottage and small-scale enterprises by restricting volume of production in the large-scale sector by differential taxation or by direct subsidies.

The term Green Revolution refers to the technological breakthrough in of agricultural practices. During 1960’s the traditional agricultural practices were gradually replaced by modern technology and agricultural practices in India.

The modern technology and agricultural practices in India in 1960-61 as a pilot project in seven districts. It was called as the High Yielding Varieties Programme (HYVP).

The major achievement of the new strategy was to boost the production of major cereals viz., wheat and rice. India was depending on the US for the food grain. The US by using Public Law 480 (PL480) exported wheat to India. Indians were waiting for the ships to sip their food. On the other hand, India lost lots of minerals.

The Green revolution was confined only to High Yielding Varieties (HYV) cereals, mainly rice, wheat, maize and jowar. This Strategy was mainly directed to increase the production of commercial crops or cash crops. Per hectare productivity of all crops had increased due to better seeds.

Green Revolution had brought prosperity to rural people. Increased production had generated employment opportunities for rural masses. Due to this, their standard of living had increased.

Except in Punjab, and to some extent in Haryana, farm mechanization had created widespread unemployment among agricultural labourers in the rural areas.

Larger chemical use and inorganic materials reduced the soil fertility and spoiled human health. Now organic farming is encouraged.

The Government of India had implemented ‘Second Green revolution’ to achieve higher agricultural growth. The target of Second Green Revolution was to increase 400 million tons of food grain production as against about 214 million tons in 2006-07. This is to be achieved by 2020. In agricultural sector, the growth rate of 5% to 6% has to be maintained over next 15 years.

First steel industry at Kulti, Near Jharia, West Bengal - Bengal iron works company in 1870.

First large-scale steal plant TISCO at Jamshedpur in 1907 followed by IISCO at Burnpur in 1919. Both belonged to private sector.

The first public sector unit was “Vishveshvaraya Iron and Steel works” at Bhadrawati

Steel Authority of India Ltd (SAIL) was established in 1974 and was made responsible for the development of the steel industry.

Presently India is the eighth largest steel producing country in the world.

All the Steel plant are managed by SAIL (at present all important steel plants except TISCO, are under public sector)

The first modernised Jute industrial unit was established at Reshra in West Bengal in 1855.

The jute industry in the country is traditionally export oriented. India ranks number one in the raw jute and jute goods production and number two in export of jute goods in the world.

Sugar industry is the second largest industry among agriculture-based industries in India.

Cotton and textile industry are the Oldest industry of India, and employs largest number of workers. It is the largest organised and broa-based industry which accounts for 4% of GDP, 20% of manufacturing value-added and one third of total export earnings.

The first Indian modernised cotton cloth mill was established in 1818 at Fort Gloaster near Calcutta. But this mill was not successful. The second mill named “Mumbai’s Spinning and Weaving Co.” was established in 1854 at Bombay by KGN Daber.

India is now the largest producer and consumer of sugar in the world. Maharashtra contributes over one third of the Indian total sugar output, followed closely by Uttar Pradesh.

India is the third largest producer of nitrogenous fertilisers in the world.

The first mechanised paper mill was set up in 1812 at Serampur in West Bengal. The paper industry in India is ranked among the 15 top global paper industries.

India is the second-largest (first being China) country in the world in producing natural silk. At present, India produces about 16% silk of the world.

India enjoys the distinction of being the only country producing all the five known commercial varieties of silk viz Mulberry, Tropical Tussar, Oak Tussar, Eri and Muga.

First successful Oilwell was dug in India in 1889 at Digboi, Assam. At present a number of regions with oil reserves have been identified and oil is being extracted in these regions

Oil and Natural Gas Commission (ONGC) was established in 1956 at Dehradun, Uttarakhand.

SSIs promote decentralized development of industries as most of the SSIs are set up in backward and rural areas. The employment-capital ratio is high for the SSIs.

SSIs help to mobilize and utilize local resources like small savings, entrepreneurial talent etc., of the entrepreneurs, which might otherwise remain idle and unutilized. They pave way for promoting traditional family skills and handicrafts. There is a great demand for handicraft goods in developed countries.

SSIs do not require sophisticated machinery. Hence, import the machines from abroad is not necessary. On the other hand, there is a great demand for goods produced by SSIs. Thus, they reduce the pressure on the country’s balance of payments.

SSIs play a complementary role to large scale sector and support the large-scale industries. z SSIs provide parts, components, accessories to large scale industries and meet the requirements of large-scale industries through setting up units near the large-scale units. SSIs serve as ancillaries to large scale units.

Micro Manufacturing Enterprises: The investment in plant and machinery does not exceed Rs.25 lakhs. Small Manufacturing Enterprises: The investment in plant and machinery is more than twenty-five lakh rupees but does not exceed Rs.5 crores.

Public sector bank is a bank in which the government holds a major portion of the shares. Say for example, SBI is public sector bank, the government holding in this bank is 58.60%. Similarly, PNB is a public sector bank, the government holds a stake of 58.87%.

Public sector banks are classified into two categories: 1. Nationalised Banks 2. State Bank and its Associates.

In case of nationalized banks, the government controls and regulates the functioning of the banking entity. Some, examples are State Bank of India, Punjab National Bank, Bank of Baroda, Allahabad Bank etc. However, the government keeps reducing the stake in PSU banks as and when they sell shares. So, to that extent they can also become minority shareholders in these banks. This is in accordance with the privatization policy

In private sector banks, most of the equity is owned by private bodies, corporations, institutions or individuals rather than government. These banks are managed and controlled by private promoters. Of the total banking industry in India, public sector banks constitute 72.9% share while the rest is covered by private players.

Eighth Five Year Plan (1992-1997) was successful and got annual growth rate of 6.8% against the target of 5.6%. Ninth, Tenth and Eleventh failed to achieve the growth target.

The Bank Nationalist on 15 April 1980 are 1. Andhra Bank 2. Corporation Bank 3. New Bank of India 4. Oriental Bank of Commerce 5. Punjab & Sindh Bank 6. Vijaya Bank.

The father of Green Revolution in India was M. S. Swaminathan.

In terms of the number of banks, there are 27 public sector banks and 22 private sector banks. As part of its differentiated banking regime, RBI, the apex banking body, has given license to Payments Bank and Small Finance Banks (SFBs). As a result, Airtel Payments Bank and Paytm Payments Bank Limited have come up.

After Independence, the Government of India adopted planned economic development. For this purpose, Five Year Plans came into existence since 1951. The main objective of the economic planning aimed at social welfare. Before Independence commercial banks were in the private sector.

After Independence, the commercial banks failed in helping the Government to achieve social objectives of planning. Therefore, the government decided to nationalize 14 major commercial banks on 19 July 1969. In 1980, again the government took over another 6 commercial banks.

Economic planning is the process in which the limited natural resources are used skilfully so as to achieve the desired goals. The concept of economic planning in India or five-year plan is derived from Russia (then USSR). India has launched 12 five-year plans so far. Twelfth five-year plan will be the last one.

The government of India has decided to stop the launching of five-year plans and it was replaced by NITI Aayog.

First Five-Year Plan (1951-1956) was based on the Harrod-Domar Model. Its main focus was on the agricultural development of the country. This plan was successful and achieved the GDP growth rate of 3.6% (more than its target).

The Third Five Year Plan (1961-1966) was called ‘GadgilYojana’ also. The main target of this plan was to make the economy independent and to reach self prpalled position ortake off. Due to Indo -China war, this plan could not achieve its growth target of 5.6%.

Second Five-Year Plan (1956-1961) was based on the P.C. Mahalanobis Model. Its main focus was on the industrial development of the country. This plan was successful and achieved the growth rate of 4.1%.

The main reason behind the plan holiday was the Indo-Pakistan war & failure of third plan. During this plan, annual plans were made and equal priority was given to agriculture, its allied sectors and the industry sector.

Fifth Five Year Plan (1974-1979) top priority was given to agriculture, next came industry and mines. Overall, this plan was successful, which achieved the growth rate of 4.8% against the target of 4.4%. The draft of this plan was prepared and launched by D.P. Dhar. This plan was terminated in 1978.

The basic objective of Sixth Five Year Plan (1980-1985) was poverty eradication and technological self-reliance. Garibi-Hatao was the motto. It was based on investment yojana. Its growth target was 5.2% but it achieved 5.7%.

Eighth five-year Plan could not take place due to volatile political situation at the centre. So, two annual programmes are formed in 1990-91& 1991-92.

During Eighth Five Year Plan (1992-1997), New Economic Policy of India was introduced. In this plan the top priority was given to development of the human resources i.e. employment, education and public health. This plan was successful and got annual growth rate of 6.8% against the target of 5.6%

Eleventh Five Year Plan (2007-2012) main theme was “faster and more inclusive growth”. Its growth rate target was 8.1% but it achieved only 7.9%.

Ninth Five Year Plan (1997-2002) main focus was “growth with justice and equity”. This plan failed to achieve the growth target of 7% and Indian economy grew only at the rate of 5.6%.

Twelfth Five Year Plan (2012-2017) main theme is “Faster, More Inclusive and Sustainable Growth”. Its growth rate target is 8%.

Tenth Five Year Plan (2002-2007) aimed to double the per capita income of India in the next 10 years. It aimed to reduce the poverty ratio to 15% by 2012. Its growth target was 8.0% but it achieved only 7.2%.

NITI Aayog serves as a knowledge hub and monitors progress in the implementation of policies and programmes of the Government of India. It includes the matters of national and international importance on the economic front, dissemination of best practices from within the country and from other nations, the infusion of new policy ideas and specific issue-based support.

The Planning Commission has been replaced by the NITI Aayog on 1st January, 2015. NITI (National Institution for Transforming India) Aayog will monitor, coordinate and ensure implementation of the accepted sustainable development goals.

United Nations Development Programme has been publishing Human Development Report annually since 1990. HDI helped the government to the real uplifting of standard of living of the people.

Human Development Index (HDI) was developed by the Pakistani Economist Mahbub ul Haq and the Indian Economist Amartya Kumar Sen in 1990 and was published by the United Nations Development Programme (UNDP). It is constructed based on Life Expectancy Index, Education Index and GDP Per Capita.

HDI is based on the following three indicators 1. Longevity is measured by life expectancy at birth, 2. Educational attainments, 3. Standard of living, measured by real GDP per capita (PPP$).

Before calculating HDI, the fixed minimum and maximum values of each indicator are chosen. The performance in each dimension is expressed as a value between 0 and 1 by applying the following formula Dimension Index = (Actual value – Minimum value) / (Maximum value - Minimum value).

The HDR 2016 stated that regional disparities in education, health and living standards within India has caused India’s downfall to 27 % on HDI score. India’s HDI rank value in 2015 stood at 0.624, which had increased from 0.580 in 2010. India’s rank in 2014 was 131.

Top three countries of HDI Norway (0.949) Australia (0.939) Switzerland (0.939)

Biswajeet Guha has stated that the calculation of HDI neglected many important aspects of human development. He has created four indices of HDI as HDI1, HDI2, HDI3, and HDI4. HDI1 is based on UNDP methodology as given in Human Development Report. He has enlarged the scope of HDI by adding three more dimensions such as quality of life, poverty eradication, and urbanization.

Morris D Morris developed the Physical Quality of Life Index (PQLI). The PQLI is a measure to calculate the quality of life (well-being of a country). For this, he included three indicators such as life expectancy, infant mortality rate and literacy rate. A scale of each indicator ranges from the number 1 to 100.

In Physical Quality of Life Index (PQLI) scale Number 1 represents the worst performance by any country. 100 is the best performance. For example, in case of life expectancy, the upper limit of 100. This was assigned to 77 years which was achieved by Sweden in 1973. The lower limit of 1 was assigned to 28 years which was achieved by Guinea-Bissau in 1960.

Human Development Index is a composite statistic of life expectancy, education and per capita income indicators.

The First World War started in the year in year 1914.

The Bank Nationalized on 19 July 1969 was 1. Allahabad Bank 2. Bank of Baroda 3. Bank of Maharashtra 4. Canara Bank 5. Central Bank of India 6. Dena Bank 7. Indian Bank 8. Indian Overseas Bank 9. Punjab National Bank 10. Syndicate Bank 11. Union Bank 12. United Bank of India 13. UCO Bank 14. Bank of India.