NCERT Solutions for Class 12 Indian Economic Development Chapter 2 MCQ and important question answers for session 2022-2023. Class 12 Economics chapter 2 Indian Economy 1950-1990 extra questions and multiple choice question answers are given here with explanation.

Class 12 Indian Economic Development Chapter 2 MCQ


Land ceiling refers to

[A]. Fixing rural landholding at the existing level
[B]. Fixing the maximum size of land held by an individual
[C]. Fixing urban landholding at the existing level
[D]. Fixing land area for irrigation purpose

In 1955, Karve committee was constituted for

[A]. Using SSI for rural development
[B]. Using SSI for urban development
[C]. Using large scale industries for development
[D]. Both a and b

All the state governments, imposed land ceiling in 1960, except

[A]. South-western
[B]. North-western
[C]. South-eastern
[D]. North-eastern

IADP stands for

[A]. Integrated agriculture development product
[B]. Intensive area development programme
[C]. Integrated area development product
[D]. Intensive area development product

The Green Revolution

At independence, about 75 percent population of the country was addicted to agriculture. Productivity in agriculture sector was too low thanks to the previous technology and therefore the absence of needed infrastructure for the overwhelming majority of farmers. India’s agriculture vitally depends on the monsoon and if the monsoon fell short, the farmers were in hassle unless that they had access to irrigation facilities that an awfully few had.

The stagnation in agriculture throughout the colonial rule was for good broken by the revolution. This refers to the big increase within the production of food grains ensuing from the employment of high yielding variety (HYV) seeds particularly for wheat and rice. The use of these seeds needed fertiliser and pesticide within the correct quantities yet as regular provide of water. As a result of the first phase of the green revolution, the use of HYV seeds was restricted to the more affluent states such as Punjab, Andhra Pradesh and Tamil Nadu.

Class 12 Indian Economic Development Chapter 2 Important Question Answers

Define a plan.

A plan spells out how the resources of a nation should be put to use. It should have some general goals as well as specific objectives which are to be achieved within a specified period of time; in India plans were of five years duration and were called five-year plans. Our plan documents up to the year 2017 not only specify the objectives to be attained in the five years of a plan but also what is to be achieved over a period of twenty years. This long-term plan is called ‘perspective plan’. The five-year plans were supposed to provide the basis for the perspective plan.

What is Industrial Policy Resolution 1956 (IPR 1956)?

In accordance with the goal of the state controlling the commanding heights of the economy, the Industrial Policy Resolution of 1956 was adopted. This resolution formed the basis of the Second Five Year Plan, the plan which tried to build the basis for a socialist pattern of society. This resolution classified industries into three categories. The first category comprised industries which would be exclusively owned by the government; the second category consisted of industries in which the private sector could supplement the efforts of the public sector, with the government taking the sole responsibility for starting new units; the third category consisted of the remaining industries which were to be in the private sector.

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

A nation can promote economic growth and modernisation by using its own resources or by using resources imported from other nations. The first seven five-year plans gave importance to self-reliance which means avoiding imports of those goods which could be produced in India itself. This policy was considered a necessity in order to reduce our dependence on foreign countries, especially for food. It is understandable that people who were recently freed from foreign domination should give importance to self-reliance. 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.

Explain the need and type of land reforms implemented in the agriculture sector.

At the time of independence, the land tenure system was characterised by intermediaries who merely collected rent from the actual tillers of the soil without contributing towards improvements on the farm. The low productivity of the agricultural sector forced India to import food from the United States of America (U.S.A.). Equity in agriculture called for land reforms which primarily refer to change in the ownership of landholdings. Just a year after independence, steps were taken to abolish intermediaries and to make the tillers the owners of land. The idea behind this move was that ownership of land would give incentives to the tillers to invest in making improvements provided sufficient capital was made available to them.

What do you understand by ‘Prices as Signals’?

It is important to understand that prices are signals about the availability of goods. If a good becomes scarce, its price will rise and those who use this good will have the incentive to make efficient decisions about its use based on the price. If the price of water goes up because of lower supply, people will have the incentive to use it with greater care; for example, they may stop watering the garden to conserve water. We complain whenever the price of petrol increases and blame it on the government. But the increase in petrol price reflects greater scarcity and the price rise is a signal that less petrol is available; this provides an incentive to use less petrol or look for alternate fuels.

Growth in Agricultural Output

Growth in agricultural output is important, but it is not enough. If an outsized proportion of this increase is consumed by the farmers themselves rather than being sold within the market, the higher output will not make much of a distinction to the economy as a full. If, on the opposite hand, a considerable quantity of agricultural manufacture is sold within the market by the farmers, the higher output can build a distinction to the economy.

The portion of agricultural manufacture which is sold within the market by the farmers is named marketed surplus. Whereas the nation had vastly benefited from the revolution, the technology concerned wasn’t free from risks. One such risk was the likelihood that it’d increase the disparities between tiny and large farmers—since solely the massive farmers could afford the required inputs, thereby reaping most of the benefits of the green revolution. Moreover, the HYV crops were conjointly additionally vulnerable to attack by pests and the tiny farmers who adopted this technology could lose everything in a pest attack.

Class 12 Indian Economics Chapter 2 Multiple Choice Questions


Who is the architect of Indian planning?

[A]. K N Raj
[B]. P C Mahalanobis
[C]. R C Desai
[D]. Dadabhai Naoroji

When was the Planning Commission established

[A]. 5th March, 1950
[B]. 10th March, 1950
[C]. 15th March, 1950
[D]. 20th March, 1950

What prevented firms from becoming efficient?

[A]. Tariffs
[B]. Quotas
[C]. New economic policy
[D]. Permit licence raj

In which type of economic system goods are produced on purchasing power

[A]. Socialist
[B]. Capitalist
[C]. Mixed
[D]. None of the above
The Debate over Subsidies

The economic justification of subsidies in agriculture is, at present, a heated debated question. It’s typically in agreement that it absolutely was necessary to use subsidies to produce an incentive for adoption of the new HYV technology by farmers generally and little farmers particularly. Any new technologies are looked upon as being risky by farmers. Subsidies were, therefore, required to encourage farmers to check the new technology. Some economists believe that after the technology is found profitable and is wide adopted, subsidies ought to be phased out since their purpose has been served.

Further, subsidies are meant to learn the farmers however a considerable quantity of fertilizer grant conjointly advantages the fertilizer industry; and among farmers, the grant for the most part advantages the farmers within the additional prosperous regions. Therefore, it’s argued that there’s no case for continuing with fertiliser subsidies; it doesn’t profit the target cluster and it’s an enormous burden on the government’s finances. On the opposite hand, some believe that the govt ought to continue with agricultural subsidies as a result of farming in India continues to be a risky business.

Conditions of Farmers

Most farmers are terribly poor and they won’t be able to afford the specified inputs without subsidies. Eliminating subsidies can increase the difference between rich and poor farmers and violate the goal of equity. These specialists argue that if subsidies are hugely profiting the fertilizer business and massive farmers, the proper policy isn’t to get rid of subsidies however to require steps to confirm that solely the poor farmers get pleasures from the advantages. Thus, by the late 1960s, Indian agricultural productivity had exaggerated sufficiently to modify the country to be self-sustaining in food grains.

This can be an action to be pleased with. On the negative aspect, some 65 per cent of the country’s population continued to be employed in agriculture even as late as 1990. Economists have found that as a nation becomes additional prosperous, the proportion of GDP contributed by agriculture as well as the proportion of population working in the sector declines significantly.