Indian Economy Before and After 1991

1.Impact of British Rule on the Indian Economy

• Colonial Economy and the International Division of LabourImportance 3/5
  How did colonial rule fit India into the world economy in a weaker position? Understand the division of labour forced on India and what it meant to be a supplier of raw materials. Remember what India mainly exported and imported, and the British hold over its trade.
• Economic Stagnation, Low Savings and the Drain of WealthImportance 3/5UPSC 2011
  Why was growth so slow and saving so low under colonial rule? Understand who took the social surplus and why the tax system hurt peasants most. You should be able to explain the "Drain": how a surplus from exports became a transfer of wealth to Britain.
• Free Trade and the Denial of Tariff ProtectionImportance 2/5
  How did India's position differ from that of other countries that industrialised? Distinguish the protection of young industries elsewhere from the free trade imposed on India. Understand why policy was decided in Britain and in British interests.
• Colonial Agriculture: Agrarian Structure and CommercialisationImportance 2/5
  Who controlled farm output in the colonial period, and why did agriculture stagnate? Understand the roles of landlords, moneylenders and the state. Remember the zamindari system, the shift to cash crops and the lack of investment in irrigation.
• Decline of Handicrafts and DeindustrialisationImportance 3/5
  Why did Indian handicrafts collapse in the 19th century? Remember the two causes. Then understand where the ruined artisans went for work, and what that did to the size of farm holdings.
• Modern Industry Under Colonial Rule and the Absence of Capital GoodsImportance 2/5
  Which modern industries grew under colonial rule, and which were missing? Remember the main industries of the 19th century and of the 1930s. Explain why the lack of capital goods industries blocked independent industrialisation, and why India still imported most of its machine tools in 1950.
• Foreign Capital and Managing AgenciesImportance 2/5
  Which fields did British capital dominate? Remember the main sectors. Understand how the managing agency system let British firms control many Indian-owned companies.
• Infrastructure Under Colonial RuleImportance 2/5
  Whom did the railways, roads, ports and telegraphs mainly serve? Understand how this infrastructure suited colonial purposes, and how the railways affected village economies.
• Demographic Conditions and Occupational Structure at IndependenceImportance 3/5
  Know the social conditions India inherited at independence: literacy and life expectancy. Remember how the workforce was divided between agriculture, manufacturing and services. Also know which regions moved away from farming, and in which regions the share of farming in the workforce rose.

2.Economy After Independence

• Why India Chose a Mixed EconomyImportance 3/5
  Why did Nehru and other leaders reject both Soviet-style socialism and extreme capitalism? Explain the "middle path" they chose. Remember where this outlook was reflected: the Industrial Policy Resolution of 1948, the Directive Principles and the Planning Commission of 1950.
• Industrial Policy Resolution, 1948Importance 3/5
  Why is this resolution seen as the start of the mixed economy? Remember its four categories of industry, with examples of each. Understand what it meant for private firms already working in basic industries.
• Calcutta School: The Mahalanobis ModelImportance 4/5
  Who proposed this model, and at which institute did he work? Understand its strategy: heavy, capital-goods industry led by the public sector, with the private sector in a supporting role. Explain why putting investment into capital goods first delays output (the gestation lag) but raises it later.
• Bombay School: The Wage-Goods Strategy (Vakil and Brahmananda)Importance 2/5
  Understand the starting point of this school: plenty of labour, little capital, and disguised unemployment in villages. What are wage goods? Distinguish this labour-intensive strategy from the capital-intensive heavy industry strategy of the Calcutta school.
• Industrial Policy Resolution, 1956Importance 3/5
  Remember the policy goal behind this resolution and how many industries it reserved for the public sector. Understand how Schedules A, B and C divided industry between the state and private firms, and why the reservations were justified.
• Flaws of the Mixed Economy ModelImportance 3/5
  Why is it argued that the mixed economy combined the controls of socialism with the monopolies of capitalism? Remember the main flaws: inward-looking trade, an inefficient public sector, over-regulation, discouraged foreign capital and low labour productivity. Did subsidies take the place of better education and health?
• Outcomes of the First Three Plans: Trickle-Down and Capital DeepeningImportance 2/5
  What did the early plans assume about trickle-down, and why did it fall short? Distinguish the achievements of the model (including capital deepening) from its shortfalls in education and in poverty reduction.
• Why India Built a Large Public Sector: The Big PushImportance 3/5
  Explain the "big push" argument and the coordination problem it was meant to solve. Think of an aluminium factory and an aircraft factory, each waiting for the other to be built. Remember examples of public enterprises that helped private industry grow: HAL, IDPL and the public sector banks.

3.Economic Situation from 1965 to 1991

• Crisis of the Mid-1960s: Droughts, Wars and PL-480Importance 3/5
  Which shocks hit the economy between 1962 and 1967? Remember the two wars and the two monsoon failures, and their effect on prices, the deficit and reserves. What was PL-480, and why did the US refusal to renew it for the long term hurt India?
• Devaluation and Liberalisation of 1966 and Their ReversalImportance 2/5
  What did the US, the World Bank and the IMF ask of India in the mid-1960s, and what did India do in 1966? Explain why the devaluation and trade liberalisation were seen as failures and then reversed. Understand the resentment over outside pressure.
• Policies of Control After 1967: Nationalisation, MRTP and FERAImportance 4/5
  Remember each major control measure of 1969–73 and its year: bank nationalisation, the MRTP Act, general insurance and FERA. Coal was nationalised in two phases: what were they, and in which years? Why did FERA make India a hard place for foreign capital while East Asian countries were opening up? Understand why the government took over sick firms.
• Growth in the 1980s and the "Hindu Rate of Growth"Importance 4/5
  What does the "Hindu rate of growth" mean, and who coined the term? Remember how growth in the 1980s compared with the earlier decades. Understand how the government's attitude to business changed from 1980, and what Rajiv Gandhi's partial reforms did. Also know how savings and investment rose across the 20th century.
• Poverty Decline and the Green Revolution from the Mid-1960sImportance 2/5
  Did anti-poverty schemes or faster farm growth bring poverty down from the mid-1960s? Understand what this shows about where growth takes place, since most poor people then lived in villages.
• The Licence Raj and the IDR Act, 1951Importance 4/5
  What did the Industries (Development and Regulation) Act, 1951 let the government control? Remember what licensing covered and why it was introduced. Explain why it failed: foreclosed capacity, long delays and the vested interests it created. Understand how the 1956-57 balance of payments crisis led to import and exchange controls.
• MRTP Act, 1969Importance 3/5
  What did the MRTP Act do to large business houses? Remember its asset limit and how it changed. Understand how it kept firms from reaching economies of scale. What happened to the Act in 1991, and was it repealed then? Which law finally replaced it?
• Reservation of Items for Small-Scale IndustriesImportance 3/5
  Why were items reserved for small-scale industry? Remember when the first formal definition and the reservation began, how the list grew by the late 1980s, and when it ended. Explain why reservation cost firms economies of scale, and why imports flooded in after 1991.
• Import Substitution Industrialisation and Its ResultsImportance 3/5
  What is import substitution industrialisation? Distinguish what it achieved (a deeper industrial base) from what it cost (inefficiency and export pessimism). How did India's growth in 1950–90 compare with other developing countries? Why did the public sector use up savings instead of creating them?

4.Economic Reforms of 1991 (LPG Reforms)

• Meaning of Liberalisation, Privatisation and GlobalisationImportance 3/5UPSC 1997
  What does each of the three terms mean in the context of the 1991 reforms? Be clear about how they differ from one another.
• Political Chronology and the Budget of July 1991Importance 2/5
  Which governments and finance ministers came before the 1991 reforms? Remember the sequence from V. P. Singh to Chandra Shekhar, what kind of budget the Chandra Shekhar government could present in March 1991 and what it could not, the date Narasimha Rao took office and the date of the July 1991 budget. Whose political management is often credited with getting the reforms through?
• Structural Weaknesses and Fiscal Profligacy of the 1980sImportance 3/5
  Why did a decade that looked successful end in a crisis? Explain the hidden weaknesses that were building up: the licence raj, MRTP, import substitution and a large trade deficit. Understand the growing short-term borrowing and reckless government spending. Remember how high the fiscal deficit, current account deficit and inflation were in 1990-91.
• The 1991 Balance of Payments CrisisImportance 4/5
  What brought India close to default in 1991? Remember the three weak points of early 1991: short-term debt, NRI deposits and the level of foreign exchange reserves. How did the Gulf war and the fall in India's credit rating add to the pressure? What emergency step involved gold?
• New Economic Policy: Stabilisation and Structural ReformImportance 4/5UPSC 1996
  How do short-term stabilisation measures differ from long-term structural reforms? Remember the three directions of the 1991 reforms and their main objective. Understand what the IMF and the World Bank asked for in return for their loan, and why competition links all three directions.
• Fiscal Stabilisation MeasuresImportance 2/5
  Why did the reforms begin with fiscal stabilisation? Know the steps taken on export subsidies, the fertiliser subsidy and budget support to loss-making public sector units.
• Industrial Policy Reforms of 1991: Delicensing and the Public Sector ListImportance 4/5
  What happened to industrial licensing in 1991, and why did a short list of industries still need licences? What happened to the MRTP controls on large houses? How was the list of industries reserved for the public sector cut? Be clear about the sectors opened to private firms, such as power, hydrocarbons, air transport and telecom.
• Foreign Investment Reforms and FERA to FEMAImportance 4/5
  How restrictive was the cap on foreign ownership before 1991? Remember the new rule of automatic approval and the number of industries it covered. Distinguish the Foreign Exchange Regulation Act, 1973 (FERA) from the Foreign Exchange Management Act, 1999 (FEMA).
• Trade and Exchange Rate Reforms: Devaluation, Market Rate and ConvertibilityImportance 5/5UPSC 1995, 1996, 2003
  How did import controls change after 1991, and what stayed restricted at first? Remember the July 1991 devaluation, the dual exchange rate system (LERMS) of 1992, the move to a market-based exchange rate in 1993 and the start of current account convertibility. Is the rupee fully convertible on the capital account too?
• Tax Reforms After 1991Importance 3/5
  Understand the direction of tax reform after 1991: what happened to the top rates of personal income tax, corporate tax and customs duty, and why. Also know the step-by-step path from CENVAT to VAT to GST.
• Public Sector Reforms of 1991Importance 3/5UPSC 1999, 2002
  Why did the 1991 package choose limited disinvestment instead of outright privatisation? How much government equity did the 1991-92 programme offer for sale, and to whom? When did the later norm of keeping 51% of equity and management control come in? Remember how budget support to loss-making units was to end, and how public sector firms were expected to fund their investment.
• Financial Sector Reforms: Private Banks, SEBI and Capital MarketsImportance 3/5
  Remember the early-1990s steps in banking and capital markets: private bank licences, portfolio investment and GDRs. Which committee's report set out the banking reforms, and in which year were the guidelines for private banks issued? When was SEBI set up, and from what date did the SEBI Act, 1992 take effect? Which law controlling capital issues was repealed in 1992?
• Short-Term Impact of the Reforms on Key IndicatorsImportance 4/5UPSC 2017
  How did inflation, foreign exchange reserves, growth and the fiscal deficit move in the first few years after 1991? How did India's share in world exports, FDI inflows, reserves and agriculture's share in GDP each change after liberalisation?
• Reforms and Poverty ReductionImportance 3/5
  In what two ways does faster growth reduce poverty? Remember the direction of the poverty ratio across 1993-94, 2004-05 and 2011-12, compared on a single method. Distinguish the Tendulkar and Rangarajan estimates for 2011-12. Understand why reforms alone are not enough. Are reforms an end in themselves or a means to an end?
• Reforms and InequalityImportance 2/5
  What happened to inequality after the reforms? Know the trend in the Gini coefficient on NCAER data and how health and education gaps moved. Understand the debate on whether reforms caused it, and why some argue for a wider tax base and equality of opportunity instead of higher tax rates.
• Jobless Growth and Weak Rural Productivity After the ReformsImportance 3/5UPSC 2020
  Why is post-reform growth called jobless, and how could the demographic dividend turn into a problem? Explain Raghuram Rajan's 2014 point on rural transfers such as MGNREGA and MSP: what was missing, and what did it do to inflation?
• Reforms in India and China ComparedImportance 3/5
  Which sector did China reform first in 1978, and which did India in 1991? Understand the labels bottom-up and top-down and China's household responsibility system. Explain why Indian firms went into services and why imports from China rose.
• Globalisation and OutsourcingImportance 2/5
  What is outsourcing, and how is it linked to globalisation? Remember examples such as BPO work. Why did India become a major destination, and what part did IT, wages and skills play?
• Sectoral Growth Rates Before and After the ReformsImportance 3/5
  Which sector led growth after 1991, which swung the most from year to year, and which kept growing in 2020-21? Understand the overall pattern from 1980-91 to recent years.
• Growth Phases After 1991Importance 3/5UPSC 2010, 2011, 2015
  What drove the investment-led boom of 2003–08? How did India respond to the global financial crisis of 2008-09? Understand the post-2010 slowdown and the "twin balance sheet problem". Also learn about the contraction of 2020-21 and the debate on whether the recovery was V-shaped.

5.Planning Commission and Five Year Plans

• Planning Before Independence: National Planning Committee and Early PlansImportance 3/5
  Which planning efforts came before 1951? Remember M. Visvesvaraya's plan of 1934, the National Planning Committee of 1938 and the Bombay, Gandhian, People's and Sarvodaya Plans. For each, know who was behind it, the year and its main emphasis.
• Planning Commission: Set-Up, Nature and FunctionsImportance 5/5UPSC 2002, 2004, 2014
  Was the Planning Commission set up by a law or by a resolution, and when? Remember its status (constitutional, statutory or neither?), who chaired it and who was its first chairman. Understand its main functions. What replaced it, and what was the role of the National Development Council?
• Objectives of Planning in IndiaImportance 3/5
  Understand the four long-term objectives of planning. What does modernisation include besides new technology? Why did self-reliance matter, especially for food? Why is growth alone not enough?
• Imperative and Indicative Planning, and the Perspective PlanImportance 3/5
  How does imperative planning differ from indicative planning? When did Indian planning become more indicative? Different sources name the Eighth or the Ninth Plan as the first indicative plan, so understand the reasoning for each. What is a perspective plan, and how many years does it cover? Did Indian plans fix the output of every good?
• Origin and End of Five-Year PlanningImportance 2/5
  Which country began five-year planning? How did China change the status of its Eleventh plan? Remember when India stopped making Five Year Plans and after which plan.
• First Five Year Plan (1951–56)Importance 4/5UPSC 2000, 2009
  On which growth model was the First Plan based, and what was its focus? Remember the projects linked to it (Bhakra and Hirakud) and community development. Why is it called a success?
• Second Five Year Plan (1956–61)Importance 4/5UPSC 2009, 2019
  Why is the Second Plan called the Mahalanobis Plan? Remember its focus on heavy and basic industries and where its steel plants were set up. Understand its two-pronged strategy of a capital goods sector plus cottage industries. What forced its targets to be cut?
• Third Five Year Plan (1961–66) and the Plan Holiday (1966–69)Importance 3/5UPSC 2009
  What was the Third Plan's aim, and why did it fail? Explain the effect of the wars and the drought. Why were three annual plans (the "plan holiday") used instead of a Fourth Plan, and what new farm strategy came with them?
• Fourth Five Year Plan (1969–74)Importance 3/5UPSC 2019
  What were the two objectives of the Fourth Plan? Remember the major banking event that falls in this period.
• Fifth Five Year Plan and the Rolling PlanImportance 4/5UPSC 2009, 2019
  What were the main objectives of the Fifth Plan, and which slogan went with them? Remember the Minimum Needs Programme. Why did the plan end early? Understand the Rolling Plan of the Janata government and its stress on employment.
• Sixth (1980–85) and Seventh (1985–90) Five Year PlansImportance 3/5UPSC 1997, 2010
  What did the Sixth Plan focus on, and which programme and institution are linked to it? What was the theme of the Seventh Plan?
• Annual Plans (1990–92) and the Eighth Five Year Plan (1992–97)Importance 4/5UPSC 1995, 1996
  Why was the Eighth Plan delayed by two years, and what were the annual plans in between? Understand the crisis it was launched into and how it carried the 1991 reforms forward.
• Ninth Five Year Plan (1997–2002)Importance 2/5
  What was the theme of the Ninth Plan? How was the role of the state expected to change, and who was expected to lead investment?
• Tenth Five Year Plan (2002–07) and Monitorable TargetsImportance 2/5
  Why did the Tenth Plan set monitorable targets besides a growth target? Know examples of such targets, such as gender gaps, mortality and drinking water. Which sector was called the prime moving force, and what goal was set for per capita income?
• Eleventh Five Year Plan (2007–12)Importance 3/5UPSC 2010
  What was the theme of the Eleventh Plan? Understand why inclusiveness became its focus, and which groups growth had left behind.
• Twelfth Five Year Plan (2012–17)Importance 3/5UPSC 2014
  What was the subtitle of the Twelfth Plan? Understand what inclusiveness and sustainability covered under it. Why does it matter that this was the last Five Year Plan?

6.NITI Aayog

• Formation and Nature of NITI AayogImportance 4/5
  When and how was NITI Aayog set up: by a law or by a Cabinet resolution? What does NITI stand for? Understand its role as a policy think tank and in cooperative federalism. Is it statutory or advisory, and how does that compare with the Planning Commission?
• Objectives and Functions of NITI AayogImportance 3/5
  Understand the main objectives of NITI Aayog: a shared vision with the states, cooperative federalism, plans made from the village level, attention to groups at risk of being left out, monitoring and evaluation, and its role as a resource centre and knowledge hub.
• Composition and the Governing Council of NITI AayogImportance 4/5
  Who sits on the Governing Council, and what is its role? Are Union Territories represented, and by whom? Remember the other parts of the structure: Chairperson, Vice-Chairperson, full-time, part-time and ex officio members, special invitees, the Chief Executive Officer and Regional Councils. Know the theme of the latest Governing Council meeting.
• Initiatives and Indices of NITI AayogImportance 3/5
  Remember NITI Aayog's Aspirational Districts Programme, the Aspirational Blocks Programme (and how it differs from the districts programme) and Atal Innovation Mission. Who runs Poshan Abhiyan, and what is NITI's part in it? Which indices does NITI publish on health, education and the SDGs? Understand why it stresses measuring outcomes.
• NITI Aayog and the Planning Commission ComparedImportance 4/5UPSC 2015
  How does NITI Aayog differ from the Planning Commission? Distinguish them on who allocates funds, on the states' role (annual plan approval and the National Development Council versus the Governing Council) and on approach (top-down versus bottom-up). In what respect are they alike?

7.Service Sector

• India's Structural Shift from Agriculture to ServicesImportance 4/5UPSC 1999, 2007
  How did the shares of agriculture, industry and services in GDP change between 1947 and now? Distinguish the usual path of development (agriculture, then industry, then services) from India's. Does India's path match the usual order?
• Why Manufacturing Lagged: Requirements India Did Not MeetImportance 4/5
  Explain the seven things manufacturing needs, and where India fell short on each: land, transport, ports, power, labour laws, tax and clearances. Why do services need less of these? Labour rules, tax and port administration have since been reformed, so know the present position.
• Why Services Grew Faster Than Manufacturing After 1991Importance 3/5
  How had the licence raj, the MRTP Act and FERA held back India's entrepreneurs? Explain why the 1991 reforms, which came with the telecom and internet revolution, favoured services while the bottlenecks for manufacturing remained.
• Output Share versus Employment Share of SectorsImportance 3/5UPSC 1995
  Why is the share of services in jobs much smaller than its share in output? Distinguish each sector's share of GDP from its share of the workforce, for agriculture too. What does NITI Aayog's 2025 report on services employment say about informality and the kind of jobs services provide?
• Structural Transformation and the Lewis ModelImportance 2/5
  What is structural transformation, and why does moving labour from low- to high-productivity sectors raise incomes? Understand the Lewis model: surplus labour, the traditional and modern sectors, and the Lewis turning point. Understand how Engel's law explains the change in demand as incomes rise.
• Meaning and Size of the Services SectorImportance 4/5UPSC 2002
  What counts as a service, and what are some examples? Know the latest share of services in GVA, exports and FDI, and what has pushed it up since FY14. These shares change with each estimate, so be clear about the latest official figures.
• Services in the Union, State and Concurrent ListsImportance 2/5
  Which List of the Seventh Schedule covers each of these services: telecommunications, banking, retail, education and electricity? Remember one or two services under each of the three Lists.
• Contact-Intensive and Non-Contact-Intensive ServicesImportance 2/5
  How are services divided into contact-intensive and non-contact-intensive types? Distinguish the two with examples. Why did the split matter during and after the pandemic?
• Growth Drivers, Challenges and Government Support for ServicesImportance 2/5
  Understand what drives services growth (a young population, urbanisation, e-commerce and IT), what challenges it faces (artificial intelligence and the need for human capital) and how the government supports it (Digital India and export promotion).
• India's Trade in ServicesImportance 3/5
  Where does India stand among the world's services exporters, and is its share rising? Know the current rank and share. Which services lead exports, and how fast have information and computer services grown? Know where tourism stands in GDP after the pandemic recovery.
• Financing of Services Sector ActivityImportance 1/5
  Which main channels of finance support services? Understand the roles of bank credit, FDI and external commercial borrowing.
• Tourism Sector and Tourism SchemesImportance 2/5
  What does each of these do: Swadesh Darshan 2.0, PRASHAD, Dekho Apna Desh, the NIDHI portal, SAATHI and Incredible India 2.0? What is the Travel and Tourism Development Index, and where does India rank? Know whether Swadesh Darshan 2.0 and PRASHAD continue, and in what form.
• Telecommunications Sector and Telecom InitiativesImportance 3/5UPSC 2005
  Which older laws is the Telecommunications Act, 2023 meant to replace, and are all its provisions yet in force? What has the Universal Service Obligation Fund been renamed? Remember the purpose of BharatNet, PM-WANI, the National Digital Communications Policy 2018 (and its proposed successor) and the Telecom Technology Development Fund. Understand the 5G rollout and the trend in teledensity.
• IT Services and Global Capability CentresImportance 3/5UPSC 2001
  What part do IT services play in India's exports and growth? What is a Global Capability Centre, and why does India host so many? Understand the fields they work in (R&D, IT and business process management) and why their employment has grown.

1. 1.

   With reference to the Calcutta school of thought on economic development in India in the 1950s, consider the following statements:
   1. Its core strategy was labour-intensive production of wage goods led by the private sector.
   2. In its model, a larger share of investment in capital goods postpones the rise in output because of a longer gestation lag, but leads to greater output in the longer term.
   Which of the statements given above is/are correct?

   1. A1 only
   2. B2 only
   3. CBoth 1 and 2
   4. DNeither 1 nor 2
2. 2.

   With reference to the economic situation in India in early 1991, consider the following statements:
   1. By June 1991, foreign exchange reserves had fallen to about $1 billion, not enough to finance imports even for a fortnight.
   2. Outstanding deposits of Non-Resident Indians of more than $10 billion were rapidly increasing.
   3. India pledged gold as collateral to raise foreign exchange to meet its immediate transactions.
   How many of the above statements are correct?

   1. AOnly one
   2. BOnly two
   3. CAll three
   4. DNone
3. 3.

   With reference to the nationalisation of the coal industry in India in the early 1970s, which one of the following is correct?

   1. ACoking coal mines were taken over in 1971-72 and non-coking coal mines in 1973
   2. BNon-coking coal mines were taken over in 1971-72 and coking coal mines in 1973
   3. CThe whole coal industry was nationalised in a single step in 1969, along with the major commercial banks
   4. DOnly coking coal mines were nationalised, in 1973, while non-coking coal stayed under private ownership
4. 4.

   Match List I with List II:

   List I (Exchange rate or convertibility step)	List II (Year)
   A. Acceptance of IMF Article VIII obligations (current account convertibility)	1. 1991
   B. Liberalised Exchange Rate Management System (dual exchange rate)	2. 1992
   C. Unified, market-determined exchange rate	3. 1993
   D. Devaluation of the rupee in two stages	4. 1994

   Select the correct answer using the code given below:

   1. AA-1, B-2, C-3, D-4
   2. BA-4, B-3, C-2, D-1
   3. CA-3, B-2, C-4, D-1
   4. DA-4, B-2, C-3, D-1
5. 5.

   Match List I (Plan) with List II (Association):

   List I (Plan)	List II (Association)
   A. Bombay Plan	1. Drafted by Jayaprakash Narayan
   B. Gandhian Plan	2. Proposed by a group of industrialists including J. R. D. Tata and G. D. Birla
   C. People's Plan	3. Authored by Sriman Narayan Agarwal
   D. Sarvodaya Plan	4. Drafted by M. N. Roy

   Select the correct answer using the code given below:

   1. AA-3, B-2, C-4, D-1
   2. BA-2, B-4, C-3, D-1
   3. CA-2, B-3, C-4, D-1
   4. DA-2, B-3, C-1, D-4
6. 6.

   Consider the following statements:
   Statement-I: Industrial licensing under the Industries (Development and Regulation) Act, 1951 ended in thwarting competition, entrepreneurship and growth without achieving its social objectives.
   Statement-II: The licensing system rewarded efficient and honest new entrants by clearing their applications quickly.
   Which one of the following is correct in respect of the above statements?

   1. ABoth Statement-I and Statement-II are correct and Statement-II explains Statement-I
   2. BBoth Statement-I and Statement-II are correct and Statement-II does not explain Statement-I
   3. CStatement-I is correct but Statement-II is incorrect
   4. DStatement-I is incorrect but Statement-II is correct
7. 7.

   With reference to the Planning Commission of India, consider the following statements:
   1. It was set up by a Resolution of the Government of India in March 1950.
   2. It was chaired by the Union Finance Minister.
   3. It was a statutory body established under an Act of Parliament.
   How many of the above statements are correct?

   1. AOnly one
   2. BOnly two
   3. CAll three
   4. DNone
8. 8.

   NITI Aayog, which replaced the Planning Commission, was formed on 1 January 2015 through which one of the following?

   1. AAn Act of Parliament
   2. BA resolution of the Union Cabinet
   3. CAn amendment to the Constitution of India
   4. DA recommendation of the Finance Commission
9. 9.

   With reference to the differences between NITI Aayog and the Planning Commission, consider the following statements:
   1. Like the Planning Commission, NITI Aayog allocates funds to ministries and States.
   2. NITI Aayog follows a top-down approach to planning, in contrast to the bottom-up approach of the Planning Commission.
   Which of the statements given above is/are correct?

   1. A1 only
   2. B2 only
   3. CBoth 1 and 2
   4. DNeither 1 nor 2
10. 10.

    With reference to the structure of the Indian economy, consider the following statements:
    1. At the time of independence in 1947, agriculture contributed the largest share of GDP, ahead of services and industry.
    2. Unlike the usual path of development, India shifted directly from an agriculture-dominated economy to a services-dominated one.
    Which of the statements given above is/are correct?

    1. A1 only
    2. B2 only
    3. CBoth 1 and 2
    4. DNeither 1 nor 2
11. 11.

    With reference to why manufacturing lagged behind services in India, consider the following statements:
    1. A service firm can run on a diesel generator set for an hour or two during a power outage, but a manufacturing firm cannot.
    2. A services industry such as software or banking needs thousands of acres of land to get established.
    3. Before the Goods and Services Tax, goods were taxed by the Centre alone, which avoided any cascading effect.
    How many of the above statements are correct?

    1. AOnly one
    2. BOnly two
    3. CAll three
    4. DNone
12. 12.

    With reference to the "Hindu rate of growth" and growth in the 1980s in India, consider the following statements:
    1. The term was coined by Prof. Raj Krishna.
    2. It refers to the growth rate of about 3.5% recorded in the three decades before the 1980s.
    3. Growth in the 1980s stayed at the same level, as the reforms of the second half of that decade made no difference to growth.
    Which of the statements given above are correct?

    1. A1 and 2 only
    2. B2 and 3 only
    3. C1 and 3 only
    4. D1, 2 and 3
13. 13.

    Consider the following pairs:

    Industry	Category under the Industrial Policy Resolution, 1948
    1. Atomic energy	State monopoly
    2. Iron and steel	Regulated industry
    3. Automobiles	Regulated industry

    Which of the pairs given above is/are correctly matched?

    1. A1 and 2 only
    2. B2 and 3 only
    3. C1 and 3 only
    4. D1, 2 and 3
14. 14.

    Consider the following pairs:

    Event	Date
    1. RBI guidelines for establishing new private-sector banks	1991
    2. Report of the Narasimham Committee on banking reforms	November 1991
    3. SEBI Act, 1992 coming into force	30 January 1992

    Which of the pairs given above is/are correctly matched?

    1. A1 and 2 only
    2. B2 and 3 only
    3. C1 and 3 only
    4. D1, 2 and 3
15. 15.

    With reference to the stabilisation and structural reform components of the New Economic Policy adopted in India in 1991, which one of the following is correct?

    1. AStabilisation measures are long-term strategies to raise efficiency, while structural reforms are short-term actions on the balance of payments
    2. BStabilisation measures and structural reforms are both short-term actions meant only to control inflation
    3. CStabilisation measures are to be taken by the State Governments, while structural reforms are to be taken by the Union Government
    4. DStabilisation measures are short-term actions on the balance of payments and inflation, while structural reforms are long-term strategies for efficiency and competitiveness
16. 16.

    With reference to the short-term impact of the 1991 economic reforms in India, consider the following statements:
    1. Inflation fell from a peak of about 17% in August 1991 to about 8.5% within about two and a half years.
    2. Foreign exchange reserves rose to over $15 billion by 1994.
    3. GDP growth increased from 1.1% in 1991-92 to 4% in 1992-93.
    4. The Centre's fiscal deficit as a share of GDP rose between 1990-91 and 1992-93.
    How many of the above statements are correct?

    1. AOnly one
    2. BOnly two
    3. COnly three
    4. DAll four
17. 17.

    With reference to the Second Five Year Plan (1956-61) of India, consider the following statements:
    1. It focused on rapid industrialisation through heavy and basic industries, and steel plants were set up at Bhillai, Durgapur and Rourkela.
    2. Its strategy combined the creation of a large machine-building industry with decentralised cottage industries.
    3. It gave agriculture the top priority in view of a severe food shortage.
    Which of the statements given above are correct?

    1. A1 and 2 only
    2. B2 and 3 only
    3. C1 and 3 only
    4. D1, 2 and 3
18. 18.

    With reference to the collapse of Indian handicrafts in the 19th century, consider the following statements:
    1. The ruined artisans were largely absorbed into the modern factories that grew up in Indian cities.
    2. European markets remained open to Indian manufactures after 1820, since Britain and other European countries imposed no import duties on them.
    Which of the statements given above is/are correct?

    1. A1 only
    2. B2 only
    3. CBoth 1 and 2
    4. DNeither 1 nor 2
19. 19.

    With reference to the Indian economy at the end of colonial rule, consider the following statements:
    1. About 70-75% of the workforce was employed in agriculture, about 10% in manufacturing and 15-20% in services.
    2. Literacy was below 16% and life expectancy was about 32 years.
    3. The share of agriculture in the workforce rose in Madras Presidency, Bombay and Bengal, while it fell in Orissa, Rajasthan and Punjab.
    How many of the above statements are correct?

    1. AOnly one
    2. BOnly two
    3. CAll three
    4. DNone
20. 20.

    Consider the following statements:
    Statement-I: The reservation of items for the small-scale sector helped Indian firms to reap the benefits of economies of scale.
    Statement-II: By March 1987, the reservation of production for the small-scale sector had been extended to over 800 items.
    Which one of the following is correct in respect of the above statements?

    1. ABoth Statement-I and Statement-II are correct and Statement-II explains Statement-I
    2. BBoth Statement-I and Statement-II are correct and Statement-II does not explain Statement-I
    3. CStatement-I is correct but Statement-II is incorrect
    4. DStatement-I is incorrect but Statement-II is correct

1. 1.

   UPSC 2009

   In the context of independent India's economy, which one of the following was the earliest event to take place ?

   1. ANationalisation of Insurance companies
   2. BNationalisation of State Bank of India
   3. CEnactment of Banking Regulation Act
   4. DIntroduction of First Five-Year Plan
2. 2.

   UPSC 2020

   With reference to the Indian economy after the 1991 economic liberalization, consider the following statements :
   1. Worker productivity (₹ per worker at 2004 – 05 prices) increased in urban areas while it decreased in rural areas.
   2. The percentage share of rural areas in the workforce steadily increased.
   3. In rural areas, the growth in non-farm economy increased.
   4. The growth rate in rural employment decreased.
   Which of the statements given above is/are correct ?

   1. A1 and 2 only
   2. B3 and 4 only
   3. C3 only
   4. D1, 2 and 4 only
3. 3.

   UPSC 2019

   With reference to India’s Five-Year Plans, which of the following statements is/are correct?
   1. From the Second Five-Year Plan, there was a determined thrust towards substitution of basic and capital good industries.
   2. The Fourth Five-Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power.
   3. In the Fifth Five-Year Plan, for the first time, the financial sector was included as an integral part of the Plan.
   Select the correct answer using the code given below.

   1. A1 and 2 only
   2. B2 only
   3. C3 only
   4. D1, 2 and 3
4. 4.

   UPSC 2017

   Which of the following has/have occurred in India after its liberalization of economic policies in 1991 ?
   1. Share of agriculture in GDP increased enormously.
   2. Share of India's exports in world trade increased.
   3. FDI inflows increased.
   4. India's foreign exchange reserves increased enormously.
   Select the correct answer using the codes given below :

   1. A1 and 4 only
   2. B2, 3 and 4 only
   3. C2 and 3 only
   4. D1, 2, 3 and 4
5. 5.

   UPSC 2015

   The Government of India has established NITI Aayog to replace the

   1. AHuman Rights Commission
   2. BFinance Commission
   3. CLaw Commission
   4. DPlanning Commission
6. 6.

   UPSC 2015

   With reference to Indian economy, consider the following statements :
   1. The rate of growth of Real Gross Domestic Product has steadily increased in the last decade.
   2. The Gross Domestic Product at market prices (in rupees) has steadily increased in the last decade.
   Which of the statements given above is/are correct?

   1. A1 only
   2. B2 only
   3. CBoth 1 and 2
   4. DNeither 1 nor 2
7. 7.

   UPSC 2014

   The main objective of the 12th Five-Year Plan is

   1. Ainclusive growth and poverty reduction
   2. Binclusive and sustainable growth
   3. Csustainable and inclusive growth to reduce unemployment
   4. Dfaster, sustainable and more inclusive growth
8. 8.

   UPSC 2014

   Which of the following are associated with 'Planning' in India?
   1. The Finance Commission
   2. The National Development Council
   3. The Union Ministry of Rural Development
   4. The Union Ministry of Urban Development
   5. The Parliament
   Select the correct answer using the code given below.

   1. A1, 2 and 5 only
   2. B1, 3 and 4 only
   3. C2 and 5 only
   4. D1, 2, 3, 4 and 5
9. 9.

   UPSC 2011

   With reference to the period of colonial rule in India, "Home Charges" formed an important part of drain of wealth from India. Which of the following funds constituted "Home Charges"?
   1. Funds used to support the India Office in London.
   2. Funds used to pay salaries and pensions of British personnel engaged in India.
   3. Funds used for waging wars outside India by the British.
   Select the correct answer using the codes given below:

   1. A1 only
   2. B1 and 2 only
   3. C2 and 3 only
   4. D1, 2 and 3
10. 10.

    UPSC 2011

    In the context of Indian economy, consider the following statements:
    1. The growth rate of GDP has steadily increased in the last five years.
    2. The growth rate in per capita income has steadily increased in the last five years.
    Which of the statements given above is/are correct?

    1. A1 only
    2. B2 only
    3. CBoth 1 and 2
    4. DNeither 1 nor 2
11. 11.

    UPSC 2010

    Inclusive growth as enunciated in the Eleventh Five Year Plan does NOT include one of the following:

    1. AReduction of poverty
    2. BExtension of employment opportunities
    3. CStrengthening of capital market
    4. DReduction of gender inequality
12. 12.

    UPSC 2010

    In the context of India’s Five Year Plans, a shift in the pattern of industrialization, with lower emphasis on heavy industries and more on infrastructure begins in

    1. AFourth Plan
    2. BSixth Plan
    3. CEighth Plan
    4. DTenth Plan
13. 13.

    UPSC 2010

    With reference to Indian economy, consider the following statements :
    1. The Gross Domestic Product (GDP) has increased by four times in the last 10 years.
    2. The percentage share of Public Sector in GDP has declined in the last 10 years.
    Which of the statements given above is/are correct ?

    1. A1 only
    2. B2 only
    3. CBoth 1 and 2
    4. DNeither 1 nor 2
14. 14.

    UPSC 2009

    During which Five Year Plan was the Emergency clamped, new elections took place and the Janata Party was elected ?

    1. AThird
    2. BFourth
    3. CFifth
    4. DSixth
15. 15.

    UPSC 2009

    Consider the following statements regarding Indian Planning :
    1. The Second Five-Year Plan emphasised on the establishment of heavy industries.
    2. The Third Five-Year Plan introduced the concept of import substitution as a strategy for industrialisation.
    Which of the statements given above is/are correct ?

    1. A1 only
    2. B2 only
    3. CBoth 1 and 2
    4. DNeither 1 nor 2
16. 16.

    UPSC 2007

    Which one of the following is the correct sequence in the decreasing order of contribution of different sectors to the Gross Domestic Product of India?

    1. AService – Industry – Agriculture
    2. BService – Agriculture – Industry
    3. CIndustry – Service – Agriculture
    4. DIndustry – Agriculture – Service
17. 17.

    UPSC 2005

    Consider the following statements:
    1. The number of post offices in India is in excess of 1.5 lakhs.
    2. Bharat Sanchar Nigam Limited (BSNL) was formed in the year 1997.
    3. The Telecom Regulatory Authority of India (TRAI) was established in the year 2000.
    Which of the statements given above is/are correct?

    1. A1 and 3
    2. B1 and 2
    3. C1 only
    4. D3 only
18. 18.

    UPSC 2004

    Consider the following statements:
    1. The highest deciding body for planning in India is the Planning Commission of India.
    2. The Secretary of the Planning Commission of India is also the Secretary of the National Development Council.
    3. The Constitution includes economic and social planning in the Concurrent List in the Seventh Schedule of the Constitution of India.
    Which of the statements given above is/are correct?

    1. A1 and 2
    2. B2 and 3
    3. C2 only
    4. D3 only
19. 19.

    UPSC 2003

    Assertion (A): The new EXIM Policy is liberal, market-oriented and favours global trade. Reason (R): GATT has played a significant role in the liberalisation of economy.

    1. ABoth A and R are individually true and R is the correct explanation of A
    2. BBoth A and R are individually true but R is NOT the correct explanation of A
    3. CA is true but R is false
    4. DA is false but R is true
20. 20.

    UPSC 2002

    With reference to the Indian economy, consider the following activities:
    1. Agriculture, Forestry and Fishing
    2. Manufacturing
    3. Trade, Hotels, Transport and Communication
    4. Financing, Insurance, Real Estate and Business services The decreasing order of the contribution of these sectors to the Gross Domestic Product (GDP) at factor cost at constant prices (2000-01) is

    1. A3, 1, 2, 4
    2. B1, 3, 4, 2
    3. C3, 4, 1, 2
    4. D1, 3, 2, 4
21. 21.

    UPSC 2002

    Consider the following statements: The objectives of the National Renewal Fund set up in February 1992 were
    1. To give training and counselling for workers affected by retrenchment or VRS.
    2. Redeployment of workers
    Which of these statements is/are correct?

    1. ANeither 1 nor 2
    2. BBoth 1 and 2
    3. C1 only
    4. D2 only
22. 22.

    UPSC 2002

    A Five Year Plan in India is finally approved by the

    1. AUnion Cabinet
    2. BPresident on the advice of the Prime Minister
    3. CPlanning Commission
    4. DNational Development Council
23. 23.

    UPSC 2001

    Assertion (A): India's software exports increased at an average growth rate of 50% since 1995-96.
    Reason (R): Indian software companies were cost-effective and maintained international quality.

    1. ABoth A and R are individually true, and R is the correct explanation of A
    2. BBoth A and R are individually true, but R is NOT a correct explanation of A
    3. CA is true, but R is false
    4. DA is false, but R is true
24. 24.

    UPSC 2000

    “...instil into the vast millions of workers, men and women, who actually do the job, a sense of partnership and of cooperative performance....” The above passage relates to

    1. APlanned Development
    2. BCommunity Development
    3. CPanchayati Raj System
    4. DIntegrated Development Programme
25. 25.

    UPSC 1999

    Which one of the following is the objective of National Renewal Fund?

    1. ATo safeguard the interests of workers who may be affected by technological upgradation of industry or closure of sick units
    2. BTo develop the core sector of the economy
    3. CFor the development of infrastructure such as energy, transport, communications and irrigation
    4. DFor human resource development such as full literacy, employment, population control, housing and drinking water
26. 26.

    UPSC 1999

    Since 1980, the share of the tertiary sector in the total GDP of India has

    1. Ashown an increasing trend
    2. Bshown a decreasing trend
    3. Cremained constant
    4. Dbeen fluctuating
27. 27.

    UPSC 1997

    The Sixth and the Eighth Five-Year Plans covered the period 1980-85 and 1992-97 respectively. The Seventh Five-Year Plan covered the period

    1. A1987-92
    2. B1986-91
    3. C1985-90
    4. D1988-94
28. 28.

    UPSC 1997

    Assertion (A): The emergence of economic globalism does not imply the decline of socialist ideology. Reason (R): The ideology of Socialism believes in universalism and globalism.
    In the context of the above two statements, which one of the following is correct?

    1. ABoth A and R are true and R is the correct explanation of A
    2. BBoth A and R are true, but R is not a correct explanation of A
    3. CA is true, but R is false
    4. DA is false, but R is true
29. 29.

    UPSC 1996

    Which one of the following is correct regarding stabilization and structural adjustment as two components of the new economic policy adopted in India?

    1. AStabilization is a gradual, multi-step process while structural adjustment is a quick adaptation process
    2. BStructural adjustment is a gradual, multi-step process, while stabilization is a quick adaptation process
    3. CStabilization and structural adjustment are very similar and complementary policies. It is difficult to separate one from the other
    4. DStabilization mainly deals with a set of policies which are to be implemented by the Central Government while structural adjustment is to be set in motion by the State Governments
30. 30.

    UPSC 1996

    Assertion (A): An important policy instrument of economic liberalization is reduction in import duties on capital goods. Reason (R): Reduction in import duties would help the local entrepreneurs to improve technology to face the global markets.
    In the context of the above two statements, which one of the following is correct?

    1. ABoth A and R are true and R is the correct explanation of A
    2. BBoth A and R are true and R is not a correct explanation of A
    3. CA is true but R is false
    4. DA is false but R is true
31. 31.

    UPSC 1995

    Which one of the following Five-Year Plans recognised human development as the core of all developmental efforts?

    1. AThe Third Five-Year Plan
    2. BThe Fifth Five-Year Plan
    3. CThe Sixth Five-Year Plan
    4. DThe Eighth Five-Year Plan
32. 32.

    UPSC 1995

    What is the annual growth rate aimed at in the Eighth Five-Year Plan?

    1. A5.6%
    2. B6%
    3. C6.5%
    4. D7%
33. 33.

    UPSC 1995

    One of the reasons for India’s occupational structure remaining more or less the same over the years has been that

    1. Ainvestment pattern has been directed towards capital-intensive industries
    2. Bproductivity in agriculture has been high enough to induce people to stay with agriculture
    3. Cceilings on land holdings have enabled more people to own land and hence their preference to stay with agriculture
    4. Dpeople are largely unaware of the significance of transition from agriculture to industry for economic development
34. 34.

    UPSC 1995

    The largest source of financing the public sector outlay of the Eighth Five-Year Plan comes from

    1. Abalance from current revenue
    2. Bcontribution of public enterprises
    3. Cgovernment borrowings
    4. Ddeficit financing
35. 35.

    UPSC 1995

    The new Exim Policy announced in 1992 is for a period of

    1. A3 years
    2. B4 years
    3. C7 years
    4. D5 years
36. 36.

    UPSC 1996

    The Eighth Five-Year Plan is different from the earlier ones. The critical difference lies in the fact that

    1. Ait has a considerably larger outlay compared to the earlier plans
    2. Bit has a major thrust on agricultural and rural development
    3. Cconsiderable emphasis is placed on infrastructure growth
    4. Dindustrial licensing has been abolished