Condition of Indian Economy Between 1950-1990

Before talking about he Indian economy,it is very important to known various terms-

What is an economic system?
It refers to an arrangement by which central problems of economy are solved.

What are the central problems of economy?
1.what to produce?
2.how to produce?
3.for whom to produce?
Condition of Indian Economy Between 1950-1990
Courtesy-astrologicalmusings.com
There are 3 types of economic system-
1.capitalist economy
2.socialist economy
3.mixed economy

Capitalist economy
It is the economy in which means of production are owned controlled and operated by private sector.it is also known as market economy. Example US UK
What to purchase?
Only those goods are produced which are demanded by people to earn profit.
How to produce?
Technique of production can be labour intensive or capital intensive.
Decisions will be based on relative factor prices.
For whom to produce?
The goods are produced for only those people who have the purchasing power.Example rich people

Socialist economy
It is the economy in which means of production are owned controlled and operated by government. Example China
What to produce?
Government or central panning authority take the decisions. Majority is considered by government and consumer preference is not given importance.
How to produce?
Taken by government keeping in view the plan priorities and social benefits.
For whom to produce?
The decision of how to distribute is not on the basis of purchasing power but on the needs of the people.

Limitations of Capitalist economy
1.Practically not useful.
2.India being a democratic country cannot go for complete dilution.
3.Not successful in many countries.

Mixed economy
It is the combination of both capitalist and socialist economy in which both government and private sector co-exist.Private sector will produce whatever the goods they are produced well and government will produce the goods which private sector fails to produce.Mixed economy is also known as golden path as it solves all the problems of socialist and capitalist economy. Hence India went for this economic system.

What is a plan?
Plan spells out how the resources of country should be used.There are two types of plan
1.five years plan which is also known as developmental plan.
2.perspective plan which is of 20 years and five year plan is the base of this plan

Economic planning
It is a way of organising and utilising the resources to its maximum advantage defined in terms of social ends.

Need for economic planning
1.To break the vicious circle of poverty.
Poor people are generally unemployment.hence they will have low or no income. This circle keeps on going which has to be broken with policy intervention.
2.Importance to social interest.
Private entrepreneur will go for individual interest but government will go for social interest. Hence the government can make private entrepreneur work for the society.
3.Optimum utilization of resources.
Best of resources is only possible when there is a plan behind it.
4.To develop economic and social infrastructure.
Social infrastructure include education, health, banking whereas economic infrastructure include transportation, communication etc.
Private entrepreneur will not invest in infrastructure as the output is not fast and immediate. These are important for the country hence the government will be more concerned about it.
5.To increase capital formation
To increase capital formation means to increase capital stock such as land,building,tools etc

Planning Commission
It was established in 1950.Prime minister is the chairperson of this commission,Jawaharlal Nehru was the 1st chairperson of planning commission .It was this planning commission who found the need for Five-year plan and perspective plan.The first five year plan started in 1951 and ended in 1955.
Official portal of Planning commission
Courtesy-Official website
Goals of Five years plan
1.Economic growth
Economic growth means increasing countries capacity to increase the output of goods and services within the country.Large stock of productive capital and large stock of supportive system together would the countries economic growth.
2.Equity
The directive principles of Constitution had proclaimed equity as the basic national commitment.Equity in economic growth means-
(a)Reducing economic inequality
Means reducing the gap between the rich and poor and giving equal status to all.
(b)Carving the concentration of economic power.
Power should not be limited to only few hands like rich people but power should be distributed to all.
(c)Upliftment of the weaker sections of the society.
Special emphasis should be given to poor and backward landless labours,children,women and handicapped.

3.Self reliance
It means the country should not be dependent on other for various thing and making the economy self sufficient which will also avoid interference by other countries and will give employment opportunities to the people.

4.Modernisation
It refers to adoption of new technology in the field of production and change in social outlook. If we adopt modern technology, the production can be enhanced and change in outlook will give women their respect and equality.

Condition of agriculture sector
During this time, there was neither growth nor equity in the agricultural sector.So agricultural policies were needed. Agricultural policy was implemented by the government for the growth of agricultural sector.
Condition of agriculture sector

Agricultural policy includes two measures-
1.Institutional measures
2.Technological measures

Institutional measures
It includes abolition of Zamindar which would give incentives to its rightful owners and the other was land ceiling means fixing the maximum size of land owned by individual.

Technological measures

It includes green revolution founded by Norman Borlaug.At this time; farmers were using old traditional ways of farming which leads to low productivity. Hence it has to be replaced. Green revolution bought a change because with the use of High Yielding variety seeds(HYV) which have a genetical potential of higher yield brought a change in the productivity of the farms. Stay tuned if you want to know what the advantages of this revolution are and what its disadvantage are over the Indian economy.
       

Condition of Indian Economy Between 1950-1990 Condition of Indian Economy Between 1950-1990 Reviewed by Roman Empire on October 02, 2017 Rating: 5
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