Indian Economy 1950–1990

The economic ideas of 1950–1990: the goals of planning, land reforms and the Green Revolution, marketable surplus, the industrial policy, small-scale industry, and tariffs and quotas.

Key ideas

A plan sets out how a nation’s resources should be used to reach goals in a fixed period; the five year plans aimed at growth, modernisation, self-reliance and equity.
Economies can be market (prices decide), centrally planned (the government decides) or mixed (both work side by side).
Land reforms meant abolishing intermediaries so tillers owned the land, and land ceilings fixing the most land one person could own.
The Green Revolution raised foodgrain output, especially wheat and rice, with HYV seeds that needed fertiliser, pesticide and assured water.
Marketable surplus is the part of the harvest farmers sell after keeping what they need.
The 1956 industrial policy grouped industries into three categories; licences were needed to start or expand a unit, and some goods were reserved for small-scale industry.
Import substitution meant making at home what was imported, protected by tariffs (taxes on imports) and quotas (limits on quantity).

Remember

Marketable surplus	output − family use − seed kept
Extra output from HYV seeds	area × (new yield − old yield)
Land above a ceiling	land owned − ceiling
Price with a tariff	world price + tariff % of it = price × (100 + tariff) ÷ 100
Share of GDP	per cent × GDP ÷ 100 (industry about 13% in 1950–51, 24.6% in 1990–91)
Key years	Planning Commission 1950; Karve Committee 1955; Industrial Policy Resolution 1956

Watch out

Confusing a tariff (a tax) with a quota (a limit on quantity).
Forgetting to subtract the seed kept when finding the marketable surplus.
Adding only the tariff, not the price plus the tariff, for the cost of an import.

Worked example

A land ceiling of 20 hectares is fixed. 5 landowners hold 28, 48, 53, 59 and 52 hectares. How much land in all is above the ceiling, and what is the aim of a ceiling?

Working: (28 − 20) + (48 − 20) + (53 − 20) + (59 − 20) + (52 − 20)

Answer: 140 hectares; to reduce the concentration of land ownership in a few hands