Notes-Class 9-History-Chapter-4-Economic Development-Maharashtra Board

Economic Development

Maharashtra Board-Class 9-History-Chapter-4

Notes

Points to be learn :

  • Mixed Economy
  • Five Year Plans
  • Goals of Plans
  • Nationalisation of Banks
  • World Trade Organisation

Types Economic System :

  • Capitalist System, means of production are privately owned.
  • Socialist System means of production are owned by the state.
  • Mixed economy works both in the private and the public sector.

Mixed Economy :

Rather than taking recourse to Capitalist System and the Socialist System, India under the leadership of Pandit Jawaharlal Nehru adopted the middle path of mixed economy for economic development.

  • Mixed economy has Public Sector, Private Sector and Joint Sector. Public Sector is under the control and management of the government. Private Sector industries are owned by private industrialists and work under supervision and control of the government.
  • There is joint-ownership of the government and private industrialists in the Joint Sector.
  • Mixed economy aims at maximisation of production and social welfare.
  • This system tries to bring together the good aspects of both the capitalist and the socialist systems. It cannot ignore the profit motive, entrepreneurship, discipline and time-bound planning.
  • Mixed economy gives priority to national interest. Emphasis is on long term development. Large scale industries require huge capital investment and private sector industrialists are not keen to make investment. Therefore, the government takes up these activities.
  • The Industrial Policy Resolution proposed to increase the speed of industrialisation and priority was given to : (i) check influence of the industrial houses and foreign industries, (ii) remove regional imbalances, (iii) development of small scale and cottage industries and (iv) paying more attention to the cooperative sector.

Five-Year Plans :

  • The colonial power had exploited India economically. The country faced severe problems like poverty, unemployment, population growth, low standards of living, low productivity of agriculture and industries and backwardness in the fields of knowledge, science and technology.
  • Planning was essential to solve these problems.
  • Planning Commission was established in 1950 under the chairmanship of Pandit Jawaharlal Nehru.
  • It formulates Five-Year plans that include rural and agricultural development, balanced industrialisation, provision for a minimum standard of living and economic development consistent with democratic ideas.
  • Importance is given to people's participation and in the formation and implementation of the Five-Year plans.
  • General principle of planning is the proportionate distribution of the resources and the appropriate use of the human resources to fulfil the needs of the people.

Objectives/Goals of Five-Year Plans :

Objectives/Goals of Five-Year Plans :

  • Increase in national income (economic growth).
  • Rapid industrialisation with focus on basic industries.
  • Increase in agricultural production to achieve self-sufficiency in the production of foodgrains.
  • Use of human resource by increasing employment opportunities.
  • Removal of disparity (inequality) in income (earning) and wealth.
  • Price stability.
  • Population control by adopting Family Planning.
  • Eradication of poverty and improvement in the standard of living of people.
  • Develop social service.
  • Make economy self-sufficient

First Five Year Plan (1951-1956) :

Main objective : Planned economic development

The expenditure in this plan was primarily on

  • Agriculture, social development, irrigation and flood control,
  • Sources of  energy, rural and small industries, heavy industries and minerals.
  • Transport and communication,
  • Education and health.

This plan consisted of measures to lay the foundations of planned economic development.

Second Five Year Plan (1956-1961):

Main objective : lndustrialisation

This plan had ambitious goals of industrialisation.

  • Iron and steel industries at Durgapur, Bhilai and Rourkela;
  • Chemical fertilisers plant at Sindri;
  • Rail engine factory at Chittaranjan; factory of railway bogies at Perambur;
  • Ship building factory at Vishakhapattanam and other heavy industries were set up in the Public Sector.
  • Huge dams like Bhakra- Nangal, Damodar, etc. were built to make water available for agriculture.

It led to increase in the national income.

Third Five Year Plan (1961-1966) :

Main objective : Balance in industries and agriculture

  • The other goals of the plan included
  • Increase in national income,
  • Heavy industries,
  • Development in transport and mineral industry,
  • Alleviation of poverty and to expand the opportunities for employment.

Annual Plan : Three one year plans (1966 to 1969).

  • After the third five year plan, three one year plans were implemented.
  • This was a period of intense famine. Due to the invasion by China and war with Pakistan, the government had to focus on defence rather than development related tasks.

Fourth Five Year Plan (1969-1974) :

Fourth Five Year Plan (1969-1974):

Main objective : Development of basic industries. Socialistic pattern of society

Other objective :

  • Increase speed of economic development.
  • India should become self-reliant.
  • Nationalisation of 14 Banks

Plan did not succeed as expected, burden of Bangladesh war, expenditure of refugees, pay raise of government and railway employees, rise in the price of petrol.

The Fifth Five-Year Plan(1974-1979) :

The Fifth Five-Year Plan(1974-1979) :

Accorded priority to poverty alleviation and economic self sufficiency.

The objectives of the Fifth Five-Year Plan were :

  • To increase national income, development of basic industries, enlargement of employment, education, supply of nutritious food, drinking water and health services in the rural areas; implementation of welfare schemes in the rural area.
  •  It also proposed monopolitic purchase of foodgrains and supply of the same to the poor at subsidised rate through the public distribution system.

These activities received special mention in the 20-point programme announced by Mrs. Indira Gandhi on 1st July 1975.

The Sixth Five-Year Plan (1980-1985) :

The Sixth Five-Year Plan (1980-1985) :

The Fifth Five-Year Plan was suspendedwhen the lanata Party came to power in 1977. However, the planning process was restored after the Congress returned to power in 1980.

  • The Sixth Five-Year Plan continued the emphasis of the Fifth Five-Year Plan on poverty alleviation and employment generation.
  • For this purpose, the Government of India launched Integrated Rural Development Programme (IRDP), Rural Landless Employment Guarantee Programme (RLEGP) and National Rural Employment Programme (NREP).
  • The objectives of the Sixth Five-Year Plan were to increase economic growth rate, reduce poverty and Unemployment and to bring population under control by popularising family planning.

The Seventh Five-Year Plan (1985 to 1990) :

The Seventh Five-Year Plan (1985 to 1990) :

  • The Seventh Five-Year Plan laid stress on increase in production of foodgrains,
  • Increase in employment and increase in productivity (by means of science and technology.)
  • Its objectives were economic developments modernisation of production techniques, social achieve increase in national income of 5% per annum and increase food production.
  • For the generation of employment, Jawahar Rozgar Yojana was launched.
  • For providing affordable housing, Indira Awaas Yojana was launched, to make provision for drinking water in the villages, the scheme of 10 lakh wells was launched.

Eight Five Year Plan (1992-1997) :

Eight Five Year Plan (1992-1997) : The Eighth Five-Year Plan proposed economic growth rate of 6.5% per annum.

  • It provided scope to the private sector to contribute to economic development.
  • It proposed to control the population growth rate by encouraging family planning.
  • It proposed to eradicate illiteracy by spread of primary education.
  • A number of welfare schemes were launched.

They were :

  • Pradhanmantri Rozgar Yojana.
  • Mahila Samruddhi Yojana.
  • Rashtriya Samajik, Arthik Sahayya Yojana.
  • Midday Meal Scheme.
  • Indira Mahila Vikas Yojana.
  • Ganga Kalyan Yojana.

Ninth Five Year Plan (1997-2002) :

Ninth Five Year Plan (1997-2002) :

  • The Ninth Five-Year Plan focused on agriculture and rural development.
  • Its objectives were to increase economic growth rate, to create healthy competition in the development of infrastructure, give a new direction to industrial policy to ensure larger foreign investment.

The following schemes of social welfare were launched :

  • Swarna Jayanti Shahari Rozgar Yojana.
  • Bhagyashree Child Welfare Policy.
  • (m) Rajrajeshwari Mahila Kalyan Yojana.
  • Swarnajayanti Gram Swarozgar Yojana.
  • Jawahar Gram Sumruddhi Yojana.
  • Antyodaya Anna Yojana.
  • Pradhanmantri Gram Sadak Yojana

The service sector, telecommunication industry and construction industry made satisfactory progress during the Ninth Five-Year Plan.

Nationalisation : Nationalisation is a process of changing ownership of private assets, its production tools and distribution by bringing it under the ownership of government. After independence most of the banks were owned by private entrepreneurs. In 1969, fourteen banks were nationalised bringing them directly under government control. Thereafter, the profits earned by the banks flowed into government treasury and the losses were compensated by the exchequer.

 Nationalisation of Imperial Bank (1955) :

  • Banking was the monopoly of the private sector. These banks represented different industrial groups.
  • They were working towards developing industrial sector and increasing its profits.
  • The government nationalised the ‘Imperial Bank’ in 1955 and it got converted into State Bank of lndia. It played a major role in development.

Nationalisation of Commercial Banks (1969) :

Nationalisation of Commercial Banks (1969) :

  • Nationalisation of banks was essential to cover the deficits if they occurred while implementing different schemes. The profits of these banks would come to the government once they were nationalised.
  • The policy of developing small industries and pharmaceutical industries had to be implemented.
  • Lal Bahadur Shastri undertook the Green Revolution in order to overcome food shortages and droughts.
  • ‘Congress Forum for Socialist Action‘, a group in the Congress party inspired by socialist ideas, demanded nationalisation of commercial banks.
  • They were supported by the Communist Party.
  • To establish socialist pattern of society, 14 major commercial banks were nationalised by Prime Minister Indira Gandhi on 19th July 1969. 6 more banks were nationalised in 1980.

20-Point Programme :  Prime Minister Indira Gandhi announced the 20-point programme on 1st July, 1975. She expressed the resolve of becoming a developed nation.

The main provisions of the 20-point programme were as follows :

  • Land ceiling for cities and agricultural land,
  • Equal division of wealth,
  • Minimum wages for workers,
  • Increase in water conservation,
  • Workers’ participation in industry,
  • National Training Scheme,
  • Freeing bonded labour,
  • Prevention of tax evasion, economic crimes and smuggling,
  • Regulation of Prices of basic necessities,
  • Improvements in the public distribution system,
  • Improvement in the textile industry by developing handloom sector,
  • Waiving loans for weaker sections, housing, communication facilities,
  • Making educational equipment available to schools.

Issues of workers :

Issues of workers : The first textile mill was started in Mumbai on 11th July 1851 by Kawasjee Dawar. Eventually, mills started in Dadar, Paral, Bhaykhala, Shivdi, Prabhadevi and Worli. This part came to be known as Girangaon or ‘town of mills’.

  • The efforts of Narayan Meghaji Lokhande, an associate of Mahatma Jotirao Phule, resulted in the weekly Sunday holiday for mill workers from 1st January, 1882.
  • The working class has contributed culturally as well through folk theatre, folk art and literature. Anna Bhau Sathe, Shahir Amar Sheikh, Shahir Sable were popular for their programmes aimed at public education. Poets like Narayan Surve, Namdev Dhasal, etc. portrayed the real life of the workers through their poems.
  • The discontent among the textile mill workers was increasing due to disparity in the higher wages, better facilities and more bonus paid to the workers in the other industries.
  • The workers expected to get 20% bonus in the Diwali of 1981. However, Rashtriya Mill Mazdoor Sangh, without taking the workers into confidence, agreed to 8% to 17% bonus. This cut in the bonus proved to be the cause of unrest.
  • Some workers approached Dr. Datta Samant totake up their leadership. Dr. Datta Samant agreed to lead strike of workers in 65 mills. On 18th January, 1982 2.5 lakh workers went on strike.
  • Efforts of the Chief Ministers Barrister A. R.Antulay and later of Babasaheb Bhosale failed as Bhosale insisted that he would negotiate only with Rashtriya Mill Mazdoor Sangh.
  • There was a split among the workers as the strike dragged on for over six months.
  • The workers started a ‘Jail Bharo Agitation’. In September 1982, one and a half lakh workers took a march to the Legislative Assembly of Maharashtra.
  • The strike went on for one year and during that period about 1.5 lakh workers became unemployed.
  • As polyester was in greater demand than cotton cloth, the sale of mill cloth was already affected.
  • The mills moved from Mumbai to Surat in Gujarat.The Central government nationalised 13 textilemills. Appointment of arbitrators did not help to resolve the issue.
  • In a nutshell, the strike of textile mill workers was a miserable failure.

Know this :

Inflation: The availability of more currency in market than in demand leads to devaluation of currency. When the currency is more than the national income of country it is called as inflation.

  • Inflation leads to increase in price of commodities, followed by uncertainty in production, bringing the economy on verge of collapse.
  • Inflation can be controlled by increasing rate of interest on loans, increase in savings and reduction in spending money.
  • The Nations which were involved in First and Second World War experienced inflation.

 New Economic Policy (1991) :

Grave economic crisis prior to 1991 led to adoption of New Economic Policy. The year 1991 is very important in the history of modern India.

  • After the 10th General Elections, P. V. Narasimha Rao became the Prime Minister of India.
  • With Dr. Manmohan Singh as Finance Minister, he adopted the new economic policy of linking India’s economy with the global economy.
  • For this, fundamental changes were brought about in the Indian economy. Indian economy was brought in tune with the global mainstream.

Factors leading to New Economic Policy :

Factors leading to New Economic Policy :

  • Rate of inflation was 17%.
  • Economic growth rate had gone down to 1.1%.
  • Foreign exchange reserves were enough for just a week's import.
  • Difficult to pay back loans and interest thereon.
  • Liability of over 10 thousand crore rupees on loan waiver given by the V. P. Singh government.
  • Proportion of internal loans of central and state governments together constituted 55% of Gross Domestic Product.
  • Foreign loans increased from 2350 crores in 1980-81 to 8380 crores in 1990, as against exchange reserves of only 100 crores.
  • Oil prices increased due to invasion of Kuwait by Iraq.
  • Non-resident Indians also started withdrawing deposits in foreign currency from India.

Remedies (Corrective measures taken) :

Remedies (Corrective measures taken) :

Dr. Manmohan Singh as Finance Minister took many corrective steps.

  •  He removed restriction on foreign investment and restricted license system to 18 industries.
  • Opened up public sector for private industries.
  • Regulated share market by establishing SEBI in 1992 and computerised National Stock Exchange.
  • Gave priority to remove recession.
  • He launched policy of privatisation, liberalisation and globalisation

Effects of measures taken by Shri Manmohan Singh :

Effects of measures taken by Shri Manmohan Singh :

  • Due to these efforts foreign investment grew.
  • India could recover the gold mortgaged with Bank of England.
  • It got support of capitalist as well as middle class.
  • Opened telecom sector which started mobile phone services in the whole country.

World Trade Organisation (WTO) :India became a member of the WTO in 1995.

The objectives of the WTO are :

(i) promote free trade among the countries,

(ii) remove the restrictive barriers in free trade.

(iii) regulate global trade with the help of formal multi-party mechanism.

  • General Agreement on Tariffs and Trade (GATT) existed prior to the establishment of the WTO.
  • The provisions of WTO are regarding grants, import-export foreign investment, agriculture, technology and services.
  • There was rapid progress in the electricity, water transportation, education and health after India became the member of WTO.
  • As per the reports of WTO, India made improvements in various areas like reduction in the below poverty line population, declines in infant mortality, availability of drinking water and waste water management.
  • India signed the South Asian Preferential Trade Agreement (SAPTA) with the SAARC nations.

Facilities for SAARC countries :

Facilities for SAARC countries :

  • India removed import restrictions on many commodities for SAARC countries.
  • India gave discounts on import duties, opened insurance sector for private and foreign investment.

Useful links :

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