Planning, Economic Reforms & Policy: previous-year questions

Answer: (C) 1966-1969

The 'Plan Holiday' is the gap of 1966-69 between the Third Plan (1961-66) and the Fourth Plan (1969-74), when the government ran three Annual Plans (1966-67, 1967-68, 1968-69) instead of a five-year plan. The causes were the wars with China (1962) and Pakistan (1965), two successive droughts, high inflation and the devaluation of the rupee in June 1966; the Green Revolution strategy was introduced in these years. Other breaks in planning: the Rolling Plan of 1978-80 and the Annual Plans of 1990-92. The Twelfth Plan (2012-17) was the last, and the Planning Commission was replaced by NITI Aayog on 1 January 2015.

Answer: (B) National Development Council.

The National Development Council, chaired by the Prime Minister, had all Union Cabinet Ministers and the Chief Ministers of all States as members to approve the Five-Year Plans. The Planning Commission was an expert body without Chief Ministers, and the Finance Commission is a quasi-judicial body of experts. Note: the Inter-State Council set up under Article 263 also has the Chief Ministers of all States as members, so (C) is equally correct on the facts. But the PSC answer key provided option B only.

Answer: (B) Avadi Session of 1955

The Indian National Congress adopted the 'socialistic pattern of society' as its goal at the Avadi (Madras) session in January 1955, which shaped the Second Five-Year Plan. The Nagpur session of 1959 is known for the resolution on cooperative farming, not for this goal.

Answer: (D) 1978–83

The Janata government ended the Fifth Plan a year early and introduced a 'Rolling Plan' from 1978, conceived for 1978–83; it was abandoned in 1980 when the new government launched the Sixth Plan (1980–85). 1973–78 was the Fifth Plan, and 1980–85 the Sixth.

Answer: (A) Increase in informalisation of the economy

After 1991 most new jobs were casual, contract or unorganised-sector jobs, while organised-sector employment hardly grew, so the economy became more informal: option (A). Access to developed-country markets stayed limited by their trade barriers, so (B) is not accepted, and income inequalities widened rather than fell, so (C) is wrong.

Answer: (D) Shri Montek Singh Ahluwalia

Montek Singh Ahluwalia was Deputy Chairman of the Planning Commission from 2004 to 2014; the Commission was replaced by NITI Aayog on 1 January 2015, making him the last. The other names were never Deputy Chairmen.

Answer: (A) political changes at the centre.

The Eighth Plan due in 1990 could not start because of frequent changes of government at the Centre in 1989–91, so annual plans were run for 1990–91 and 1991–92 and the Plan began in 1992. The foreign exchange crisis of 1991 was a contemporary event but not the reason given for the postponement.

Answer: (D) not been satisfactory.

The first-generation reforms raised GDP growth, but employment grew slowly (the 'jobless growth' of the 1990s) and poverty fell only modestly in those years. So their impact on jobs and poverty is judged not satisfactory, option (D); 'satisfactory', 'good' and 'spectacular' all overstate it.

Answer: (C) Harrod-Domar model

The First Plan (1951–56), which stressed agriculture and capital formation, was based on the Harrod–Domar growth model. The Mahalanobis model underlay the Second Plan, which made it the tempting wrong option.

Answer: (D) All of the above

After the Third Plan failed, successive droughts in 1965–67, the 1965 war, devaluation, shortage of resources and rising inflation forced the Government to run three annual plans in 1966–69 instead of a Fourth Plan. All the listed causes contributed.

Answer: (D) 2017

The Twelfth Five-Year Plan ran from 2012 to 2017 and ended on 31 March 2017; it was the last Five-Year Plan, as NITI Aayog replaced the Planning Commission in 2015. The earlier years fall within the Plan period.

Answer: (C) NITI Ayog

NITI Aayog (National Institution for Transforming India) replaced the Planning Commission on 1 January 2015 as the government's policy think-tank. NABARD is a rural development bank and SEBI the securities regulator.

Answer: (A) Promotion of Foreign Direct Investment

A main argument for opening the economy in 1991 was to attract foreign direct investment, bringing in capital, technology and foreign exchange during the balance-of-payments crisis. Boosting agriculture, poverty alleviation or indigenous technology were not the central arguments for globalisation.

Answer: (D) Faster, more inclusive and sustainable growth

The theme of the Twelfth Plan (2012–17) was 'Faster, More Inclusive and Sustainable Growth'. 'Towards faster and more inclusive growth' was the theme of the Eleventh Plan, which makes (B) the tempting wrong option.

Answer: (B) Services

During the Tenth Plan (2002–07) the services sector grew fastest, at over 9% a year, with industry close behind and agriculture far lower at about 2.5%. Mining grew more slowly than manufacturing.

Answer: (C) Fifth Five Year Plan

The Minimum Needs Programme, providing basic services such as elementary education, rural health, drinking water and rural roads, was introduced in the first year of the Fifth Plan (1974–79). The Third, Eighth and Ninth Plans came before or long after it.

Answer: (D) All of the above

The first-generation reforms of 1991 are summed up as LPG — liberalisation of controls and licensing, privatisation (disinvestment and opening sectors to private firms) and globalisation (opening trade and foreign investment). All three characterise them.

Answer: (D) All of the above

Indian Five-Year Plans were financed from domestic savings (taxes and surpluses of public enterprises), public borrowing at home and abroad, and deficit financing. All three were sources, so no single option is complete.

Answer: (B) 1991

The Liberalisation–Privatisation–Globalisation model was introduced with the New Economic Policy of July 1991 under P. V. Narasimha Rao and Manmohan Singh. 1990 was the year of the crisis's build-up, not of the reforms.

Answer: (D) Change of power at the Center

The Janata government drafted a Sixth Plan for 1978–83, but when Congress returned to power in 1980 it scrapped it and launched a fresh Sixth Plan for 1980–85. The change of government, not war, monsoon or a payments crisis, caused the two plans.