Indian Economic Development: Planning, Reforms and Poverty
This domain tests the planning era, the 1991 reforms, poverty measurement, human capital and the sectoral experience of the Indian economy since independence.
Core rules
- The Planning Commission was set up in 1950. The First Plan (1951–56) stressed agriculture; the Second Plan (1956–61) adopted the Mahalanobis heavy-industry strategy. Plan goals were growth with equity and self-reliance.
- Pre-1991 policy featured import substitution, industrial licensing (Industrial Policy Resolution 1956), public-sector dominance and administered prices.
- The New Economic Policy of July 1991 combined liberalisation (deregulation, devaluation, tax reform), privatisation (disinvestment) and globalisation (trade openness, FDI).
- Poverty was officially measured by calorie norms (2,400 rural, 2,100 urban) and later by the Tendulkar line (2011–12: ₹816 rural and ₹1,000 urban per capita per month). The head count ratio is the share of the population below the line.
- Human capital formation through education and health raises productivity; the HDI combines life expectancy, education and per capita income.
- The Green Revolution raised wheat and rice output; problems persist in small holdings, irrigation dependence and MSP distortions. MGNREGA (2005) guarantees rural wage employment.
Worked example
If 30 people in a population of 200 fall below the poverty line, the head count ratio is 30 ÷ 200 × 100 = 15%. The ratio measures incidence, not the depth of poverty, so two states with the same 15% can differ sharply in how far below the line their poor actually fall.
Traps
Saying the First Plan was industrial. Reducing 1991 to privatisation alone. Confusing the poverty line with destitution. Treating the HDI as income only. Crediting the Green Revolution to all crops rather than mainly wheat and rice.