Tamilnadu State Board New Syllabus Samacheer Kalvi 12th Economics Guide Pdf Chapter 11 Economics of Development and Planning Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 12th Economics Solutions Chapter 11 Economics of Development and Planning

12th Economics Guide Economics of Development and Planning Text Book Back Questions and Answers

PART – A

Multiple Choice questions

Question 1.
“Redistribution with Growth” became popular slogan under which approach?
a) Traditional approach
b) New welfare oriented approach
c) Industrial approach
d) None of the above
Answer:
b) New welfare oriented approach

Question 2.
Which is not the feature of economic growth?
a) Concerned with developed nations
b) Gradual change
c) Concerned with quantitative aspect
d) Wider concept
Answer:
d) Wider concept

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 3.
Which among the following is a characteristic of underdevelopment?
a) Vicious circle of poverty
b) Rising mass consumption
c) Growth of Industries
d) High rate of urbanization
Answer:
a) Vicious circle of poverty

Question 4.
The non-economic determinant of economic development
a) Natural resources
b) Human resource
c) Capital formation
d) Foreign trade
Answer:
b) Human resource

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 5.
Economic growth measures the ……………………
a) Growth of productivity
b) Increase in nominal income
c) Increase in output
d) None of the above
Answer:
c) Increase in output

Question 6.
The supply side vicious circle of poverty suggests that poor nations remain poor because
a) Saving remains low
b) Investment remains low
c) There is a lack of effective government
d) a and b above
Answer:
d) a and b above

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 7.
Which of the following plan has focussed on the agriculture and rural economy?
a) People’s Plan
b) Bombay Plan
c) Gandhian Plan
d) Vishveshwarya Plan
Answer:
c) Gandhian Plan

Question 8.
Arrange following plans in correct chronological order
a) People’s Plan
b) Bombay Plan
c) Jawaharlal Nehru Plan
d) Vishveshwarya Plan
Answer choices
a) (i) (ii) (iii) (iv)
b) (iv) (hi) (ii) (i)
c) (i) (ii) (iv) (ii)
d) (ii) (i) (iv) (iii)
Answer:
b) Bombay Plan

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 9.
M. N. Roy was associated with …………..
a) Congress Plan
b) People’s Plan
c) Bombay Plan
d) None of the above
Answer:
b) People’s Plan

Question 10.
Which of the following country adopts indicative planning?
a) France
b) Germany
c) Italy
d) Russia
Answer:
b) Germany

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 11.
Short-term plan is also known as ……………………
a) Controlling Plans
b) De-controlling Plans
c) Rolling Plans
d) De-rolling Plans
Answer:
a) Controlling Plans

Question 12.
Long-term plan is also known as …………
a) Progressive Plans
b) Non-progressive Plan
c) Perspective Plans
d) Non-perspective Plans
Answer:
c) Perspective Plans

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 13.
The basic philosophy behind long – term planning is to bring ………………. changes in the economy?
a) Financial
b) Agricultural
c) Industrial
d) Structural
Answer:
c) Industrial

Question 14.
Sarvodaya Plan was advocated by ……………..
a) Mahatma Gandhi
b) J.P. Narayan
c) S. N Agarwal
d) M. N. Roy
Answer:
b) J.P. Narayan

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 15.
Planning Commission was set up in the year ………….
a) 1950
b) 1951
c) 1947
d) 1948
Answer:
a) 1950

Question 16.
Who wrote the book ‘The Road to Serfdom’?
a) Friedrich Hayek
b) H. R. Hicks
c) David Ricardo
d) Thomas Robert Malthus
Answer:
a) Friedrich Hayek

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 17.
Perspective plan is also known as ………….
a) Short-term plan
b) Medium-term plan
c) Long-term plan
d) None of the above
Answer:
c) Long-term plan

Question 18.
NITI Aayog is formed through ……………
a) Presidential Ordinance ‘
b) Allocation of business rules by President of India
c) Cabinet resolution
d) None of the above
Answer:
c) Cabinet resolution

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 19.
Expansion of NITI Aayog?
a) National Institute to Transform India
b) National Institute for Transforming India
c) National Institution to Transform India
d) National Institution for Transforming India
Answer:
d) National Institution for Transforming India

Question 20.
The Chair Person of NITI Aayog is
a) Prime Minister
b) President
c) Vice – President
d) Finance Minister
Answer:
a) Prime Minister

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

PART – B

Answer the following questions in one or two sentences.

Question 21.
Define economic development
Answer:

  1. Economic development is regarded as a process whereby there is an increase in the consumption of goods and services by individuals.
  2. From the welfare perspective, economic development is defined as a sustained improvement in health, literacy and standard of living.

Question 22.
Mention the indicators of development.
Answer:

  • Gross National product (GNP)
  • GNP Per capita
  • Welfare
  • Social Indicators

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 23.
Distinguish between economic growth and development
Answer:

Economic growth

Economic Development

1. Deals with the problems of Developed countries. Deals with the problem of UDCs.
2. Change is gradual and steady Change is discontinuous and spontaneous.
3. Narrow wider concept.

Question 24.
What is GNP?
Answer:
Gross National Product (GNP):

  1. GNP is the total market value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non – residents located in that country.
  2. GNP is one measure of the economic condition of a country, under the assumption that a higher GNP leads to a higher quality of living, all other things being equal.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 25.
Define economic planning.
Answer:
Economic planning is “collective contral or suppression of private activities of production and exchange”. – Robbins.

Question 26.
What are the social indicators of economic development?
Answer:
Social Indicators:

  1. Social indicators are normally referred to as the basic and collective needs of the people.
  2. The direct provision of basic needs such as health, education, food, water, sanitation, and housing facilities check social backwardness.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 27.
Write a short note on NITI Aayog.
Answer:

  1. NITI Aayog (National Institution for Transforming India) was formed on January 1, 2015, through a Union Cabinet resolution.
  2. NITI Aayog is a policy think-tank of the Government of India. It replaced the Planning Commission from 13th August 2014.
  3. The Prime Minister is the Chairperson of NITI Aayog and Union Ministers will be Ex – officio members.
  4. The Vice-Chairman of the NITI Aayog is the functional head and the first Vice-Chairman was Arvind Panangariya.

PART-C

Answer the following questions in one paragraph.

Question 28.
Elucidate major causes of vicious circle of poverty with diagram
Answer:
The vicious circle of Poverty
Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning 1
A country is poor because of low capital income. The vicious circle of poverty operates both on the demand side and the supply side.
It is associated with low rate of saving and investment on the supply side and low level of income leads to low level of demand on the demand side.

Question 29.
What are the non-economic factors determining development?
Answer:

  1. Human Resource
  2. Technical Know-how
  3. Political Freedom
  4. Social Organization
  5. Corruption free administration
  6. Desire for Development
  7. Moral, ethical and social values
  8. Casino Capitalism
  9. Patrimonial Capitalism

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 30.
How would you break the vicious circle of poverty?
Answer:

  • In the demand side Nurkse suggested the strategy of balanced growth to break vicious circle of poverty.
  • The balanced growth (i.e.,) simultaneous investment in large number of industries creates mutual demand.
  • Thus, through the strategy of balanced growth, vicious circle of poverty operating on the demand side of capital formation can be broken.
  • In the supply side to break the circle a country has to keep its marginal rate of savings higher than its average rate of savings.

Question 31.
Trace the evolution of economic planning in India.
Answer:
The evolution of planning in India is stated below:

(I) Sir M. Vishveshwarya (1934):
A prominent engineer and politician made his first attempt in laying the foundation for economic planning in India in 1934 through his book, “Planned Economy of India”. It was a 10-year plan.

(II) Jawaharlal Nehru (1938):
Set-up “National Planning Commission” by a committee but due to the changes in the political era and Second World War, it did not materialize.

(III) Bombay Plan (1940):
The 8 leading industrialists of Bombay presented the “Bombay Plan”. It was a 15 Year Investment Plan.

(IV) S.N Agarwal (1944):
Gave the “Gandhian Plan” focusing on the agricultural and rural economy.

(V) M.N. Roy (1945):
Drafted ‘People’s Plan”. It was aiming at the mechanization of agricultural production and distribution by the state only.

(VI) J.P. Narayan (1950):
Advocated, “Sarvodaya Plan” which was inspired by the Gandhian Plan and with the idea of Vinoba Bhave. It gave importance not only for agriculture but encouraged small and cottage industries in the plan.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 32.
Describe the case for planning.
Answer:

The economic planning is justified on the following grounds:-

  • To accelerate and strengthen market mechanism.
  • To remove unemployment ‘
  • To achieve balanced development
  • To remove poverty and inequalities.
    Arthur lewis says, ‘planning is more necessary in backward countries to devise ways and means and to make concentrated efforts to raise national income.

Question 33.
Distinguish between functional and structural planning.
Answer:
Functional planning refers to that planning which seeks to remove economic difficulties by directing all the planning activities within the existing economic and social structure.
The structural planning refers to a good deal of changes in the socioeconomic framework of the country.
This type of planning is adopted mostly in under developed countries.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 34.
What are the functions of NITI Aayog?
Answer:
Functions of NITI Aayog:
(I) Cooperative and Competitive Federalism:
To enable the States to have active participation in the formulation of national policy.

(II) Shared National Agenda:
To evolve a shared vision of national development priorities and strategies with the active involvement of States.

(III) Decentralized Planning:
To restructure the planning process into a bottom-up model.

(IV) Vision and Scenario Planning:
To design medium and long – term strategic frameworks towards India’s future.

(V) Network of Expertise:
To mainstream external ideas and expertise into government policies and programmes through collective participation.

(VI) Harmonization:
To facilitate harmonization of actions across different layers of government, especially when involving cross-cutting and overlapping issues across multiple sectors; through communication, coordination,
collaboration, and convergence amongst all the stakeholders.

(VII) Conflict Resolution:
To provide a platform for mutual consensus to inter-sectoral, interdepartmental, interstate as well as center-state issues for all speedy execution of the government programmes.

(VIII) Coordinating Interface with the World:
It will act nodal point to harness global expertise and resources coming from International organizations for India’s developmental process.

(IX) Internal Consultancy:
It provides internal consultancy to Central and State governments on policy and programmes.

(X) Capacity Building:
It enables to provide capacity building and technology up-gradation across government, benchmarking with latest global trends and providing managerial and technical know-how.

(XI) Monitoring and Evaluation:
It will monitor the implementation of policies and progammes and evaluate the impacts.

PART – D

Answer the following questions in about a page

Question 35.
Discuss the.economic determinants of economic development.
Answer:
Economic factors:

1. Natural Resource:-
The existence of natural resources in abundance is essential for development.
A country deficient in natural resources may not be in a position to develop rapidly.

2. Capital Formation:-
Capital formation refers to the net addition to the exist¬ing stock of capital goods which are either tangible like plants and machinery or intangible like health, education and research.

3 Size of the Market:-
Large size of the market would stimulate production,increase employment and raise the National per capita income.

4. Structural change:-
Structural change refers to change in the occupational structure of the economy.

5. Financial System:-
Financial system implies the existence of an efficient and organized banking system in the country.

6. Marketable Surplus :-
Marketable surplus refers to the total amount of farm output cultivated by farmers over and above their family consumption needs. This is a surplus that can be sold in the market for earning income.

7. Foreign Trade:-
The country which enjoys favourable balance of trade is always developed. It has huge forex reserves and stable exchange rate.

8. Economic system:-
The countries which adopt free market mechanism enjoy better growth rate compared to controlled economics.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 36.
Describe different types of Planning.
Answer:
(I) Democratic Vs Totalitarian:
A form of rule in which the government attempts to maintain ‘total’ control over society, including all aspects of the public and private lives of its citizens.

(II) Centralized Vs Decentralized:

  1. Under centralized planning, the entire planning process in a country is under a central planning authority.
  2. This authority formulates a central plan, fixes objectives, targets and priorities for every sector of the economy.
  3. In other words, it is called ‘planning from above’.

(III) Planning by Direction Vs Inducement:
Under planning by direction, there is a central authority which plans, directs and orders the execution of the plan in accordance with pre-determined targets and priorities.

(IV) Indicative Vs Imperative Planning:

  1. Indicative planning is peculiar to the mixed economies. It has been in practice in France since the Monnet Plan of 1947-50.
  2. In a mixed economy, the private sector and the public sector work together.
  3. Under this plan, the outline of plan is prepared by the Government.
  4. Then it is discussed with the representatives of private management, trade unions, consumer groups, finance institutions and other experts.

(V) Short, Medium and Long term Planning:

  1. Short-term plans are also known as ‘controlling plans’.
  2. They encompass the period of one year, therefore, they are also known as ‘annual plans’

(VI) Financial Vs Physical Planning:
Financial planning refers to the technique of planning in which resources are allocated in terms of money while physical planning pertains to the allocation of resources in terms of men, materials and machinery.

(VII) Functional Vs Structural Planning:
Functional planning refers to that planning seeks to remove economic difficulties by directing all the planning activities within the existing economic and social structure.

(VIII) Comprehensive Vs Partial Planning:
General planning which concerns itself with the major issues for the whole economy is known as comprehensive planning whereas partial planning is to consider only a few important sectors of the economy.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 37.
Bring out the arguments against planning.
Answer:
The prime goals of economic planning are stabilization in developed countries and growth in LDCS But the economic planning also is not free from limitations.
The arguments against planning are,

1. Loss of Freedom:
The absence of freedom in decision making may acts as an obstacle for economic growth. Under planning, the crucial decisions are made by the central planning Authority. The consumers, producers and the workers enjoy no freedom of choice. Therefore, Hayek explains, that centralized planning leads to loss of personal freedom and ends in economic stagnation. The decisions by the Government are not always rational Freedom to private producers will be misused, Profit will be given top priority, welfare will be relegated.

2. Elimination of Initiative:
Under centralized planning, there will be no incentive for initiatives and innovations. Planning follows routine procedure and may cause stagnation in growth.

  • The absence of private ownership and profit motive discourages entrepreneurs from taking bold decisions and risk taking.
  • Equal reward to all discourages interested in undertaking new and risky ventures.
  • The bureaucracy and red tapism which are the features of planned economy.

3. High cost of Management:
The cost of management of the economic affairs outweights the benefits of planning. Inadequate data, faulty estimations and improper implementation of plans result in wastage of resources and cause either surplus or shortages.

Difficulty in advance calculations :
Advance calculation in a precise manner are impossible to make decisions regarding the consumption and production. It is also very difficult to put the calculations into practice under planning.

12th Economics Guide Economics of Development and Planning Additional Important Questions and Answers

I. Match the following:
Question 1.
A) Development- 1) Narrow concept
B) Todaro – 2) Wider concept
C) Economic Growth – 3) Structural change
D) Economic Development – 4) Development
Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning 2
Answer:
b) 3 4 2 1

Question 2.
a) Innovation – 1) Dadabai Naoroji
b) Poverty and un British Rule- in India – 2) Douglas c. North
c) Moral and social values – 3) Thomas Piketty
d) Casino capitalism – 4) Schumpeter
Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning 3
Answer:
d) 4 1 2 3

II. Choose the correct pair

Question 1.
a) Patrimonial capitalism – Douglas c. North
b) Vicious circle of poverty – Thomas Piketty
c) Great Depression – 1930
d) Planning commission – 1951
Answer:
c) Great Depression – 1930

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 2.
a) M.N. Roy – People’s plan
b) J.P. Narayan – Gandhian plan
c) S. N. Agarwal – Sarvodaya plan
d) Jawaharlal Nehru – Bombay plan
Answer:
a) M.N. Roy – People’s plan

III. Choose the incorrect pair

Question 1.
a) Planning commission – March 15,1950
b) Plan era – April 1,1951
c) First five-year plan – 1951-56
d) Planning – Gandhi
Answer:
d) Planning – Gandhi

Question 2.
a) Underdeveloped country – high percapita Income
b) Low-Income countries – $ 906 and below
c) Middle Income countries – Between $ 906 and $ 11,115
d) High Income countries – $ 11,116 or more
Answer:
a) Underdeveloped country – high percapita Income

Choose the correct statement

Question 1.
a) The UDCS are characterized by the predominance of the tertiary sector.
b) The Prime minister is the functional head of NITI Aayog.
c) The first vice-chairman of NITI Aayog was Arvind panangariya.
d) NITI Aayog assist planning commission
Answer:
c) The first vice-chairman of NITI Aayog was Arvind panangariya.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 2.
a) Centralised planning is called planning from below.
b) Decentralised planning is called planning from above.
c) Long-term plans are operational plans.
d) Medium-term planning is tactical planning.
Answer:
d) Medium-term planning is tactical planning.

V. Choose the incorrect statement

Question 1.
a) Short-term plans are for the period up to 1 year.
b) Medium-term plans last for 5-8 years
c) Long term plans last for the period of 10 – 30 years
d) Short term plans are also known as ‘controlling plans’
Answer:
b) Medium-term plans last for 5-8 years

Question 2.
a) NITI Aayog was formed on January 1, 2015
b) NITI Aayog replaced the planning commission on 13th August 2014
c) Ayushmaan Bharat’s approach was towards forest conservation.
d) National medical commission was replaced by the medical council of India.
Answer:
c) Ayushmaan Bharat’s approach was towards forest conservation.

VI. Pick the odd one out:

Question 1.
a) Economic planning
b) Financial Planning
c) Physical planning
d) Perspective Planning
Answer:
a) Economic planning

Question 2.
a) Low productivity
b) High Investment
c) Low percapita Income
d) Low saving
Answer:
b) High Investment

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Analyse the reason:

Question 1.
Assertion (A): Structural changes refers to change in the occupational structure of the Economy.
Reason (R): A country is generally divided into primary, secondary, and tertiary sectors.
a) Both (A) and (R) are true, (R) is the correct explanation of (A)
b) Both (A) and (R) are true, (R) is not the correct explanation of (A)
c) (A) is true; but (R) is false
d) Both (A) and (R) are false.
Answer:
b) Both (A) and (R) are true, (R) is not the correct explanation of (A)

Question 2.
Assertion(A): Economic development depends on Economic, social, political, and religious factors.
Reasons (R): Being a wider concept economic development includes all the as¬pects of the country.
a) Both (A) and (R) are true, (R) is the correct explanation of (A)
b) Both (A) and (R) are true, (R) is not the correct explanation of (A)
c) Both (A) and (R) is false, d) (A) is true (R) is false
Answer:
a) Both (A) and (R) are true, (R) is the correct explanation of (A)

VIII. Fill in the blanks with the correct option.

Question 1.
Gross National Product is ……………………..
a) GDP
b) GNP
c) GNI
d) None
Answer:
b) GNP

Question 2.
The countries which adopt free-market mechanism are
a) Socialist
b) Mixed economy
c) Laissez-faire
d) Communist
Answer:
c) Laissez faire

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 3.
Capital is a necessary but not a sufficient condition of progress is a statement of …………………….
a) Thomas piketty
b) Douglas c. North
c) Schumpeter
d) Ragnar Nurkse
Answer:
d) Ragnar Nurkse

IX. Choose the best answer.

Question 1.
The first chairman of the planning commission was
a) J. P. Narayan
b) S. N. Agarwal
c) Jawaharlal Nehru
d) Sri. M. Vishveshwarya
Answer:
c) Jawaharlal Nehru

Question 2.
A declaration of industrial policy was announced in
a) 1950
b) 1948
c) 1947
d)1951
Answer:
b) 1948

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 3.
The better we try to plan, the more planners we need’ is the statement of ………………………..
a) Thomas piketty
b) Douglas c. North
c) Ragnar Nurkse
d) Arthur Lewis
Answer:
d) Arthur Lewis

X. Answer the following in one or two sentences.

Question 1.
Define “Traditional Approach”?
Answer:
Traditional Approach:

  1. The traditional approach defines development strictly in economic terms.
  2. The increase in GNP is accompanied by a decline in the share of agriculture in output and employment while those of manufacturing and service sectors increase.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 2.
State the meaning of Under development.
Answer:
The term underdevelopment refers to that state of an economy where levels of living of masses are extremely low due to very low levels of per capita income, resulting from low levels of productivity and high growth rate of population.

Question 3.
Write “UDC” characteristics?
Answer:
The UDCs are characterized by the predominance of primary sector i.e. agriculture, low per capita income, widespread poverty, wide inequality in the distribution of income and wealth, overpopulation, low rate of capital formation, high rate of unemployment, technological backwardness, dualism, etc.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 4.
What are the pillars of NITI Aayog?
Answer:

  • pro-people
  • pro – Activity.
  • Participation
  • Empowering
  • Inclusion of all
  • Equality
  • Transparency

Question 5.
Define “Financial system.”?
Answer:
Financial System:

  1. A financial system implies the existence of an efficient and organized banking system in the country.
  2. There should be an organized money market to facilitate the easy availability of capital.

Question 6.
What is GNP Per Capita?
Answer:
It relates to an increase in per capita real income of the economy over a long period.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 7.
Define “Sarvodaya plan”?
Answer:
“Sarvodaya Plan” was inspired by the Gandhian Plan and with the idea of Vinoba Bhave.
It gave importance not only to agriculture but encouraged small and cottage industries in the plan.

XI. Answer the following questions in paragraph

Question 1.
Briefly explain the Measurement of Economic Development?
Answer:
Measurement of Economic Development:
Economic development is measured on the basis of four criteria

(I) Gross National Product (GNP):
1. GNP is the total market value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country.

2. GNP is one measure of the economic condition of a country, under the assumption that a higher GNP leads to a higher quality of living, all other things being equal.

(II) GNP per capita:

  1. This relates to increasing in the per capita real income of the economy over the long period.
  2. This indicator of economic growth emphasizes that for economic development the rate of increase in real per capita income should be higher than the growth rate of the population.

(III) Welfare:

  1. Economic development is regarded as a process whereby there is an increase in the consumption of goods and services by individuals.
  2. From the welfare perspective, economic development is defined as a sustained improvement in health, literacy and standard of living.

(IV) Social Indicators:

  1. Social indicators are normally referred to as the basic and collective needs of the people.
  2. The direct provision of basic needs such as health, education, food, water, sanitation, and housing facilities check social backwardness.

Question 2.
Distinguish Between Economic Growth and Economic Development.
Answer:

Economic Growth

Economic Development

1. Deals with the problems of developed countries Deals with the problems of UDCS
2. Change is gradual and steady Change is discontinuous and spontaneous
3. Means more output Means not only more output but also its composition
4. Concerns quantitative aspects ie increase in per capita income quantitative as well as qualitative
5. Narrow wider concept, Development = Growth + Change

Question 3.
Explain Thomas Piketty’s non – Economic factors contributing to Economic development
(or)
Explain
1) casino capitalism
2) Patrimonial capitalism
Answer:

  1. Casino capitalism: If people spend a larger proportion of their income and time on the proportion of their income and time on entertainment liquor and other illegal activities, productive activities may Suffer.
  2. Patrimonial capitalism: If the assets are simply passed on to children from their parents, the children would not work hard, because the children do not know the value of the assets Hence productivity will below.
    These two ideas were contributed by Thomas Piketty.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 4.
What is Crony capitalism?
Answer:
Social Organization:

  1. People show interest in the development activity only when they feel that the fruits of development will be fairly distributed.
  2. Mass participation in development programs is a pre-condition for accelerating the development process.
  3. Whenever the defective social organization allows some groups to appropriate the benefits of growth.
  4. The majority of the poor people do not participate in the process of development.
  5. This is called crony capitalism.

Question 5.
Explain the concepts of NITI Aayog.
Answer:
Initiatives like the Atal Innovation mission, the Ayushmaan Bharat approach towards water conservation measures, and the draft bill to establish the National Medical Commission to replace the medical council of India have all been conceptualized in NITI Aayog.

Question 6.
Explain the price mechanism?
Answer:

  1. Price mechanism provides for the automatic adjustment among price, demand, and supply in a Laissez-Faire economy.
  2. The producers and consumers adjust their supply and demand based on price changes.
  3. There is no such mechanism in a planned economy.
  4. Advance calculations in a precise manner are impossible to make decisions regarding consumption and production.
  5. It is also very difficult to put the calculations into practice under planning.
  6. Excess supply and excess demand can also happen in the market-oriented economy.
  7. In fact, it has happened in many capitalistic economies, including the US.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 7.
Explain the supply side of the vicious circle of poverty.
Answer:
On the supply side, the low level of real income means low savings. The low level of savings leads to low investment and to deficiency of capital. The deficiency of capital leads to a low level of productivity and back to low income. Thus the vicious circle is complete from the supply side.

XII. Answer the following questions

Question 1.
Explain the Economic planning in India?
Answer:
Economic Planning in India:

  • Consists of economic decisions, schemes formed to meet certain pre-determined economic objectives, and a road map of directions to achieve specific goals within a specific period of time.
  • The idea of economic planning was strengthened during the Great Depression in the 1930s.
  • The outbreak of World War II also required adequate and suitable planning of economic resources for effective management after the effects of the post-war economy.
  • After Independence, in 1948, a declaration of industrial policy was announced.
  • The policy suggested the creation of a National Planning Commission and the elaboration of the policy of a mixed economic system.
  • On January 26, 1950, the Constitution came into force.
  • In logical order, the Planning Commission was created on March 15, 1950, and the plan era began on April 1, 1951, with the launch of the first five-year plan (1951-56). The evolution of planning in India.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 2.
Explain the arguments in favour of economic planning.
Answer:
The economic planning is justified on the following grounds.

1. To accelerate and strengthen market mechanism:
The market mechanism works imperfectly in underdeveloped countries because of ignorance and unfamiliarity with it. A large part of the economy comprises the non – monetized sector. The product, factor, money, and capital markets are not organized properly. Therefore the planned economy will be a better substitute for a free economy.

2. To remove unemployment
The need for planning in underdeveloped countries is further stressed by the necessity of removing widespread unemployment and disguised unemployment in such economies.

3. To achieve balanced development:
In the absence of sufficient enterprise and initiative, the planning authority is the only institution for planning the balanced development of the economy.

For rapid economic development:

  • The development of Agriculture and Industrial sectors.
  • The development of Infrastructure
  • The development of money and capital markets is necessary.

To remove poverty and inequalities:
Planning is the only path open to underdeveloped countries, for raising national and per capita income, reducing inequalities and poverty, and increasing employment opportunities.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning

Question 3.
Briefly explain Indicative and Imperative planning?
Answer:
Indicative Vs Imperative Planning:

  1. Indicative planning is peculiar to the mixed economies.
  2. It has been in practice in France since the Monnet Plan of 1947-50.
  3. In a mixed economy, the private sector and the public sector work together.
  4. Under this plan, the outline of the plan is prepared by the Government.
  5. Then it is discussed with the representatives of private management, trade unions, consumer groups, financial institutions, and other experts.
  6. The essential function of planning is the coordination of different economic units.
  7. The state provides all types of facilities to the private sector.
  8. The private sector is expected to fulfill the targets and priorities.
  9. The state does not force the private sector but just indicates the areas of operation and targets to be fulfilled.
  10. In short, the planning procedure is soft and flexible.
  11. Under imperative planning, the state is all-powerful in the preparation and implementation of the plan.
  12. Once a plan is drawn up, its implementation is a matter of enforcement.
  13. The USSR President Stalin used to say, ‘Our plans are our instructions’.
  14. There is complete control over the entire resources by the state.
  15. There is no consumer sovereignty.
  16. The Government policies and procedures are rigid.
  17. China and Russia follow imperative planning.

Samacheer Kalvi 12th Economics Guide Chapter 11 Economics of Development and Planning