INSIGHT UPSC QUIZ

ANSWER: (C) 

India approached the International Bank for Reconstruction and Development (IBRD), popularly known as World Bank and the International Monetary Fund (IMF), and received $7 billion as loan to manage the crisis. 

• For availing the loan, these international agencies expected India to liberalise and open up the economy by removing restrictions on the private sector, reduce the role of the government in many areas and remove trade restrictions between India and other countries. 
• India agreed to the conditionalities of World Bank and IMF and announced the New Economic Policy (NEP). 
• The NEP consisted of wide-ranging economic reforms. The thrust of the policies was towards creating a more competitive environment in the economy and removing the barriers to entry and growth of firms. 
• This set of policies can broadly be classified into two groups: the stabilisation measures and the structural reform measures. 
• Stabilisation measures are short- term measures, intended to correct some of the weaknesses that have developed in the balance of payments and to bring inflation under control. In simple words, this means that there was a need to maintain sufficient foreign exchange reserves and keep the rising prices under control. 
• On the other hand, structural reform policies are long-term measures, aimed at improving the efficiency of the economy and increasing its international competitiveness by removing the rigidities in various segments of the Indian economy. 
• The government initiated a variety of policies which fall under three heads i.e., Liberalisation, Privatisation and Globalisation.

ANSWER: (C) 

In 1950, the Planning Commission was set up with the Prime Minister as its Chairperson. The era of five year plans had begun. 

• The goals of the five-year plans were: growth, modernisation, self-reliance and equity. 
• Growth: It refers to increase in the country’s capacity to produce the output of goods and services within the country. 
• It implies either a larger stock of productive capital, or a larger size of supporting services like transport and banking, or an increase in the efficiency of productive capital and services. 
• Modernisation: To increase the production of goods and services the producers have to adopt new technology. Adoption of new technology is called modernisation. 
• However, modernisation does not refer only to the use of new technology but also to changes in social outlook such as the recognition that women should have the same rights as men. In a traditional society, women are supposed to remain at home while men work. 
• A modern society makes use of the talents of women in the work place — in banks, factories, schools etc. — and such a society in most occassions is also prosperous. 
• Self-reliance: A nation can promote economic growth and modernisation by using its own resources or by using resources imported from other nations. The first seven five year plans gave importance to self-reliance which means avoiding imports of those goods which could be produced in India itself. This policy was considered a necessity in order to reduce our dependence on foreign countries, especially for food. 
• Equity: Now growth, modernisation and self-reliance, by themselves, may not improve the kind of life which people are living. 
• A country can have high growth, the most modern technology developed in the country itself, and also have most of its people living in poverty. 
• It is important to ensure that the benefits of economic prosperity reach the poor sections as well instead of being enjoyed only by the rich.