Indian Economy 1950-1990 explains how independent India used planning, public sector growth and import substitution to build its economy.
Important Questions Class 11 Economics Indian Economic Development Chapter 2 help students revise five year plans, agriculture, industry and trade policy.
India’s economic choices after 1947 were shaped by the need to reduce poverty, increase production and avoid dependence on foreign countries. Chapter 2 of Indian Economic Development explains why India adopted a mixed economy, how the five year plans set goals, and why agriculture and industry needed government support. Students should revise growth, modernisation, self-reliance, equity, land reforms, green revolution, public sector expansion and import substitution carefully. These topics are often asked as direct definitions, reasons, policy-based explanations and long analytical answers. The questions below follow a board-style pattern for the 2026-27 exam.
Key Takeaways
- Planning: India set up the Planning Commission in 1950 with the Prime Minister as its Chairperson.
- Goals: Growth, modernisation, self-reliance and equity were the four goals of five year plans.
- Agriculture: Green revolution helped India become self-sufficient in food grains.
- Industry: The industrial sector’s GDP share rose from 13 per cent in 1950-51 to 24.6 per cent in 1990-91.
Important Questions Class 11 Economics Indian Economic Development Chapter 2 Structure 2026-27
| Question Type |
Marks |
Best Answer Style |
| Objective Type |
1 mark |
Term, policy or correct option |
| Very Short Answer |
3 marks |
60-80 words with direct explanation |
| Short Answer |
4 marks |
80-100 words with 3-4 points |
| Long Answer |
6 marks |
100-150 words with analysis |
| Case-Based |
4 marks |
Concept, data clue and policy link |
Objective Type Questions from Important Questions Class 11 Economics Indian Economic Development Chapter 2
Objective questions from this chapter usually test planning goals, economic systems, agriculture reforms, industrial policy and import substitution. Students should learn dates, policy names and terms with exact meanings.
Q1. India adopted which economic system after independence?
- Pure capitalism
b. Pure socialism
c. Mixed economy
d. Command economy only
Answer: c. Mixed economy
India adopted a mixed economy with a strong public sector and space for private property.
Q2. The Planning Commission was set up in:
- 1947
b. 1948
c. 1950
d. 1956
Answer: c. 1950
The Planning Commission was set up with the Prime Minister as its Chairperson.
Q3. The four goals of five year plans were:
- Growth, profit, imports and taxation
b. Growth, modernisation, self-reliance and equity
c. Equity, exports, loans and subsidies
d. Planning, licensing, quotas and tariffs
Answer: b. Growth, modernisation, self-reliance and equity
These four goals shaped India’s planning strategy after independence.
Q4. GDP means:
- Value of imported goods only
b. Market value of final goods and services produced in a country during a year
c. Value of agricultural output only
d. Total tax collected by government
Answer: b. Market value of final goods and services produced in a country during a year
GDP is used as an indicator of economic growth.
Q5. The use of new technology in production is called:
- Equity
b. Modernisation
c. Import substitution
d. Marketed surplus
Answer: b. Modernisation
Modernisation also includes changes in social outlook.
Q6. The policy of avoiding imports of goods that can be produced in India is called:
- Equity
b. Self-reliance
c. Privatisation
d. Disinvestment
Answer: b. Self-reliance
Self-reliance was important in the first seven five year plans.
Q7. The policy of replacing imports with domestic production is called:
- Export promotion
b. Import substitution
c. Liberalisation
d. Globalisation
Answer: b. Import substitution
Import substitution class 11 questions usually focus on tariffs and quotas.
Q8. Tariffs refer to:
- Tax on imported goods
b. Direct cash transfer
c. Export subsidy
d. Domestic production quota
Answer: a. Tax on imported goods
Tariffs make imported goods expensive and protect domestic firms.
Q9. Quotas refer to:
- Tax on exports
b. Quantity limits on imports
c. Price limits on domestic goods
d. Farm subsidies only
Answer: b. Quantity limits on imports
Quotas restrict the quantity of goods that can be imported.
Q10. The green revolution mainly involved the use of:
- HYV seeds
b. Handlooms
c. Import quotas
d. Steel plants
Answer: a. HYV seeds
HYV seeds increased food grain production, especially wheat and rice.
Q11. Marketed surplus means:
- Total farm output consumed by farmers
b. Portion of farm output sold in the market
c. Total imports of food grains
d. Government tax on agriculture
Answer: b. Portion of farm output sold in the market
Marketed surplus class 11 questions often link higher output with food availability.
Q12. Land ceiling means:
- Fixing the minimum farm size
b. Fixing the maximum land an individual can own
c. Removing irrigation facilities
d. Increasing imports of land
Answer: b. Fixing the maximum land an individual can own
Land ceiling was introduced to reduce concentration of land ownership.
Q13. The Industrial Policy Resolution 1956 was linked to:
- First Five Year Plan only
b. Second Five Year Plan
c. Green revolution
d. New economic policy 1991
Answer: b. Second Five Year Plan
Industrial Policy Resolution 1956 class 11 questions usually test public sector control.
Q14. The Karve Committee is related to:
- Small-scale industries
b. Green revolution
c. Import substitution
d. Land ceiling only
Answer: a. Small-scale industries
The committee noted the role of small-scale industries in rural development.
Q15. Assertion: Import substitution protected domestic industries.
Reason: Tariffs and quotas restricted foreign competition.
- Both Assertion and Reason are true, and Reason explains Assertion
b. Both are true, but Reason does not explain Assertion
c. Assertion is true, Reason is false
d. Assertion is false, Reason is true
Answer: a. Both Assertion and Reason are true, and Reason explains Assertion
Tariffs and quotas made imports expensive or limited in quantity.
Very Short Answer Questions from Class 11 Economics Chapter 2 Important Questions
Very short answers from this chapter usually ask for definitions and direct policy reasons. Keep the answer precise and use NCERT terms.
Q16. Define a plan.
A plan states how the resources of a nation should be used. It includes general goals and specific objectives to be achieved within a fixed time period. In India, plans were usually prepared for five years and were called five year plans.
Q17. Why did India opt for planning?
India opted for planning to use limited resources carefully and promote welfare for all. After independence, the country needed growth, employment, poverty reduction, industrial development and food security. Planning helped the government guide economic activity in agriculture, industry and trade.
Q18. What Is a Mixed Economy Class 11 Economics?
A mixed economy class 11 economics answer should mention both government and market roles. In a mixed economy, the government and private sector together decide what to produce, how to produce and how output should be distributed. India adopted this model after independence.
Q19. What Are the Goals of Five Year Plans Class 11?
The goals of five year plans class 11 are growth, modernisation, self-reliance and equity. Growth means increasing production capacity. Modernisation means using new technology. Self-reliance means reducing dependence on imports. Equity means reducing inequality and meeting basic needs.
Q20. What Are HYV Seeds?
HYV seeds are high yielding variety seeds. They produce more output than traditional seeds when used with proper irrigation, fertilisers and pesticides. HYV seeds played a major role in the green revolution class 11 economics topic.
Q21. What Is Marketed Surplus Class 11?
Marketed surplus class 11 means the portion of agricultural output that farmers sell in the market. It is important because food grains sold in the market help non-farming households and allow the government to build food stocks.
Q22. What Is Import Substitution Class 11?
Import substitution class 11 means replacing imported goods with goods produced in the domestic economy. India used this policy in the first seven plans to protect local industries from foreign competition through tariffs and quotas.
Short Answer Questions from Indian Economy 1950-1990 Class 11 Important Questions
Short answer questions from this chapter usually test reasons, policies and outcomes. Use 3-4 points and keep examples specific to India’s planning period.
Q23. Why Should Plans Have Goals?
Plans should have goals because resources are limited and choices must be made.
Goals help decide which sectors and policies need priority. They also help measure whether the plan has succeeded. In India, plans had goals like growth, modernisation, self-reliance and equity.
Without goals, planning can become directionless.
Q24. Explain Growth as a Planning Objective.
Growth means an increase in the country’s capacity to produce goods and services.
It can happen through more capital, better transport, improved banking or greater efficiency. GDP is a common indicator of growth. A higher GDP means the economy produces more final goods and services in a year.
Growth was needed to improve living standards after independence.
Q25. Explain Modernisation as a Planning Objective.
Modernisation means adopting new technology and improving social outlook.
In agriculture, modernisation can mean using HYV seeds instead of old seed varieties. In industry, it can mean using better machines. Modernisation also includes giving women equal rights and work opportunities.
It helps increase productivity and supports social progress.
Q26. Why Was Self-Reliance Important for India?
Self-reliance was important because India had recently become free from colonial rule.
The country wanted to reduce dependence on foreign food, technology and capital. Dependence on imports could make India vulnerable to foreign pressure. The first seven five year plans therefore encouraged domestic production.
Self-reliance also supported national sovereignty.
Q27. Explain Equity as a Planning Objective.
Equity means ensuring that the benefits of growth reach all sections of society.
High growth alone cannot remove poverty or inequality. A country may use modern technology and still have many poor people. Equity focuses on food, housing, education, health care and fair distribution of wealth.
It was important for building a welfare-oriented economy.
Q28. Explain Land Reforms Class 11 Economics.
Land reforms class 11 economics refers to changes in land ownership and landholding patterns.
After independence, India abolished intermediaries like zamindars to make tillers the owners of land. Land ceiling laws fixed the maximum land an individual could own. These reforms aimed to increase equity and improve agricultural productivity.
They were more successful in states like Kerala and West Bengal.
Q29. What Is the Green Revolution? Why Was It Implemented?
The green revolution means a large increase in food grain production due to HYV seeds, fertilisers, pesticides and irrigation.
It was implemented because India faced low agricultural productivity and food shortages after independence. Agriculture depended heavily on monsoon rainfall. The green revolution helped India increase wheat and rice production.
It also reduced dependence on imported food grains.
Q30. Why Was Public Sector Class 11 Economics Given a Leading Role in Industrial Development?
Public sector class 11 economics questions should mention capital shortage and social goals.
At independence, private industrialists did not have enough capital for large industries. The market was also not large enough to encourage major private investment. The government therefore took the lead in industries vital for the economy.
The public sector was expected to promote growth, employment and regional balance.
Long Answer Questions from Important Questions Class 11 Economics Indian Economic Development Chapter 2
Long answers from this chapter usually ask students to explain policy choices and evaluate results. Use headings and include both achievements and limitations.
Q31. Explain the Need and Types of Land Reforms Implemented in Agriculture.
Land reforms were needed because the colonial land tenure system created exploitation and low productivity.
At independence, intermediaries like zamindars collected rent from actual tillers without improving land. Farmers had little incentive to invest in land because they did not own it.
Main types of land reforms were:
- Abolition of Intermediaries: This removed zamindars and brought tenants into direct contact with the government.
- Land to the Tiller: Ownership rights were given to cultivators to create incentives for higher output.
- Land Ceiling: A maximum limit was fixed on land ownership to reduce concentration of land.
Land reforms improved equity in some areas. They were more successful in Kerala and West Bengal. In many states, loopholes and weak implementation reduced their impact.
Q32. What Is the Green Revolution? Explain Its Benefits and Risks.
The green revolution was the increase in food grain production due to HYV seeds, fertilisers, pesticides and irrigation.
It was introduced to solve food shortages and raise agricultural productivity. In the first phase, it mainly benefited wheat-growing and more affluent regions such as Punjab, Andhra Pradesh and Tamil Nadu. In the second phase, it spread to more states and more crops.
Benefits:
- India became self-sufficient in food grains.
- Marketed surplus of wheat and rice increased.
- The government could build food stocks.
- Small farmers also benefited because of loans and fertiliser subsidies.
Risks:
- It could increase inequality between rich and poor farmers.
- HYV crops were more prone to pest attacks.
- It needed irrigation, fertilisers and pesticides.
- It could favour rich farmers without state support.
The green revolution succeeded because the government supported small farmers through loans, subsidies and research services.
Q33. Explain Growth with Equity as a Planning Objective.
Growth with equity means increasing national output while ensuring fair distribution of benefits.
Growth was needed because India had low production, poverty and weak infrastructure after independence. GDP had to rise through agriculture, industry and services.
Equity was equally important because growth alone could benefit only the rich. India needed to ensure that poor people had access to food, housing, education and health care.
Planning tried to combine both goals. Land reforms, small-scale industry support and subsidies were used to promote equity. Public sector investment was used to build infrastructure and support industrial growth.
However, equity was not fully achieved. Land inequality continued in many states, and a large share of people remained dependent on agriculture till 1990.
Q34. Why Was the Public Sector Given a Leading Role in Indian Industrial Development?
The public sector was given a leading role because India needed large-scale industrial development after independence.
Private industrialists did not have enough capital to invest in heavy industries. The domestic market was also too small to attract large private projects. The government therefore had to develop industries that were essential for economic growth.
The Second Five Year Plan gave importance to the state controlling the commanding heights of the economy. The Industrial Policy Resolution 1956 classified industries into three categories. Some industries were reserved for the government, while private sector participation was allowed in others under state regulation.
The public sector helped diversify industry and build infrastructure. It also promoted regional development and employment.
However, some public sector enterprises later became inefficient and incurred losses.
Q35. Explain How Import Substitution Protected Domestic Industry.
Import substitution protected domestic industry by replacing imports with goods produced within India.
The government used tariffs and quotas to reduce foreign competition. Tariffs made imported goods costlier. Quotas limited the quantity of goods that could be imported. These measures gave Indian industries time to grow and learn to compete.
This policy was important because newly independent India’s industries were not strong enough to compete with developed countries. It also helped save foreign exchange and encouraged domestic manufacturing.
However, long-term protection reduced the pressure to improve quality. Indian consumers often had to buy low-quality goods at high prices because producers had a protected market.
Q36. Evaluate the Industrial Policy Followed During 1950-1990.
India’s industrial policy from 1950-1990 aimed to build a diversified industrial base.
Achievements:
- The industrial sector’s share in GDP rose from 13 per cent in 1950-51 to 24.6 per cent in 1990-91.
- The industrial sector grew at about 6 per cent annually.
- Public sector investment helped diversify industries.
- Small-scale industries created employment and supported rural development.
- Import protection helped indigenous industries grow.
Limitations:
- Many public sector enterprises became inefficient.
- Some public sector firms incurred huge losses.
- The license system was misused by large industrial houses.
- Protection from foreign competition reduced quality improvement.
- The policy did not build a strong export sector.
These weaknesses created the need for economic reforms in 1991.
Case-Based Questions from Class 11 Economics Indian Economy 1950-1990 Important Questions
Case-based questions from this chapter usually connect policy goals with outcomes. Identify the policy first, then explain its purpose and limitation.
Q37. Case Study: A Small Farmer and HYV Seeds
A small farmer wants to use HYV seeds but lacks money for fertilisers, pesticides and irrigation. The government offers low-interest loans and fertiliser subsidies to encourage adoption of new technology.
Q37(a). Which Agricultural Change Is Shown in the Case?
The case shows the green revolution.
HYV seeds, fertilisers, pesticides and irrigation were key inputs of the green revolution.
Q37(b). Why Were Subsidies Needed?
Subsidies were needed because new technology appeared risky and costly to farmers.
Small farmers needed support to buy inputs and test HYV technology.
Q37(c). How Did This Support Equity?
It helped small farmers access the same technology as rich farmers.
This reduced the risk that only big farmers would benefit.
Q38. Case Study: A Domestic Car Company
A car company in India faces no foreign competition because imported cars are restricted. The government uses tariffs and quotas to protect domestic producers.
Q38(a). Identify the Trade Policy.
The policy is import substitution.
It aimed to replace imported goods with domestic production.
Q38(b). How Did Tariffs Help Domestic Producers?
Tariffs made imported goods costlier.
This made domestic products more competitive in the Indian market.
Q38(c). What Was One Limitation of This Policy?
Producers had less pressure to improve quality.
Consumers had to buy whatever domestic producers supplied.
Q39. Case Study: Land Ownership After Independence
A state government abolishes intermediaries and gives ownership rights to actual tillers. It also fixes a maximum limit on land ownership.
Q39(a). Identify the Reform.
The reform is land reform.
It includes abolition of intermediaries and land ceiling.
Q39(b). Why Was Land to the Tiller Important?
It gave cultivators an incentive to improve land and increase output.
Owners benefit directly from higher production.
Q39(c). Why Did Land Reforms Fail in Some States?
Some landlords used legal loopholes and registered land in relatives’ names.
Weak political commitment also reduced success.
Diagram and Data-Based Questions from Indian Economy 1950-1990 Class 11 Important Questions
Data-based questions may ask students to interpret sectoral contribution, occupational structure or industrial growth. Use the data point first, then explain its meaning.
Q40. How Did the Share of Industry in GDP Change Between 1950-51 and 1990-91?
The share of industry in GDP increased from 13 per cent in 1950-51 to 24.6 per cent in 1990-91.
This shows industrial growth during the planning period. Public sector investment and import substitution helped expand the industrial base.
Q41. Why Was the Service Sector’s Growth Unusual in India?
In many economies, agriculture declines first and industry becomes dominant before services rise.
India’s case was unusual because by 1990 the service sector contributed 40.59 per cent to GDP. This was higher than agriculture and industry, even though India was still developing.
Q42. Why Did Agriculture Continue to Employ About 65 Per Cent of People Till 1990?
Agriculture continued to employ about 65 per cent of people because industry and services did not absorb enough workers.
Although agriculture’s share in GDP declined, the share of population dependent on agriculture did not fall much. This showed a weakness in employment generation during 1950-1990.
Chapter-Wise Revision for Important Questions Class 11 Economics Indian Economic Development Chapter 2
Important questions class 11 economics indian economic development chapter 2 should be revised in four parts: planning, agriculture, industry and trade.
Start with planning because it explains why India adopted a mixed economy. Revise the goals of five year plans class 11 with one example for each goal.
Next, revise agriculture policies. Land reforms class 11 economics and green revolution class 11 economics are important because they explain growth and equity in rural India.
Then revise industry. Industrial Policy Resolution 1956 class 11 and public sector class 11 economics are important for understanding why the government led industrial development.
Finally, revise import substitution class 11. Focus on tariffs, quotas, domestic industry protection and the criticism of inward-looking trade policy.
Useful Links for Class 11 Economics