Poverty, Planning, Finance and Economic/Social Development (Part-I)

Total Questions: 50

1. Which one of the following Five Year Plans recognised human development as the core of all development efforts? [1995]

Correct Answer: (d) The Eighth Five Year Plan
Solution:

In the eight five year plan (1992-1997), the top priority was given to the development of the human resources i.e., employment, education, and public health.
In eighth five year plan share of public sector in total investment had declined considerably to about 34.%.
• The Eighth Plan promoted the modernisation of Industries.
• India became a member of the World Trade Organisation on 1 January 1995.
• The goals were to control population growth, reduce poverty, generate employment, strengthen the development of infrastructure, manage tourism, focus on human resource development etc.
• It also laid emphasis on involving the Panchayats and Nagar Palikas through decentralisation.
• The target growth rate was 5.6% but the actual growth rate was an incredible 6.8%

2. Which of the following are among the non-plan expenditures of the Government of India? [1995]

1. Defence expenditure

2. Subsidies

3. All expenditures linked with the previous plan periods

4. Interest payment

Codes:

Correct Answer: (d) 1, 2, 3 & 4
Solution:Non-plan expenditures include non-developmental expenditure (interest payment, subsidies, defence expenditure, civil administration), developmental expenditure and expenditure incurred on projects which remained unfinished in the earlier plans.

Non-plan expenditure is a crucial component of a nation's budgetary framework. In financial planning, it is essential to comprehend the various facets of non-plan expenditure, including non-plan revenue expenditure. Non-plan expenditure refers to regular expenses incurred by the government that is not directly related to developmental projects. Unlike plan expenditure, which is dedicated to developmental initiatives, non-plan expenditure focuses on meeting routine obligations and maintaining the functioning of the government machinery. Non-plan expenditure is essential for ensuring the smooth operation of administrative systems, welfare programs, and other essential services.
Among the various components, the most important item of non-plan expenditure is the interest payments on loans. These payments represent the interest accrued on outstanding government debt. The government borrows funds from domestic and international sources to finance its developmental projects and meet its expenditure requirements. The interest payments on these loans are a recurring obligation and account for a significant share of non-plan revenue expenditure. Managing and reducing interest payments are crucial for maintaining fiscal discipline and ensuring sustainable public finances.

3. What is the annual rate aimed in the Eighth Five Year Plan : [1995]

Correct Answer: (a) 5.6%
Solution:

The Eighth five-year plan targeted the generation of adequate employment opportunities. The plan also targeted the creation of human development, through provisioning adequate facilities like education, healthcare infrastructure, and safe drinking water.
The plan targeted growth rate was 5.6% as the actual achievement was around 6.8%. The growth rate of the first two years of the Eighth five-year plan was about 7.7%. The planned outlay of the plan was 798100 crore. The outlay for the public sector in India was 434100 crores. The agriculture and allied sector targeted a growth rate of around 3.5% and the actual attainment was around 3.9%.
The eighth five-year plan also launched various programmes like “Mid Day Meal Scheme”, “Indira Mahila Scheme”, “The Ganga Kalyan Yojana”, “Mahila Samridhi Yojana”, “The Pradhan Mantri Rojgar Yojana”.

4. The largest source of financing the public sector outlay of the Eighth Five Year Plan comes from: [1995]

Correct Answer: (d) deficit financing
Solution:Financing of Eighth five year plan outlay In the Public sector (Rupees in crores).
PeriodDomestic Budgetory Resources External ResourcesDeficit financingAggregate Resources
Balance from Current revenuesSurpluses of Public enterprisesCapital ReceiptsTotal domestic resources
(1992-97)(-)39563 (-10.4)131449 (34.5)240215 (63.1)332101 (87.2)19234 (5.1)33037 (8.7)380524

5. The New Exim Policy announced in 1992, is for period of: [1995]

Correct Answer: (d) 5 years
Solution:The New Exim Policy was for five years (April 1, 1992-March 31, 1997).
Objectives of EXIM Policy
• To increase growth in exports and imports in India.
• To stimulate long-term economic growth by expanding access to components, intermediates, essential raw materials, consumables and capital goods.
• To improve agriculture service and industry competitiveness, create new employment opportunities and encourage attaining internationally accepted quality standards.
• To supply high-quality goods and services at an affordable cost.
• To encourage economic expansion by providing access to necessary raw materials, capital goods, installations, consumables, intermediate products and essential elements for expanding production and providing services.
• To improve the technological productivity and potency of Indian agriculture, services and companies, thus enhancing competitive power while creating employment possibilities, and to accomplish globally acknowledged quality norms.
• To supply consumers with fine-condition services and goods at globally competitive rates.

6. Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R). [1996]

Assertion (A): An important policy instrument of economic liberalization is reduction in import duties on capital goods.

Reason (R): Reduction in import duties would help the local entrepreneurs to improve technology to face the global markets.

In the context of the above two statements, which one of the following is correct?

Correct Answer: (a) Both A & R are true & R is the correct explanation
Solution:Both statements are correct and explain one of the instruments to liberalise the Indian economy.

Advantages of liberalization in India

• Freely flowing Capital: Liberalization has boosted the flow of funding by making it more inexpensive for all types of businesses to access capital from investors and to have a successful project.
• Investor diversity: As a result of liberalization, investors are now able to place a significant amount of their capital in a variety of assets.
• Impact on agriculture: Liberalization had a favorable effect on agriculture. The cropping patterns and designs have undergone significant alteration. Before the agricultural sector was liberalized, the government imposed limitations on everything from the beginning of crop production to its distribution.
• Economic laws that are relaxed result in a rise in the value of the stock market, which improves investor trading.

7. The Eighth Five Year Plan is different from the earliest ones. The critical difference lies in the fact that: [1996]

Correct Answer: (a) it has a considerably larger outlay compared to the earlier plans
Solution:Eighth Five Year Plan (1992-97) had a bigger outlay with energy being given 26.6% of total outlay to a cheque a targeted growth rate of 6.78% per annum.
The Eighth five-year plan targeted a transition of an economy that was managed through central strategies to a market-centric economy. This was achieved through planned efforts and meticulous strategies.
There exist various dimensions of the Eighth five-year plan, these are procurement and proper estimating of the various heads of finance, properly planned allocation of the finance in different sectors. Assessment of the consistency factors and efficient channelization these sources of finance to pull of out growth the Indian economy was another dimension to the plan.
The Eighth five-year plan faced innumerable challenges in the economy as the rate of inflation was high; the BoP (Balance of payment) situation was also complex due to various factors. The Indian economy at that time was facing high fiscal deficits and budgetary deficits and the much-needed flow of adequate resources was absent in the economy.

8. Consider the following statements: [1996]

Most international agencies which find Development Programme in India on intergovernmental bilateral agreements, mainly provide:

1. Technical assistance

2. Soft loans which are required to be paid back with interest

3. Grants, not required to be paid back

4. Food assistance to be paid back

Correct Answer: (b) 1, 2 & 3 are correct
Solution:A soft loan is a loan with a below market rate of interest. It also includes concessions to borrowers such as long repayment periods or interest holidays. Technical assistance is aid involving highly educated or trained personnel, such as doctors, who are moved into a developing country to assist with a program of development.

Food assistance is given to countries in urgent need of food supplies, especially if they have just experienced a natural disaster. Grant is usually given to governments through individual countries, international aid agencies and through multilateral institutions such as the world Bank and by through development charities.

9. Consider the following items imported by India: [1996]

1. Capital goods

2. Petroleum

3. Pearls and precious stones

4. Chemicals

5. Iron and Steel

The correct sequence of the decreasing order of these items (as per 94-95 figures), in terms of value is:

Correct Answer: (d) 2, 1, 4, 5, 3
Solution:Value of import in India as per 94-95 figures

1. Petroleum oils and oils US$ 3,285,560.58 million obtained from bituminou

2. Petroleum oils oils, etc.-US $ 2,642,351.87 millions (excl. crude), Preparation

3. Diamonds non-industrial-US $ 1,500, 668.80 million unworked or simply swan

10. The Sixth and the Eighth Five Year Plans covered the period 1980-1985 and 1992-1997 respectively. The Seventh Five Year Plan covered the period: [1997]

Correct Answer: (c) 1985-1990
Solution:

The Seventh Five-Year Plan was introduced in 1985 to help India reach its development goals by 1990. The plan called for increased industrial and agricultural production, as well as improved economic efficiency. Despite some initial successes, the Seventh Five-Year Plan ultimately failed to achieve all of its goals. In addition, the Seventh Five-Year Plan did not adequately address the issue of corruption. Corruption was rampant at all levels of the government, and this led to inefficiencies and wastefulness in the implementation of the plan.
The main objective of India’s seventh five-year plan was to expand the education and health care systems, as well as complete infrastructure projects throughout the country. Despite these successes, the overall failure of the Seventh Five-Year Plan highlights the need for careful planning and implementation for development goals to be met. Without a clear plan and the necessary resources, it is very difficult for any country to achieve its development goals.