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Economic System Capitalism Mixed Economies Socialism
आ थक णाल → पजीवाद त अ यव ाएँ स ाजवाद
What goods and ‘Free Market - Essential Govt. will decide
services should Economy’: Let the goods/services by what must be
we produce? market forces of Public Sector produced & in how
More books or supply & demand - Others by Pvt much quantity.
more bikes? decide it. sector.
During production Whichever mode of In public sector Preference for
shd we use more production is more industries- govt will labour intensive
labour or more cheaper. decide. In pvt sector- modes of
capital entrepreneur will production.
(machines)? decide.
Only the consumers - For essential goods Govt to decide who
who can afford and services → needs how much,
How to
them, can purchase government may fix and will distribute
sell/distribute
them. If a sick man the prices e.g. accordingly, using
those goods and
cannot afford NPPA-Stent. subsidy / rationing
services among
medicine, it is not - For others → shops.
people?
govt’s problem. market forces will
decide.
- Presently, most nations are ‘Mixed Economic System’ including USA and India. While
China officially claims to be ‘Socialist’ but, in practice, they too have become a Mixed
Economy.
- The socialist economic system stopped in most nations after the collapse of USSR,
except a handful of outliers like North Korea, Cuba & Venezuela.
- Communism is a branch of socialism, (usually) run by a totalitarian government made up
of one and only one party.
Related terms: Closed economy (बद अ यव ा)= A country that does not have any import-
export / economic relations with rest of the world. Open Economy= an economy that is not
a closed economy.
45.1 ECONOMIC PLANNING: आ थक योजना
Definition? It is the process through which Govt. prepares a list of socio-economic problems
e.g. mass poverty, inequality, low productivity in agriculture, lack of industrial and
infrastructural development etc.; and then Govt. sets goals / targets / plans to fix these
problems.
45.1.1 Economy Planning → Before Independence:
1934 M. Visvesvaraya’s book “The planned economy of India”. He was an Engineer, Ex-
Diwan of Mysore and Bharat Ratna recipient.
1938 Nehru’s Congress plan. But not implemented due to WW2.
1944 Bombay Plan by noted industrialists JRD Tata, GD Birla et al.
1944 Sriman Narayan Agrawal’s Gandhian plan.
1945 MN Roy’s _ _ _ _ _ _ _ _ _ _ _ _ – with socialist leanings.
1950 Jayprakash Narayan’s _ _ _ _ _ _ _ _ Plan based on Vinoba’s philosophy
Mrunal’s Economy Pillar#4: Sectors of Economy → Page 305
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45.2 ECONOMY PLANNING → AFTER INDEPENDENCE
1950- Inspired from the USSR / Soviet Model, PM Nehru established a Planning
51 Commission (योजना आयोग) 1st FYP starts from 1951.
1952 National Development Council (NDC: रा य िकास प रषद) of PM, CM etc. to
approve the Five-Year Plans: पंचिष य योजनाएँ drafted by Planning Commission.
2014 Modi shuts down Planning Commission.
2015, Modi notified the formation of Niti Aayog: National Institution for Transforming
Jan India, to replace the Planning Commission.
PC, NDC and NITI were / are neither Constitutional nor Statutory bodies.
45.3 PLANNING COMMISSION → FIVE YEAR PLANS
Following table is more relevant for CDS, SSC & StatePCS than for UPSC-CSE.
Plan Period Theme/Model/Target
1st 51-56 ➢ Harrod Domar Model
➢ Main focus: Agriculture, irrigation and power.
➢ Got more GDP growth than its original target.
2nd 56-61 ➢ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Model
➢ Socialist model, Rapid industrialization, heavy industries.
3rd 61-66 ➢ Sukhmoy Chakraborty and John Sandy Model
➢ Also called “Gadgil Yojana”.
➢ Failed to achieve its target due to droughts and wars with Pak-
China
Holidays 66-69 Plan Holiday declared thanks to #EPICFAIL of 3rd FYP.
4th 69-74 ➢ Ashok Rudra and Alon Manney Model.
➢ growth with stability and self-reliance.
➢ Indira gave ‘Garibi Hatao’ slogan in 1971 election campaign
➢ #EPICFAIL due to Bangladeshi refugee problem and drought.
5th 74-79 ➢ C.Subramaniam and later redrafting by D.P.Dhar
➢ Originally it was a 10 year long term perspective plan with focus
on poverty removal and self-reliance
____ 78-80 Morarji Desai’s Janta government: “we’ll measure progress every
Plan year and make new plans accordingly for next year.”
6th 80-85 ➢ Poverty removal, IRDP, NREM, TRYSEM etc.
7th 85-89 ➢ Pranav Mukherjee Model
➢ Focus on employment. Jawahar Rozgar Yojana started.
Two 89-91 Political instability at Centre. So, only annual plans.
annual
plans
8th 92-97 ➢ John W.Miller Model.
➢ Prime Minister PV Narasimha Rao- LPG reforms
9th 97-02 ➢ Growth with social justice and equity. Mostly “indicative”
planning.
➢ #EPICFAIL due to global slowdown after Asian Financial Crisis
(which we learned in Pillar#3 currency convertibility).
10th 02-07 Target 8% GDP growth rate, double per capita income in 10 years.
Mrunal’s Economy Pillar#4: Sectors of Economy → Page 306
