Planning & Development — UPSC Prelims Economy previous year questions

Statement 1 is correct. The Second Plan (1956-61) followed the Mahalanobis model. It aimed to make basic and capital goods at home instead of importing them.
Statement 2 is correct. The Fourth Plan (1969-74) sought to correct the growing concentration of wealth and economic power. Bank nationalisation (1969) and the MRTP Act (1969) came in this period.
Statement 3 is incorrect. The financial sector became an integral part of the Plan only in the Ninth Plan (1997-2002).
Remember: The Fourth Plan theme was 'growth with stability and progressive achievement of self-reliance'.

Source: Planning Commission, Five Year Plan documents

Economic growth means a rise in output and income. It is a quantitative change.
Economic development is wider. It means better living standards for the people. Lower poverty, more jobs and better health and education are part of it.
If GNP rises but poverty and unemployment also rise, growth has not reached the people. So there is no real development.
The balance between farm and factory output is not the test of development. So options (a) and (b) are wrong.
A trade deficit alone does not show lack of development. So option (d) is wrong.

Source: NCERT Class XII, Indian Economic Development

The Twelfth Plan ran from 2012 to 2017. Its title was 'Faster, More Inclusive and Sustainable Growth'.
It targeted average GDP growth of 8% a year. Earlier draft target was 9%.
The other options use parts of this phrase. They do not give the full stated objective.
Remember: The Eleventh Plan (2007-12) theme was 'Towards Faster and More Inclusive Growth'. The Twelfth was the last Five-Year Plan; NITI Aayog replaced the Planning Commission in 2015.

Source: Planning Commission, Twelfth Five Year Plan (2012-17) document

The Eleventh Plan (2007-12) had the theme 'Towards Faster and More Inclusive Growth'.
Its inclusive growth goals included lower poverty, more jobs, better health and education, and gender equality.
Strengthening the capital market supports growth and investment. But it is not a stated element of inclusive growth.
Remember: The Eleventh Plan was the first to use 'inclusive growth' as its central theme.

Source: Planning Commission, Eleventh Five Year Plan (2007-12) document

This definition comes from the Brundtland Commission report 'Our Common Future' (1987).
Carrying capacity is the largest population an environment can support without being damaged.
Sustainable development means using resources within this limit. Only then will future generations have enough.
Social justice and inclusive growth concern fair sharing among present people. They do not deal with the limit of natural resources.
Globalization concerns world trade links. It has no inherent link with sustainability.

Source: World Commission on Environment and Development, Our Common Future (1987)

The Fifth Plan ran from 1974 to 1979. The Janata government ended it a year early, in 1978.
The Emergency was declared in June 1975. Lok Sabha elections were held in March 1977. The Janata Party won and formed the government.
All three events fall within the Fifth Plan period.
The Fourth Plan ended in 1974. The Sixth Plan began in 1980.
Remember: The Janata government brought the 'Rolling Plan' (1978-80).

Source: Previous year paper; answer key cross-checked against published sources

Statement 1 is correct. The Second Plan (1956-61) used the Mahalanobis model. It gave top priority to heavy and basic industries such as steel.
Statement 2 is treated as correct. The Third Plan (1961-66) stated import substitution as a key strategy. It aimed at self-reliance in industry. Import substitution means making at home what was earlier imported.
Note: The roots of import substitution lie in the Second Plan. Published keys still accept both statements.

Source: Planning Commission, Second and Third Five Year Plan documents

The Banking Regulation Act was enacted in 1949. It is the earliest of the four.
The First Five Year Plan began in 1951.
The Imperial Bank of India was nationalised as the State Bank of India in 1955.
Life insurance was nationalised in 1956, when LIC was formed. General insurance was nationalised later, in 1972-73.
So the order is 1949, 1951, 1955, 1956.
Remember: The Banking Companies Act, 1949 was renamed the Banking Regulation Act in 1966.

Source: Banking Regulation Act 1949; State Bank of India Act 1955; LIC Act 1956

The India Human Development Report was prepared by NCAER from a large household survey.
For each sample village it built indices on infrastructure and amenities, education and health.
It did not build an unemployment index for each village.
Unemployment is usually measured at State and national level through NSSO surveys.
So 'Unemployment Related Index' is the odd one out.

Source: NCAER, India Human Development Report (1999)

The published key gives infrastructure growth as the answer.
The Eighth Plan (1992-97) came after the 1991 reforms. It was an indicative plan. The State was to build infrastructure such as energy, transport and communication. Private investment was to drive industry.
A larger outlay is true of almost every new Plan. So it is not a critical difference.
Agriculture and rural development were stressed in earlier Plans too.
Industrial licensing was largely abolished by the New Industrial Policy of 1991, not by the Plan.
Remember: The Eighth Plan made human development its core concern.

Source: Previous year paper; answer key cross-checked against published sources

The Eighth Plan (1992-97) made human development the core of all development efforts.
It set priorities in jobs, population control, literacy, health, drinking water and food.
The Sixth Plan (1980-85) stressed poverty removal through programmes like IRDP.
The Seventh Plan (1985-90) stressed 'food, work and productivity'.
The Fifth Plan (1974-79) stressed poverty removal and self-reliance.

Source: Previous year paper; answer key cross-checked against published sources

Imperative planning is command planning. The State decides what to produce, how and for whom. Markets play almost no role. The former USSR followed it.
Indicative planning works through the market. The State sets broad targets and gives signals and incentives. Private firms take their own decisions.
Option (b) is not the basic difference. Indicative plans may still keep some public enterprises.
Option (c) reverses the two systems.
Option (d) is a possible result, not the basic difference.
Remember: India moved towards indicative planning from the Eighth Plan.

Source: NCERT Class XII, Indian Economic Development, Ch. 1

An import quota limits the physical quantity of goods imported. It is a physical control.
Rationing is a physical control of supply to consumers, not a fiscal one.
Cash Reserve Ratio is a general quantitative tool, not a selective credit control.
Licensing is a direct control on units, and calling it comprehensive control is not the standard match.
Remember: selective credit controls target specific sectors or goods.

Source: Standard Indian economics texts on controls; RBI

The Fifth Plan was launched amid runaway inflation. The 1973 oil price shock had pushed prices up sharply.
Its main aims were removal of poverty (Garibi Hatao) and self-reliance.
The official plan record states that high priority was given to controlling inflation and achieving economic stability.
The Fourth Plan's aim was 'growth with stability' and progressive self-reliance. This makes it an attractive but wrong option.
Remember: The Fifth Plan was ended a year early, in 1978, by the Janata government.

Source: Planning Commission, Fifth Five Year Plan (as summarised in India Year Book)

The First Plan was based on the Harrod-Domar model.
This model links growth to the savings rate and the capital-output ratio.
The Second Plan followed the Mahalanobis model, which stressed heavy industry.
The Third Plan is linked with Sukhamoy Chakravarty's model.
The Fourth Plan is linked with the Ashok Rudra and Alan Manne model.
So the code is 2, 4, 1, 3.

Source: Planning Commission, Five Year Plan documents

Assertion (A) is true. Sustainable development protects the resources on which human welfare depends.
Reason (R) is true. It is the standard definition given by the Brundtland Commission in 1987.
R explains A. Development that protects future needs secures the long-term well-being of society.
Remember: The three pillars of sustainable development are economic, social and environmental.

Source: World Commission on Environment and Development, Our Common Future (1987)

Statement I is true. Public bodies fund most research in India. Private spending is low compared with the US or China.
Statement II is also true. Most research is done in government laboratories and institutes. Universities have a small share.
Statement II does not explain Statement I. A small university role does not tell us why private firms spend less.
So both are true and II is not the explanation.

Source: Economic Survey 2017-18, Ch. 8 (Transforming Science and Technology in India)

Statement 1 is correct as set. NIC has been revised several times: 1970, 1987, 1998, 2004 and 2008. NIC-2008 is the version that replaced the older ones.
Statement 2 is correct. NIC is the standard for classifying economic activities so that data from different sources can be compared.
Both statements are therefore correct.
Update (2026): MoSPI has since published NIC-2025 as a newer revision. The exam answer stays the same.

Source: MoSPI, Central Statistics Office, National Industrial Classification

The First Plan (1951-56) launched the Community Development Programme in 1952.
The Second Plan (1956-61) aimed at rapid industrialisation under the Mahalanobis model.
The Third Plan (1961-66) continued the expansion of basic industries.
The Fourth Plan (1969-74) aimed at growth with stability and self-reliance.
The Fifth Plan (1974-79) introduced the Minimum Needs Programme.
So the code is 2, 1, 3, 5, 4.

Source: Planning Commission, Five Year Plan documents

Statement 1 is incorrect. The policy covers people displaced by land acquisition. It also covers involuntary displacement due to any other reason.
Statement 2 is incorrect. The policy was framed by the Ministry of Rural Development (Department of Land Resources).
Remember: The policy was later given legal backing by the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Source: Ministry of Rural Development, National Rehabilitation and Resettlement Policy 2007