Which of the following statements best captures the economic rationale behind the pursuit of 'self-reliance' in India's development strategy from 1947 to 1990, and its broader implications on trade and industrial policy?
Show answer & explanation
Correct answer: B
Explanation
Solution: The correct answer is It sought to reduce dependence on foreign technology, capital, and imports by developing indigenous industrial capacity, thereby promoting economic sovereignty within a mixed economy framework.
Explanation:
☛ Following independence in 1947, India adopted self-reliance as a fundamental objective in its Five-Year Plans to avoid economic dependence on foreign powers.
☛ This strategy relied heavily on Import Substitution Industrialization (ISI), which meant producing goods domestically rather than importing them from abroad.
☛ Under the Mahalanobis Model introduced in the Second Five-Year Plan (1956–1961), top priority was given to the development of heavy and basic industries.
☛ The state reserved the "commanding heights of the economy" for the public sector through the Industrial Policy Resolution (IPR) of 1956, while permitting the private sector to operate under strict regulations and licenses.
☛ Trade policy relied on high tariffs, import quotas, and foreign exchange restrictions to shield domestic infant industries from foreign competition.
Extra Exam-Relevant Facts:
☛ First Five-Year Plan (1951–1956): Based on the Harrod-Domar Model, it primarily focused on agriculture, irrigation, and power projects.
☛ License-Permit-Quota Raj: Established by the Industries (Development and Regulation) Act, 1951, requiring government permission to start, expand, or diversify any private industrial unit.
☛ Green Revolution: Launched in the mid-1960s with High-Yielding Varieties (HYV) of seeds to achieve self-sufficiency in food grains and eliminate reliance on foreign food aid like US PL-480.
☛ Balance of Payments Crisis (1991): Severe foreign exchange shortages eventually compelled India to transition from an inward-looking policy to the LPG (Liberalisation, Privatisation, and Globalisation) reforms.
Important One-Liners for Upcoming Exams:
☛ Which Five-Year Plan explicitly introduced the goal of "Growth with Stability and Progressive Achievement of Self-Reliance"? → Fourth Five-Year Plan (1969–1974)
☛ Which policy resolution is regarded as the "Economic Constitution of India"? → Industrial Policy Resolution of 1956
☛ What economic term describes replacing foreign imports with domestic production? → Import Substitution
☛ Which committee recommended the abolition of the industrial licensing system in India? → Hazari Committee (1967)
☛ Under which Prime Minister's tenure were the New Economic Policy (NEP) reforms launched in 1991? → P. V. Narasimha Rao