The Indian economy for CDS

Indian economy questions in CDS GK are mostly history and matching. Which plan followed the Mahalanobis model? Who led Operation Flood? What did the 1991 reforms change? Which scheme gives what benefit? Very few questions need current figures, which is good news: the planning era and the reforms do not change, and you can learn them once.

The concepts behind these facts (GDP, deficits, RBI tools) are in economic concepts for CDS. Read that first if terms like fiscal deficit feel shaky.

The planning era

The Planning Commission was set up on 15 March 1950 by a Cabinet resolution, with the Prime Minister as chairman. It was neither constitutional nor statutory. The National Development Council (1952) brought in the Chief Ministers to approve plans.

NITI Aayog (National Institution for Transforming India) replaced the Planning Commission on 1 January 2015. It too was created by a Cabinet resolution. The Prime Minister is chairperson, and its Governing Council includes all Chief Ministers. The key difference: NITI Aayog is a think tank. It does not allocate funds to states the way the Planning Commission did.

Agricultural revolutions

The lesser colours vary between textbooks. Learn the first four firmly, and treat the rest as low priority.

The 1991 reforms

By mid-1991 India's foreign exchange reserves were barely enough for a few weeks of imports, and the government pledged gold to borrow abroad. The government of P. V. Narasimha Rao, with Manmohan Singh as Finance Minister, responded with what is called LPG: liberalisation, privatisation and globalisation.

• New Industrial Policy (July 1991): abolished industrial licensing for all but a short list of industries and cut the list reserved for the public sector.
• Trade: tariffs were lowered and the rupee was devalued, later becoming convertible on the current account.
• Foreign investment: automatic approval for FDI in many sectors. FERA was later replaced by FEMA (1999).
• Banking: the Narasimham Committee (1991) recommended lower reserve requirements and more competition.
• Disinvestment: the government began selling part of its stake in public sector units.

Sectors and structure

• Primary: agriculture, forestry, fishing, mining.
• Secondary: manufacturing, construction, electricity.
• Tertiary: services such as trade, transport, banking, IT.

Services produce the largest share of India's output. Agriculture's share of output is far smaller, yet it still employs the largest share of the workforce. That gap between output and employment is the "structural" problem questions allude to.

Financial regulators and institutions

Flagship schemes

Digital public infrastructure

• Aadhaar: a 12-digit identity number issued by UIDAI (set up 2009), given a statutory basis by the Aadhaar Act, 2016.
• JAM trinity: Jan Dhan accounts, Aadhaar and mobile phones together enable Direct Benefit Transfer.
• UPI: launched in 2016 by NPCI. It allows instant bank-to-bank payments through a mobile app.
• RuPay: India's domestic card network, launched by NPCI.

Common confusions

• Planning Commission vs NITI Aayog: both came from Cabinet resolutions. Only the Planning Commission allocated funds.
• NDDB vs Operation Flood: NDDB (1965) is the body; Operation Flood (1970) is the programme it ran.
• 1969 vs 1991: 1969 nationalised banks (more state control); 1991 liberalised the economy (less state control).
• FERA vs FEMA: regulation vs management. FEMA made foreign exchange violations civil offences.

Practice MCQs

1. The Second Five-Year Plan was based on the (a) Mahalanobis model (b) Harrod–Domar model (c) Gandhian model (d) Rolling plan model
2. NITI Aayog came into being on (a) 15 March 1950 (b) 15 August 2014 (c) 1 January 2015 (d) 1 April 2015
3. Operation Flood is associated with (a) M. S. Swaminathan (b) C. Subramaniam (c) Norman Borlaug (d) Verghese Kurien
4. The period 1966–69 is known as a (a) rolling plan (b) plan holiday (c) perspective plan (d) sixth plan
5. Which Plan was terminated a year early by the Janata government? (a) Third (b) Fourth (c) Fifth (d) Sixth
6. The Yellow Revolution relates to (a) eggs (b) fisheries (c) honey (d) oilseeds
7. Which of these was NOT part of the 1991 reforms? (a) Nationalisation of 14 banks (b) Devaluation of the rupee (c) Abolition of most industrial licensing (d) Opening to foreign investment
8. Which body runs UPI? (a) RBI (b) SEBI (c) NABARD (d) NPCI
9. SEBI got statutory powers in (a) 1988 (b) 1992 (c) 1999 (d) 2003
10. Asia's oldest stock exchange is the (a) NSE (b) Calcutta Stock Exchange (c) BSE (d) Tokyo Stock Exchange

Answers:

1. (a) The First Plan followed Harrod–Domar.
2. (c) 15 March 1950 is the Planning Commission.
3. (d) Swaminathan and Borlaug are the Green Revolution.
4. (b) Three annual plans after the Third Plan failed.
5. (c) Replaced by the rolling plan, 1978–80.
6. (d) Eggs are Silver; fisheries Blue.
7. (a) That was 1969, the opposite direction.
8. (d) NPCI, set up in 2008.
9. (b) Set up in 1988, statutory in 1992.
10. (c) BSE, 1875.

What to do next

• Write the plan table from memory: numbers, years and the one-line focus of each.
• Explain in two lines how NITI Aayog differs from the Planning Commission.
• Match six revolutions to their products.
• List five changes of 1991 and one thing that was not part of it.
• Recite nine schemes with launch year and benefit.

For the institutions that frame these policies, revise government and constitutional bodies for CDS.