Indian Economy, Planning, Liberalisation and Industrial Policy · GPSC (Gujarat)

What the official syllabus says

General Studies-III (Main Examination, Paper VI), (D) Economy of India and Gujarat:
Indian Economy & Economic Planning: Evolution of Indian economy since independence, major policy shifts, Economic planning and its evolution, role of NITI Aayog, Effects of liberalisation on the economy (post 1991 changes), changes in industrial policy and their effects on industrial growth.

Topics in detail

The economy at Independence and after

The colonial legacy: deindustrialisation, stagnant agriculture, low literacy and life expectancy
The mixed economy model; the Bombay Plan (1944) and the role of the State
Phases: planned State-led growth (1951-1980), early reforms (1980s), liberalisation (from 1991), the digital and formalisation phase
Structural change: falling share of agriculture in output; the services-led growth path; the role of manufacturing
Key concepts: GDP, GVA, growth and development, inflation, the business cycle

Major policy shifts

Bank nationalisation (1969, 1980) and the Green Revolution
The balance of payments crisis of 1991 and the New Economic Policy: liberalisation, privatisation, globalisation
Goods and Services Tax (2017); Insolvency and Bankruptcy Code (2016); inflation targeting (2016)
Demonetisation (2016) and digital payments
Atmanirbhar Bharat, Make in India and production-linked incentive schemes

Economic planning and its evolution

The Planning Commission (1950) and the National Development Council
The Five-Year Plans (1951 to 2017): objectives and models (Harrod-Domar in the First, Mahalanobis in the Second); plan holidays (1966-1969); rolling plan
From physical planning to indicative planning after 1991
Decentralised planning: District Planning Committees (Article 243ZD), gram panchayat development plans
Gujarat's State planning machinery and district planning

NITI Aayog

Set up on 1 January 2015 in place of the Planning Commission
Structure: Governing Council, regional councils, CEO
Role: think tank, cooperative and competitive federalism, State indices (SDG India Index, Export Preparedness Index, health and school indices)
Aspirational Districts and Aspirational Blocks Programmes; Atal Innovation Mission
Comparison with the Planning Commission: no role in allocating funds

Effects of liberalisation (post-1991)

Growth acceleration, foreign investment, exports of services, foreign exchange reserves
Changes in trade policy: lower tariffs, end of import licensing, WTO membership (1995)
Financial sector reforms: Narasimham Committees, private banks, SEBI
Criticisms: jobless growth, rising inequality, agrarian distress, regional imbalance

Industrial policy and industrial growth

Industrial Policy Resolutions of 1948 and 1956; Industries (Development and Regulation) Act, 1951; licence raj
MRTP Act and its replacement by the Competition Act, 2002
Industrial Policy of 1991: end of licensing for most industries, fewer reserved sectors, FDI opening
Public sector enterprises: Navratnas and Maharatnas; disinvestment and strategic sale; new PSE policy
MSMEs: definitions (2020), credit, Udyam registration
Make in India (2014), PLI schemes (2020), National Manufacturing Policy, industrial corridors
Effects on industrial growth: changes in the share of manufacturing, labour-intensive versus capital-intensive growth

Overlaps

Prelims General Studies: Economy of India and Gujarat (planning, new economic reforms, NITI Aayog, industrial policy, public sector, privatisation and disinvestment).
Economy of Gujarat: Agriculture, Industry and Cooperatives on this paper.