UPSC Prelims 2019 Q70: Indian Economy – Economic Planning & Five - Year Plans

UPSC Prelims 2019, General Studies Paper I · Indian Economy

With reference to India's Five - Year Plans, which of the following statements is/are correct? 1. From the Second Five - Year Plan, there was a determined thrust towards substitution of basic and capital good industries. 2. The Fourth Five - Year Plan adopted the objective of correcting the earlier trend of increased concentration of wealth and economic power. 3. In the Fifth Five - Year Plan, for the first time, the financial sector was included as an integral part of the Plan. Select the correct answer using the code given below.

(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) 1, 2 and 3

Answer: (a) 1 and 2 only

Explanation

Five-Year Plans: Key Thrusts

Statement	Claim	Verdict	Detail
1	Second FYP = thrust towards basic and capital goods industries	TRUE	Mahalanobis strategy (heavy industry, capital-goods focus). PSUs like SAIL, BHEL, HAL, HMT etc. established.
2	Fourth FYP = correcting concentration of wealth and economic power	TRUE	The 4th FYP (1969-74) explicitly aimed at reducing concentration of wealth; Indira Gandhi's socialist tilt (bank nationalisation 1969, MRTP Act 1969).
3	Fifth FYP = financial sector included as integral part	FALSE	Financial sector integration in planning framework came later (post-liberalisation FYPs). Fifth FYP (1974-79) focused on Garibi Hatao and self-reliance, not financial sector integration.

Statements 1 and 2 are correct. Answer: (a) 1 and 2 only.

Answer: (a) 1 and 2 only.

Why each option is right or wrong

(a) CORRECT. 2nd FYP = capital goods (Mahalanobis), 4th FYP = wealth concentration reduction. 5th FYP did NOT integrate financial sector.
(b) Incorrect. Statement 1 is also correct.
(c) Incorrect. Statement 3 is wrong.
(d) Incorrect. Statement 3 is factually wrong.

Key point

2nd FYP (1956-61) = Mahalanobis heavy industry model. 4th FYP (1969-74) = reduce wealth concentration (bank nationalisation, MRTP). 5th FYP (1974-79) = Garibi Hatao, self-reliance (not financial sector integration).

Remember

Statements 1 and 2 are correct. The Second FYP (Mahalanobis strategy) had a determined thrust towards basic and capital goods industries. The Fourth FYP explicitly adopted the objective of correcting concentration of wealth and economic power. But the Fifth FYP did NOT integrate the financial sector as its explicit focus - it emphasised Garibi Hatao and self-reliance.

Common mistakes

Confusing 5th FYP's Garibi Hatao (poverty alleviation) with financial sector integration.
Assuming banking reforms of 1991 were part of FYPs - liberalisation was separate policy.
Not knowing Mahalanobis was the architect of the 2nd FYP's capital-goods strategy.

Exam tip

FYP quick anchors: 1st (1951-56) = Harrod-Domar, agriculture, Bhakra dam. 2nd (1956-61) = Mahalanobis, heavy industry. 3rd (1961-66) = defence, agri. Plan Holidays (1966-69). 4th (1969-74) = growth with justice, wealth de-concentration. 5th (1974-79) = Garibi Hatao. 6th (1980-85) = MSP, rural. 7th (1985-90) = employment. 8th (1992-97) = liberalisation-consistent. 9-12 gradual sectoral integration.

Sources

Planning Commission - Historical FYP documents
NCERT Class 11 - Indian Economic Development (Planning chapters)

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