Q2
(a) Explain the main features of money and credit policies in India during the pre-Independence era. (20 marks) (b) What are the factors contributing towards shift in sectoral composition in Gross National Product (GNP) in India during the pre-economic reform period? Discuss. (15 marks) (c) Explain the main reasons for deceleration in agricultural growth in India during the post-economic reform period. (15 marks)
हिंदी में प्रश्न पढ़ें
(a) भारत में स्वतंत्रता-पूर्व मुद्रा तथा साख नीतियों की प्रमुख विशेषताओं की व्याख्या कीजिए। (20 अंक) (b) वे कौन-से कारक हैं जिन्होंने आर्थिक सुधार-पूर्व की अवधि में, भारत के सकल राष्ट्रीय उत्पाद (जी० एन० पी०) के क्षेत्रीय संघटकों में परिवर्तन में योगदान दिया है? विवेचना कीजिए। (15 अंक) (c) भारत में आर्थिक सुधारों के पश्चात् की अवधि में, कृषि-वृद्धि में अवमंदन के प्रमुख कारणों की व्याख्या कीजिए। (15 अंक)
Directive word: Explain
This question asks you to explain. The directive word signals the depth of analysis expected, the structure of your answer, and the weight of evidence you must bring.
See our UPSC directive words guide for a full breakdown of how to respond to each command word.
How this answer will be evaluated
Approach
The directive 'explain' demands clear causal exposition across all three parts. Allocate approximately 40% of time and words to part (a) given its 20-mark weight, with roughly 30% each to parts (b) and (c). Structure with a brief composite introduction, three distinct body sections addressing each sub-part sequentially, and a concluding synthesis on structural transformation in Indian economy.
Key points expected
- Part (a): Presidency Banks (Bank of Bengal, Bombay, Madras), Imperial Bank of India 1921, exchange rate policies under sterling peg, limited credit to Indian traders, dichotomy between European and Indian money markets, role of indigenous bankers
- Part (a): Exchange rate stabilization (1893-1913), currency board system, Hilton Young Commission recommendations, limited monetization and rural credit exclusion
- Part (b): Declining share of agriculture in GNP from 55% to 45% (1950-1990), rising industrial and services share, Green Revolution's uneven regional impact, public sector dominance in heavy industry
- Part (b): Structural shift drivers: planned industrialization, import substitution, demographic transition, urbanization, and capital formation patterns in Second and Third Five Year Plans
- Part (c): Post-1991 deceleration factors: reduction in public investment in agriculture, input subsidy reforms, trade liberalization exposing Indian farmers to global price volatility, WTO Agreement on Agriculture constraints
- Part (c): Declining terms of trade for agriculture, infrastructure neglect, technology fatigue in Green Revolution regions, and environmental degradation (groundwater depletion in Punjab-Haryana)
Evaluation rubric
| Dimension | Weight | Max marks | Excellent | Average | Poor |
|---|---|---|---|---|---|
| Concept correctness | 25% | 12.5 | For (a), accurately distinguishes between Presidency Banks and Imperial Bank with correct dates; for (b), correctly defines sectoral composition shift using GNP/GDP concepts; for (c), precisely identifies post-reform period as 1991 onwards and distinguishes between growth deceleration and absolute decline | Covers basic institutional names and periods but conflates pre-Independence monetary arrangements or misidentifies sectoral trends; treats GNP and GDP interchangeably without context | Confuses colonial monetary institutions (e.g., calls RBI established in 1935 as pre-Independence central bank without noting its limited functions), misidentifies reform periods, or describes sectoral shifts without conceptual clarity |
| Diagram / model | 15% | 7.5 | For (b), draws a clear sectoral composition pie chart or stacked area graph showing agriculture-industry-services transition 1950-1990; for (c), uses Lewis dual-sector model or terms of trade diagram to illustrate agricultural stagnation; labels axes and periods precisely | Includes one rough diagram without proper labels or uses a generic growth curve without sectoral breakdown; attempts Lewis model but misplaces turning point | No diagrams attempted, or draws irrelevant models (e.g., IS-LM for monetary policy in part a without adaptation to colonial context) |
| Quantitative reasoning | 20% | 10 | For (a), cites specific ratios like sterling-rupee exchange rate (1s 4d or 1s 6d) and note circulation figures; for (b), provides approximate sectoral shares (agriculture ~55% in 1950 to ~30% by 1990); for (c), cites agricultural GDP growth falling from 3.5% (1980s) to below 2% (1990s) | Mentions general trends without specific figures or uses approximate percentages without source attribution; confuses absolute and relative decline in sectoral shares | No quantitative data cited, or invents implausible statistics (e.g., claiming agriculture was 80% of GNP in 1990 or RBI established in 1850) |
| Indian / empirical examples | 25% | 12.5 | For (a), references Chamberlain Commission (1913), Hilton Young Commission (1926), and specific indigenous banking practices (hundi, chit funds); for (b), contrasts Punjab-Haryana Green Revolution success with eastern India stagnation; for (c), cites Commission on Agricultural Costs and Prices (CACP) reports or Swaminathan Committee on farmer distress | Mentions generic examples like 'Green Revolution' or 'economic reforms' without specific regional or institutional details; names RBI but not its colonial predecessors accurately | No Indian-specific examples, or uses anachronistic references (e.g., NABARD in pre-Independence period, or 1991 reforms affecting 1950s data) |
| Policy implication | 15% | 7.5 | For (a), explains how colonial monetary policy constrained indigenous industrialization and created financial dualism with legacy effects; for (b), links sectoral shift to Mahalanobis strategy and its employment implications; for (c), connects deceleration to need for second generation reforms in agriculture (contract farming, APMC reforms) | Makes generic statements about policy importance without connecting specific historical policies to outcomes; treats three parts as isolated without synthesis | No policy implications drawn, or suggests irrelevant contemporary policies (e.g., demonetization for colonial period) without historical context |
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