Chapter 4.4: Economic Development Class 9 • Maharashtra Board
📈 Mixed Economy • 🗓️ Five-Year Plans • 🏦 Bank Nationalisation • 🧵 Mill Strike • 🌐 NEP 1991
📚 Introduction
In this chapter we study India’s economic policy framework: Mixed Economy, Five-Year Plans, Nationalisation of Banks, the 20-Point Programme, the Mumbai Mill Workers’ Strike, and especially the New Economic Policy (1991).
⚖️ Mixed Economy
Post-independence, India followed a middle path (Nehru): blending positives of capitalism and socialism to speed development with public welfare.
🧩 Structure
- Public Sector: Govt-owned & managed (e.g., defence, railways, core infra).
- Private Sector: Privately owned; regulated by govt (e.g., consumer goods).
- Joint Sector: Ownership/management shared between govt and private entities.
🎯 Rationale & Aims
- Combine profit motive & entrepreneurship with social goals.
- Focus on long-term national interest & time-bound planning.
- Enable state leadership in high-capital, slow-return sectors: defence, research, transport, ports, airports, power.
💡 Note: 1973 Industrial Policy pushed regional balance, curbed dominance of large/foreign business houses, and boosted small-scale & cottage industries + cooperatives.
🗺️ Five-Year Plans: Foundations
- Context: Colonial exploitation left poverty, unemployment, low productivity, population growth, tech & knowledge gaps.
- Planning Commission (1950): Chaired by Jawaharlal Nehru.
- Principle: Proportionate resource allocation + optimal use of human resources.
- Broad Goals: Raise national income; rapid industrialisation; food self-sufficiency; employment; reduce inequality; stable prices; family planning; poverty eradication; develop social services; self-reliance.
| Focus Areas (Typical) | Examples |
|---|---|
| Agriculture & Irrigation | Dams, flood control, rural development |
| Energy & Transport | Power projects, roads, rail, ports |
| Industry | Basic/heavy industries, minerals, small-scale |
| Human Development | Education, health, social services |
📊 Plans & Highlights
1st Plan (1951–56)
- Priority to agriculture, rural & social development, irrigation, energy.
- Laid foundations for planned growth.
2nd Plan (1956–61)
- Ambitious industrialisation (public sector): Bhilai, Rourkela, Durgapur steel; Sindri fertiliser; Chittaranjan loco; Perambur coaches; Vizag shipyard.
- Major dams (Bhakra-Nangal, Damodar) boosted agri & power.
3rd Plan (1961–66)
- Balance industry & agriculture; transport, minerals; jobs & poverty alleviation.
- 1966–69: Three annual plans due to wars (China ’62, Pakistan ’65) & famine.
4th Plan (1969–74)
- Self-reliance, basic industries, faster growth, socialist pattern.
- 1969: 14 major banks nationalised; strains from Bangladesh War, refugees, pay hikes, global oil prices.
5th Plan (1974–79)
- Goal: Garibi Hatao, self-sufficiency; food, water, health, electricity, PDS, jobs.
- Couldn’t fully achieve poverty/employment targets. 1978: Janata Govt ended plan → Rolling Plan (failed). 1980: Congress restored planning.
6th Plan (1980–85)
- Growth, poverty reduction, jobs, population policy (small family norm).
- Key programmes: IRDP, RLEGP, NREP; Salem Steel.
7th Plan (1985–90)
- Focus: food, employment, productivity; devpt, modernisation, self-reliance, social justice.
- Targets: ~5% NI growth; raise foodgrain output. Schemes: Jawahar Rojgar, Indira Awaas, 10 lakh wells.
8th Plan (1992–97)
- Aligned with 1991 reforms; greater role for private sector.
- Goals: 6.5% growth, population control, primary education, literacy.
- Programmes: PMRY, Mahila Samriddhi, Rashtriya Samajik-Arthik Sahayya, Midday Meal, Indira Mahila, Ganga Kalyan.
9th Plan (1997–2002)
- Priority to agriculture & rural development; healthy infra competition; FDI-friendly industrial policy.
- Schemes: SJSRY, Bhagyashree Child Welfare, Rajrajeshwari Mahila Kalyan, SGSY, JGSY, Antyodaya Anna, PMGSY.
- Expected gains in construction, communications & services.
🗓️ Quick Timeline
| Period/Year | Milestone | Impact |
|---|---|---|
| 1950 | Planning Commission setup | Institutionalised planning |
| 1951–56 | I Plan | Agriculture & rural focus |
| 1956–61 | II Plan | Heavy industry push |
| 1969 | 14 banks nationalised | Credit for development |
| 1974–79 | V Plan | Garibi Hatao & PDS |
| 1980–85 | VI Plan | IRDP, RLEGP, NREP |
| 1985–90 | VII Plan | Food, jobs, productivity |
| 1991 | NEP (LPG reforms) | Global integration |
| 1992–97 | VIII Plan | Private-sector thrust |
| 1997–2002 | IX Plan | Rural & services growth |
🏦 Nationalisation of Banks
To align credit with national priorities and support mixed-economy development, major private banks were brought under state control.
- 1955: Imperial Bank → State Bank of India (public sector) to expand rural/priority banking.
- 1969 (19 July): PM Indira Gandhi nationalised 14 banks (e.g., Allahabad, BoB, BoI, BoM, Canara, CBI, Dena, Indian Bank, IOB, PNB, Syndicate, United Bank, UCO, Union Bank).
- 1980: Six more banks nationalised.
💡 Background: Private banks were aligned with industrial groups; nationalisation ensured resources for small industries, pharma, agriculture, and backed schemes like the Green Revolution.
🧭 20-Point Programme (1 July 1975)
- Equity & Land Reforms: Urban/rural land ceilings, fair wealth distribution, minimum wages, water conservation.
- Labour & Training: Workers’ participation, national training, abolition of bonded labour.
- Clean Economy: Act against tax evasion, smuggling, economic crimes.
- Price & PDS: Control essential prices; strengthen public distribution.
- Social Infrastructure: Handloom uplift, loan waivers (weaker sections), housing, connectivity, school equipment.
🧵 Mumbai Mill Workers’ Strike (1982)
A landmark industrial action reflecting wage/bonus disparities and representational issues in the textile sector.
- Backdrop: Mumbai’s Girangaon (Parel, Byculla, Worli, etc.)—textile hub since 1854 (Kawasji Dawar). Sunday holiday since 1882 (N. M. Lokhande’s efforts).
- Trigger (1981 Diwali): Workers expected 20% bonus; union settlement of 8–17% without broad consent → unrest.
- Leadership: Dr. Datta Samant; 18 Jan 1982 strike by ~2.5 lakh workers across 65 mills.
- Course: Community support, food committees; later splits; Jail Bharo; Sept 1982 march; strike lasted ≈1 year; ~1.5 lakh lost jobs.
- Sectoral Shift: Polyester preference over cotton; mills migrated (e.g., to Surat); 13 mills nationalised; arbitration failed to fully resolve.
🎭 Cultural Note: Working-class voices enriched literature & folk arts—Anna Bhau Sathe, Shahir Amar Sheikh, Shahir Sable; poets Narayan Surve, Namdev Dhasal.
🌐 New Economic Policy (1991): Liberalisation–Privatisation–Globalisation
Faced with macroeconomic crisis—high inflation, low growth, dwindling forex—India undertook structural reforms to integrate with the world economy.
🧨 Crisis Context
- Inflation ~17%; growth down by 1.1%; forex barely a week of imports.
- Gold sold/mortgaged to meet obligations; rising oil prices (Kuwait invasion); NRI withdrawals.
- High internal & external debt burdens; fiscal strain from loan waivers, etc.
🛠️ Reform Measures (PVN Govt; FM Dr Manmohan Singh)
- Industrial Policy: Delicensing—licence requirements cut to ~18 industries.
- FDI/FII: Restrictions eased; private entry into public sector areas.
- Financial Markets: Strengthened SEBI (est. 1988); NSE computerised.
- Telecom: Sector opened; mobile services rolled out.
- Trade: Tariff cuts; move to a market-linked exchange regime; integration with WTO.
💡 Outcome Snapshot: Foreign investment rose; mortgaged gold was recovered; middle & business classes backed reforms; economy aligned with global mainstream.
🌍 WTO Membership (1995) & SAPTA
- WTO Objectives: Freer, rules-based trade; end discriminatory barriers; multilateral dispute-settlement.
- Coverage: Grants, import–export, FDI, agriculture, technology, services (electricity, water transport, education, health saw faster commercialisation).
- Social Indicators: Reports noted progress in BPL reduction, infant mortality decline, water & wastewater facilities.
- SAPTA/SAARC: India eased import restrictions, gave tariff concessions within the region; opened insurance to private/foreign players.
🧠 Quick Revision (Exam-Ready)
| Topic | Essentials | One-Line Takeaway |
|---|---|---|
| Mixed Economy | Public + Private + Joint sectors; long-term national interest | Blend efficiency with equity |
| Five-Year Plans | From agri-foundations to heavy industry & human development | Planned growth for self-reliance |
| Bank Nationalisation | 1955 SBI; 1969—14 banks; 1980—6 banks | Direct credit to priority sectors |
| 20-Point Programme | Land reforms, labour, prices/PDS, social infra | Accelerate inclusive development |
| Mill Strike (1982) | Bonus dispute, leadership by Datta Samant, year-long action | Industrial relations turning point |
| NEP 1991 | Liberalisation, privatisation, globalisation; SEBI/NSE; telecom opening | Crisis-led global integration |
| WTO & SAPTA | Trade rules, regional concessions, sectoral opening | Deeper trade linkages |
✅ Conclusion
India’s economic journey moved from mixed economy & planning to reforms & globalisation. Through banks’ nationalisation, social programmes, and the 1991 NEP, the country sought growth with inclusion while integrating into the world economy.
📝 Chapter 4: Economic Development – Exercises with Answers
1. (A) Choose the correct option
- On 19th July 1969, 14 major banks in India were nationalised. ✅
- Indira Gandhi declared a 20-point programme. ✅
1. (B) Identify and write the wrong pair
| Person | Specialty | Correct/Wrong |
|---|---|---|
| Kavasaji Davar | Iron and Steel factory | ⚠️ Wrong → He started the first textile mill in Mumbai (1854). |
| Dr Datta Samant | Leadership of mill workers | ✅ Correct |
| N. M. Lokhande | Holiday for mill workers | ✅ Correct |
| Narayan Surve | Depiction of lives of workers through poems | ✅ Correct |
2. Activity: Complete the chart
| Five Year Plan | Duration | Purposes |
|---|---|---|
| First | 1951–1956 | Agriculture, Social development |
| Second | 1956–1961 | Industrialisation |
| Third | 1961–1966 | Elimination of inequality, increasing employment opportunities, increase in national income |
| Fourth | 1969–1974 | Scientific research, health and family planning |
| Fifth | 1974–1979 | Poverty removal, economic self-sufficiency, basic needs (education, food, water, electricity, medical) |
3. (B) Write short notes on
(1) Mixed Economy
India adopted a mixed economy after independence, combining features of capitalism (private ownership, entrepreneurship) and socialism (public sector control). It has three parts:
- Public Sector: Industries fully under government control (e.g., defence production).
- Private Sector: Owned by private industrialists but supervised by the government (e.g., consumer goods).
- Joint Sector: Run jointly by government and private owners.
This model aimed at maximising production, ensuring equity, and prioritising long-term national interest.
(2) 20-point Programme
Introduced by Indira Gandhi in 1975, it was designed to speed up development and social justice. Key provisions included:
- Land ceiling and redistribution, minimum wages, water conservation.
- Abolition of bonded labour, national training scheme.
- Prevention of tax evasion and smuggling.
- Price regulation, strengthening public distribution.
- Support to weaker sections, housing, and education facilities.
4. (A) Explain the following with reasons
(1) Independent India opted for mixed economy.
Because capitalism and socialism both had strengths and weaknesses. A mixed economy could blend profit motive, entrepreneurship and efficiency of capitalism with social welfare, equity and long-term planning of socialism.
(2) Banks were nationalised in 1969.
Private banks mainly served industrial houses and elites. Nationalisation ensured wider access to credit, channelised funds into development projects, and brought profits into the public treasury.
(3) Mill workers went on strike.
Mill workers in Mumbai expected higher bonus and better conditions. When their expectations were not met, under Dr Datta Samant’s leadership (1982), 2.5 lakh workers went on strike. The strike reflected economic disparity and demand for dignity.
4. (B) Answer the following questions in detail
(1) Which programmes were started in the 8th Five-Year Plan?
- Pradhan Mantri Rozgar Yojana
- Mahila Samriddhi Yojana
- Rashtriya Samajik Arthik Sahayya Yojana
- Midday Meal Scheme
- Indira Mahila Scheme
- Ganga Kalyan Scheme
The plan (1992–1997) reflected liberalisation and gave greater scope to the private sector while focusing on education and poverty reduction.
(2) Which projects were started in the 2nd Five-Year Plan?
The 2nd Plan (1956–1961) emphasised industrialisation. Major projects included:
- Iron & Steel plants: Bhilai, Rourkela, Durgapur.
- Chemical fertiliser plant: Sindri.
- Railway engine factory: Chittaranjan.
- Rail bogie factory: Perambur.
- Ship-building: Vishakhapatnam.
- Dams: Bhakra-Nangal, Damodar Valley, etc.
These projects built the industrial foundation and increased national income.
🧠 Quick Recap
- 1969: 14 banks nationalised.
- 20-point Programme: Launched by Indira Gandhi (1975).
- Mixed Economy: Blend of capitalism & socialism.
- 2nd Plan: Heavy industries, dams, fertiliser plants.
- 8th Plan: PM Rozgar, Mahila schemes, Midday Meal.