The progress of the Indian economy during the first seven five year plans (1950-1990) was impressive. Indian industries became far more diversified than at the time of independence, largely due to the public sector. The policy of import substitution protected domestic industries from foreign competition, but the policies of this period failed to develop a strong export sector. Excessive government regulation, which came to be called the permit license raj, prevented the growth of entrepreneurship and stopped certain firms from becoming more efficient. Many public sector firms incurred huge losses but continued to function. On the agricultural front, the green revolution made India self-sufficient in food grains. These problems, along with the changing global economic scenario, led the government to introduce a new economic policy in 1991.
Import substitution is technically the name of which trade strategy?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Inward looking trade strategy
In the first seven plans, trade followed an inward looking trade strategy. Its technical name is import substitution: replacing imports with home production.
NCERT (2026-27): “2.5 Trade Policy: Import Substitution The industrial policy that India adopted was closely related to the trade policy. In the first seven plans, trade was characterised by what is commonly called an inward looking trade strategy. Technically, this strategy is called import substitution. This policy aimed at replacing or substituting imports with domestic production. For example, instead of importing vehicles made in a foreign country, industries would be encouraged to produce them in India itself. …” |