Important Questions Class 11 Economics Indian Economic Development Chapter 4

Important Questions Class 11 Economics, Indian Economic Development Chapter 4 Poverty

The challenge of poverty is one of the current challenges that the Indian economy is facing. The upliftment of the poor was envisioned as one of the main goals for the following five-year plans of an independent India. Poverty can be defined as a situation where people cannot meet their basic needs. It is not just confined to India; nearly 300 million people over the globe are affected by it, and it is a pressing issue that requires long-term solutions. Poverty has many faces, so it becomes imperative to understand it from various perspectives. 

Chapter 4 in Class 11 Economics explains poverty in detail; students will learn about the various attributes of poverty, grasp its diverse dimensions, understand how poverty is calculated, and learn about the various poverty alleviation programmes. Studying this chapter in detail can help students understand the gripping problem of poverty and the impacts it has on the nation as well as its growth and development. While preparing this chapter for the examinations, students can also take help from the Important Questions Class 11 Economics Indian Economic Development Chapter 4 provided by Extramarks.

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Important Questions Class 11 Economics, Indian Economic Development Chapter 4 with Solutions

Chapter 4 of Poverty of Class 11 Economics covers a wide range of topics such as what poverty is, how it is identified, the concept of the poverty line, the number of people under the poverty line in India, what the causes of poverty and various poverty alleviation programmes introduced by the government. Hence it becomes essential for students to have a thorough knowledge of the information shared in this chapter, for which the Important Questions Class 11 Economics Indian Economic Development Chapter 4 provided by Extramarks can be pretty useful.


Here is a list of Important Questions Class 11 Economics Indian Economic Development Chapter 4 provided with step-by-step solutions for students:


Question 1. What is poverty?

Answer 1: The definition of poverty is the inability to meet basic needs, including housing, food, clothing, access to medical care, and other things. Extreme poverty is defined as having no access to even the most necessities, such as clothing, food, or shelter.


Question 2. By which year was the government aiming to meet the Millennium Development Goals, including the global poverty rate?

  • 2017
  • 2013
  • 2015
  • 2009

Answer 2. c) 2015. 

Explanation: The target year for Millennium Development Goals, including the global poverty rate, was set as 2015 by all the world’s countries.

Question 3. When was Valmiki Ambedkar Awas Yojana launched?

  • 2001
  • 1999
  • 2005
  • 2011

Answer 3: a) 2001

Explanation: The Prime Minister introduced the Valmiki Ambedkar Awas Yojana (VAMBAY) on 2nd December 2001, intending to improve the living conditions of urban slum inhabitants below the poverty line by giving them access to housing and communal toilets.


Question 4. ________ is a cut-off point on the line of distribution that divides the population into the poor and non-poor.

  • Poverty cut-off
  • Poverty
  • Poverty line
  • Poverty distribution

Answer 4: c) Poverty Line is a cut-off point on the line of distribution that divides the population into the poor and non-poor. 


Question 5. UWSP and USEP are the two components of which yojna?

  • Valmiki Ambedkar Awas Yojna 
  • Swarna Jayanti Shahri Rozgar Yojna
  • Indira Awas Yojna
  • Antodya Anna Yojna

Answer 5: b) Swarna Jayanti Shahri Rozgar Yojna.

Explanation: UWSP ( Urban Women Self-Help Programme)  and USEP ( Urban Self Employment Programme) are the two components of the Swarna Jayanti Shahri Rozgar Yojna.


Question 6. What is meant by the ‘Food for Work’ programme?

Answer 6: When the Janata Party-led government first took office in 1977, it implemented the Food for Work Program, which gave unskilled labourers jobs building roads and other essential infrastructure in exchange for food grains. The government restarted the same initiative in 2004 under NFFWP (National Food for Work Programme). This initiative began to give the unskilled labourers in 150 of the most underdeveloped districts in the nation, providing employment opportunities and ensuring their food security.


Question 7. Is absolute and relative poverty the same? Comment. 

Answer 7: Both absolute and relative poverty are types of poverty and indeed have some differences in meaning. Absolute poverty refers to a situation when a person lacks the means to meet even the most basic needs of existence, such as food, shelter, and clothing. People who live in absolute poverty frequently have malnutrition because they lack access to food. Additionally, they generally lack access to clean water, suitable housing, enough clothing, medical treatment and medication.

Whereas relative poverty implies a person’s standard of living and income are lower than the general standard of living prevalent in their country or region. This type of poverty is generally witnessed in developed countries. 

Hence it can be seen that both absolute and relative poverty have significant differences among them. While absolute poverty means the total level of dispossession, relative poverty is the culturally defined standard of living.


Question 8. What programmes has the government adopted to help older people and poor women?

Answer 8: The following programmes are adopted by the government to help older people and poor and destitute women:

  • National Old Age Pension Scheme: 

The National Old Age Pension Scheme is part of the National Social Assistance Programme. The objective of the scheme is to help old age people. It came into effect on 15th August 1995.


  • National Family Benefit Scheme:

The National Family Benefit Scheme, also a part of the National Social Assistance Programme, has the primary objective of providing social assistance and benefits to eligible families. 


  • National Maternity Benefit Scheme:

The Ministry of Women and Child Development of India launched the National Maternity Benefit Scheme in 1995. This scheme provides benefits of Rs. 500 for pre-natal and post-natal maternity care to pregnant women aged 19 or above with a BPL card. The National Maternity Benefit Scheme is valid for the first two live births.


  • Public Distribution System:

The Public Distribution System is a government programme that helps people obtain food and non-food items at a considerable price. Under the public distribution system, the government-entrusted shops are responsible for distributing basic necessities and food items at low prices to those who cannot afford these products at their actual MRP. They are also known as ration shops.


Question 9. Illustrate the major difference between rural and urban poverty. Is it right to say that poverty has shifted from rural to urban areas? Use the trends in the poverty ratio to support your answer.

Answer 9: There are significant differences between urban and rural poverty. People who live in poverty in urban regions are unemployed, working for very little pay, or underemployed. In contrast, those who live in poverty in rural areas are primarily agricultural labourers, small farmers, or seasonal employees. Urban and rural areas have different standards of living. In comparison to rural areas, people in metropolitan areas have access to better healthcare and educational services. The type of homes they live in also makes a difference. The urban poor live in pucca houses, well-developed and equipped with proper sanitation facilities, while the rural poor live in kutcha houses. Last but not least, whereas urban poverty is permanent, poverty in rural areas is transient since people who need work can move to urban areas in search of jobs.


Year Poverty Ratio
Rural (%) Urban (%) Total (%)
1973-74 56.4 49.0 54.9
1977-78 53.1 45.2 51.3
1983 45.6 40.8 44.5
1987-88 39.1 38.2 38.9
1993-94 37.3 32.4 36.0
1999-2000 27.1 23.6 26.1
2004-05 compatible  with 1993-94 28.3 25.7 27.5
Estimates Source: Planning Commission Estimates (Uniform Reference Period)

It would be accurate to state that poverty has moved from rural to urban regions. According to the above data, rural poverty significantly decreased from 56.4% to 28.3% between 1973–1974 and 2004–2005. The drop in urban poverty (from 49% to 25.7%) has not been as extreme. The rural poor have moved to metropolitan regions in search of better job prospects and a higher standard of living. On the other hand, because rural residents lack education and skills, the urban industrial sector cannot utilise this labour surplus. As a result, these unskilled workers create an unregulated industry (rickshaw pullers, barbers, cobblers, etc.) that increases their vulnerability.

As a result, India’s poverty trends support the shift in poverty from rural to urban areas.


Question 10. Do poverty and unemployment hold any relationship? If yes, then comment. 

Answer 10: There is a strong correlation between unemployment and poverty. The points that support this statement are listed below.

  1. When a person is in poverty, their life is in turmoil because they lack the essential goods necessary for survival. While being unemployed is the inability to earn a living in return for one’s time, talent, and effort.
  2. Unemployment leads to poverty, and poverty, steer to unemployment. Unemployment indicates poverty since it causes financial crises, hunger, sadness, debt, and other problems. A person without a job has no source of income and is unable to provide for the basic needs of their family.
  3. As unemployment rates grow, so does the level of poverty. Many people live in poverty due to unemployment, which also increases the number of dependents on the working population. As a result, per-capita consumption spending is falling. According to unemployment statistics, only those who can work but are unemployed look for work. Still, these numbers may not be a reliable representation of the number of individuals who live in poverty. Other groups of individuals could not have access to enough employment opportunities or may only receive meager compensation to support themselves.


Question 11. Why are employment generation programmes so important in poverty alleviation in India? 

Answer 11: The following list illustrates the significance of employment generation programmes in India’s efforts to alleviate poverty:

  • Direct Relationship Between Employment and Poverty Alleviation:

Employment and the reduction of poverty are positively correlated. If the government works to increase employment possibilities, more individuals will be working, increasing their income and enabling them to escape poverty.


  • Higher Standards of Living:

People living in poverty can enjoy a higher standard of living and increased access to education, better health facilities, decent sanitation, etc., with the rise in income that results from the new employment prospects.


  • Reduce Rural-Urban Migration:

Poor people frequently move from rural to urban areas for more lucrative career possibilities. This puts an excessive load on metropolitan regions, which must offer these migrants plenty of employment options. If this doesn’t happen, an informal sector will develop, increasing these people’s risk in urban areas. A benefit of employment generation programmes is that they create a lot of work options in rural areas, reducing rural-urban migration.


  • Creation of Durable Assets:

The employment generation programmes focus on creating long-lasting assets such as watershed development projects, water harvesting infrastructure, irrigation systems, canal construction, highways connecting rural and urban regions, and dam construction. All of these resources greatly influence the social and economic development of the nation.


  • Impart and Enhance Skills:

By constructing these long-lasting assets, the areas plagued by poverty are shielded from natural disasters like floods and droughts, enabling them to become self-sufficient and independent.


  • Reduce Underemployment and Disguised Employment:

In the Indian agricultural sector, there is disguised unemployment. This suggests that even though a labourer is employed in agriculture, its presence won’t impact total output if the labourer is removed. Programs that provide jobs play a critical role in lowering disguised unemployment. These programmes employ these excess workers in profitable economic ventures, reducing the unnecessary burden on the agricultural sector.


Question 12. What can be the three-dimensional approach to compact poverty? 

Answer 12: Poverty has most likely been recognised as a complex issue, but it has typically been measured using only one dimension: income. The presumption was that a person’s income level could fairly accurately reflect whether they could meet specific basic standards in various areas, including housing, clothes, and nutrition. Due to the realisation of these drawbacks, methods for measuring poverty in various dimensions have been developed, and governments are increasingly being requested to create official poverty measures of this type that can supplement income poverty measurements.

The government has adopted the following three-dimensional strategies to combat poverty:


  • Trickle Down Approach:

This strategy is based on the belief that the benefits of economic progress would trickle down or help all members of society, including the poor.


  • Poverty Alleviation Approach:

This strategy attempted to create chances for employment and assets that may generate income.


  • Providing Basic Amenities:

This strategy attempted to give the less privileged access to essential amenities, including good medical and health care facilities, better education, decent sanitation, etc. Basic amenities have a favourable impact on productivity, health, and income opportunities, which reduces poverty.

Despite all these methods, no strategy for reducing poverty has led to a fundamental shift in who owns what, how it is produced, or how the poor are provided with necessities. The advantages of poverty reduction programmes have not reached the poor due to unequal asset distribution. When we consider the severity of poverty, the resources allocated for programmes to reduce it are insufficient. As a result, the resources are used inefficiently. Due to local-level institutions’ lack of participation in programme implementation, government policies have failed to address the numerous challenges associated with poverty. Clearly, without the people’s active involvement, high development alone will not be enough to eradicate poverty.


Question 13. Assume you are a resident of a village; suggest a few steps to tackle the problem of poverty.

Answer 13: Being a resident of the village, one can suggest the following measures to tackle the problem of poverty:

  1. Help in the identification and classification of poor people properly and accurately.
  2. To encourage the identified sections towards attaining education, so they are better equipped for employment opportunities.
  3. Find ways to provide vocational training to unskilled labour to attain skills necessary for job opportunities.
  4. Help inform the general public about the numerous government programmes that assist poor people.
  5. Help in the creation and promotion of small-scale industries for the growth of the village as well as the result of employment opportunities.
  6. Offer financial and technical support for the creation of small businesses.
  7. To provide people with access to free medical services.


Question 14. Why is the calorie-based norm not adequate to identify the poor?

Answer 14: The calorie-based norm is insufficient to identify the poor for the reasons described below: 

  1. It categorises everyone in need as being impoverished. As a result, it cannot be identified as belonging to the poor. The calorie intake norm doesn’t say which individuals are more in need than others.
  2. Calorie intake may not always reflect a person’s financial situation. Additionally, it does not consider the accessibility to medical services, sanitary conditions, clean water, etc.
  3. The monthly per capita expenditure is used as a measure of income; however, it does not provide an accurate picture of calorie intake and requirements.
  4. In the calorie-based norm, social elements that contribute to or aggravate poverty, such as a lack of resources, a lack of civil and political rights, etc., are not taken into consideration.


Question 15. What are the primary reasons for the ineffectiveness of anti-poverty measures in India? 

Answer 15:  There hasn’t been much of a change to reduce poverty in India as a whole despite the efforts to eradicate poverty.  The government has jointly unveiled numerous programmes to solve the problem. But efforts mostly failed to succeed due to the flaws in the implementation. .

  • Lack of political will:

Since the country’s independence, poverty has hampered India’s overall progress. Numerous programmes were launched to reduce poverty, including distributing ration cards, food in exchange for work, MGNREGA, etc. Still, none of them has been successfully implemented because local governance wasn’t well-established, political participation is low, so is the education level etc.


  • Lack of holistic approach:

In India, programmes that have been implemented to combat poverty have primarily focused on providing financial support. For instance, only the meal element of Food for Work was covered. The beneficiary of MGNREGA was only eligible for monetary benefits. According to UN research, poverty is simply not about money, but this was not taken into account by government programmes.


  • An up-to-down approach:

Most programmes to reduce poverty, like MGNREGA, were developed centrally and either implemented unchanged or with minor adjustments at the district level. For instance, MGNREGA recipients in Kerala, where literacy rates are high, receive the same compensation as recipients in Uttar Pradesh, where developmental factors are less favourable than in Kerala and literacy rates are comparably low.


  • Lack of periodical review and a consistent approach:

When our country initially gained independence, Pandit Jawaharlal Nehru used an educational and technological approach to reducing poverty, whereas Indira Gandhi focused on providing direct aid in the 1970s. When Rajeev Gandhi came to power, this drastically changed because the IT revolution directly related to reducing poverty. The present government’s emphasis on alleviation through inclusion is causing a change in perception. Even though every government strives to do good, the positive results are rarely considered in succeeding governments’ plans, especially when the political parties are different.


Question 16. What is the concept of the poverty line in India? 

Answer 16: The poverty line is the sum of money required to meet one’s personal and basic requirements. It is described as the monetary value of the commodities and services needed to ensure a person’s essential well-being. Different countries have different poverty lines depending on how a country defines poverty. The poverty line is higher in developed nations with better consumption levels and more readily available products and services because of these enhanced standards of living and welfare notions.

  • India’s former Planning Commission had a well-designed system for measuring poverty. The Planning Commission served as the central organisation for measuring poverty. It has periodically appointed expert groups to set the poverty threshold and develop its construction process. A poverty line is determined to measure poverty. The poverty line shows the amount of income required to maintain the bare necessities of life. People who earn less than this are regarded as living below the poverty line.
  • The Indian central government was unsure of the standards to use to identify families living in poverty going into a poll scheduled for ten years. Globally, extreme poverty is characterised as having a daily income per person of less than $1.90 at purchasing power parity. According to this statistic, 21.2% of Indians live in extreme poverty. It was based on the minimum daily calorie requirements for adults in rural and urban settings, which were 2,400 and 2,100 calories, respectively. Rural locations are thought to have higher calorie needs than metropolitan ones because residents perform more physically demanding activities.
  • The approach for estimating poverty in India has evolved, starting with the Working Group in 1962 and ending with the Rangarajan Task Force in 2014. As in many other nations, the Head Count Poverty Ratio (HCPR) calculates the poverty level. The population that lives below the poverty line is known as the HCPR. This indicates that when India’s poverty is estimated, it is absolute poverty.


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Economics is a subject that requires students to go through a lot of essential concepts that are applicable in the real world. While it might seem difficult at the beginning, with a little bit of hard work, the subject can prove to be really interesting and score for the examinations. Along with understanding what goes around in the economy, students will also understand the problems that economies face. One such problem is poverty. Chapter 4 of Class 11 Economics discusses in detail the various aspects of poverty. This chapter is also important from the examination’s point of view; students should be thorough with its concepts.

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Q.1 Market for a good is in equilibrium. There is simultaneous ?increase? both in demand and supply but there is no change in market price. Explain with the help of a schedule how it is possible.


As per question there is no change in market price, it means that increase in supply is equal to increase in demand and quantity will increase in the same ratio.

Price Qd Qs
10 30 30
10 40 40
10 50 50

When increase in demand is equal to the increase in supply, it neither creates excess demand nor excess supply. Thus, the equilibrium price remains constant; however the equilibrium quantity will increase. In the fig, initially the equilibrium is at point E where the demand and supply curve intersect with each other at an equilibrium price OP and equilibrium quantity OQ. When both demand and supply increase in same proportion, demand curve DD and supply curve SS shifts to D1D1 and S1S1 to the rightward and intersect at new equilibrium point E’. The equilibrium quantity increases from OQ to OQ1.

Q.2 State whether the following statements are true or false, with reasons:

(i) Equilibrium quantity remains unchanged when supplies increases and demand curve of a good is perfectly elastic.

(ii) When there is a rise in price of inputs, equilibrium price of the commodity will decrease.

(iii) When prevailing price is more than equilibrium price, there is an excess supply.


(i) False.
Reason: When supply of a commodity increase while demand is perfectly elastic, it results an increase in equilibrium quantity but equilibrium price remains constant. As perfectly elastic demand means, demand can increase as much as according to the increase in supply. So, there will be no change in price as there is neither excess demand nor excess supply.
(ii) False.
Reason: When there is a rise in price of inputs, it adversely affects the profitability for producers. Thus, producers are willing to supply less by decreasing their production. When supply decrease with no change in demand, it results excess demand in the market. So, the equilibrium price will increase.
(iii) True.
Reason: When prevailing price is more than equilibrium price, there is an excess supply as producers are willing to supply more to earn more profit. While consumers are willing to buy less according to the law of demand.

Q.3 Explain the chain of effects of excess demand of a good on its equilibrium price.


In the diagram, SS is the supply curve and DD is the demand curve. Suppose the price in the market for the good is P. At this price level, the firms want to supply OQ1 quantity while the consumers demand quantity OQ2. Since OQ2 is more than OQ1, there is excess demand in the market. As there is excess demand, all buyers are not able to buy good. There will be competition among buyers which leads to increase in the price of good. As per the law of supply, firms will supply more of the good. This goes on till the price rise to PE where the total quantity supplied is equal to total quantity demanded OQE.

Q.4 What are the adverse consequences of Price ceiling?


Price ceiling is defined as the upper limit imposed on the price of a good or service by government. The following are the adverse consequences of price ceiling:

  • Consumers have to wait in long queues to purchase the good from fair shops.
  • Since all consumers will not be satisfied by the quantity of the goods that they get from the fair price shop, some of them will be purchasing goods at a higher price.
  • Shortage of goods leads to black marketing.
  • This cost huge to government to maintain the buffer stock.

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