NCERT Solutions Class 12 Economics

NCERT Solutions for Class 12 Economics

NCERT Solutions of Class 12 Economics is a one-stop study material for students looking to understand the subject matter of Economics in great detail. The NCERT solutions for economics class 12 are developed by subject matter experts to provide easy, in-depth, and accurate material for students. It explains difficult concepts in a simplistic manner and briefly to make them easier to understand. Hence, it becomes easier for students to write in the exams.

NCERT Solutions for Economics by Extramarks help students develop a strong conceptual base, which later allows them to prepare successfully for competitive exams. The NCERT Economics book solution is the best guide for students looking to strengthen their basic and advanced subject concepts. That’s because we offer a step-by-step solution for all the questions in the book. The NCERT solutions of class 12 Economics is developed with the approach to precisely answer the textbook questions in an easy-to-understand manner.

Class 12 Economics NCERT Solutions – Free download

Explore the NCERT solutions for class 12 economics; download for free using one of the links provided below. We have segregated all the subject matter as per the chapter and topic wise. This way, it is easier for students to peruse the material. 

Moreover, if you have successfully completed NCERT solutions class 11, it is time to delve into NCERT solutions for Economics class 12 with our exhaustive subject material. The best part? Our subject matter, designed by experts, is divided into chapters. Hence, making it easier for you to navigate through the extensive material and retain useful knowledge.

NCERT Solutions for Class 12 Economics

The school’s final phase can be challenging. What makes it tougher is understanding the complicated concepts in the all-inclusive subject of Economics. It broadly covers topics associated with individuals and their economic issues, along with the behaviour of large-scale economic factors like that of national and government productivity. With Extramarks NCERT solutions for class 12 Economics, you can understand all the concepts in detail with solved questions and examples.

Class 12 Economics NCERT Solutions

Economics is an extremely practical subject. The subject matter deals with crucial day-to-day topics that are integral to society’s functioning. Economics is essentially a comprehensive study of distribution and production, along with the usage of products and services. The subject name Economics originates from the Greek word “eco”, which means home, and “nomos”, meaning accounts. 

If you are studying Economics, dive deep into the NCERT Solutions of Class 12 Economics, and follow the domain as a career path, you can find employment across business verticals. You can become a part of government positions, private organisations, banks, etc. After completing NCERT solutions for class 12 Economics, you can easily understand the cost of goods and services along with the initial cost of the resources that produce them. You’ll also have a brief understanding of the ways in which force and labour are combined and how sellers and buyers interact in society. 

All of these topics are covered and explained in detail in NCERT solutions class 12 for Economics. All your questions on the subject matter are also answered in our NCERT solutions for Economics class 12.

In this regard, after covering your NCERT book, it’s prudent to deep dive into the NCERT Solutions of Class 12 Economics that cover these aspects well. Moreover, by solving the NCERT solutions for class 12 Economics, students can get an overall idea of this subject and score well in the examination.

Let us Take a Look at the Chapters That Form a Part of Microeconomics:

  • Introduction to Microeconomics
  • Theory of Consumer Behaviour
  • Production and Costs
  • The Theory of Firm Under Perfect Competition
  • Market Competition
  • Non-Competitive Markets

The following are a Part of Macroeconomics:

  • Introduction to Macroeconomics
  • National Income Accounting
  • Money and Banking
  • Determination of Income and Employment
  • Government Budget and Economy
  • Open-Economy Macroeconomics

NCERT Economics Class 12: Chapter-wise Solution

Here’s a brief overview of the Class 12 Economics NCERT syllabus.

Part I

Chapter 1: Introduction to Economics

The NCERT solutions for economics class 12’s first chapter offers an introductory note on Economics and its allied concepts. This section includes the scope of Economics, reasons for economic problems, and more. The chapter also covers the concepts of micro and macroeconomics.

Chapter 2: Consumer Equilibrium

This chapter of NCERT solutions for class 12 economics comprise numerous concepts like a budget set, budget line, the downward sloping of the budget line, etc. This chapter also talks about marginal utility and utility.

Chapter 3: Demand

The Economics Class 12 NCERT syllabus’s third chapter includes multiple numerical problems and concepts such as the law of demand, market demand, change of demand, etc.

Chapter 4: Elasticity of Demand

Like the previous chapter, this section also briefly talks about topics, including inelastic demand, the elasticity of demand, and related sums.

Chapter 5: Production

The NCERT Solutions of Class 12 Economics fifth chapter extensively focuses on the total and average of the product of input, the production function, marginal product of input and other topics.

Chapter 6: Cost

From this chapter, students will get to learn about different types of cost like total cost, variable cost as well as cost function with proper explanation.

Chapter 7: Supply

This NCERT solutions chapter further explains how various aspects like technological progress, increased price of input impacts the supply curve of business organisations.

Chapter 8: Revenue

This chapter of the Economics NCERT syllabus for Class 12 CBSE will help students explore the various kinds of revenue and how that influences firms.

Chapter 9: Producer Equilibrium

The Class 12 Economics NCERT syllabus’s ninth chapter elaborates on how producer equilibrium is achieved via some effective measures like an MR/MC approach and more.

Chapter 10: Perfect Competition

The chapter comprises everything ranging from defining a good market and various forms of the market to homogeneous products in the NCERT Class 12 Economics syllabus.

Chapter 11: Non – Competitive Market

This eleventh chapter offers a comprehensive account of monopolistic competition, its association with zero profit and other similar concepts.

Chapter 12: Market Equilibrium and Simple Application

The last but not least chapter of the NCERT Economics Class 12 syllabus offers deep conceptual insights into the equilibrium price of a commodity. It also covers its representations through supply and demand graphs and many more.

Part II

Chapter 1: Introduction to Macroeconomics and Its Concepts

The Economics NCERT Class 12 Macroeconomics’ first chapter provides students with an account of the Great Depression of 1929, various features of a capitalist economy, and more.

Chapter 2: National Income and Related Aggregates

This NCERT 12 Economics chapter discusses multiple concepts such as planned and unplanned inventory accumulation, factor payment, etc.

Chapter 3: Money

The NCERT Solutions of Class 12 Economics’ third chapter deals with the significance of money and various other concepts like money supply, a Barter system, transaction demand and so on.

Chapter 4: Banking

This CBSE Class 12 Economics chapter emphasises the delimitation of money multipliers, functions of commercial banks, etc.

Chapter 5: Aggregate Demand and Its Related Concepts

In this CBSE Class 12 Economics chapter, topics like the consumption function, Aggregate demand and supply, etc., are covered.

Chapter 6: National Income Determination and Multiplier

In this next chapter of NCERT Class 12 Economics, students learn about Effective Demand, “Paradox of Thrift”, and several other numerical problems associated with these concepts.

Chapter 7: Excess Demand and Deficient Demand

This chapter encompasses several concepts like excess demand, full employment, inflationary gap, etc.

Chapter 8: Government Budget and Economy

This NCERT Class 12 Economics chapter helps students identify the difference between capital expenditure, fiscal deficit, revenue expenditure, etc.

Chapter 9: Foreign Exchange Rate

In this NCERT Class 12 Economics chapter, multiple aspects of foreign exchange, like its rates, system, risk, etc., are explained in detail.

Chapter 10: Balance of Payment

The Economics Class 12’s concluding chapter elaborates topics like visible and invisible items, the balance of trade, and other related ones.

Why Study NCERT Class 12 Economics Solutions?

Here are some of the many advantages of preparing with the NCERT Solutions of Class 12 Economics.

Correct and Descriptive Answers: The answers in NCERT solutions for Economics class 12 are written by subject experts who have been teaching or working in this domain for many years. Since they have extensive knowledge of the concepts in Economics, be it Microeconomics or Macroeconomics, their answers are 100% accurate for the exam. The answers strictly follow the NCERT plus two Economics syllabus; hence, the answers include only details relevant to the subject matter.

Cleared by Scholarly Experts and Teachers: The NCERT Solutions of Class 12 Economics include answers written, vetted, and verified by the subject matter experts. Therefore, they are written in a simplistic manner and are trustworthy. You can easily prepare for the exams by learning your answers here.

Simplified Explanation of Complicated Topics: The speciality of Extramarks is that all the answers in NCERT Solutions of Class 12 Economics are explained with a simple, eloquent, and descriptive approach. The answers include pointers along with crisp explanations. 

That’s why it is easy for students to understand the concepts while reading and remembering them during the exams. The NCERT solutions break down complex topics into simple language. Hence, students can rest assured that the material covers the entire course in a simplistic manner.

Using our Economics NCERT solutions class 12, students will explore a new way of answering both easy and complex questions. With time, students will have a firm grasp on how to break down complex topics into simple words and answer the questions in a lucid way.

The NCERT Solutions of Class 12 Economics are made available for students for free. Check out the NCERT solutions for class 12 Economics, download without any extra fee or payment with Extramarks. 

The NCERT Solutions of Class 12 Economics is also available for offline use. All you need to do is click on the link NCERT solutions for class 12 Economics download. Students can view the material on multiple devices, including phones, laptops, iPads, etc., offline, which increases the convenience for students. Students can also print out the material and read it accordingly if that method suits them.

Thus, by studying with NCERT Solutions of Class 12 Economics, students can prepare comprehensively for Economics and ace the examination with flying colours.

As you can see, there are so many benefits to downloading NCERT solutions for Economics class 12 and preparing for the exam with them. Now, nothing should stop you from downloading the solutions and getting started with your exam preparations. Head over straight to the Extramarks website and download the Economics NCERT solutions now!

Q.1 Compared to the 1970s, there has hardly been any change in the distribution of workforce across various industries. Comment.


Compared to the 1970s, there has been a subsequent change in the distribution of the workforce across various industries. At the dawn of independence, the Indian economy was considered as an agrarian economy because the majority of the Indian population was depended on agriculture for their livelihood.

1972-73 2011-12
Primary sector 74.3% 48.9%
Secondary sector 10.9% 24.3%
Tertiary sector 14.8% 26.8%

India along with other developing countries is trying to reduce this dependence. There has been a substantial shift from farm work to non-farm work in the distribution of the workforce. In 1972-73, around 74 % of the workforce was engaged in primary i.e. agriculture and allied activities and in 2011-12, this proportion has declined to around 50 %.

In 1972 – 73, the secondary and services sectors were in their budding stage. The shares of these sectors have increased from 11 to 24 % and 15 to 27 % respectively in 2011-12.

1972-73 2011-12
Self-employed 61.4 % 52.0%
Regular Salaried Employees 15.4% 18.0%
Casual Wage Labourers 23.2% 30.0%

Over the last four decades, 1972-2012, people have moved from self-employment and regular salaried employment to casual wage work. Though the percentage share of self-employed has decreased but it is still dominating the Indian employment status.

It has also been observed that the percentage share of casual wage labor has increased. Economists propound this phenomenon as casualization of the workforce.

Q.2 Enlist some problems faced by farmers during the initial years of organic farming.


The following are the problems faced by farmers during the initial years of organic farming:

  • It has been observed that in the initial years of organic farming yields is lesser than the modern agricultural farming. As a result farmers found it difficult to implement this method on a larger scale.
  • Organic produce may have shorter shelf life as compared with produce from conventional farming.
  • In organic farming the cultivation of off-season crops is quite limited. This reduces options available with farmers to produce crops.

Q.3 Identify the benefits and limitations of organic farming.


Organic farming is a form of agriculture which makes use of organic inputs for the supply of nutrients and management of pests and diseases. It is a specialised form of diversified agriculture, wherein problems of farming are managed by using local resources alone.

Benefits of organic farming:

i) Organic farming is cheaper than modern farming because it requires locally produced inputs which are easily available at low costs.

ii) Organic farming generates good returns, particularly through exports.

iii) Organic farming results in the food which has more nutritional value than farming with chemical fertilisers.

iv) Organic farming is labour intensive and provides employment opportunities to a number of people.

v) Organic farming is eco-friendly.

vi) Organic farming is sustainable farming system which maintains long term fertility of the soil through the use of farm resources.

vii) It is an indication of purity and careful handling.

Limitations of organic farming:

i) Organic farming requires a good network of infrastructural facilities.

ii) There is a problem of marketing in these products.

iii) Organic farming is costly in the initial years because of lower returns.

iv) Choice in production of off-season crops is quite limited in organic farming.

Q.4 What is organic farming and how does it promote sustainable development?


Organic farming is a form of agriculture which makes use of organic inputs for the supply of nutrients and management of pests and diseases. It makes use of organic inputs for cultivation. It is a whole system of farming that restores, maintains and enhances the ecological balance.

It offers a way to substitute costlier agricultural inputs with locally produced inputs. These inputs are cheaply available and generate good returns on investment. These inputs help soil to gain nutrients.

Production from conventional farming is toxic and less nutritious which harms the livestock, depletes the soil and devastates natural eco-system. When chemical fertilizers are used in farming, it drains to water bodies and pollute them. In organic farming, production is toxic-free. Owing to this reasons, the use of factory made fertilizers is getting reduced over time. Studies reveals that organically produced food has more nutritional value.

With organic farming penetration of chemical fertilizers in water bodies has reduced.

Organic produce is pesticides free and promote sustainable development.

Q.5 ‘Information technology plays a very significant role in achieving sustainable development and food security’ – comment.


It is believed that information technology can play a vital role in achieving sustainable development and food security. By using appropriate information and software tools, government can predict the areas of food insecurity. In the field of agriculture, it can be further helpful as it disseminates the information regarding emerging technologies and its application. And accordingly, appropriate steps can be taken to prevent or reduce the likelihood of an emergency. It also provides information regarding prices, and weather and soil conditions for growing different crops. It also has the potential of employment generation in rural areas.

Q.6 Bring out the importance of animal husbandry, fisheries and horticulture as a source of diversification.


In India, agricultural sector is already overcrowded and thus a major proportion of increasing labor force needs to look at non-farm sectors for employment. In this sense, animal husbandry, fisheries and horticulture have emerged as a source of diversification.

The Indian farming community follows mixed crop-livestock farming methods. These methods provide increased stability in income, food security, transport, fuel, etc. without disrupting other food producing activities. A major proportion of Indian workers especially small and marginal farmers including landless labourers get employment in the lives-stock husbandry. Also this provides employment to women.

In India, West Bengal, Andhra Pradesh, Kerala, Gujarat, Maharashtra and Tamil Nadu are the major fish producing states. Though the performance of fisheries sector is not very impressive, but it has huge potential for employment.

India’s climatic conditions favour the cultivation of diverse horticultural crops such as fruits, vegetables, tuber crops, medicinal and aromatic plants, etc. These crops play an important role in providing food and nutrition, besides addressing employment concerns. India is a leading country in producing a variety of fruits and spices. Flower harvesting, nursery maintenance, hybrid seed production and tissue culture, propagation of fruits and flowers and food processing are giving good returns and are good employment options for women. This sector has improved the economic condition of farmers and standard of living of underprivileged classes.

Q.7 Explain the role of non-farm employment in promoting rural diversification.


Farm employment means employment on agricultural field. Employment in any area other than employment at agricultural field is considered as non-farm employment.

In India, agricultural sector is already overcrowded and thus a major proportion of increasing labor force needs to look at non-farm sectors for employment. Animal husbandry, fisheries, horticultural, etc. are the sectors which provide employment to majority of population. These sectors are prominently playing its role in providing employment to women and in areas where climatic conditions are not very much suitable for agriculture.

For rural diversification, it is also imperative to develop other avenues of employment like employment in schools, banks, coaching centers, primary health care centres, agro processing units, tourism etc. Construction of basic infrastructure like roads, dams, etc. provides employment as well as supports other activities which can provide employment.

In providing employment in rural areas, the role played by small scale industries, shops, transportation, cottage industries, traditional home based industries like pottery, farms, handlooms, cannot be ignored. Employment in these areas is necessary not only to reduce the risk from agriculture sector but also to provide sustainable livelihoods options to rural people.

Q.8 Do you think various measures taken by the government to improve agricultural marketing are sufficient? Discuss.


Various measures taken by the government to improve agricultural marketing have improved the condition but a lot still need to be done to realise full potential to agricultural sector.

Government is maintaining buffer stocks, providing the facilities of storage but still these storage facilities are not sufficient. Even today more than 10 % of goods produced in farms are wasted due to lack of storage.

The infrastructure facilities which are currently available in India are inadequate to meet the growing demand. These facilities need to be improved in terms of quality and quantity.

Except few cooperatives many have received setbacks in last few years because there is inadequate coverage of farmers, lack of appropriate link between marketing and processing cooperatives and inefficient financial management.

Though the government is intervening in the market through various measures, still private traders like money lenders, rural political elites, big merchants and rich farmers pre-dominate agricultural markets.

Q.9 Distinguish between ‘Green Revolution’ and ‘Golden Revolution’.


Green Revolution Golden Revolution
The immense increase in food grains production is termed as green revolution. The rapid growth in the production of horticultural crops is termed as golden revolution.
It especially occurred in wheat and rice production It occurred in fruits, vegetables, tuber crops, flowers, medicinal plants, etc.
Owing to green revolution India become self-sufficient in food grains production. Owing to golden revolution, India become leader in the production of mangoes, spices, bananas, etc.
Green revolution enabled India to achieve food security and farmers to increase their income. This play an important role in providing food and nutrition, besides addressing employment concerns.

Q.10 What are the alternative channels available for agricultural marketing? Give some examples.


There are two alternative channels for agricultural marketing:

i) Farmers can directly sell their produce to consumers. It means that there should be no intermediaries between the farmers and the consumers. Some examples are Apni Mandi (Punjab, Haryana and Rajasthan), Hadaspar Mandi (Pune), and Rythu Bazaars (Andhra Pradesh).

ii) Farmers and national and international fast food chains may enter into contracts or alliances under which farmers shall cultivate the products of the desired quality. For this purpose, farmers will be provided with seeds and other inputs. There will be an assured procurement of the produce at predetermined prices.

Q.11 Mention some obstacles that hinder the mechanism of agricultural marketing.


The main obstacles or the hindrances for the smooth functioning of agricultural marketing in India are:

i) There is no proper storage or warehousing facilities for farmers in the villages where they can store their perishable agricultural produces. Farmers are compelled to store their produce in pits, mud vessels, kutcha store houses etc. These unscientific methods of storing lead to considerable wastage.

ii) The poor farmers have no capacity to wait for the better market for their produce in the absence of proper credit facilities. Farmers often have to go for forced sale of their output to village money lenders cum traders at a low price.

iii) Transportation facilities are highly inadequate. Farmers have no other options to go the nearby mandis but to sell their products in the village market at low rates.

iv) A large number of intermediaries exit between the cultivator and the consumer. All these middlemen claim a good amount of margin and thus reduce the returns of the actual cultivators.

v) The farmers are the least informed about the ruling prices in the big markets. As a result they are easily exploited by the intermediaries.

vi) Indian farmers do not give importance to grading and standardising their products and consequently miss the opportunities to fetch good prices for better quality products.

vii) In the absence of institutional finance, Indian farmers have to depend on traders and village money lenders for credit. Immediately after harvesting, these farmers have to give away all their produce to the borrowers at unfavourable prices.

Q.12 What do you mean by agricultural marketing?


Agricultural marketing involves the assembling storage, processing, transportation, packaging, grading and distribution of different agricultural commodities across the country. It refers to those processes that start from harvesting and end with final sale of products by the farmers.

A strong and good agricultural activity helps farmers in getting good prices for their produce.

Q.13 Critically evaluate the role of the rural banking system in the process of rural development in India.


In the process of rural development in India the role of the rural banking system is imperative. There had been institutionalisation of agricultural credit during the planning. In 1951-52 the institutional sources accounted for only 7% of agricultural credit which has now risen to about 70%. India adopted social banking and multi-agency approach to meet the needs of rural credit. The policies followed by the Reserve Bank of India and later by NABARD with regard to rural credit, have helped to transform the rural credit market in India drastically. The rapid expansion of the banking system in rural areas has raised the level of rural farm and non-farm output, income and employment especially after mid 1960s. The Green Revolution was an indication of major changes in the credit system because it changed the portfolio of rural credit towards production oriented lending. Banking habits are becoming popular amongst the rural people.

However, our banking system has certain drawbacks:

  1. Banks face several problems like, under performance, high incidence of over dues etc.
  2. Except certain commercial banks, other formal institutions have failed to lend good borrowers.
  3. Default rates have been chronically high.
  4. 50% of the defaulters were categorised as ‘willful defaulters’.

Q.14 Why is agricultural diversification essential for sustainable livelihoods?


There are two aspects of diversification of agriculture. First aspect relates to diversification of crops and the other relates to shift of the work-force from agriculture to other allied activities such as livestock, poultry, fisheries etc. and non agricultural sector. Agriculture in India is a seasonal occupation. During off-seasons, it becomes essential to provide alternative employment opportunities for the rural people. It is always risky to depend exclusively on agriculture for livelihood. Diversification towards non-farm activities is needed to realise higher and sustained level of income for rural people to overcome poverty.

Crop diversification ensures higher growth. It brings stability in farm income as the risk due to fluctuations in production and market prices would be least. Further it also ensures national food security. Thus it can be concluded that agricultural diversification provides productive sustainable livelihood options to rural people.

Q.15 Explain the steps taken by the government in developing rural markets.


Measures for improving agricultural marketing system by government are:

i) Setting up regulated markets – Government has set up regulated markets to protect the farmers from the malpractices in mandis. The management of such markets is done by a market committee which has representatives of the state government, the local bodies, the traders, the commission agents and the farmers. This system has assured fair price deals for the farmers. It has helped in using standard measures and weights throughout the country. However, there is still a need to develop 27,000 rural periodic markets into regulated markets.

ii) Provision of physical infrastructure facilities – Roads, railways, warehouses, godowns, cold storages and processing units has been developed to support agricultural marketing. The condition of current infrastructure facilities is inadequate and is not sufficient to meet the growing demand. The infrastructure facilities need to be developed.

iii) Cooperative markets – The government promoted the cooperative markets through which farmers can realize fair prices. These cooperatives have got success in transforming the socio-economic landscape. But due to inadequate coverage of farmer members, these cooperatives received setback in recent past years.

iv) Policy instruments: The government uses following policy instruments to enhance agricultural marketing:

  • Assurance of minimum support prices for agricultural products
  • Maintenance of buffer stocks of wheat and rice by FCI
  • Distribution of foodgrains and sugar through PDS.

These instruments protect the income of the farmers and provide foodgrains at subsidized rate to needy. But despite several efforts private traders dominates in agricultural markets.

Q.16 Explain the role of micro-credit in meeting credit requirements of the poor.


Micro credit or Micro finance is a provision of extending small loans to improvised people who lacks collateral, other related documents through some agencies (Self-help groups (SHGs), commercial banks, regional rural banks, cooperatives, land development banks, etc.). Since some kind of collateral is required for taking loans from banks, a large proportion of poor rural households were automatically out of the credit network. The formal credit delivery mechanism has not only proven inadequate but has also not been fully integrated into overall rural social and community development. Micro finance has emerged as a viable alternative to banking for the poor. It is a system initiated for banking the unbankables. It bridges the gap in the formal credit system.

For instance: SHGs promote thrift in small proportions by a minimum contribution from each member. From the pooled money, credit is given to the needy members to be repayable in small installments at reasonable interest rates. These SHG-bank linkage programmes are referred as Micro-credit programmes.

Q.17 Discuss the importance of credit in rural development?


Following points highlight the importance of credit in rural development:

i) Credit is required by the farmers to meet their personal needs because the gestation period between sowing and realisation of income after production is quite long.

ii) Credit is required by the farmers to make investments on seeds, fertilizers, implements, other family expenses of marriages etc. Since majority of the farmers are poor, they do not have sufficient personal resources to make such investments.

iii) Credit is required by the non-farm sectors also such as cottage and small scale industries.

iv)Credit is required by the rural self-employed people for meeting expenses.

Q.18 What do you mean by rural development? Bring out the key issues in rural development.


Rural development refers to actions and initiatives for the socio-economic development of rural areas which are lagging behind in overall development of the village economy. Rural development is a comprehensive term. The key issues in rural development are as follows:

  • Human resource development: for the development of rural areas human resource development is imperative. Development programmes should aim to improve literacy especially female literacy, education, technical and skill based knowledge, etc. Development programmes should also aim to provide good health care facilities which can address sanitation and public health.
  • Land reforms: Reforms like consolidation of land along with technical reforms must be implemented in rural areas. Farmers should be encouraged to use insecticides, pesticides, new methods of agriculture, etc.
  • Development of productive resources: People in rural areas primarily depend on agricultural sector for their survival. Agriculture is a seasonal activity. Thus to enhance or support the livelihood of rural people, alternative sources of occupation needs to develop.
  • Development of infrastructure: Infrastructure provides support system to all the productive activities. Development of basic infrastructure like banks, means of transport, electricity, irrigational methods, facilities for agriculture research and extension, etc. is very crucial for rural development.
  • Elimination of poverty: Poverty is one of the main causes and effects of adverse condition of rural areas. Thus, special programmes for poverty elimination and to enhance the living standard of rural people should be implemented. These programmes can cater the weaker section of the population and increase their access to productive employment opportunities.

Q.19 Suppose you are a resident of a village, suggest a few measures to tackle the problem of poverty.


Being a resident of a village, I would suggest the following measures to tackle the problem of poverty:

  • Introducing policies for agricultural growth and poverty alleviation
  • Policies for speedy development of rural infrastructure.
  • Accelerating human resource development through opening new skill development centres.
  • Growth of non-farm employment.
  • Providing easy credit facilities for income generating assets.
  • Providing access to job creating assets.
  • Improving the Public Distribution System.
  • Introducing new employment schemes for poor.
  • Opening up of new primary and secondary schools with mid-day meal programs.
  • People should be made aware about the different employment programmes which are launched by government for their welfare.
  • New social security schemes should be launched for elderly people, destitute women and differently-abled people.
  • Vocational training centres and skill development centres should be opened.
  • Inputs for agricultural production should be made available at cheap rates or at subsidised prices.

Q.20 Illustrate the difference between rural and urban poverty. Is it correct to say that poverty has shifted from rural to urban areas? Use the trends in poverty ratio to support your answer.


Poverty is a state in which person are not able to afford certain basic necessities like food, clean drinking water, shelter, health facilities employment. These conditions are common for both rural and urban areas, but have different reasons for existence.

Indian rural economy is characterized on the basis of ownership of land and activities related to land. Mostly rural poor are small and marginalized farmers, landless labor and unskilled workers. These people either have a very small land holding or don’t have any land to work upon. They either are engaged in disguised employment or do not have any jobs. Rural poor also do not have access to any kind of capital or possess skill so that they can be self employed.

Rural-urban migration is one of the major reasons for unemployment in urban areas. Urban poor are basically unskilled rural poor, who have migrated to urban areas for employment but are engaged in casual jobs. They engage in casual jobs because they don’t have the minimum skills required to get employment in the formal sector and they are better off doing casual jobs compared to being unemployed in the rural sector.

Poverty Ratio (%)
Year Rural Urban Total
1973-74 56.4 49.0 54.9
1993-94 50.1 31.8 44.3
2004-05 41.8 25.7 37.2
2011-12 25.7 13.7 21.9
Source : Planning Commission
From the following table it can be seen that the rural poverty has declined from 56.4% to 25.7%, whereas in urban poverty has declined from 49.0% to 13.7% from 1973-74 to 2011-12. This table shows that the absolute poverty has declined in both the areas but nothing can be said about the shifting of poverty from rural areas to urban areas.


Q.21 Suppose you are from a poor family and you wish to get help from the government to set up a petty shop. Under which scheme will you apply for assistance and why?


I will apply under Pradhan Mantri Rozgar Yojana (PMRY) for assistance. Under this scheme financial assistance is provided to set up small businesses to educated unemployed from lower income families in rural and urban areas.

Q.22 Is there any relationship between unemployment and poverty? Explain.


Unemployment and poverty are very deeply related and there exists a direct relation between them. In other words, it can be said that unemployment leads to poverty and poverty also at some level lead to unemployment. Lack of employment opportunities deprives people from earning basic livelihood and leads them to live their lives in poverty and indebtedness. If there are sufficient employment opportunities, poor people can break the clutters of poverty and raise their income. This can help them to access good education and health facilities and develop the human capital of country, which in turn would be beneficial in generating more employment opportunities and eradicating poverty. On the other hand poverty deprives individuals from basic necessities like food and education. Lack of food leads to malnutrition and lack of education makes the individual incapable to get lucrative jobs which can help them to brake the shackles of poverty.

Q.23 What programmes has the government adopted to help the elderly people and poor and destitute women?


National Social Assistance Programme (NSAP) was initiated by central government in 1995 to help elderly people and destitute women who have no one to take care of them. Under this programme these people are taken care by government, by providing them financial assistance in form of monthly pensions.

Q.24 The three dimensional attack on poverty adopted by the government has not succeeded in poverty alleviation in India. Comment.


Poverty in India is multi-dimensional challenge and it has to be addressed strategically by the government. Government uses three dimensional approach to eradicate poverty which includes growth oriented approach, poverty alleviation programmes and providing minimum basic amenities. These programmes have not performed up to the expectation and haven’t led to any extreme change in ownership of the assets, production and improvement of basic amenities in the country. These approach haven’t performed largely due to

  • Unequal distribution of assets (land) which has acted as major hurdle for these programmes, due to which benefits haven’t reached to the targeted groups.
  • Amount of resources allocated to these programmes are not sufficient, keeping in the view magnitude of poverty.
  • Dependency on government officials and bank officials, who are ill motivated, corruption prone, inadequately trained to handle the implementation of these programmes.
  • Non-participation of local bodies and institutions in implementation.
  • Non-participation of local people due to lack of awareness about these programmes.

Q.25 How can creation of income earning assets address the problem of poverty?


Problem of poverty can’t be addressed by government efforts alone, there needs to be active participation from people also. Creation of an income earning asset is one such measure which takes care of this issue. Income earning assets helps people in being self-employed and reduces their dependency over the government policies for employment. These income earning assets include land for agriculture, tools and instruments to start a self employment unit, providing training to develop skills to enhance the income earning capacity and providing cheap credit to setup small scale industries. These assets raise income of poor people and help them to fulfill their basic needs and live a comfortable life. This helps people to engage in economic activities and contribute towards economic growth. These also help in increasing the employment rate. Government has launched programmes like Rural Employment Generation Programmes (REGP), Prime Minister Rozgar Yojana (PMRY) and Swarna Jayanti Shahari Rozgar Yojana (SJSRY) which promote self-employment. Under these programme, government encourage people to setup up small projects and businesses by providing them financial assistance.

Q.26 Why are employment generation programmes important for poverty alleviation in India?


Employment generation programmes are important for poverty alleviation in India because

  • Large section of the Indian society is poverty ridden and is unemployed. Especially, in rural areas majority of population doesn’t have access to basic amenities like food, shelter, clean water, etc.
  • These programmes provide minimal support to unskilled workers to survive.
  • These programmes help in developing human capital by providing skills to unskilled workers.
  • These programmes create assets which further help in social and economic development.
  • Some of these programmes promote self-employment which helps poverty ridden people in becoming self sufficient.

Pradhan Mantri Swarozgar Yojana (PMSY), National Food for Work Programme (NFFWP), Swarna Jayanti Shahri Rozgar Yojana (SJRSRY) and MNREGA are some of the major poverty alleviation programme to eradicate poverty.

Q.27 What is meant by ‘Food for Work’ programme?


‘Food for Work’ is the poverty alleviation programme launched by government of India on 14 November, 2014. This programme was launched in 150 most backward districts of the country with the objective of providing minimal wages and food security to unskilled workers. Wages in this programme were paid partly in cash and partly as food grains. Men and women were paid equal wages under this programme. This programme was subsumed under in NREGA in February 2006.

Q.28 Why calorie – based norm is not adequate to identify the poor?


There are different categories of poor people like always poor, usually poor and churning poor. Calorie based system to identify the poor, clubs all these categories together and does not differentiate between the very poor and other poor. With this classification government is able to identify the poor but not the ones who are in greater need of help. This norm also creates a loop hole in the system when the policies directed towards a target group, benefit the other better off group. Further, this mechanism also doesn’t take into consideration the social issues that trigger poverty such as illiteracy, lack of access to basic resources and lack of political and civil freedom.

Q.29 Discuss economic reforms in India in the light of social justice and welfare.


1. Some of the economists argue that economic reforms may have lead to rise in living standards of the economy but the social justice and welfare aspect of society has been compromised. Economic reforms have aggravated the inequalities in India.

2. It has increased the income and quality of consumption of only high-income groups. It has encouraged production of comforts and luxury goods. But it hasn’t led to any rise for low income or the weaker sections.

3. Employment has increased only in certain sectors like IT, finance, entertainment travel and hospitality, trade, real estate. These sectors require minimum degree of skills which are missing in large section of society, especially rural areas.

4. This has led to a rise in income inequalities in the economy such that on one side we are importing cars worth crore, while some people still do not have access to basic amenities like drinking water, basic sanitation etc.

5. Rising number of suicides of farmer in areas like Andhra Pradesh, Maharashtra and other areas point towards policy failure.

6. Some state like Bihar, Odisha, West Bengal and Madhya Pradesh are still suffering from poverty and have wide income gap compared to rest of the country.

Q.30 Why has the industrial sector performed poorly in the reform period?


Industrial sector has registered a slowdown in post reform period. Share of industries have declined due to:

  • Declining demand for domestic industrial products due to availability of cheaper imports.
  • Inadequate investment in infrastructure facilities like power supply, transportation, etc.
  • Forced opening up of economy has led to increased flow of industrial goods and capital from developed countries.
  • Developed nations rarely transfer the latest technologies to developing nations. Thus, Indian industries are still in the immature stage.
  • Indian industries don’t have access to developed economies market due non-tariff barriers.
  • Many public sector units have been undervalued and sold to private sector and proceeds from disinvestments have been used to offset shortage of government revenues rather than to build economic and social infrastructure.

Q.31 Agriculture sector appears to be adversely affected by the reform process. Why?


Reforms have adversely affected and not been able to benefit agriculture sector. Growth rate of agriculture sector has been declining after reform process. It is due to following reasons:

  • Public investment in irrigation, power, and roads to markets, research etc. which played a vital role during green revolution declined in the reform period.
  • Removal of fertiliser subsidies and other concessions have increased the cost of production. It has severely affected the small and marginal farmers.
  • After inclusion of India in WTO, a number of policy changes have taken place such as reduction in import duties on agriculture products, lifting of quantitative restrictions. These changes have exposed Indian farmers to international competition.

Q.32 What are the major factors responsible for the high growth of service sector?


Service sector comprise of transport, communication, financial, legal and hospitality services. The share of service sector in GDP has increased from 28.5% in 1951 to 52.5% in 2015 due to many factors. Some of them are:

1. There has been a boom in the telecommunication services due to new technology e.g. mobile phones, tablets, etc.

2. The information technology sector has been opened for private sector.

3. Growth of IT sector has increased the number of multinational companies which outsource services to India. Like legal advice, computer services etc.

4. Many sectors like banking, mutual funds, insurance, and retail have been opened not only to private sector but also to foreign direct investments.

5. Foreign direct investment in India has increased from US$ 100 billion to US$ 467 billion in last two decades.

6. India has become a favorite destination for medical treatment, due to its comparatively cheaper services.

Q.33 Do you think the navaratana policy of the government helps in improving the performance of public sector undertakings in India? How?


Yes, Navratna policy helps in improving the performance of public sector undertakings. Navratana status is conferred to those PSU’s which perform exceptionally well i.e., either they are earning high profits or are producing goods which are contributing towards increasing the social welfare. This policy boosts the performance of all these PSU’s and encourages them to further improve their productivity. These PSU’s produce goods and services for masses and make them available to the masses at very nominal price which wouldn’t be possible if it was owned by the private sector. Navaratna status also sets benchmark for other PSU’s, which are not performing well or are making losses.

Q.34 India has certain advantages which makes it a favorite outsourcing destination. What are these advantages?


India is a favorite outsourcing destination because:

  • India has one the largest and youngest English speaking workforce with reasonable amount of skill and accuracy. Many of the services such as voice-based business processes, record keeping, accountancy, banking services, music recording, film-editing, book transcription, clinical advice, or even teaching are being outsourced to India.
  • Multi National Corporations and other corporations find it cheaper and more profitable to outsource their jobs to India due to availability of cheap labour and easy availability of raw materials.
  • India is considered one best country for ease of doing business.

Q.35 Do you think outsourcing is good for India? Why are developed countries opposing it?


Yes, in last two decades outsourcing has done wonders for Indian economy.

  • Outsourcing has lead to technical advantages which have increased employment opportunities in the economy.
  • Foreign investments in economy have increased in form of Foreign Direct Investment and Foreign Institutional Investment.
  • Disposable income of urban areas has increased exponentially due to rise in employment.
  • Outsourcing has opened new avenues of employment in the country that have led to simultaneous development of industrial and agricultural sector.
  • Services sector (of which outsourcing is a part) has been contributing maximum towards the GDP of the country.

Developed countries are opposing this because there has been an increase in unemployment and outflow of capital from their countries due to outsourcing. Outsourcing is contributing towards development of host countries and leading to competitive environment for these countries. Outsourcing has created a wage war kind of situation in developed countries as jobs are being outsourced from these countries due to cheap wage rates available in other countries.

Q.36 Those public sector undertakings which are making profits should privatised. Do you agree with this view? Why?


No, the profit making public sector undertakings should not be privatised as they generate additional revenue for the government. Only the PSU’s which are making losses and are inefficient must be privatised as they are act as a burden on government and may increase the deficit in the budget. But, if the PSU is working towards the welfare of people by providing services (like water, electricity, railways, etc) at a minimal cost then it should not be privatised as it would lead to a loss of welfare of the people. Hence, only the PSU’s which are not making any profit or contributing towards welfare shall be privatised whereas the profit making PSU’s must be given more autonomy to further improve their efficiency and productivity which will enhance their performance and help them to make more profits or increase the welfare.

Q.37 What is the meaning of quantitative restrictions?


Quantitative restriction refers to fixing or limiting the quantity of imports or exports. This is done through quotas and licensing. Government can decide a limit on the quantity of a good to be exported or imported. For example: all the exporters have to bid for their share within that limit or quota. Similarly there is an import quota. The actual demand may far exceed the supply. These restrictions are imposed to protect domestic consumer and producer.

Q.38 Why are tariffs imposed?


Tariffs are imposed on imports to protect domestic industries from foreign competition and discourage consumers from buying imported goods. Tariffs raise the cost of the imports and act as barrier in trade.

Q.39 Distinguish between the following

    1. Strategic and Minority sale
    2. Bilateral and Multi-lateral trade
    3. Tariff and Non-tariff barriers.


  1. Strategic and Minority sale

Strategic sale

Minority sale

Strategic sale refers to complete sell off or more than 51% stake of ownership. Minority sale refers to sale of ownership of PSU by less than 49% in form securities.
By this control and management of the firm is transferred to the private sector. By this control and management of PSU is still with government.
  1. Bilateral and Multi-lateral trade

Bilateral Trade

Multi-lateral Trade

It refers to trade between two countries. It refers to trade between more than two countries.
It leads to syncing of trade policy of only two countries which promotes economic cooperation. Here trade policies of many countries get negotiated which saves time and resources and provide equal opportunities to all the countries in the international market.
  1. Tariff and Non-tariff barriers

Tariff Barriers

Non-Tariff Barriers

Tariff barriers are the tax levied by the government on imports and exports. These are restrictions other than tariff on imports and exports like licensing, quotas, etc.
Government receives revenue from levying tariff. No revenue is generated through the non-tariff barriers.

Q.40 What do you understand by devaluation of rupee?


Devaluation of rupee is lowering the value of rupee in terms of other currencies by the government. This is done by government in very specific situations. One such instance was in 1991, when as an immediate measure to resolve economic crisis devaluation of rupee was done by the Indian government. This in turn made imports more expensive and exports cheaper. Devaluation leads to increase in exports and thereby foreign exchange.

Q.41 How is RBI controlling the commercial banks?


Commercial banks are controlled by RBI or Reserve Bank of India:

  • RBI fixes Statutory Liquidity Ratio and Cash Reserve Ratio which decides the reserves to be kept by banks with them and RBI in form of cash, deposits, gold and securities.
  • RBI sets various interest rates like repo, reverse repo rate and bank rate at which banks can lend or borrow from RBI and other banks.
  • RBI sets the upper limits on lending by banks for various purposes, this helps in controlling credit creation in the economy.

Q.42 Why did RBI have to change its role from controller to facilitator of financial sector to India?


RBI had to change its role from controller to facilitator of financial sector so that there could be more autonomy in functioning of the financial sector. Financial sector is composed of institutions such as commercial banks, investment banks, rural banks, stock exchanges and foreign exchange market. RBI sets the norms and regulations for the banking sector and exercises control over the financial sector by setting up various rates of interest. Changing its role from controller to mere facilitator allowed financial sector take important decisions by itself without consulting the RBI. This change of role promoted decentralisation in the financial sector and reduced the significant amount of workload for RBI. This also played an essential role in expansion of financial sector and encouraged private sector to increase its participation in financial sector.

Q.43 Why is it necessary to become a member of WTO?


WTO is an international institution which administers rules and regulations for international trade. It provides equal opportunity to all the countries to trade in international market. There are certain advantages which a country can realise from being a part of WTO thus it is necessary to be a part of it. For example, country can be a part of economic union which would not have been possible if it was not a part of WTO.

Q.44 Why were reforms introduced in India?


During 1990, government of India was under the huge burden of external debt. Debt included huge loans from banks and international institutions. Foreign exchange reserves were also very low and were not sufficient to survive for a long time. Prices of essential goods were rising exponentially and were increasing inflation. All these factors led to a situation of economic crisis. To manage the crisis, India received $7 billion loan from World Bank and International Monetary Fund on a condition that New Economic Reforms would be introduced which would liberalise and open up the economy.

Q.45 How can we increase the effectiveness of health care programmes?


The constitution obliges its citizen with a right to health which obligates the government to address all the health related issues, whether that be medical education, adulteration of food, medical profession or any other. Centre Council for Health and Family Welfare which comes under central government evaluates information and provides assistance to state governments, union governments and other bodies in implementing important health programmes. These programmes haven’t been able to perform as desired, so there is a need to make these programmes effective.

These programs can be made effective through

  • Decentralisation – local authorities shall be provided with enough power to implement customised version of the programmes which suite their requirements.
  • Raising awareness about the health issues, hygiene, clean habits and sanitation.
  • Providing everyone with best health facilities at minimal cost.
  • Increasing health care facilities for women.
  • Use of modern medical techniques, increase in no. of medical institutes to improve the doctor to patient ratio.
  • Regulating private medical sector & encouraging competition between them.

Developing health related infrastructure like health insurance, medical loans, etc.

Q.46 Differentiate the six systems of Indian medicine.


Ayurveda, Unani, Yoga, Siddha, Naturopathy and Homeopathy are the six systems of Indian medicine.

  1. Ayurveda is an ancient Indian medicine system which is based on balance of bodily systems through herbal treatment, healthy diet and yogic breathing.
  2. Unani is ancient greek medicine system which travelled with muslim rulers to india. This system is based on keeping a balance between 4 humors (blood, phlegm, yellow bile and black bile) in the body. The diagnosis is done chiefly by checking the pulse (nabz).
  3. Yoga is hindu spiritual and ascetic discipline which includes breath control, simple meditation and adopting specific bodily postures practiced for health and relaxation.
  4. Siddha is an ancient medicine system prevalent in south india. It believes that human body consists of five elements – earth, fire, air, space and water. Food is the basic building material of human body and gets processed into humors, tissue and waste. Equilibrium of humors is considered as health whereas disturbances or imbalances lead to unhealthy state.
  5. Naturopathy is a system of medicine based on treating diseases without the use of drugs, by controlling diet, performing exercise regularly and massage.
  6. Homeopathy is a system which is used to treat diseases with minimum doses of natural substances that if taken in large amounts can produce ailment in a healthy body also.

Q.47 Describe the meaning of public health. Discuss the major public health measures undertaken by the state in recent years to control diseases.


Public health refers to all the measures taken up by public or private sector to prevent diseases and to keep the whole population healthy. Indian constitution obligates the government to ensure right to health for every citizen. Central Council of Health and Family Welfare has been formed which provides assistance to government in implementing health related policies through analysis of information and data collected over the years related to health. Indian health system has been expanding over the years. Health system in India follows a three-tier system – primary, secondary and tertiary. In recent years, several major measures have been taken by state to control diseases. Some of them are

  • Organisation of camps to immunize children from polio, leprosy, small pox, diphtheria, tetanus, etc.
  • Spreading awareness about diseases like (AIDS, HIV, TB) and measures to control them through use of all types of advertisement media.
  • Expansion in number of government hospitals and dispensaries which has led to increased bed capacity from 1.2 to 6.3 lakh.
  • Increased number of Primary Health Centre’s (PHCs) and hospitals managed by voluntary agencies and private organisations at the village level.
  • Expansion in skilled professionals and para-medical professionals through opening of new medical and pharmacy colleges.
  • Increased efforts by states to raise awareness about the use of clean and safe drinking water.
  • Swacch Bharat Mission is a recent programme, which promotes “cleanliness and proper sanitation around us.

Q.48 How has women’s health become a matter of great concern?


Women’s health has became a matter of greater concern because

  • Half of the total population of India consists of females.
  • Sex-ratio (females per 1000 males) in India is deteriorating.
  • There has been no considerable decline in female feticide.
  • Nearly 300,000 girls are married around the age of 15 years and have already borne their first child.
  • 50% married women have anemia and nutritional anemia caused due to iron deficiency.
  • Due to lack of maternal care there are increased maternal deaths.
  • Abortions have also come up as a reason for maternal morbidity and female mortality.
  • Socio factors in India also play an important role in deteriorating health status of women like domestic violence, patriarchy, etc.

Q.49 Discuss the main drawbacks of our health care system.


The main drawbacks of Indian healthcare system are:

  1. There is a rural urban divide, despite of the fact that 70% of population lives in the rural areas, only one-fifth of hospitals, half of dispensaries, 30% of beds available in the government hospitals are at their disposal. This creates a wide gap in health status of rural-urban people.
  2. In Indian health care system there is lack of modern facilities at hospital, non availability of essential facilities at local health centres, low doctor to patient ratio, lack of skilled medical personnel, etc.
  3. Indian health care system is not well equipped to fight diseases like HIV, AIDS, Zika-virus, etc.
  4. Health expenditure as percentage of GDP is very low as compared to other countries, developed or developing.

Inability of public sector to provide health care facilities has led to private sector to provide the same. But, there is no mechanism to regulate the monetary aspect of the private sector which exploits the general public.

Q.50 What is a ‘global burden of disease’?


Global Burden of Diseases (GBD) is an indicator used by experts to evaluate the number of people dying prematurely owing to disease as well as number of years spent by these people in ‘disability’ owing to disease. India has 17% of world population but bears 20% global burden of diseases (GBD).

Q.51 What are the main characteristics of health of the people of our country?


Indian constitution obligates the government of India to regulate and guide all the health related issues of the country. Health status of country is evaluated on the basis of indicators such as infant mortality and maternal mortality rates, life expectancy and nutritional levels, etc. The following table shows some of the health indicators of India according to World Health Statistics Survey 2013:



Infant mortality rates per 1000 births


Under -5 yrs mortality per 1000 births


Birth by skilled Attendants (%of total)


Health Expenditure as per % of GDP


Life expectancy


  • India has high level of infant mortality and maternal mortality rates as compared to the global standards.
  • Life expectancy in India is 67 which is way below the average life expectancy globally
  • Health expenditure in India was 3.9 % of GDP in 2012 as compared to 12.5% in china and 20.5% in USA.
  • India has 17% of world population but bears 20% global burden of diseases (GBD).

Less than 30% percent of population has access to medical facilities, whereas there is acute shortage of medical personnel as well as essential medicine in less developed areas of the country.

Q.52 Discuss the reforms which have been initiated recently to meet the energy crisis in India.


India is the fourth largest producer of electricity & fourth largest consumer of electricity. It has fifth largest installed capacity in the world. Since independence, power sector has evolved drastically and major change came up with the enactment of Electricity Regulatory Commission Act 1998 and Electricity Act 2003. These acts led to liberalisation of the power sector with increased investments from private firms and private-public partnerships. These Acts have allowed

  • Privatisation of the distribution networks (BSES, NDPL, etc).
  • Privatisation & private public partnerships in transmission networks (Powerlinks Transmission Ltd, etc).
  • Setting up of Central and State regulatory electricity commissions to regulate tariff of power generating companies. (CERC & SERC)
  • Allowing foreign capital inflows (FDI) in the power sector.

Government has launched awareness campaigns like National Energy Efficiency Program to encourage citizens to reduce and use power more efficiently and promote the use of renewable energy. Central Power Research Institute (CPRI) and National Power Training Institute (NPTI) are research & development bodies created to carry out essential research related to the schemes of power sector.

Q.53 What problems are being faced by the power sector in India?


The problems faced by power sector in India are:

  • Huge losses incurred by State Electricity Boards (SEBs) due to theft and corruption in distribution systems.
  • Incapability of private power sector to play a critical role.
  • Shortage of raw material and coal supplies for thermal power stations.
  • Insufficiency of installed capacity of power sector to back the growth rate of 7-8% annually.
  • Public unrest due to acute power shortages and increased power tariffs.
  • Increasing power demand from rising population.
  • Incapability of power sector to expand power distribution networks to remotest areas of the country.

Q.54 How are the rates of consumption of energy and economic growth connected?


There is a bidirectional relationship between consumption of energy and economic growth. Increase in rates of consumption of energy leads to economic growth and on the other hand, economic growth leads to increase in rates of consumption of energy. But there is a catch in the above statement, the former part of the statement is more relevant in the scenario of developing economies whereas latter part is a characteristic of developed economy.

Energy sector play crucial role in economic development as energy is required by all sector to flourish whether it be transportation, agriculture, business, etc. Rate of consumption of energy by different sectors defines in which phase of development the economy is now. Economies with high consumption of energy in agricultural and related sector are considered under-developed and developing, whereas economies with high rate of consumption by non-agricultural sectors are considered developed.

Q.55 How has the consumption pattern of energy changed over the years?


To keep up with the sustainable development goals defined by United Nations, there has been a considerable shift in consumption patterns of energy around the world. There has been a decline in consumption of coal as a source of energy due to its disadvantages and increase in consumption of oil & gas; simultaneously, an increase in use of renewable sources of energy as an alternative.

In India, sectoral pattern of consumption of energy has gone through drastic change. In a span of last 50 year, Transport sector share in consumption of energy has declined from 44% to 2%. Industrial sectors share of consumption has increased from 40% in 1953-54 to 45% in 2013-14 only. Meanwhile, share of household, agriculture and other sector has jumped considerably. Household consumption of energy has increased from 10% to 22% and agricultural consumption of energy has increased from 1% to 18% over a span of 60 years.

Q.56 Justify that energy crisis can be overcome with the use of renewable sources.


As the world is making progress, it is moving towards the need for sustainable development due to scarcity of resources. Sustainable development can only be achieved through judicious use of available resources. This judicious use can be achieved through using less of non-renewable resources and increased use of renewable resources.

Energy sector which is moving towards crisis can successfully escape this through using the same principle; i.e. reducing the use of non-renewable resources innovating and increasing the use of renewable sources. There is wide range of option available for renewable energy such as hydel energy, solar energy and wind energy. Specifically in the case of India; it being in the tropical-equatorial region with wide availability of plain surfaces, long rivers, high exposure to sunlight, it can use these alternate renewable sources for energy quite comfortably. Likewise others can also choose to produce energy by renewable sources depending on their geographical situation.

Q.57 What are the various non-commercial sources of energy?


Non-commercial sources of energy are generally renewable sources which are not to be bought and are easily available. Firewood, agricultural waste and bio fuels are some of the non-commercial sources of energy. These are non-exhaustible and are basically used for domestic purposes.

Q.59 What do you mean by transmission and distribution losses? How can they be reduced?


In Power & Electricity Scenario, transmission and distribution losses are the losses which occur between the source of supply and the final consumer. These losses are due to:

  1. Consumption by the distribution intermediaries, which is inevitable.
  2. Leakages in the distribution system.
  3. Inefficient management of distribution & transmission.
  4. Inefficient pricing mechanism.
  5. Theft in the process of distribution & transmission.
  6. Use of outdated technology of transmission and distribution.

These losses can be reduced by:

  1. Controlling leakages and theft from distribution system through strict action.
  2. Updating technology of transmission and distribution.
  3. Restructuring the pricing mechanism.
  4. Managing the distribution and transmission process effectively.

Q.60 What are the three basic sources of generating power?


Thermal power, Wind power and Hydel power are the three basic sources of generating power. Nuclear power is also emerging as an important source of generating power.

Q.61 What is the significance of ‘energy’? Differentiate between commercial and non-commercial sources of energy.


Energy plays a very important role in development process of any economy. Now, energy has become a need for every sector of the economy. Initially, industries only required energy, but now ‘energy’ is playing a significant role in development of the agricultural sector as well. Household sector also requires energy for the purposes of cooking, electricity and heating.

The sources of energy can be classified as commercial sources and non-commercial sources.
The differences between the two sources of energy are as follows:

Commercial Sources Non-commercial Sources
1. These are extracted from nature through processing, thus can be bought or sold. 1. These sources are available naturally, no processing is required.
2. These are non-renewable. 2. These are non-exhaustible.
3. These are non-renewable. 3. These are renewable sources.
4. These are used for commercial purposes. 4. These are used for domestic purposes.
5. Examples : Coal, gas, oil, etc. 5. Firewood, agricultural waste and cow dung

Q.62 Infrastructure contributes to the economic development of a country. Do you agree? Explain


Yes, Infrastructure is very crucial for economic development of a country. Infrastructure is defined as the supporting services which facilitate industrial and agricultural activities. It includes transportation, power, dams, telecommunications, health & education facilities, monetary systems, etc. Infrastructure supports in enhancing productivity of factors of production, developing the human capital and raising the standard of living. Improvement in any of these factors represents economic development. Thus we can say infrastructure contribute to economic development.

Q.63 How does infrastructure boost production?


Developed infrastructure boosts production through reduction in cost of production. Infrastructure facilitates smooth and cost effective completion of all the production related activities. This reduced cost leads to expansion of production. For example: Construction of roads reduces transportation costs and time, efficient banking system contributes towards smooth movement of capital, improvement in technology contributes towards effective production of output, improvement in facilities related to education, sanitation and health improves the overall status of human capital in the economy.

Q.64 Explain the two category into which infrastructure is divided. How are both interdependent?


Infrastructure is divided into two categories – economic and social. Economic infrastructure comprises of facilities (like transportation, communication, etc.) which affect the production activities directly, whereas social infrastructure comprises of facilities (like health, education, sanitation, etc.) which affect the production activities (more or less) indirectly. Development of economic infrastructure leads to improvement in social infrastructure. Social infrastructure leads to development of human capital, which in turn helps in improving the economic infrastructure. In this way, both infrastructures are interdependent on each other.

Q.65 Explain the term ‘infrastructure’.


‘Infrastructure’ refers to all the supporting services, which are necessary for smooth & efficient operation of all economic activities such as industrial and agricultural production, domestic and foreign trade and commerce. These supporting services include basic facilities like ports, roads, railways, airports, dams, pipelines, telecommunication facilities, gas pipelines, education & health services, sanitation, banking system, insurance and other facilities. These above facilities are divided into economic and social infrastructure; which have direct or indirect impact on production of goods and services.

Q.66 Were there any positive contributions made by the British in India? Discuss.


The British introduced the railways in India in 1850. It is considered as the greatest contribution of their rule. The railways affected Indian Economy in two ways.

  • On the positive front,it enabled people to travel long distance and become more aware of geographical, cultural and economic conditions of their own country.
  • On the negative front,it resulted in commercialisation of Indian agriculture, which adversely affected the self-sufficiency of the Indian village economies.

The volume of India’s export expanded due to expansion of railways but its benefits did not accrue to the Indian economy.

Q.67 Indicate the volume and direction of trade at the time of Independence.


Due to restrictive policies of commodity production, trade and tariff pursued by the British government; the structure, composition and volume of India’s foreign trade was adversely affected. India became an exporter of primary products such as cotton, raw silk, sugar, wool, indigo, etc. and an importer of final consumer goods like cotton textile, silk, woollen clothes and capital goods like light machinery produced in Britain factories.

More than half of India’s foreign trade was restricted to Britain (due to Britain’s monopoly control over India’s export) and rest was allowed with a few other countries like Ceylon (Sri Lanka), China and Persia(Iran).

Throughout the colonial period, India’s foreign trade was characterised by large export surplus. But, this surplus did not result in any flow of gold or silver in India. Rather it was used to make payments for expenses incurred by offices set up by the colonial government in Britain, expenses on wars fought by British government and import of invisible items.

Q.68 When was India’s first official census operation undertaken?


India’s first official census operation was undertaken in the year 1881.

Q.69 Underscore some of India’s most crucial economic challenges at the time of independence.


At the time of independence the areas which needed immediate attention and posed the most crucial economic challenges were:

  1. Agriculture sector: India’s agriculture sector was burdened with surplus labour and had extremely low productivity. Farming techniques were outdated and it was dependent on monsoons.
  2. Industrial sector: It was outdated, needed modernisation, diversification and huge public investments. At the time of independence,there was hardly any capital goods industry to help promote further industrialisation in India.
  3. Infrastructure facilities like railways, roads, power were inadequate.
  4. Poverty and unemployment had to be tackled on a war footing.
  5. High mortality rates and low literacy rates needed a lot of investment in social infrastructure.

Q.70 Highlight the salient features of India’s pre-independence occupational structure.


By occupational structure we mean the distribution of workforce across different industries and sectors.

The main features of occupational structure during the colonial rule were as follows:
a) Agricultural sector accounted for the largest share of workforce.
b) About 70-75% people were engaged in agriculture.
c) About 10% people were engaged in manufacturing.
d) About 15-20% people were engaged in the service sector.
e) Parts of the then Madras Presidency (comprising parts of present-day states of Tamil Nadu, Andhra Pradesh, Kerala, and Karnataka), Maharashtra and West Bengal had witnessed a decline of workforce in the agricultural sector due to the shift to manufacturing and service sector.
f) Share of workforce in the agricultural sector increased in Punjab, Rajasthan and Orissa.

Q.71 Give a quantitative appraisal of India’s demographic profile during the colonial period.


India’s population growth was not even during the colonial period. Before 1921, India was in the first stage of demographic transition. The second stage started after 1921. India’s demographic profile during the colonial period was as follows:

  1. Overall mortality rate was very high, particularly the infant mortality rate which was around 218 per 1000 live births.
  2. Life expectancy was about 44 years which was again very low.
  3. Overall literacy level was less than 16 per cent. The female literacy level was even low at around 7%.
  4. Public health facilities were highly inadequate and unavailable to large chunks of population.
  5. Air and water-borne diseases were out of control and took a huge toll on life.

Q.72 Which is regarded as the defining year to mark the demographic transition from its first to second decisive stage?


Year 1921 is considered as the defining year to mark the demographic transition from the first to the second decisive stage.

Q.73 What do you understand by the drain of Indian wealth during the colonial period?


Answer: Before colonial rule, India was described as a rich country by all the different travellers who came here at different times. It produced enough for its own consumption- wheat, vegetables, grains, etc. It also exported cotton and silk, rice, sugar etc. It also had abundant sources of metal and minerals.

During the British times,Indian wealth was gradually sucked out.

Agriculture was totally geared up to being a feeder for Britain’s own rapidly expanding industrial base. India became an exporter of primary products such as raw silk, cotton, wool, sugar, indigo and jute. Farmers were forced to grow these and sell at cheaper rates to British Industry. They were not free to sell it to the highest bidder. Britain maintained a monopoly control over India’s Exports and Imports. Indian exports did not bring any Gold and silver into India. This was used to make payments for the expenses incurred by the Government or expenses incurred on war, fought by the British and the import of items for the rulers. All this led to the drain of Indian Wealth.

Q.74 Critically appraise some of the shortfalls of the industrial policy pursued by the British colonial administration.


The main objective of the industrial policies pursued by the British colonial government in India was to turn India as a feeder economy for Great Britain where the modern industrial base was rapidly expandingneeded a wide market.

The industrial policy pursued by the British colonial administration had the following shortfalls:

  • It neglected the Indian handicraft industries which led to its decline. Britain wanted to make India a mere exporter of important raw materials to run the industries of Britain, so they imposed huge tariff on exports of Indian handicraft products while allowed free export of raw material to Britain. These made India’s exports costlier in international market and hence demand for India’s handicraft fell.

The Indian handicraft products also faced a tough competition from machine-made textiles form Britain.

  • The growth of Indian industries was severely constrained due to lack of adequate investment in modern industries. There was hardly any capital goods industry which could promote further industrialisation in India. Few industries which were established were no substitute to the displaced traditional handicrafts industry. Further the rate of growth of new industrial sector and its contribution to GDP remained very small.
  • There was very limited area of operation of the public sector, confined only to the railways, communication, ports and some other departmental undertakings.The operation was limited to serving the colonial interests only.

Q.75 What objectives did the British intend to achieve through their policies of infrastructure development in India?


Under the Colonial regime, basic infrastructure such as railways, ports, water transport, post and telegraphs did develop. But the real motive behind this development was not to provide services to the people but to strengthen and further colonial interests.

1. Roads and railways were developed to strengthen law and order. So that army and police forces could move easily to resist and kill any rebellion.

2. Roads were built to take out raw materials from the countryside and take it to the nearest rail head or to the ports to send to England.

3. Introduction of Electric Telegraph served the purpose of maintaining law and order while Postal services which were serving a useful purpose for public remained inadequate.

Q.76 The traditional handicrafts industries were ruined under the British rule. Do you agree with this view? Give reasons in support of your answer.


Yes we agree, before the colonial rule, Indian handicrafts were famous all over the world. During the British rule, it got a major setback. Britain’s idea was to reduce India’s status to a mere exporter of cheap raw material for the growing modern industries of Britain and also turn India into a big market for the finished goods from Britain.

The colonial government’s motive was not to industrialise India but to de-industrialise it.The traditional Indian handicraft industries declined due to lack of support from the Government. No corresponding modern industrial base was allowed to come up. The government did not want to have any competitors in this field.The decline of Indian handicrafts sector resulted in massive unemployment and created a new demand for cheap manufactured goods imported from Britain. As a result,there was a drain of Indian wealth. Many Indian handicraft Industries like Malmal from Dhaka could not compete with cheap mill made fabrics and just died down

Thus,handicraft industries located in India ruined under the British rule.

Q.77 What was the two-fold motive behind the systematic de-industrialisation effected by the British in the pre-independent India?


Under the British rule, Indian handicraft industries had a major setback and no corresponding industrial base was allowed to come up. Colonial government adopted the policy of systematic de-industrialisation with the following two-fold motive:

  • To reduce India to the status of a sheer exporter of important raw materials to run the modern industries in Britain.
  • To turn India into a sprawling market of finished products for industries located in Britain.

Q.78 Name some modern industries which were in operation in our country at the time of independence.


Answer: Some modern industries started coming up in India during the latter half of the nineteenth century. But there progress remained slow. Cotton textile mills were set up in Maharashtra and Gujarat which were mainly owned by Indians. Jute mills were concentrated in West Bengal because of easy availability of raw jute from East Bengal. These jute mills were owned by British and had a monopoly over the world jute market. Tata Iron and Steel Company started in 1907 in Jamshedpur by Jamshed J Tata. Few other industries like cement, sugar and paper industries came up after the Second World War.

Q.79 What were the main causes of India’s agricultural stagnation during the colonial period?


The main causes of India’s agricultural stagnation during the colonial period were:

System of Land Settlement- The main reason for low productivity of agriculture was the introducton of the system of land settlement by the British,specially the Zamindari System in the Bengal presidency. Here the landlords were given the right to the land and had to deposit the revenue at fixed dates to the government, regardless of the condition of the crops. The Zamindars in turn gave the land to the cultivators and collected rent from them. The profit went to the Zamindars instead of cultivators. They did nothing to improve the condition of the agriculture. The landlords had no incentive to spend money on new technology, irrigation facilities or on use of fertilizers and the cultivators were too poor to improve anything. They could barely pay the rent. Sometimes, it caused immense misery and social tension among them.

Commercialisation of Agriculture: In order to feed British industries with cheap raw materials, Indian farmers were forced to grow cash crops like, indigo, cotton, etc. instead of food crops like, wheat and rice. This increased the burden of revenues on the poor farmers and also led to shortage of food grains in India.

Subsistence Farming: Dependence on monsoon due to lack of irrigational facilities, low levels of technology, insignificant use of fertilizers, etc. added to the plight of poor farmers and contributed to the gloomy level of agricultural productivity.

Q.80 Name some notable economists who estimated India’s per Capita income during the colonial period.


Some notable economists who estimated India’s per Capita income during the colonial period were:

  • R.C. Desai
  • Dadabhai Naoroji
  • William Digby
  • V.K.R.V. Rao and
  • Findlay Shirras

Q.81 What was the focus of the economic policies pursued by the colonial government in India? What were the impacts of these policies?


The main focus of the economic policies pursued by colonial government in India was to turn India to a feeder economy for Great Britain where the modern industrial base was rapidly expanding and needed a wide market.

The impacts of these economic policies were as follows:

  • India was transformed into a supplier of raw materials and consumer of finished industrial products from Britain.
  • The agricultural sector experienced stagnation and agricultural production became very low.
  • Modern industrial base was not allowed to come up. As a result, India failed to develop a sound industrial base. Moreover, it led to a collapse of India’s world famous handicraft industry.
  • Unemployment in the country increased and there was insignificant growth in the GDP.
  • More than half of India’s foreign trade was restricted to Britain.

All this led to the social and economic problems in India.

Q.82 Match The following:


Q.83 Why and how was private sector regulated under the IPR 1956?


Under Industrial Policy Resolution, IPR 1956, industries were classified in 3 categories

  • Industries exclusively owned by government.
  • Industries in control of government but managed by private sector.
  • Industries owned by private sector.

Every private sector industry had to obtain license for operation or setting up. No new industrial unit could be established without the permission of government. Even an existing industry had to obtain license, if it was expanding. Licensing was the tool used by government to establish private industries in the backward areas. It was quite easy to obtain a license to setup industries in economically backward regions and it was also further incentivised by concessions such as tax benefits, lower tariff on electricity, etc. This policy was taken up to promote regional equality.

Q.84 Explain how import substitution can protect domestic industry.


Import substitution refers to substituting imports by domestically produced goods. This is done in two ways – Tariff and Quotas. Tariff is the tax levied by the government on imports and exports. Quotas are quantitative restriction imposed by imports and exports.

It protects domestic industry by

  1. Boosting demand for domestically produced goods by increasing the cost of imports.
  2. Providing them shield from international competitive environment.

It allows domestic industries to sustain and earn profits, so that they can invest in R&D and gain expertise in all the related activities. Import substitution policy provides the domestic industry a platform to prepare itself to sustain in the global competitive market.

Q.85 Though public sector is very essential for industries, many public sector undertakings incur huge losses and are a drain on the economy’s resources. Discuss the usefulness of public sector undertakings in the light of this fact.


Public sector undertakings play a very critical role in the growth of an economy. They employ large portion of society and work on a non-profit motive. The goods produced by these enterprises are made available to all individuals at a reasonable price, at which any private firm would like to shut its operations. Though some of these enterprises incur losses and are draining economy’s resources but they are really important from the perspective of welfare of the society. Some of the PSU’s are setup in the remotest of locations to promote regional equality and increase employment opportunities in those areas. Even if PSU’s are making losses this doesn’t mean that all the private sector enterprises are making profits. In few circumstances private firms have been nationalised as they were incurring losses and employed a large number of workers. After independence, heavy good industry was majorly owned by public sector as it involved huge amount of initial investment and private sector was reluctant to invest due to lack of resources. PSU’s promote equality and regional equality and are employer to large section of society. Thus, public sector is very essential for the economy.

Q.86 Why, despite the implementation of green revolution. 65 per cent of our population continued to be engaged in the agriculture sector till 1990?


In development theories, developing nations are the one whose population is in transition to find work in the modern (industry or service) sector from the traditional sector (agriculture) sector. In Indian scenario, this transition took place after 4 decades of planning. This was due to the fact that service and industrial sector were not able to absorb the excess agricultural labour. Indian industries were protected till 1990 and they didn’t try to expand their operations and scope and kept enjoying their monopoly status. Incumbent firms or existing firms were interested in procuring new licenses and quotas not to expand their activities or start new firms but to prevent competition from new firms. This attitude of industrial sector didn’t increase the employment opportunities in the economy. But after 1990’s reforms, there were increased job opportunities in the industrial and service sector due to competition and new foreign entrants in the domestic market. Even though, after green revolution took place the agricultural contribution to GDP declined considerably in later stages. But the employment in agriculture didn’t decline at the same pace. 65% of population continued to be engaged in the agriculture sector till 1990 because industrial and service sector were not able generate new opportunities.

Q.87 While subsidies encourage farmers to use new technology, they are a huge burden on government finances. Discuss the usefulness of subsides in the light of this fact.


Subsidies are the money grant provided by government to the industries to keep the price of the products low. Subsidies in agriculture definitely burden the government finances, but they are very essential from the perspective of welfare of the economy. Without subsidies only rich farmers would be able to prosper as they would have the necessary capital to take advantage of new technology. Subsidies create an equal opportunity for small farmers to compete with rich and big counterparts, though big farmers benefit from it. As we know in India majority of farmers are with small land holding or small farmers, subsidies are blessing in disguise for them which helps them to compete with the rich and large farm holders. Some of the economists argue that subsidies were only introduced to encourage the use of new technology. Once this new technology has been found profitable and is widely used, subsidies should be phased out as its purpose has been served and is only benefiting the fertiliser industry. On the other hand there is an argument in favour to keep the amount of subsidies intact as agriculture still remains a risky business and most of the farmers are small and poor and can’t afford the required inputs without subsidies. And, subsidies are also useful in keeping the agricultural output sustained at constant level which is necessary for the nation’s food security. They are also contributing towards keeping the rural employment rate of the country high as majority of rural population is engaged in farm related activities.

Q.88 Explain the statement that green revolution enabled the government to procure sufficient food grains to build its stocks that could be used during times of shortage.


India was dependent on USA for food imports due to low productivity of its agriculture sector. There was severe drought for two consecutive years in 1960’s in some areas of the country. It was the introduction of green revolution in the mid 1960’s which changed the situation. Green revolution led to an increase in agricultural output of the country especially rice and wheat. This led to rise in marketable surplus for the farmers, which reduced the prices of food grains in the market. Green revolution made the country self reliant in food grain production and improved the food security status. Government was able to procure surplus amount of food grains from the market to build a buffer stock which could be utilsed in times of shortage.

Q.89 Why was public sector given a leading role in industrial development during the planning period?


Public sector was given a leading role in industrial development during the earlier phase of planning because Indian policy makers were following the socialist lines of development. It meant state would have control over the major industries of the economy and private sector can play a complimentary role. On the other hand, Indian industrialists were very skeptical about investing in new ventures. They didn’t had enough capital to undertake heavy industries which involved huge initial fixed cost and even if they had the necessary capital the market for industrial products was very small. These factors discouraged them to undertake heavy initial investments, thus public sector had to step ahead and play a leading role in industrial development.

Q.90 What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum to GDP of an economy? Comment.


Economy is divided into 3 sectors – Primary, secondary and tertiary. The sectoral composition of an economy is decided on the basis of share contributed by each sector towards the GDP of the economy. Primary sector comprises of agriculture, secondary sector consists of manufacturing and services come under tertiary sector. Empirically, it has been noticed that in initial stages of development agriculture sector contributes the most towards the GDP. Later, the share of agriculture shrinks and share of secondary and tertiary sector increases. It is in the developed economies where service sector contributes maximum towards the GDP.

It is not necessary for the service sector of the economy to contribute maximum towards the GDP. The contribution of a sector depends upon the rate of employment in particular sector of the economy. Further, it also depends on the resources and policies taken up by government for development. But, after a certain stage of development services definitely contribute maximum. This is due to a certain living standard achieved by the economy during the growth process where services related to the industrial and agricultural products become more important. Gradually, with technological development there are increased job opportunities in the service sector which leads to an increase contribution of service sector.

Q.91 Why was it necessary for a developing country like India to follow self-reliance as a planning objective?


Self-reliance refers to fulfilling needs with available resources and without using any resource of some external source. After independence, India was dependent on imports and food aid for fulfilling its primary needs which led to huge decline in foreign exchange reserves. This dependency on foreign countries for fulfilling necessary requirements leads to indirect interference in domestic and foreign policies which affects the sovereignty of the country. Thus, it was necessary for developing country like India to follow the objective of self reliance as it had the potential and sufficient amount of economic resources to be self reliant. Self-reliance as a goal has helped India to reduce its dependency over the other countries over the years.

Q.92 Does mordernisation as a planning objective create contradiction in the light of employment generation? Explain.


Mordernisation refers to adoption of new technology to increase the production of goods and services. In view of this definition many think that mordernisation will lead to mass unemployment. But it’s a much broader term than the above given narrow view; it refers to change in social outlook. It gives recognition to women and equal rights to men and women.

Mordernisation leads to opening up of new horizons of employment. With improvement in technology there is an increase in productivity, which leads to an increase in income which in turn leads to rise in demand of goods and services. This increased demand creates more employment opportunities. Thus, mordernisation is improving the living standards of the country and increasing the employment.

It can’t be denied that in the short run mordernisation does reduce employment opportunities for the unskilled workers but in the long run after required training, it definitely increases the employment opportunities for them.

Q.93 Explain ‘growth with equity’ as a planning objective.


Growth is very important for an economy. Growth refers to increase in country’s capacity to produce the goods and services. Growth is always beneficial for an economy, but growth shall always be related to social welfare. Equity with growth is necessary because growth leads to inequality through income disparities in the economy. There should be equal opportunity created for every section of the society in the development process. Every individual should be able to meet his or her basic needs and live a decent lifestyle. Growth shall not only benefit the rich but also the poor and weaker sections of the society; so that they can facilitate health and education facilities which provide them equal opportunity to grow.

Q.94 What is Green Revolution? Why was it implemented and how did it benefit the farmers? Explain in brief.


Green revolution refers to increase in productivity of agricultural produce due to use of high yield variety (HYV) seeds. These seeds increased the proportion of produce 10 times as compared to normal seeds during 1960’s, especially wheat and rice.

State of Indian agriculture after independence was very peculiar. Even though 75% of rural economy was engaged in activities related to agriculture, productivity was very low. The agricultural productivity was low due to use of obsolete technology and absence of required infrastructure. Indian agriculture significantly depends on the monsoon. If monsoon fell short, the farmers were in deep trouble unless they had access to irrigation facilities. The stagnation in agriculture sector came to a halt with introduction of high yield variety (HYV) seeds, which led to green revolution. This move was in sync with the goals of five year plan adopted by government to become self sufficient in agriculture.

Green revolution turned out to be beneficial for the economy. There was a significant increase recorded in the agricultural produce especially for rice and wheat. There was significant increase in the marketable surplus; farmers were able to sell more in the market after keeping a portion of produce for their personal consumption. This led to an increase in relative income of farm households, though there was a fall in the prices of the food grains. There were improvements in irrigation facilities, as HYV seeds require regular supply of water. Small farmers were able to avail loans at low interest rate and subsidised fertilizers, which was not an option for them earlier.

Q.95 Explain the need and type of land reforms implemented in the agriculture sector.


After independence, the state of agriculture was very poor; growth of the sector was sluggish. Even though 75% of the economy was agrarian there was widespread poverty & inequality in the agriculture sector. This was due to various land settlement systems introduced by colonial government. Intermediaries like zamindars, jagirdars were parasite to the system. They collected huge amount of rents from actual land tillers without contributing towards improvement in farm technology. Cultivators had no incentive to improve or put in extra efforts to increase the produce or improve the cultivating techniques. Thus, agricultural productivity was low in absolute terms. Large amount of land was consolidated in hands of very few, and rest of the land was fragmented and sub-divided. These were the key issues which led to introduction of land reforms

Types of land reforms introduced were

  1. Abolition of Intermediaries

This was one of the major agricultural reforms to promote equity in agriculture sector. In this zamindari system and other intermediaries were abolished which only collected rent from actual tillers and contributed nothing towards production. This abolition transferred ownership of land to the actual tillers which enabled them to earn profit and make necessary improvements in cultivation techniques.

  1. Ceiling on Land Holdings

Land ceiling refers to fixing the maximum amount of land which can be owned by a person. This helped in reducing the concentration of land in fewer hands.

  1. Land Consolidation

Land consolidation means to bring together small, scattered and fragmented land holdings in an area through purchase or exchange with others. This was done to reap up the benefits of large scale farming.

  1. Cooperative Farming

To solve the issues of sub-divided land holdings cooperative farming was introduced. In this system, farmers pooled their small land holdings for the purpose of cultivating together and were able reap benefits of large scale farming.

  1. Bhoodaan Movement

Bhoodaan Movement or land gift movement started in 1951, spearheaded by Acharya Vinobha Bhave. He collected land from the rich landlords and re-distributed it to landless workers.

Q.96 What is marketable surplus?


The agricultural produce sold by farmer in the market after taking out a portion for his subsistence is known as marketable surplus.

Marketable surplus = Total output produced – portion of output taken for self consumption.

Q.97 What are High Yield Variety (HYV) seeds?


High Yield Variety (HYV) of seeds were the seeds developed by scientist Norman Borlaug; which increased the proportion of agricultural produce compared to normal variety of seeds. These are used with fertilizers and pesticide in correct quantity with regular supply of water. The HYV seeds can increase produce 10 times more than the normal seed on the same area of land.

Q.98 Why should plans have goals?


Plans are made to achieve some results. These results are actually goals, which need to be achieved through implementing the plan. Without a goal or a target planning activity would be futile.

Q.99 Why did India opt for planning?


After independence, Indian economy was in a very peculiar shape. There was wide spread poverty, huge unemployment, insufficient infrastructure, limited resources, inequality and low GDP growth rate. There was low level of industrialisation, market was really weak, and trade & commerce were stagnant. Thus, planning was opted as it lays down the framework for utilising resources of the economy in an efficient and effective manner for the welfare of the nation.

Q.100 Define a plan.


Plan lays down the systematic arrangement of specific actions to be performed to achieve a desired result. From the perspective of economics, plan lays down the long term framework for government that how should be resources of the economy utilised for the welfare of the nation.

Q.101 In your view, is it essential for the governments to regulate the fee structure in education and health care institutions? If so, why?


Yes, it is very essential for the government to regulate the fee structure in education and health care institutions because of the following reasons –

  • Proper investment in education and health sectors is very crucial for the growth of a nation.
  • Education and health care services create both private as well as social benefits. That is why both private and public institutions are needed to provide these services.
  • The private providers of education and health services need to be controlled/ regulated by the government; otherwise they will not follow the standards/norms fixed by the latter.
  • The charges of private educational institutions and private super specialty hospitals are so high that government needs to provide all those services at subsidized rates for the masses.
  • The providers of education and health care services acquire monopoly power and are involved in exploitation in case individual consumers of these services do not have complete knowledge about the quality of these services and their cost. In such a situation the role of government is to make sure that private providers of these services stick to the standards and charged the correct price.

Q.102 What are the main problems of human capital formation in India?


Human capital formation is faced with several problems in India. A brief account of these problems is given below –

  • The biggest problem that India is facing in the process of human capital formation is of rising population. It adversely affects the quality of human capital. It reduces per head availability of existing resources or facilities that determines the quality of life and capabilities of acquiring knowledge and skills.
  • There is miss-match between demand and supply of required skills and knowledge.
  • Education in India is gender biased. The quality of education in India is very poor.
  • We accord high priority to free and compulsory primary education as compared to secondary and higher education.
  • Insufficient attention is being paid to agricultural education.
  • Government expenditures on education is still quite less (4%) than the desired level of 6% of the GDP.
  • The access level of education is considerably low for the rural population as compared to the urban population.
  • Privatisation of education and health care has created a wide gap between rich and the poor. On one hand there are public schools for the rich and on the other hand, there is government or government aided schools for the common people. A similar condition prevails in the health sector.
  • Indian workers suffer from malnutrition which results in poor health.
  • Healthcare institutions are lacking in funds to equip themselves with adequate building, laboratories and emergency facilities.
  • There are insufficient numbers of hospitals and dispensaries to cure ailing patients.
  • Unavailability of ambulances and hospitals in remote areas further deteriorates the condition.
  • Another serious problem is that of migration of people born, trained and educated in India to develop countries. This problem is also referred to as brain-drain.

To conclude we may say that educational reforms and development continue to face tough problems in India. The traditional education system needs to be reshaped according to the growing needs of the Indian economy.

Q.103 Argue in favour of the need for different forms of government intervention in education and health sectors.


Proper investment in education and health sectors is very crucial for the growth of a nation. Since education and health care services create both private as well as social benefits, both private and public institutions are needed to provide these services. But the private providers of education and health services need to be controlled/ regulated by the government; otherwise they will not follow the standards/norms fixed by the latter.

At time, the charges of private educational institutions and private super specialty hospitals are so high that government needs to provide all those services at subsidised rates for the masses.

Q.104 Discuss the need for promoting women’s education in India.


Though the difference in literacy rate between males and females is narrowing down. There is still a need to promote women’s education in India. Women’s education will further improve the economic independence and social status of women. It would make a favourable impact on fertility rate and health care of women and children. Finally, promotion of women’s education would be a step towards gender equity.

Q.105 Trace the relationship between human capital and economic growth.


There is a cause and effect relationship between human capital and economic growth. Human capital stimulates the process of economic growth by enhancing or improving the productivity in the country and in turn economic growth facilitates human capital formation. Growth implies increase in per capita income and standards of living; higher income facilitates greater investment in education and health facilities hence more human capital formation.

Q.106 Bring out the need for on-the-job-training for a person.


On the job training is required because –

  • It improves the confidence and morale of the workers.
  • It helps in the introduction and adaptation of modernisation and innovation.
  • It facilitates the use of raw materials in an economical and efficient manner.
  • It helps in broadening the thinking pattern of workers so they can accept newer and better things for the organisation’s development and well-being.

Q.107 Explain how investment in education stimulates economic growth.


Answer: Investment in education is the most significant way of enhancing and enlarging a productive workforce in the country. It therefore plays an important role in stimulating economic growth in the country. People often do cost and benefit analysis of their investments. The monetary and social benefits of education (in terms of earnings of the educated person during his life time) far exceed the cost of education. Parents decide to spend a handsome amount on education of their children, even by raising loans because they know by getting a good education, their children will make a handsome earning for several years of their life. Education is considered as the undercurrent of economic and social change in the society. The availability of educated labour force facilitates adaptation and invention of new technologies which foster economic growth.

Q.108 Examine the role of education in the economic development of a nation.


Economic development refers to an increase in the production levels of a country along with an improvement in the quality of life. The following points explain the role of education in the economic development of a nation:

  • Enhances Productivity: Education adds to the quality of labour by improving skills and knowledge. It enhances total productivity and growth in the economy. It enhances the income earning capabilities of the people. Education turns human resources into human capital like engineers, doctors, teachers etc.
  • Expands mental horizon: Education helps people in making better and rational choices more intellectually. Education churns out good citizens by inculcating values in them.
  • Develops science and technology: The availability of educated workforce facilitates adaptation and invention of new technologies. It facilitates the use and growth of innovative skills
  • Raises standard of living: Education induces greater employment and opens the doors to better jobs and salary. Thereby, raises the standard of living and improves quality of life.
  • Increases participation rate: Education raises the rate of participating by making population capable of participation in economics, political and social activities of the nation.
  • Provides solutions for socio-economic problems: High rate of participation induces greater degree of economic and social equality in the society which points towards economic development. An educated society can tackles its socio- economic problems in a much better manner than an uneducated society.

Q.109 ‘There is a downward trend in inequality world-wide with a rise in the average education levels.’ Comment.


It is true that there is a downward trend in inequality world-wide with a rise in average education levels. Education induces greater employment and opens the doors to good jobs and salary. Thereby, raises the standard of living and improves quality of life. Education raises the rate of participating by making population capable of participation in economics, political and social activities of the nation. High rate of participation induces greater degree of economic and social equality and make the distribution of income less skewed which in turn helps in reducing income disparities between rich and poor. Throughout the world, education levels are improving, a clear indicator of which can be seen in the rising number of educated women in the workforce which also is an indicator of narrowing gap in the gender inequality. Importance of education is being realised worldwide and as a result the governments of different countries have started investing heavily in education sector. It is believed that a rise in education levels not only reduces inequalities but also helps in tackling problems like unemployment, poverty, etc in an efficient manner.

Q.110 How does investment in human capital contribute to growth?


Human capital refers to the stock of ‘skills and expertise’ of a nation at a point of time. Human capital is a means to achieve and enhance the productivity of existing resources. Investment in human capital helps in building the strong base for the nation’s growth by creating an environment conducive of growth. As people tend to acquire skills they tend to acquire growth oriented attitude and aspirations and as number of skilled and trained manpower possessed by a nation increase, so does its economic growth. Investment in health further enhances the capabilities of human resource and increases the rate of participation of human resource in productive activities which ultimately leads to greater degree of economic and social equality in the society. Human capital formation also facilitates the use and growth of innovative skills and innovation is a principle determinant of growth.

Q.111 Establish the need for acquiring information relating to health and education expenditure for the effective utilisation of human resources.


Acquiring information relating to job markets, healthcare facilities and educational institutions offering specialized skills, etc is an important beginning for the acquisition of skills and it appropriate utilisation.

Information about health and education expenditure discloses many facts of effective utilisation of human resource. It helps in finding out the number of people those who can afford and those who cannot afford education and healthcare expenses which can be used to decide the current number of available human resource. Further it helps in finding out which sector of society need more support from the government in attaining basic education and healthcare facilities for better human capital formation.

Hence it is important to acquire information relating to health and education expenditure for the effective utilisation of human resources.

Q.112 Discuss the following as a source of human capital formation

(i) Health infrastructure

(ii) Expenditure on migration.


(i) Health infrastructure – Expenditures on health infrastructure is important in building and maintaining a productive labour force. Health expenditure may take various forms. Preventive medicine (vaccination), curative medicine (treatment of illness), social medicine (spread of literacy), and provision of clean drinking water and good sanitation are various forms of health expenditures.

Good health infrastructure improves the quality of life. Improved health infrastructure contributes to economic growth in the following ways –

  • It increases the efficiency of workers,
  • It reduces production cost caused by worker’s illness,
  • It permits the use of natural and other resources,
  • It increases the enrollment of children in schools and makes them better able to learn,
  • It spares resources that otherwise would have to be spent on treating illness.

One thing may be noted here that mere presence of health care facilities is not sufficient to have healthy people. These should be accessible to all the people. No individual should fail to secure them because of their inability to pay for them.

(ii) Expenditure on migration – People migrate in search of jobs that bring them higher salaries than what they may get in their native places or countries. Migration involves cost of transportation, higher cost of living in the migrated places and psychic costs of living in a new socio-cultural setup. But the increased earnings in the new place outweigh the costs of migration; hence, expenditure on migration is also a source of human capital formation.

Q.113 Education is considered to be an important input for the development of a nation. How?


Education is considered to be an important input for the development of a nation because:

  • It confers higher earning capacity,
  • It gives one a better social status,
  • It enables one to make better choices in life,
  • It provides knowledge to understand the changes taking place in society,
  • It stimulates innovations,
  • It accelerates the development process, by inducing higher rate of participation and higher degree of equality.

Q.114 How government organisations facilitate the functioning of schools and hospitals in India?


In India the government organisations that regulate and facilitate the education sector or functioning of schools are:

  • The ministries of education at the union and state level
  • The department of Education
  • National Council of Educational Research and Training (NCERT),
  • University Grants Commission (UGC) and
  • All India Council of Technical Education (AICTE).

Government organisations that regulate the health sector and facilitate functioning of hospitals in India are:

  • Ministry of health at union and at state level.
  • Department of Health
  • Indian Council of Medical Research (ICMR).

Q.115 What factors contribute to human capital formation?


One of the main factors which contribute to the human capital formation is investment in education. The other factors contributing towards human capital formation are investment in health, on-the-job training, migration and information.

Q.116 How is human development a broader term as compared to human capital?


Human development is a broader term as compared to human capital because it includes many areas of human welfare which human capital ignores. Human capital considers education and health the means to increase productivity whereas human development is based on the idea that education and health are integral part of human well being. Human development stress on increasing human welfare by investing in education and health even if it does not results in higher output. It says that every individual has right to education and basic health facilities. Human capital considers an investment in health and education unproductive if it does not enhance output of goods and services. Various aspects such as life expectancy, infant mortality, gender equality, political and civil rights etc. are part of human development but they are not considered in human capital formation.

Q.117 Bring out the differences between human capital and human development.


Human Capital

Human Development

Human capital considers education and health as means to increase productivity.

Human development is based on the idea that education and health are integral part of human well being.

It treats human being as a means to an end; the end being the increase in productivity.

Human development treats human being as an end in themselves.

Human capital considers any investment in health and education is unproductive if it does not enhance output of goods and services.

Human development stress on increasing human welfare by investing in education ad health even if it does not results in higher output. It says that every individual has right to education and basic health facilities.

Q. Why do we observe regional differences in educational attainment in India?


The reasons why we observe regional differences in educational attainment in India are as follows:

Economic factors: States with more resources to invest on education in terms of establishing educational institutions, schools, colleges, appoint better teachers etc. are generally ahead in educational attainment. For instance states like Kerala, Punjab, and Himachal Pradesh are ahead in educational attainment while states like Bihar, Odisha, and Uttar Pradesh are few states which are lagging behind in educational attainment.

Political factors: The disparity in the political will of state government to invest on education and to create better human capital also plays a significant role in regional differences in educational attainment. It is the obligation of every state government to properly implement the education scheme in their respective states.

Social factors: Indian is a land of diverse culture, religions and communities. Every region has its own social norms and traditions. Due to this diversity, there exist regional differences in educational attainment in India. People of more developed regions understand the importance of education while socially backward regions do not understand the importance of education especially for girls. There is still a significant ‘gender-bias’ in offering educational opportunities to male and female children across different regions.

Q.118 What are the indicators of educational achievement in a country?


The indicators of educational achievement in a country are as follows:

1. Adult Literacy rate- It indicates the percentage of adult literate population who are aged 15 years and above and can read and write.

2. Primary completion rate – It indicates the percentage of students who are completing their last year of primary education. Primary education includes students in the age group of 6-14 years.

3. Youth literacy rate – It indicates the percentage of literate population between the age group of 15-24 years.

Q.119 What are the two major sources of human capital in a country?


The two major sources of human capital in a country are investments in education and health. The other sources of human capital formation are investment in on-the-job training, migration and information.

Q.120 Explain the relevance of intergenerational equity in the definition of sustainable development.


Sustainable Development means satisfying needs of present generation without compromising the requirement of future generation to achieve a certain standard of living. This definition strictly emphasizes on two words – ‘needs’ and ‘future generation.’ This shows that how sustainable development is trying to allocate resources equally between different generations. This equality of resources can be achieved through raising awareness in present generation regarding the requirement of future generation. Sustainable development’s definition is about focusing on welfare of present society as well as future ones. Present generation needs to judiciously use the available resources without undermining the right of future generations.

Q.121 Keeping in view your locality, describe any four strategies of sustainable development.


Sustainable development refers to use of available resources keeping in mind requirement of those resources by our future generation.

In view of my locality, strategies for sustainable development are

  • Constructing under-ground tanks to harvest rain water which helps in raising the ground water level.
  • Ensuring no wastage of electricity and power; by switching of the lights when not in use, switching off vehicles on red-light, etc.
  • Using efficient transportation techniques like car pooling, public transport, etc instead of private vehicle.
  • Setting up waste treatment plants for industrial waste and sewage to protect water bodies from contamination.

Q.122 What is sustainable development?


According to United Nation Conference on Environment and Development (UNCED), Sustainable development is ‘Development that meets the needs of present generation without compromising the ability of the future generation to meet their own needs’. Basically, sustainable development is using the available resources carefully, without undermining the right of future generation to gain benefits from the same.

Q.123 Highlight any two serious adverse environmental consequences of development in India. India’s environmental problems pose a dichotomy – they are poverty induced and, at the same time, due to affluence in living standards – is this true?


Two serious adverse environmental consequences of development in India are

  1. Air Pollution: In India, air pollution is becoming a serious environmental issue in the urban areas of the country. Industrial emission and vehicular emission are seen as the major contributor to this. Carbon emissions, green house gas emissions are deteriorating the health standard of the country. Recently, Delhi government launched an odd-even vehicle policy to curb the problem of air pollution.
  2. Land degradation: Land degradation is also emerging as a major consequence of development. It is due to deforestation, improper management of land, use of chemicals in agricultural activities, unplanned irrigation systems, etc. These factors lead to reduction in quality of soil, increase in harmful chemicals, soil erosion, etc.

India’s environmental problems pose a dichotomy because in rural areas of the country environmental issues arise due to poverty – people have to rely on forest wood and agricultural waste as the fuel for cooking and other related activities; And due to lack of water distribution facilities and awareness about sanitation, daily chores take place at the banks of open water bodies which provide water for drinking. In urban areas, environment issues occur due to maintaining of affluent living standards – industrialization, urbanisation contribute massively towards environment degradation. Further, land gets degraded due over-utilisation, water bodies get polluted due to sewage and industrial waste, air quality degrades and natural resources are getting depleted.

Q.124 Account for the current environmental crisis.


Environmental crisis occurs when the environment is not able to perform its necessary functions such as sustenance of life, assimilation of waste and supply resources due to lack of carrying capacity. Lack of carrying capacity refers to over exploitation of resources above the rate of regeneration. In the current scenario of world, rapid industrialization, rising living standards, affluent consumption and rising population have pressurized the available natural resources. These factors are also rapidly exploiting the available resources at a pace exceeding their rate of regeneration. If we keep moving at this pace, environment will lose its potency to perform its natural functions. In the current scenario, worid is facing serious environmental issues. Some of them are air pollution, ozone depletion, acid rains, climate change, deforestation, global warming, loss of biodiversity, water pollution, etc. One of the most important issues which is in the limelight is climate change. Glaciers and polar ice have started melting due to rising temperatures and climate is becoming volatile. There has been a major initiatives by United Nations to organise World Climate Summit in different parts of the world to discuss the global environment issues and what shall be the global remedial policy for them.

Q.125 Explain the supply-demand reversal of environmental resources.


In the early days of civilization, there was huge supply of natural resources but a very small demand for them. But, as we have moved forward with development process; civilizations have become more developed and this equation has reversed. With rapid industralisation and population explosion the supplies of resources have gone down while the demand for resources have increased manifold. This is known as the supply-demand reversal of environmental resources.

Q.126 State any four pressing environmental concerns of India. Correction for environmental damages involves opportunity costs – explain.


Four Pressing environmental concerns of India are: Air Pollution, Land degradation, loss of biodiversity and Solid waste management.

Correction of environmental damages involves opportunity cost refers to the huge amount of expenditure which are necessary and can’t be avoided in process of correcting the damages. This expenditure refers to cost incurred in researching and developing new technology which can be used instead of the existing technology to use the available resources efficiently and economically. For example: In Delhi, to control air pollution government is planning to implement CNG as the only fuel to be used in vehicles. This policy involves huge costs and some major problems. If this policy is implemented then everyone with a non CNG vehicle has to get his vehicle changed to a CNG one or get a CNG kit fitted. Further, there are very less number of CNG pumps in the city which wouldn’t be able to cater to the huge demand. Then there are many technical issues which are to be taken care of. Implementing this policy would involve huge amount of expenditure.

Q.127 Give two instances of

    1. Overuse of environmental resources
    2. Misuse of environmental resources.


  1. Overuse of environmental resources
    1. Use of non-renewable resources like coal & gas beyond a sustainable limit have lead to their rapid depletion, they have still not been substituted by renewable resources.
    2. Unplanned irrigation systems & flood control facilities have led to drying up of several rivers.
  2. Misuse of environmental resources.
    1. Excessive mining beyond the permissible amounts due lack of strict legal actions.
    2. Excessive & unplanned exploitation of ground water exceeding the regeneration capacity.

Q.128 Is environmental crisis a recent phenomenon? If so, why?


Yes, as we look through history of economic development, it comes to our surprise that environmental crisis is a very recent phenomenon. This phenomenon has arised just due to massive industrialization, population explosion and ever increasing human wants which have pressurized the available natural resources. Population explosion has acted as a catalyst; it has triggered industrialization and urbanisation to boost up the desire for modern lifestyle. If we go through the industrialization literature, we come across that it is just a 200 year old concept. It led to development of nations by which it improved the living standards of the people. Improved living standards led to a sharp change in demographics of the country and rise in demand of the goods. Sharp demographic shift catered to population explosion and rising demand for goods led to increased demand for resources via industries. This greed for economic development has exploited & degraded environment beyond its absorptive capacity. These factors have led to rate of extraction exceed manifold than the rate of regeneration of these resources. In recent years, demand for all the resources have grown and is still increasing on a rapid pace.

Q.129 India has abundant natural resources – substantiate the statement.


India is much diversified in terms of availability of natural resources, different quality of soils, rivers, tributaries, distributaries, different variety of forests, large deposits of precious minerals, stones, metals, wide agricultural plains, never-ending ocean stretches, youngest mountain ranges of the world, etc. There are large reserves of coal, iron ore, copper, bauxite, diamonds, gold, lead, uranium, lignite, zinc and other metals in Chhattisgarh, Jharkhand, Rajasthan and other parts of the country. North and North-East part of the country has one of the youngest mountain range of the world which has some of the densely populated tropical rain forest. Indo-Gangetic plain is one of the most fertile, densely populated and intensively cultivated area of the world. 23.7% of land is covered with uneven distribution different varieties of forest which are inhabited by some of the rare species as well as the common ones. Large natural rivers have been source of fresh water from old-times. Vast ocean stretches have played an important role in expansion of trade & commerce.

Q.130 Outline the steps involved in attaining sustainable development in India.


The steps involved in attaining sustainable development in India are:

  • Substituting the use of firewood, dung cake or other biomass with subsidized LPG, Gobar gas in rural areas to reduce the household pollution.
  • Use of cleaner fuel such as CNG in public transport systems.
  • Use of wind power for generation of electricity.
  • Setting up of plants to generate electricity through solar energy.
  • Generating electricity through turbines of mini hydel plants which use mountainous perennial streams.
  • Crop rotation or shifting agriculture techniques to save the soil from degrading.
  • Use of bio compost instead of chemical fertilisers to retain the quality of soil.
  • Setting up of rainwater harvesting plants to raise the groundwater levels.

Q.131 Explain how the opportunity costs of negative environmental impact are high.


In midst of achieving economic development, the environmental aspect of economic activities has often been compromised which has led to extinction of resources and generation of waste beyond the absorptive capacity of the environment. This has compelled us to spend humungous amount on improving technology and research & develop techniques to explore new resources or ways to use or explore existing resources in an efficient manner. Due to degraded environment there has been a steep rise in health costs. Health costs are related to deteriorating health status due to declining air and water quality leading to diseases’. Raising awareness about the degraded environment also involves incurring huge promotion costs. Thus the opportunity costs of negative environmental impact are high.

Q.132 Identify six factors contributing to land degradation in India.


The Factors contributing to land degradation in India are:

  1. Vegetation loss due to increased deforestation
  2. Extraction of firewood and fodder up to unsustainable limits
  3. Shifting cultivation & irregular crop rotation
  4. Encroachment into forest land, Over grazing and forest fires
  5. Unprecedented use of chemical fertilizers, pesticides, etc
  6. Unplanned and mismanaged irrigation systems.

Other than these reasons there are other reasons also like

  • Extraction of groundwater beyond recharge capacity.
  • Agricultural dependent poor people.
  • Open access resources.
  • In adequate soil conservation measures

Q.133 What are the functions of environment?


Functions of environment are:

  1. Suppliers of resources

Environment supplies us with all the resources – both renewable and non-renewable resources. Renewable resources are those which can regenerate themselves and do not get exhausted. This means that there is a continuous supply for production activities in the economy.

  1. Sustainer of life

Environment acts as a sustainer of life by providing genetic and bio diversity. It provides conditions for living organisms which are necessary for them to survive.

  1. Provider of aesthetic beauty

Environment provides us aesthetic beauty like scenery, beautiful views, etc. Due to generosity of environment only we get see surreal views of mountains, oceans, beaches, forest, etc.

  1. Assimilates waste

The disposable waste generated by human activities gets assimilated in the environment.

Q.134 How do the following factors contribute to the environmental crisis in India? What problems do they pose for the government?

    1. Rising population
    2. Air pollution
    3. Water contamination
    4. Affluent consumption standards
    5. Illiteracy
    6. Industrialisation
    7. Urbanisation
    8. Reduction of forest
    9. coverage
    10. Poaching
    11. Global warming.


  1. Rising population

India has world’s second largest population in the world, after china. It comprises of 17% of the world population and for that 2.5% of geographical area of the world. The high concentration of population & livestock in small surface area and moreover enormous pressure of economic activities exert large amount of pressure on limited resources of the economy. Rising population is leading to reduction in average land per individual in India.

The challenges posed by government due to rising population are

  • Rapidly reducing forest cover or deforestation
  • Rising demands for basic necessities
  • Increasing poverty in the economy
  • Declining exhaustible resources, etc.
  • Need to introduce population control measures.
  1. Air pollution

In India, air pollution is becoming a major environmental issue, which needs to be addressed immediately. Major contributors towards air pollution are industries and thermal power plants, burning of agricultural waste, firewood and carbon emission from vehicles. India being a developing nation with rising population has an increased demand for vehicles; in a span of last 60 years, countries vehicle population has risen from 3 lakh in 1951 to more than 21 crores. India is ranked amongst the 10 most industrialised nations of the world; Central Pollution Control Board (CPCB) ranks 17 categories of industries as significantly contributing towards air pollution.

Air pollution leads to respiratory disorders, cardiovascular problems, asthma, etc which affects the health status of the country. Government has to incur hefty expenditure to raise awareness regarding the rising air pollution. It has to devise and implement policies to control air pollution. Recently, Government of Delhi introduced odd-even rule for vehicles, rationed registration of heavy personal vehicles to control air pollution. Government also has to implement pollution regulation norms for the industries. How simple might this seem but in reality it takes a lot of effort from government to do the above task.

  1. Water contamination

Untreated industrial, sewage and agricultural waste is discharged and disposed in the water bodies. This waste leads to imbalance in chemical properties of water bodies which makes them contaminated and unfit for drinking and other related purposes. This water due to modified properties is unsafe for use as it can do a serious harm to health directly or indirectly.

Problems faced by government due to water contamination are:

  • Declining health status of population
  • Increase in diseases like cholera, hepatitis, diarrhea etc which are primarily caused due to contaminated water.
  • Increased need to devise and implement policies which regulate the disposal of waste into water bodies.
  1. Affluent consumption standards

Affluence refers to economic well being. To achieve affluent standards of consumption, there is a trade-off between environmental degradation and development. In a scenario, to achieve economic well being of all the people environment degradation is inevitable.

Affluent consumption standards take a heavy toll on environment so government has to keep a balance in its policies between environmental degradation and economic development.

  1. Illiteracy

In India, there is a widespread illiteracy especially about the peculiar effects of human actions on the environment. In rural areas, people do not account for effects of their activities on environment. This awareness regarding environment only comes through education. Majority of population is not able to educate themselves due to the clutters of poverty.

Challenges posed to government due to illiteracy are

  • Lack of infrastructure in rural areas to provide education.
  • Huge costs involved in spreading awareness regarding the issues.
  1. Industrialisation

In a modern society, industry plays a very critical role in development of an economy. This mordernised living standard comes at a cost; this cost is degradation of environment. Industrialisation also encourages population expansion and urbanization. As a consequence to all these air is getting polluted, water bodies are getting contaminated, forest cover is reducing, vehicular pollution is increasing, and some essential non-renewable resources are getting depleted.

Government faces issues like how to control the adverse impact of rapidly increasing industrialistaion as it is essential for economic development. Government needs to strike a balance between development and environmental degradation.

  1. Urbanisation

Urbanisation has disrupted most of the earth’s landscape and decreased the cover of wildlife habitat. Urbanisation and deforestation have led to extinction of rare species. Urbanisation enforces pressure on small pieces of lands and leads to land degradation; it leads to reduction in land per individual ratio, rapid reduction of available resources, reduction of agricultural farmland and depletion of forests.

Problems faced by government due to urbanisation are

  • Incapability to encourage cottage & small scale industries in rural areas.
  • Ineffectiveness of state mechanism to implement policies that generate rural employment.
  • Rural employment policies are inefficient in providing an incentive to regulate rural-urban migration.
  1. Reduction of forest coverage

Forests are of immensely important for the human life. They are the lungs of the earth because trees by the process of photosynthesis convert carbon dioxide into oxygen. In India virgin forest are being cleared for mining, agricultural and industrial purposes. Increase in population and massive urbanisation is taking its toll on the forest cover. Especially, due to urbanisation and shrinking livable spaces – forest cover around the urban areas is also reducing. Illegal wood trading is also one of the major reasons for reduction in forest cover.

Government faces issues like

  • Problem in implementing strict regulation on illegal wood trading.
  • Lack of forest protection Acts.
  • Low level of awareness amongst the people regarding importance of flora & fauna.
  1. Poaching

Poaching is concerned with loss of bio-diversity. There have been increased instances of poaching of animals in their natural habitat. This has led to extinction of some of the rare species from Indian forests. Excessive poaching has created ecological imbalances.

The Wildlife (Protection) Acts 1972 and National Wildlife Action Plan have been introduced to save endangered species, But government faces problems in implementing these strategies due to lack of forest personnel and wide spread wildlife.

  1. Global warming

Global warming refers to increase in level of greenhouse gases which lead to rise in the temperature of the planet. Global warming has increased due to two reasons industrialisation and deforestation. Industrialisation is producing greenhouse gases beyond the absorptive capacity of the environment. Gases like carbon dioxide, methane etc. are making the environment warmer. This is leading to rising sea levels, melting of glaciers in Polar Regions, unseen climate changes, permanent flooding of wetlands, loss of costal land and shifting of climate zones. Global warming is disturbing ecological balance of the planet with shift in climate patterns and affecting the global food security.

Global warming poses very serious issues for the government. The government has to regulate all the aspects of the economy which are leading to global warming. It has to devise policies which encourage use of cleaner energy, raise awareness among people regarding global warming and implement rules and regulations which might hamper the growth of economy.

Q.135 Two major environmental issues facing the world today are _____ and _____.


Two major environmental issues facing the world today are global warming and ozone depletion.

Q.136 Classify the following into renewable and non-renewable resources

(i) trees (ii) fish (iii) petroleum (iv) coal (v) iron ore (vi) water


Renewable Sources: (i) trees, (ii) fish and (vi) water

Explanation: Resources which can regenerate themselves quickly once used and do not go extinct once they have been fully utilised are known as renewable resources.

Non-renewable Sources: (iii) petroleum, (iv) coal and (v) iron ore.

Explanation: Resources which can’t replenish themselves and go extinct once used fully are known as non-renewable resources.

Q.137 What happens when the rate of resource extraction exceeds that of their regeneration?


Environment performs 4 vital functions (i) It supplies us with resources, both renewable and non-renewable (ii) It sustains life by providing genetic and bio-diversity (iii) it assimilates waste, and (iv) it provides aesthetic services like scenery, etc. Environment performs all these function till the demand for these functions is within its carrying capacity. This means that rate of resource extraction is below the rate of regeneration of resources. If the rate of extraction of resources exceeds the rate of regeneration of resources, then environment is not able to perform its above mentioned functions, which leads to environmental crisis.

Environmental crisis refers to the situation of environment not being able to sustain the bio-diversity (extinction of rare species of flora & fauna) and its incapability in providing the supply of resources (reserves of precious resources getting over or extinct).

A major threat arises when waste is generated beyond the absorptive capacity of the environment. Absorptive capacity refers to ability of the environment to absorb the degradation.

Q.138 What is meant by environment?


Environment means nature in its capacity as a store of resources and as an absorber/clearing agent of harmful by-products of the production system. Environment refers to our surroundings, total planetary inheritance and all the resources. This includes all biotic and abiotic elements. Biotic elements are all the living organisms in the eco-system – birds, animal, plants, fisheries, forests, etc. Abiotic elements are non living elements and physical parts of the environment which affect the living organisms like sunlight, mountains, rivers, etc.

Q.139 How will you know whether a worker is working in the informal sector?


The following features which help us in knowing whether a worker is working in the informal sector or formal sector:

  • All enterprises except those who are hiring more than 10 labourers comprise informal sector.
  • Informal sector includes millions of farmers, agricultural labourers, owners of small enterprises and people working in these enterprises, self-employed, etc.
  • Workers of informal sectors do not have social security benefits, gratuity, pension, etc.
  • Workers of informal sector earn less compared to those in formal sector.

Q.140 Who is a casual wage labourer?


Casual wage labourer is a person who is casually engaged in other’s farm or non-farm enterprises and in return receives wages according to the terms of the daily or periodic work contract. For example: worker employed in construction site.

Q.141 You are residing in a village. If you are asked to advice the village panchayat, what kinds of activities would you suggest for the improvement of your village which would also generate employment.


I would like to give following advices to the village panchayat that can improve our village along with generating employment:

  • Promote education and health: for the development of rural area, it is imperative to develop health and education facilities. It is important to increase productivity, life expectancy, standard of living, etc. Panchayat should establish primary, secondary schools along with night schools and primary health care centres.
  • Easy credit and finance: Due to lack credit and finance, rural people are not able to invest in agriculture, establish any productive units, acquire good education and health care facilities, etc. Credit on easy terms (low interest rate, collateral, etc.) would help farmers in increasing their productivity.
  • Develop non-farm activities: Agricultural activities are characterised with seasonal work. To support farmers in getting regular work and earnings, it is very crucial to develop non-farm activities like pottery making, handcrafts, artesian work and small cottage industries.
  • Implement government policies: Panchayat should implement government policies which are framed for the rural upliftment. They should be implemented by taking proper responsibility and accountability. Employment generating programmes like MGNREGA, Swaran Jayanti Gram Swarojgar Yojna, other programme/schemes public distribution system, Janani Suraksha Yojana, etc. are important to implement for rural development.

Q.142 Victor is able to get work only for two hours in a day. Rest of the day, he is looking for work. Is he unemployed? Why? What kind of jobs could person like victor be doing?


No, he is employed. Victor is able to get work only for two hours in a day and rest of the day he is looking for work. Economists defines unemployed person as one who is not able to get employment of even one hour in half day. It implies that he is underemployed worker. Underemployment is a situation in which a person gets work for lesser time than the time the person actually able or willing to work.

Victor is employed for the half day. According to current daily status approach if a person works for more than 1 hour but less than 4 hours he/she classified as working for half day and seeking/available for work or neither seeking nor available for work for other half of the day depending on whether he was seeking/available for work or not.

The person like Victor may be dropping news papers, selling milk in the morning, selling flowers and garland in front of temple, sweeping road, etc.

Q.143 Is it necessary to generate employment in the formal sector rather than in the informal sector? Why?


Yes, it is necessary to create employment in the formal sector rather than in the informal sector. The following could be the reasons:

  • Formal sectors employees are protected through various laws like minimum wage law, trade union powers etc.
  • Workers of formal sectors are covered under social security benefits, gratuity, pension, etc. which is not available in informal sectors.
  • Wages of informal sector employees are less compared to those available in the formal sector employees.

Owing to these reasons, employment in formal sector is more secure and certain. Thus,creating employment in formal sector will not only absorb the surplus labour but will also safeguard the interest of employees. This will also help in reducing poverty and income inequalities.

Q.144 Do you think that in the last 50 years, employment generated in the country is commensurate with the growth of GDP in India? How?


After independence Indian planning was aimed at increasing employment and national output. Initially Gross Domestic product of India grew at positive rate (keeps on fluctuating) and was higher than employment growth rate (around 2 %). A good point was that these two rates remain close to each other.

But it is a dismal fact that in the late 1990s, employment rate started to decline. It has decline to very low level as it was in the early stage of planning. This led to widening of gap between the growth of GDP and employment. Economists propound this growth as ‘Jobless growth’ because Indian economy was producing more goods and services without generating more employment.

Q.145 Analyse the recent trends in sectoral distribution of workforce in India.


Economists generally divide an economy into three broad sectors. They are; a) primary sector, b) secondary sector and c) tertiary sector. Primary sector includes agriculture and allied activities. Secondary sector consists of manufacturing and construction activities and in tertiary sector various types of services e.g. transport, communication, banking, insurance, trade etc. are included.

The following table shows the percentage distribution of working persons in different sectors during the year 2011-12.

Industrial Category

Place of residence



Working population (%)





Primary sector

Secondary sector

Tertiary sector






















The table clearly shows that primary sector is the main source of employment in India, which provides employment to about 50% of the workforce. Secondary sector provides employment to only 24.3% of workforce. 26.8% of the workers are employed in the service sector.

This table also shows that about two-thirds of the workforce in rural areas depend upon agriculture or allied activities. About 16% of rural workers are working in the secondary sector. Service sector provides employment to about 17% of rural workers.

Primary sector is not a major employment provider in urban areas. In urban areas people work mainly in the service sector. About 60% of urban workers are employed in the service sector. The secondary sector provides employment to about 31% of urban workforce.

Since, both men and women are heavily employed in the primary sector; concentration of women workers is very high in primary sector. About two-thirds of women workforce is employed in primary sector whereas about 45% of men are employed in that sector.

Q.146 Why are less women found in regular salaried employment?


The following are the reasons for less women employment on regular basis:

  • Due to historical reasons, majority of girls are not educated and equipped with professional skills. Regular salaried employment demands professionalism which is still very less in majority of Indian women.
  • In India generally, men are earning higher salaries and owing to this reason families discourage women from doing job.
  • Women are mostly engaged in household chores; responsibility to take care of children does not allow women to engage in regular job and thereby want to remain out of regular jobs.
  • Due to security concerns, women do not take up jobs at faraway places. Also jobs which require women to stay late or 24 X 7 hours in office are not preferred by women.

Q.147 Why are regular salaried employees more in urban areas than rural areas?


The following are the reasons for higher regular salaried employees in urban areas than in rural areas:

After independence, Indian government adopted policies that favour the development especially of basic infrastructure in urban areas. Since the basic infrastructure is imperative for the establishment of any factory, industry, etc. this led to the development of industries, skilled based professional units in urban areas. Thus, it promoted higher regular salaried employees in urban areas.

Government has implemented various laws to regulate formal sectors that promote regular employment. These laws are prominently followed in urban areas. Thus, most of the industries in urban areas follow these rules and hire workers on regular basis which may not be the case in rural areas.

An enterprise in urban area engaged in work that requires workers on regular basis whereas rural areas predominated by agricultural sector which is heavily depended on monsoon.

Q.148 The following table shows the population and worker population ratio for India in 1999-2000. Can you estimate the workforce (urban and total) for India?


Estimates of population (in crores)

Worker population ratio

Estimated No. workers (in crores)




71.88/100 X 41.9 = 30.12











Estimates of population (in crores)

Worker population ratio

Estimated No. workers (in crores)




71.88/100 X 41.9 = 30.12




28.52/100 X 33.7= 9.61124




100.40/100 X 39.5= 39.65

Estimated workforce in urban area for India = 9.61124 crores

Estimated total workforce for India = 39.65 crores

Q.149 Find the odd man out (i) rickshaw puller who works under a rickshaw owner (ii) mason (iii) mechanic shop worker (iv) shoeshine boy.


In the given options, the odd man out is (iv) shoeshine boy. Except shoeshine boy others (i.e. rickshaw puller who works under a rickshaw owner, mason and mechanic shop worker) are hired employees. They are getting salary either in cash or in kind for their services rendered for their employees. The shoeshine boy is self-employed and earns profit.

Q.150 Meena is a housewife. Besides taking care of household chores, she works in the cloth shop which is owned and operated by her husband. Can she be considered as a worker? Why?


Yes, Meena will be considered as worker because she is contributing to the total production of goods and services, in the economy. She works in her husband’s cloth shop along with performing household chores. A person engaged in any productive (economic) activity contributing to the flow of goods and services (i.e. Gross Domestic Product) in the economy is called worker.

Q.151 Compared to urban women, more rural women are found working. Why?


Answer: Compared to urban women, more rural women are found working. In urban areas, for every 100 urban women, 15 women are engaged in economic activities whereas in rural areas, for every 100 rural women, 25 women are engaged in economic activities. It is because:

  • In urban areas, men are earning higher salary and owing to this reason families discourage women from doing job.
  • Women are mostly engaged in household chores and thereby their work is not recognised as productive work. This narrow definition of work leads to non-recognition of women’s work and women participation rate turn out to be lower.
  • In rural areas poverty is widespread phenomenon. To support their family women engaged themselves in productive activities.
  • Most of the economic activities in rural areas are self-regulated and done on small levels which do not require much skill. In these types of activities women get employed easily in rural areas. In urban areas work commands professionalism in which still majority of women lack and thereby most of the urban women remain out of work.

Q.152 Raj is going to school. When he is not in school, you will find him working in his farm. Can you consider him as worker? Why?


Yes, Raj can be considered as worker because he is contributing to the total production of goods and services in the economy. A person engaged in any productive (economic) activity contributing to the flow of goods and services (i.e. Gross Domestic Product) in the economy is called worker.

Q.153 An establishment with four hired workers is known as _________ (formal/informal) sector establishment.


An establishment with four hired workers is known as informal sector establishment.

Reason: Informal sector consists of private sector enterprises which employ less than 10 workers on regular basis.

Q.154 The newly emerging jobs are found mostly in the ________ sector (service/manufacturing).


The newly emerging jobs are found mostly in the service sector.

Reason: Primary sector is already overcrowded and the growth rate of manufacturing sector is not satisfactory to generate employment whereas service sector is growing at faster pace. Thus, the newly emerging jobs are found in service sector.

Q.155 Find the odd man out (i) owner of a saloon (ii) a cobbler (iii) a cashier in mother dairy (iv) a tuition master (V) transport operator (vi) construction worker.


In the given options, the odd men out are (iii) a cashier in mother dairy and (v) transport operator because they are working as regular salaried employee in the formal sector.

Q.156 Are the following workers – a beggar, a thief, a smuggler, a gambler? Why?


No, a beggar, a thief, a smuggler or a gambler cannot term as workers because they are not involved in any productive economic activity which contributes to the GDP in the economy. A person engaged in any productive (economic) activity contributing to the flow of goods and services (i.e. Gross Domestic Product) in the economy is called worker.

Q.157 Define worker-population ratio.


Worker population ratio refers to the proportion of labour force in total population. It is obtained by dividing the total number of worker of the economy by total population in the economy multiplied by 100. It is used as an indicator to analyse the employment situation in the country. The higher the ratio, the higher will be the engagement of people and lower the ratio, the lower will be the engagement of people in economic activities.

Q.158 Who is a worker?


A person engaged in any productive (economic) activity contributing to the flow of goods and services (i.e. Gross Domestic Product) in the economy is called worker. It includes person getting remuneration by an employer for their work as worker and self-employed.

Q.159 Fill in the blanks.

    1. First Five year Plan of __________ commenced in the year 1956. (Pakistan and China)
    2. Maternal mortality rate is high in _______. (China/ Pakistan)
    3. Proportion of people below poverty line is more in _________. (India/Pakistan)
    4. Reforms in ________ were introduced in 1978. (China/Pakistan)


  1. First Five year Plan of Pakistan commenced in the year 1956.
  2. Maternal mortality rate is high in Pakistan.
  3. Proportion of people below poverty line is more in India.
  4. Reforms in China were introduced in 1978.

Q.160 Comment on the growth rate trends witnessed in China and India in the last two decades.


India and China are amongst the fastest growing countries in the world. The following table shows the growth rate of GDP in percentage:

Country 1980-90 2005-2013




On comparing the given data, we find that during 1980 to 2013 when many developed countries were finding it difficult to maintain a growth rate of 5 percent, China was able to maintain near double-digit growth for more than two decades. From the above table, we find that China was always ahead of India.

China has maintained a double digit growth rate which is almost twice that of India. In China the main contributing sector to GDP is manufacturing sector whereas in India it is service sector. Economists propound that the reform processes introduced in 1978 in China are the reasons behind this trend.

Q.161 Compare and contrast India, China and Pakistan with respect to some salient human development indicators.


Human development is a process of development of socio-economical aspects of human. It is measured through Human Development Index or HDI. HDI makes rating of different countries on a scale of 0 (which represents lowest human development) and 1 (which represents the highest human development).

The following table shows the human development indicators of India, Pakistan and China (Human Development Report 2014):





Human Development Index





Human Development Index





Life Expectancy at birth (Year)




Adult Literacy Rate (% aged 15 and above)




GDP per Capita (PPP US$)




People below poverty line (at $2 a day ppp)(%)




Infant Mortality Rate (per 1000 live birth)




Maternal Mortality Rate (Per 1 lakh live birth)

190 32 170

Population with sustainable access to improved sanitation (%)

36 65 48

Population with sustainable access to improved water source (%)

93 92 91

Population Undernourished (%)

43.5 3.4 31

The table shows that China is ahead of both India and Pakistan in terms of human development and the ranking of India and Pakistan is quite high as compared to China.

If we compare other indices of human development such as proportion of population below poverty line, mortality rates, access to sanitation, we find that Pakistan is ahead of India.

India is ahead of both Pakistan and China in terms of the percentage number of people with sustainable access to improved water sources.

Maternal mortality rate is very high in India as compared to Pakistan. But it is very low in China.

Though the above-mentioned indicators of human development are important, but these are not sufficient. Besides these, liberty indicators are no less important.

Q.162 Give reasons for the slow growth and re-emergence of poverty in Pakistan.


By using official data of Pakistan on poverty, scholars indicate that poverty is rising in Pakistan. The proportion of poor in 1960s was more than 40 % which declined to 25 % in 1980s and started to rise again in 1990s. Scholars state that the reasons for the slow-down of growth and re-emergence of poverty in Pakistan’s economy are poor agricultural growth and food supply situation. Agricultural growth and food supply situation were not based on an institutionalised process of technical change but on good harvest. This was creating two different situations in the economy. When there was a good harvest, the economy was growing and there was reduction in poverty and when it was not, the economy was stagnant and showing negative trends.

Q.163 Group the following features pertaining to the economies of India, China and Pakistan under three heads

    • One –child norm
    • Low fertility rate
    • High degree of urbanization
    • Mixed economy
    • Very high fertility rate
    • Large population
    • High density of population
    • Growth due to manufacturing sector
    • Growth due to service sector


India China Pakistan
Mixed economy One –child norm Mixed economy
Very high fertility rate Low fertility rate
High density of population High degree of urbanization
Large population
Growth due to service sector Growth due to manufacturing sector

Q.164 Evaluate the various factors that led to the rapid growth in economic development in China.


China: After emergence of People’s Republic of China in 1949, all the sectors of the economy including various enterprises and all lands owned and operated by individuals were brought under government control.

A programme named ‘The Great Leap Forward’ was started in 1958 which aimed at country’s industrialization on a large scale. In 1965, Mao Tse Tung (a strongman of China) started a cultural revolution. It aimed to weed out people opposed to communist ideology.

Since 1978, China introduced reforms in phases. In the initial phase, reforms were introduced in the field of agriculture, foreign trade and investment sectors. Then reforms were introduced in the industrial sector. A dual pricing system was also introduced. Over the years the proportion of inputs or outputs transacted in the market increased as a result of increase in production in primary sector. Special economic zones were set up to attract foreign investors.

These policies supported the rapid growth in economic development in China.

Q.165 Define liberty indicators. Give some examples of liberty indicators.


Liberty indicators are the measures of the extent of democratic participation in social and political decision-making. These indicators are the rights of citizens of a country to play a part in the governance of their country.

These indicators should be considered as indicators of the development because development is a multi-dimensional phenomenon. Liberty indicators are important components of quality of life which represents the functioning of an economy.

Some examples of liberty indicators are as follows:

  • The extent of constitutional protection given to rights of citizens
  • The extent of constitutional protection of the Independence of the Judiciary and the rule of Law

Q.166 Mention the various indicators of human development.


Human Development is a developmental process of socio economical aspects of a human well being. The various indicators of human development are as follows:

  • Life Expectancy at birth (Year)
  • Adult Literacy Rate (in %, aged 15 and above)
  • GDP per capita (PPP US$)
  • People below poverty line (at $2 a day ppp)(%)
  • Infant Mortality Rate (per 1000 live birth)
  • Maternal Mortality Rate (Per 1 lakh live birth)
  • Population with sustainable access to improved sanitation (%)
  • Population with sustainable access to an improved water source (%)
  • Population Undernourished (%)

Q.167 Compare and contrast India and China’s sectoral contribution towards GDP in 2003. What does it indicate?


The sectoral contribution towards GDP in 2003 and 2013 in India and China:

2003 2013
India China India China
Agriculture 23 15 18 10
Industry 26 53 25 44
Service 51 32 57 46

In 2003, the contribution made by agriculture sector was 23 % and 15 % in India and China respectively. It confirms that India was an agrarian economy.

The contribution made by secondary sector was in China was 53% which is almost double the contributions made by India i.e. 26 %. This indicates that industry sector is far behind in India as compared to China.

In 2003, the contribution made by service sector was 51 % and 32 % in India and China respectively. It shows that the contribution made by service sector in India was higher.

We can see from the table that in India the main contributing sector is service and in China it is industry sector. It indicates that the structural transformation in both the countries in India and China is different. From an agrarian economy India is directly switching to service sector whereas China is moving to industry as other developing countries are moving on their growth path.

In 2013, the contributions made by agriculture and industry sector have reduced and contribution made by service sector has increased in both countries.

Q.168 Mention the salient demographic indicators of China, Pakistan and India.


The following are the demographic features of India, China and Pakistan:

a) Size: China is the most populous country in the world with 1357 million populations in 2013. India comes to the second position with 1252 million populations in 2013. Pakistan roughly accounts one-tenth of China and India in terms of population size. It has 182 million populations (in 2013).

b) Growth rate: The growth rate of population in 2013 was highest in Pakistan with 1.65% per annum followed by India with 1.24%. It is the lowest in China with 0.49%. One-child norm adopted by China in the late 1970s was the main reason behind arresting the growth of population. This means after a few decades, there will be proportionately lesser younger people in China’s total population, to look after the welfare of larger old population. China also has lower fertility rate whereas it is very high in Pakistan.

c) Urbanisation: Both China and Pakistan have relatively higher urbanisation rates as compared to India in 2013. In India, 32% of the total population lives in urban areas, in China 53% and in Pakistan 38% of the people lives in urban areas.

d) Density of population: Density of population means average number of persons living per square kilometer. It is the lowest in China i.e. 145 amongst three countries in 2013. This figure for Pakistan is 236 in 2013 and for India is 421 in 2013 which is the highest among these three countries. It should be noted that there is no relation between density of population and the level of economic development reached.

Selected Demographic indicators

Country Estimated Population

(in millions)

Annual growth of population



(per square kilometer)

Sex ratio Fertility rate Urbanisation























Q.169 What is the important implication of the ‘One child norm’ in China?


To arrest its growing population growth China introduced One Child norm in the late 1970s. The important implications of the ‘One child norm’ are as follows:

  • It has resulted in lower population growth in China.
  • It led to decline in sex ratio.
  • There will be more elderly people in proportion to young people after a few decades.
  • Greater proportion of elderly people will force government to take steps to provide social security measures with few workers.

Q.170 Describe the path of developmental initiatives taken by Pakistan for its economic development.


The followings are the initiatives taken by Pakistan for its economic development:

Immediately after separation from India, Pakistan started to frame policies. Pakistan adopted mixed economy system where public and private sectors co-exist.

In the late 1950s and 1960s, it introduced a variety of regulated policy framework like direct import controls and tariff protection for manufacturing of consumer goods were combined under the policy of import substitution industrialisation.

Introduction of Green Revolution led to an increase in public investment in infrastructure. Increase in public investment in infrastructure also led to subsequent rise in the production of food grains and the shape of agriculture changed dramatically.

In the 1970s, nationalization of capital goods industries took place and in 1980s Pakistan shifted its policy orientation towards decentralisation. Encouragement was given to private sector especially by giving incentives.

It also received financial support from western nations and remittances from increasing outflow of emigrants to Middle East which stimulated country’s economic growth.

All these steps created conducive environment for new investment and reforms were introduced in the country in 1988.

Q.171 China’s rapid industrial growth can be traced back to its reforms in 1978. Do you agree? Elucidate.


The recent growth in China can be traced back to the reforms introduced in 1978. The first phase reforms were initiated in agriculture, foreign trade and the investment sectors.

  • Commune lands were divided into small plots for cultivation and then allocated to individual households. But its ownership remained with the government.
  • After paying taxes, farmers were allowed to keep all the income from these lands with them.

The first phase development helped in creating a foundation for the second phase. Later phase reforms were initiated in the industrial sector:

  • In this phase, Private sector firms that were operated by local collectives were allowed to produce goods.
  • It means that the State Owned Enterprises had to face competition with private sectors.

Reform process also involved dual pricing under which prices were being fixed in two ways:

  • A fixed proportion of inputs and outputs produced by the farmers and industry were bought and sold on the prices determined by the government.
  • Rest were bought and sold at market prices.

Special economic zones have been set up to attract foreign investment.

Owing to these reasons, production increased and the goods and services transacted in the market also increased.

Q.172 Explain the Great Leap Forward campaign of China as initiated in 1958.


Great Leap Forward (GLF) movement or campaign was initiated in China in 1958. The main aim of this movement was to have industrialisation in the country on a massive scale. People were encouraged to establish industries in their backyards. Commune system was promoted where individual household farms were collectivised into large communes and people collectively cultivated lands.

GLF campaign faced many problems:

  • A drought in China led to the loss of life of large number of people.
  • Professionals who helped China in its industrialisation process were sent back to Russia.

Q.173 What similar developmental strategies have India and Pakistan followed for their respective developmental paths?


Following are the similarities in the developmental strategies of India and Pakistan followed for their respective developmental paths:

  • Both countries have started their developmental path at the same time, after their independence i.e. in 1947.
  • Both the countries followed same economic pattern i.e. mixed economy which is the combination of public and private sector.
  • Both countries started their development through Five Year Plans and emphasised initially on public sector.
  • Till 1980s, both countries had similar growth rates and per capita income.
  • Both the countries have introduced economic reforms to strengthen their economies at the same.

Q.174 What are the various means by which countries are trying to strengthen their own domestic economies?


The various means by which countries are trying to strengthen their own domestic economies are as follows:

  • Nations are trying to form various regional and economical groupings like SAARC, ASEAN, etc. These groupings provide a common platform where members can raise their voices in a unified manner on a common issue or interest.
  • Countries are forming policies, introducing reforms, implementing various schemes etc. In this process, they are considering the developmental process/policies pursued by neighboring countries.

Q.175 Why are regional and economic groupings formed?


Overtime, nations are trying to adopt various means that will strengthen their domestic economies. One amongst them is forming regional and economic groupings such as SAARC, European Union, etc. The following are the reasons for forming regional and economic groupings:

  • It helps in understanding the developmental process pursued by neighboring countries.
  • It allows countries to better comprehend their own strengths and weakness vis-à-vis their neighbouring countries.
  • In the era of globalisation, it is considered essential for developing countries to form groupings as they face competition not only from developed nations but also amongst themselves.

Groupings are also required as all major common economic activities affects overall human development in a shared environment.

Q.176 The following table shows distribution of workforce in India for the year 1972 -73. Analyse it and give reasons for the nature of workforce distribution. You will notice that the data is pertaining to the situation in India 30 years ago.

Place of Residence

Workforce (in millions)













Analysis of the given table is summarised below:

  • In 1972-73, out of total workforce of 234 million – 195 million workforce work in rural areas and 39 million workforce work in urban areas. It indicates that in the given period most of the workforce was engaged in agricultural and allied activities (around 83%) as compared to the workforce engaged in other activities (around 17 %).
  • In rural areas, out of total workforce, 125 million is comprised of male and only 39 million – is female. On the other hand, out of total workforce, 32 million is comprised of male and only 7 million – is female. We observed that female participation in workforce is low in rural as well as in urban areas due to historical reason, lack of job opportunities available to them, more involvement of women in household chores, etc.
  • From the table we observe that female participation in rural area is 35.38% and female participation in urban area is 17.9 ~ 18 %. Although female participation in workforce is higher in rural area, but they are employed in low skilled jobs, self-farm activities. In urban areas men are earning higher salary and owing to this reason urban families discourage women from doing job.

Thus, it can be concluded from the given table that there is low productivity, most of the people are employed in rural areas especially in agricultural and allied activities which require low skill, low female participation in India in 1972-73.

Q.177 What is the state of rural infrastructure in India?


The state of rural infrastructure in India is really disappointing. People in rural areas are still using bio-fuels such as cow dung, firewood and agricultural waste despite of so much progress in the world.

According to census 2001:

  • 56% of rural population has no electricity connection.
  • 43% of the rural population use kerosene oil.
  • 90 % of rural people are still using bio fuel.
  • Tap water facilities are only available to 24 percent rural households.
  • More than 70% of population relies on open sources like wells, rivers, canals, etc. for drinking water.

Despite of efforts by the central and state governments, rural India still lacks in connectivity (paved roads, rail, etc), financial system (easy credit availability, banking facilities, etc), energy (electricity), agricultural facilities (HYV seeds, canals, credit, etc), education facilities (teachers, senior secondary schools, colleges) and healthcare facilities (hospitals, maternal care centres, etc).

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