Practicing the CBSE Sample Papers for Class 12 Economics with Solutions Set 6 allows you to get rid of exam fear and be confident to appear for the exam.
CBSE Sample Papers for Class 12 Economics Set 6 with Solutions
Time: 3 Hours.
Max. Marks: 80
General Instructions:
- This question paper contains 34 questions.
- Marks are indicated against each question.
- Answers should be brief and to the point.
- Answers to the questions carrying 3 marks may be from 50 to 75 words.
- Answers to the questions carrying 4 marks may be about 150 words.
- Answers to the questions carrying 6 marks may be about 200 words.
Section – A (Macro Economics)
Question 1.
Read the following statements carefully:
Statement 1: Consumption curve makes an intercept on Y axis and slopes upwards.
Statement 2: The two components of consumption are autonomous and induced consumption.
In the light of the given statements, choose the correct alternative from the following:
Alternatives:
(a) Statement 1 is true and statement 2 is false.
(b) Statement 1 is false and statement 2 is true.
(c) Both statements 1 and 2 are true.
(d) Both statements1 and 2 are false.
Answer:
(c) Both statements 1 and 2 are true.
Explanation: Consumption curve making intercept on Y axis is autonomous consumption and upward sloping consumption curve indicates that as income increases, consumption also increases, which is known as induced consumption.
Question 2.
If ₹ 75 are required to buy 1 US$, Instead of 65, it will lead to rise in:
(a) Imports from USA
(b) Exports to USA
(c) Both (a) and (b)
(d) Either (a) or (B)
Answer:
(b) Exports to USA
Explanation: As the rupee is depreciating so each unit of dollar can be exchange with more units of rupee, this will make Indian goods cheaper for foreigners and export from India will rise.
Question 3.
Which of the following statements is correct about Commercial Bank?
(a) It supervises the monetary structure of the country.
(b) It controls the credit in the economy.
(c) It grant loan to general public.
(d) It is banker to the government.
Answer:
(c) It grant loan to general public.
Explanation: Granting loans to general public is a function of commercial banks and rest all other options are the functions of Central Bank.
Question 4.
Read the following statements carefully:
Statement 1: On the current account, merchandise exports and imports of goods are autonomous
transactions.
Statement 2: Current account transactions do not give rise to ‘future claims’.
In the light of the given statements, choose the correct alternative:
(a) Statement1 is true and statement 2 is false.
(b) Statement1 is false and statement 2 is true.
(c) Both statements 1 and 2 are true.
(d) Both statements1 and 2 are false.
Answer:
(c) Both statements 1 and 2 are true.
Explanation: Current Account record all the transaction relating to visible and invisible items and unilateral transfer. All these transactions do not cause any changes in liabilities and no future claims are recorded in Current Account of BOP.
Question 5.
Read the following statements carefully:
Statement 1: Value of output is a part of value added.
Statement 2: Value of output includes the measure of intermediate consumption.
In the light of the given statements, choose the correct alternative from the following:
(a) Statement1 is true and statement 2 is false.
(b) Statement 1 is false and statement 2 is true.
(c) Both statements 1 and 2 are true.
(d) Both statements 1 and 2 are false.
Answer:
(b) Statement 1 is false and statement 2 is true.
Explanation: Value added = Value of output- Intermediate consumption It indicates, value added is a part of value of output. Value of output is a broader term and value added is a narrower term. Value of output includes intermediate consumption as well as value of final goods.
OR
Read the following figure carefully and choose the correct pair from the alternatives given below:
Alternatives:
(a) I- Gross, II- Domestic Product, III- Factor Cost
(b) I- Factor Cost, II- Domestic Product, III- Gross
(c) I- Domestic Product, II- Factor Cost, III- Gross
(d) I- Gross, II- Factor Cost, III- Domestic Product
Answer:
(d) I- Gross, II- Factor Cost, III- Domestic Product
Explanation:
Gross – Net = Depreciation
National product – Domestic product = NFIA
Market price – Factor cost = NIT (Indirect tax – Subsidies)
Question 6.
If the value of APS is – 0.2, the value of APC will be:
(a) 0.8
(b) 0.2
(c) 1.2
(d) 1
Answer:
(c) 1.2
Explanation:
APC + APS = 1
A PC + (- 0.2) = 1
APC = 1.2
OR
If the value of investment multiplier increases, it would mean that:
(a) Taxes have increased.
(b) MPC has increased.
(c) MPS has increased.
(d) MPC has decreased.
Answer:
(b) MPC has increased.
Explanation: Investment Multiplier = \(\frac{1}{1-\mathrm{MPC}}\)
It means, Investment multiplier and MPC are directly related. As MPC increases, investment multiplier also increases,
Question 7.
Following statement are correct about LRR:
1. LRR is the sum of SLR and CRR
2. LRR is the reciprocal of money multiplier
3. LRR is Qualitative tool of RBI.
4. LRR is Directly related to credit creation
Choose the correct alternative:
(a) 1 and 2 are correct
(b) 2, 3 and 4 are correct
(c) 1,3 and 4 are correct
(d) 1, 2 and 4 are correct
Answer
(a) 1 and 2 are correct
Explanation:
\(\begin{aligned}&\text { Explanation: } \quad \text { Credit creation is }=\frac{\text { Initial deposit }}{\text { LRR }} \\
&\qquad L R R=\frac{1}{\text { Money multiplier }}
\end{aligned}\)
Question 8.
According to the following data, balance of trade would be:
1. Total exports of merchandise LI 000 crore
2. Total Imports of merchandise ₹1200 crore
3. Total exports of invisibles ₹200 crore
4. Total imports of invisibles ₹100 crore
Choose the correct alternatives:
(a) Surplus of ₹100 crore
(b) Deficit of ₹100 crore
(c) Surplus of ₹200 crore
(d) Deficit of ₹200 crore
Answer:
(d) Deficit of ₹200 crore
Explanation:
Balance of trade =Export of goods- inputs of goods
= 1000- 1200=- 200(Deficit of ₹200 crore)
OR
Read the following information is given:
Balance of trade = ₹200 crore
Balance of invisible items =- ₹400 crore
Balance on Unilateral transfers = ₹100 crore
Balance on Current account will be_______.
(a) – ₹200 Crore
(b) – ₹100 Crore
(c) – L I00 Crore
(d) ₹200 Crore
Answer:
(b) – ₹100 crore
Explanation: Current account is the sum of Balance of trade + Balance of invisibles and Balance of unilateral transfers.
= 200 + (- 400) + 100 = -100 crore
Question 9.
Read the following statement -Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): MPC of poor is more than that of rich.
Reason (R): MPC falls with successive increase in Income.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
Answer:
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of assertion (A).
Explanation: MPC of poor is higher than MPC of rich because poor spends greater proportion of his income on consumption. (MPC = Change in consumption/ Change in income)
Question 10.
Read the following statement -Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): In Keynesian view, full employment equilibrium is an automatic phenomenon.
Reason (R): Full employment is that situation in the economy when AS = AD along with further utilisation of resources, but it does not mean a situation of zero unemployment in economy.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
Answer:
(d) Assertion (A) is false, but Reason (R) is true.
Explanation: Full employment level does not mean, AD = AS. So, full employment equilibrium is not automatic phenomena.
Question 11.
Firm A buys from X inputs worth ₹800 crores and sells to firm B goods worth ₹’I 600 crores and to firm C goods worth ₹ 1000 crores. Firm B buys from Y inputs worth ₹400 crores and sells to firm C goods worth ₹1000 crores and finished goods worth ₹2200 crores to households. Firm C buys from Z inputs worth ₹150 crores and sells finished goods worth ₹4650 crores to households. Calculate value added by firms A, B and C.
| Firm | Value of output (VO) | Intermediate consumption (IC) | Value – Added (VA = VO – IC) | ||
| A | Sales to B + Sales to C | 1600
1000 |
Purchase from X | 800 | 2600 – 800 |
| 2600 | 800 | 1800 | |||
| B | Sales to C
+ Sales to households |
1800
2200 |
Purchase from A + Purchase from Y | 1600
400 |
4000 – 2000 |
| 4000 | 2000 | 2000 | |||
| C. | Sales to households | 4650 | Purchase from A | 1000 | |
| + Purchase from B | 1800 | 4650 – 2950 | |||
| + Purchase from Z | 150 | ||||
| 4650 | 2950 | 1700 | |||
• Value Added by firm A = ₹1800 crores
• Value Added by firm B = ₹2000 crores
• Value Added by firm C = ₹1700 crores
Question 12.
Explain the effect of appreciation of domestic currency on imports.
OR
Distinguish between BOP on Current Account and Capital Account.
Answer:
Appreciation implies an increase in the value of the domestic currency in terms of foreign currency through market forces. As a result the rate of exchange declines and the price of domestic currency increases. For instance, if the price of one pound has decreased from ₹72 to ₹60. It implies that Indian citizens now can buy goods of worth one pound by spending only ₹60 compared to ₹72, due to the fall in exchange rate. Since, goods in England have become cheaper in terms of Indian rupee, they will buy more of them. As a result, Indian imports from England will increase.
OR
Difference between BOP in Current Account and Capital Account are :
|
|
Balance of Payment on Current Account | Balance of Payment on Capital Account |
| 1. | The current account deals with the receipts and payments for those goods which are currently produced. | The capital account deals with the payments of debts and claims. |
| 2. | BOP on current account has a direct influence on the level of income of a country. | The capital account influences the volume of assets of the country. |
| 3. | It includes only autonomous transactions. | It includes both autonomous and accommodating transactions. |
Question 13.
Using the equation of consumption function: C = c + b(Y), calculate consumption expenditure at the income level of ₹500 crores, if autonomous consumption is ₹40 crores and 40% of additional income is saved.
Ans.
Given, MPS = 0.4 (as 40% of additional income is saved),
MPC OR b =1 – 0.4 = 0.6
Given Autonomous Consumption (c) = ₹40 crores
Income (Y) = ₹500 crores
Consumption function = C = c + b (Y)
C = 40 + 0.6 x 500
= 40 + 300 = ₹340 crores
Question 14.
“Taxation is an effective tool to reduce the inequalities of income”. Justify the given statement with valid reasons.
Answer:
“Taxation is an effective tool to reduce the inequalities of income.” It means government reduces inequalities in income and wealth by taxing the rich more and spending more on the poor. Further, it provides for employment opportunities to poor that help them to earn. Government through fiscal tools of taxation, subsidies and transfer payments brings about ‘fair’ distribution of income. Equitable distribution of income and wealth in a way to bring social justice.
Question 15.
Read the following news report and answer the question followed.
Repo (repurchase) rate also known as the benchmark interest rate. It is the rate at which the RBI lends money to the commercial banks for a short-term (a maximum of 90 days). When the repo rate increases, borrowing from RBI becomes more expensive. If RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate. Similarly, if it wants to make it cheaper for banks to borrow money it reduces the repo rate. If the repo rate is increased, banks cannot carry out their business at a profit whereas the opposite happens when the repo rate is cut down. Generally, repo rates cut down whenever the country needs to progress in banking and economy. If banks want to borrow money (for short term, usually overnight) from RBI then banks have to charge this interest rate. Banks have to pledge government securities as collateral. This kind of deal happens through a repurchase agreement. If a bank wants to borrow, it has to provide government securities at least worth ₹1 billion (could be more because of margin requirement which is 5%-10% of loan amount) and agree to repurchase them at ₹1.07 billion (US$15 million) at the end of borrowing period. So, the bank has paid ₹65 million (US$ 910,000) as interest. This is the reason it is called repo rate. Why repo rate is known as quantitative tool? Why is it known as repurchase rate?
OR
How improvement in banking habits of the people pushes up credit availability from commercial bank?
Answer:
Quantitative tool are those tools of credit control which focus on the overall supply of money in the economy. It is known as quantitative tool because the changes in the repo rate by RBI affects the volume of credit in the country. It is known as repurchase rate because, commercial bank has to make an agreement to repurchase the securities mortgage with RBI at the predetermined date and at a predetermined price.
OR
When banking habits of the people improve, they start holding less money as cash-in and instead more and more money is deposited with the commercial bank. Accordingly, cash reserves of the commercial bank start rising. Higher cash reserve of the bank enable them to deposits more funds with the RBI as CRR- deposits. If CRR remains constant, higher the CRR- deposits with the RBI gives the commercial bank the legal authority to create more credit by way of loans or credit. Accordingly, availability of credit from the commercial bank is increased
Question 16.
(a) Why exports are included in domestic income while import is considered as a negative item in the estimation of national income ?
(b) What is the problem of double counting? How it can be avoided?
Answer:
(a) Export are included in the estimation of domestic income as exports are the parts of domestically produced goods and services, or because exports are part of a goods and services produced within the domestic territory of a country. Imports are considered as a negative item in the estimation of domestic income because imports are not an expenditure on the domestic produced goods and services for an accounting year. It is an expenditure on the goods produced aboard.
(b) Double counting refers to the situation when the value of a good is estimated more than once. It is a problem which leads to an overestimation of national income. The problem of double counting arises when the value of intermediate goods is counted along with the final value of goods and services.
The problem of double counting can be avoided by adopting any of the two approaches:
(i) Double counting can be avoided if the final value of output produced to be considered only.
(ii) If the value added of the output produced to be considered only. The problem of double counting can be avoided
Question 17.
(a) Compare the trends depicted in the figure given below:
(b) There has been constant rise in price of sugar overtime. What measure would you support to bring down the prices?.
OR
(a) Differentiate between deficit and surplus budget.
(b) Explain the concept of revenue deficit and fiscal deficit.
Answer
(a) The image shows the trends of fiscal deficit over the years from 2011 to 2014. Fiscal deficit is the borrowing requirements of the government which are estimated in the budget every year. This picture shows that except 2012, government has always estimated the count of fiscal deficit to
be higher but in actual terms the fiscal deficit for the corresponding year came out to be lesser than expectations. Only in FY 2012, Government estimated fiscal deficit to be 4.5% of the GDP but it was high in actual terms
(b) Using measures of budgetary policy, government can try to fix prices of sugar at a lower level by incurring expenditure through subsidies which would reduce cost of production and hence the prices. If the government does not want to add to its expenditure on subsidies, then it should ensure availability of sugar at reasonable prices through its fair price shops. In the situations of emergency, buffer stocks may also be used.
OR
(a) Difference between Deficit and Surplus Budget :
| Deficit Budget | Surplus Budget | |
| 1. | It is a type of budget in which government-estimated expenditure exceeds government-estimated receipts. | It is a type of budget in which government-estimated receipts exceeds government-estimated expenditure. |
| 2. | This budget is adopted to increase money supply and aggregate demand in the economy. | This budget is adopted to decrease the money supply and aggregate demand in the economy. |
| 3. | It leads to an increase in the liabilities of the government due to a reduction in its reserves. | It leads to a decrease in the liabilities of the government due to an increase in it savings. |
(b) Fiscal deficit is a wider concept than revenue deficit. Revenue deficit is defined as the excess of the government’s revenue expenditure over revenue receipt.
Thus, Revenue deficit = Revenue expenditure (RE)- Revenue receipt (RR).
Whereas fiscal deficit is defined as the excess of total expenditure over total receipts excluding borrowings. It does not take into account borrowings.
Fiscal deficit = (Total budgetary expenditure)- (Total budgetary receipt borrowings).
Section-B (Indian Economic Development)
Question 18.
Which country was the largest trading partner of India at the time of British rule?
(a) China
(b) Ceylon
(c) Persia
(d) Britain
Answer:
(d) Britain
Explanation: Trade with India.Britain was the only trading partner of India as British never allowed any country to trade with India.
Question 19.
Trade -policy before 1991, was introduced with the following objective except:
(a) to restrict imports of goods.
(b) to protect Indian Industries
(c) to reduce export
(d) to maintain trade relations
Answer:
(d) to maintain trade relations
Explanation: Before 1991, trade policy was adopted to give protection to the Indian industries. It was never adopted to maintain trade relations with foreign countries.
OR
The goal of five year plan that was meant to introduce technology and changing the social outlook in the country is:
(a) Equity
(b) Modernisation
(c) Self-reliance
(d) Growth
Answer:
(b) Modernisation
Explanation: Growth, Self-Reliance and Equity are meant to focus on GDP, Self Sufficiency and reducing the gap between rich and poor respectively. Modernization is the only goal of Five Year Plan, that had focused on machines or technology and change in social outlook.
Question 20.
Rank India, Pakistan and China in terms of better value of Human Development Index (HDI).
(a) lst-Pakistan, 2nd-China, 3rd-India.
(b) lst-Pakistan, 2nd-India, 3rd-China.
(c) lst-China, 2nd-Pakistan, 3rd-India.
(d) lst-China, 2nd-India, 3rd-Pakistan.
Answer:
(d) lst-China, 2nd-India, 3rd-Pakistan
Explanation: The rankings are presented to the countries as per their HDI. China ranked 8th. India 28th and Pakistan 136th
OR
Great Proletarian Cultural Revolution was introduced by.
(a) Mao in India
(b) Mao In Pakistan
(c) Mao in Sri lanka
(d) Mao in China
Answer:
(d) Mao in China
Explanation: Chinese Communist Head Mao Zedong introduced the Great Proletarian Cultural Revolution in China. Its main objective was to take Chinese economy on the path of development.
Question 21.
Identify which of the following is not a reason for taking rural credit?
(a) Death, illness and emergency with family members .
(b) Seeds, fertilizers, improvement of land, etc.
(c) Establishing tube-wells.
(d) None of the above
Answer:
(d) None of the above
Explanation: All the mentioned options are the reasons for taking credit in the rural areas.
Question 22.
From the set of the events given in column I and corresponding facts given in column II, choose the correct pair of statement:
| Column-I | Column-II | ||
| I. | China | (A) | Commune land system |
| II. | Pakistan | (B) | High density of population |
| III. | India | (C) | Reforms were introduced in the initial phase in Agriculture sector |
| IV. | The main reason for low population growth in China | (D) | High number of Ph.Ds produced in science and technology every year |
Alternatives:
(a) I-A
(b) II-B
(c) III-C
(d) IV-D
Answer:
(a) I-A
Explanation: China is the only country that introduced Commune system of land in which all the people cultivated the land collectively.
Question 23.
Read the following statements carefully:
Statement 1: Rising population is not such a huge roadblock in the process of human capital formation in India.
Statement 2: Human capital formation enhances the productivity of physical capital.
In the light of the given statements, choose the correct alternative:
Alternatives:
(a) Statement 1 is true and statement 2 is false.
(b) Statement 1 is false and statement 2 is true.
(c) Both statements 1 and 2 are true.
(d) Both statements 1 and 2 are false.
Answer:
(b) Statement 1 is false and statement 2 is true.
Explanation: High population is always a hindrance in human capital formation as it reduces the per head availability of facilities for the people. At the same time, human capital can make the best use of physical capital. Without human capital, physical capital is of no use.
Question 24.
Read the following statements carefully:
Statement 1: The fertility rate is low in China and very high in Pakistan.
Statement 2: Urbanisation is high in China while India having 50 percent of its people living in urban areas. In the light of the given statements, choose the correct alternative:
Alternatives:
(a) Statement1 is true and statement 2 is false.
(b) Statement1 is false and statement 2 is true.
(c) Both statements 1 and 2 are true.
(d) Both statements 1 and 2 are false.
Answer:
(a) Statement1 is true and statement 2 is false
Explanation: Urbanisation is high in China with India having 34 percent of its people living in urban areas.
Question 25.
Economic development leads to ________ pollution.
(a) environment
(b) social (c) cultural (d) none of these
(c) Both statements 1 and 2 are true.
(d) Both statements 1 and 2 are false.
Answer:
(a) environment
Explanation: The environmental impact of economic growth includes the increased consumption of non-renewable resources, higher levels of pollution, global warming and the potential loss of environmental habitats. In addition, economic growth caused by improved technology can enable higher output with less pollution.
OR
__________causes ozone depletion.
(a) Land degradation
(b) High levels of chlorine and bromine compounds in the stratosphere
(c) Soil erosion
(d) Deforestation
Answer:
(b) High levels of chlorine and bromine compounds in the stratosphere
Explanation: (a) High levels of chlorine and bromine compounds in the stratosphere results in ozone depletion.
Question 26.
Read the following statement -Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): There is a lower percentage of female workers in urban India.
Reason (R): Collectivist culture of gender biasness, social-economic backwardness among females and preferences of raising child.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
Answer:
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).
Explanation: Females are working less in urban India due to high level of income in a family which is sufficient for the survival of family while female in rural India are required to work as income is not enough for the entire family.
Question 27.
Read the following statement -Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): China is the largest nation and geographically, occupies the largest area among the three nations. Its density is the lowest with more elderly people in proportion to young people.
Reason (R): One-child norm introduced in China in the late 1970s.
Alternatives:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion(A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion(A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, but Reason (R) is true.
Answer:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
Explanation: China’s population includes more of elderly people due to one child policy adopted in the past. The result of such policy were seen after 15 to 20 years in the form of more elderly people in the country and less number of young people.
Question 28.
Interpret the given picture on account of the strategies opted for sustainable development.
Answer:
Interpretation: This picture is depicting several current environmental problems in India.
1. Air pollution releasing poisonous gases in air, causing air borne diseases primarily breathing-related.
2. Shortage of water resource because of non-judicious usage and wastage.
3. Water pollution -collection of wastes, city garbage, factory waste causing water unfit for drinking and harmful for aquatic life.
4. Infrastructural issues related to improper usage of land resource. Absence of parks in residential areas.
5. Slums where poor illiterate people live who have unawareness regarding sanitation and cleanliness. All these problems are existing due to improper usage of government funds, improper planning and lack of training.
Question 29.
Defend or Refute the following statement with valid explanation:
“Educated unemployed is gradually acquiring a greater share of unemployment problem in India.”
OR
Critically evaluate that “There is a presence of areas in rural sector which still requires massive development.” If yes, then what are the key areas of rural development in India?
Answer:
I defend the statement because of the following reasons:
Since the number of colleges, universities, and formal training institutes are increasing, so there are more number of graduates. But correspondingly there is lack of practical training programmes after higher studies. Not all colleges and graduation courses offer internship programmes. Less emphasis on skill development and application skills. Fewer options of on-the-job training programmes to absorb excess labour force. Hence, Educated unemployment is rising in India.
OR
Yes, rural areas still need to undergo lots of changes.
The needful key areas of rural development in India are :
1. Development of the productive resources in each locality.
2. Development of human resources including social infrastructure like: Literacy (more specifically female literacy) education and skill development. Health, addressing both sanitation and public healthcare services. Honest implementation of land reforms.
3. Economic Infrastructural development like electricity, irrigation, credit, marketing, transport facilities including construction of village roads and feeder roads to nearby highways, facilities for agriculture research and extension and information dissemination.
4. Special measures for alleviation of poverty and focused action to be taken to improve the living condition of the weaker sections.
Question 30.
Compare and analyse the following information related to Sectoral Share of Employment and GVA (%) on the basis if following information:
| Sector | Contribution to GVA | Distribution of workforce | |||||
| India | China | Pakistan | India | China | Pakistan | ||
| Agriculture | 16 | 7 | 24 | 43 | 26 | 41 | |
| Industry | 30 | 41 | 19 | 25 | 28 | 24 | |
| Service | 54 | 52 | 57 | 32 | 46 | 35 | |
| Total | 100 | 100 | 100 | 100 | 100 | 100 | |
Answer:
1. In both India and Pakistan, the contribution of agriculture to GVA were 16 and 24 percent, respectively, but the proportion of workforce that works in this sector was more in India.
2. In Pakistan, about 41 percent of people worked in agriculture, whereas, in India, it is 43 percent. Twenty four per cent of Pakistan workforce is engaged in industry but it produces 19 percent of GVA.
3. In India, industrial workforce account for 25 percent but produces goods worth 30 percent of GVA. In China, industries contributed to GVA at 41, and employ 28 percent of workforce.
4. In all the three countries, service sector contributed highest share of GVA. In the normal course of development, countries first shift their employment and output from Agriculture to Industry and then to services. This is what is happening in China.
5. The proportion of workforce engaged in industry in India and Pakistan were low at 25 percent and 24 percent respectively.
6. The contribution of industries to GVA is at 30 percent in India and 19 percent in Pakistan. In these countries, the shift is taking place directly to the service sector. Thus, in all the three countries the service sector is emerging as a major player of development.
7. Proportion of workforce in the 1980s, Pakistan was faster in shifting its workforce to service sector than India and China. In the 1980s, India, China and Pakistan employed 17, 12 and 27 percent of its workforce in the service sector respectively. In 2019, it has reached the level of 32, 46 and 35 percent, respectively.
Question 31.
(a) Name any one Navratana Company.
(b) IPR, 1956 was adopted to promote balanced regional growth “Support the given statement with valid explanation.”
OR
Discuss briefly “Growth with equity” as a planning objective.
Answer:
(a) Hindustan Aeronautics Limited Mahanagar telephonic Ngam limited National Aluminum Company
(b) Intellectual Property Right, 1956 was adopted to promote Indian industries with the major role given to public sector. In this policy, industries were divided in different schedules and small scale industries were also promoted by giving various concessions and facilities. Private sector was also provided with raw material, electricity and land at concessional rates so that they are induced to move to backward areas and set up industries. This was done so that employment can be generated in those regions and areas lagging behind can be developed. This will promote banced regional growth.
OR
Growth refers to increase in the country’s capacity to produce the output of goods and services within the country (productive capacity). Growth equity refers to an equitable distribution of the income so that the benefit can be passed to all sections. It implies either a larger stock of productive capital, or a larger size of supporting services like transport and banking, or an increase in the efficiency of productive capital and services.
A good indicator of economic growth is steady increase in the Gross Domestic Product (GDP). The GDP is the market value of all the goods and services produced in the country during a year. Increase in GDP does not mean that this share of prosperity is divided equally among all.
It is argued that the benefits of increase in GDP are enjoyed only by few people in the country, then it will not promote equity. So, growth with equity as an objective can be achieved when benefits of prosperity are shared among all equally. It is a national and desirable objective of planning
Question 32.
State whether the following statements are true / false, with valid arguments:
(a) Health expenditure directly increases the supply of healthy labour force and is, thus, a source of human capital formation.
(b) Human capital and economic growth have a weak relationship.
Answer:
(a) True. Health expenditure directly increases the supply of healthy labour force because good health status of population increases the physical capacity of workers and thereby the overall productivity which in turn also increases the income per capita.
Thus, health is a source of human capital formation. Human becomes a capital for the country only when the health of the people in general is good enough and is able to use and harness resources judiciously.
(b) False. Human capital and economic growth are strongly linked to each other.
As the need of human capital rises, it helps to increase the production and productivity which raises the national income of the country. Human capital is the embodiment of skills, education, health and information, as it improves the quality of life and raises the standard of living which has A direct impact on economic growth.
Question 33.
(a) Enlist two examples of rural marketing channels in India?
(b) Define ‘Operation flood’.
(c) Discuss any two limitations of Rural Banking.
Answer:
(a) (i) Apni mandi (Punjab, Haryana and Rajasthan)
(ii) Hadaspar mandi (Pune)
(iii) Rythu Bazars
(b) Operation flood led to White Revolution. It created a national milk grid linking producers throughout India to consumers. It ensured that producer gets major share of profits by eliminating intermediaries.
(c) Two Limitations of Rural Banking:
(i) Owing to political populism, the government has shown laxity in the recovery of loans.
(ii) Most financial institutions have failed to develop a culture of thrift among the farming families. Mobilisation of deposits has rather remained subdued rural banking is suffering from the problems of large amount of over dues and default rate.
(iii) The sources of institutional finance are inadequate to meet the requirements of agricultural credit.
(iv) There exist regional inequalities in the distribution of institutional credit. It is suggested that more and more regional rural banks should be set up to meet the credit need of the rural and backward areas of India.
OR
(a) India has failed to achieve human capital formation. Give valid arguments in support of the given statement.
(b) “The worker-population ratio says something about workers status in society or about the working conditions”. Defend or refute argument with valid reason.
Answer:
(a) Problems of human capital formation in India are:
(i) Rapidly rising population adversely affects the quality of human capital formation in developing countries. It reduces per capita availability of existing facilities. A large Population also requires large investment in education and health.
(ii) The process of human development is a long-term policy because skill formation is time consuming. The process which produces skilled manpower is thus slow.
(iii) Regional and gender inequality lowers the human development levels.
(iv) Migration of highly skilled labour termed as “Brain Drain”, adversely affects the economic development.
(v) Agricultural sector is neglected where the workers are not given on the job training to absorb emerging new technologies.
(vi) A large section of the population lives below poverty line and do not have access to basic health and educational facilities. A substantial section cannot afford to reach higher education or expensive medical treatment for major illness.
(b) I defend the statement Workers participation ratio shows the proportion of workforce in the total population.
It is calculated as WPR =\(\frac{\text { Workforce }}{\text { Total Population }} \times 100\)
The workers are divided as,
1. Regular salaried
2. Self employed
3. Casual workers
As per the above division, Majority of the workforce is in self-employed category. (50%) It shows that regular salaried work is less in India due to lack of job opportunities. Workers are also divided on the basis of areas. It is observed that 35% of the workforce resides in rural areas and 34% in urban areas. This indicates that need for work is slightly higher in rural areas. Also, 85 % workers are engaged in informal sector where the working conditions are not in favour of workers in comparison to formal sector workers.
Question 34.
Read the following text carefully and answer the given questions on the basis of the same and
common understanding:
The Green Revolution is referred as the process of increasing agricultural production by incorporating modern tools and techniques. Green Revolution is associated with agricultural production. It is the period when agriculture of the country was converted into an industrial system due to the adoption of modern methods and techniques like the use of high yielding variety seeds, tractors, irrigation facilities, pesticides, and fertilizers. Until 1967, the government majorly concentrated on expanding the farming areas. But the rapidly increasing population and the food production called for a drastic and immediate action to increase yield which came in the form of the Green Revolution.
Green Revolution has remarkably increased agricultural production. Food grains in India saw a great rise in output. The biggest beneficiary of the revolution was the wheat grain. The production increased to 55 million tonnes in the early stage of the plan itself. Not just limited to agricultural output the revolution also increased per acre yield. Green Revolution increased the per hectare yield in the case of wheat from 850 kg per hectare to an incredible 2281 kg/hectare in its early stage. With the introduction of the Green Revolution, India reached its way to self-sufficiency and was less dependent on imports.
The production in the country was sufficient to meet the demand of the rising population and to stock it for emergencies. Rather than depending on the import of food grains from other countries India started exporting its agricultural produce. The introduction of the revolution inhibited a fear among the masses that commercial farming would lead to unemployment and leave a lot of the labour force jobless. But the result seen was totally different there was a rise in rural employment.
The tertiary industries such as transportation, irrigation, food processing, marketing, etc. created employment opportunities for the workforce. The Green Revolution in India majorly benefited the farmers of the country. Farmers not only survived but also prospered during the revolution their income saw a significant rise which enabled them to shift from sustenance farming to commercial farming.
(a) What were the various problems faced by Indian farmers due to Green Revolution?
(b) Justify the statement:
“Green Revolution which came to be known as Wheat Revolution was a result of new agricultural strategy which constitutes institutional and technological reforms.”
Answer:
(a). Various problems faced by farmers due to Green Revolution are:
1. Income inequality: Green Revolution has benefited only the rich farmers. It required the use of FIYV seeds, fertilizers and machines which was affordable by large and rich farmers only. Hence, poor farmers had not witnessed any changes in their income levels.
2. Regional inequality: Green Revolution was seen in few states like Punjab, Haryana and Westeren UP and other parts of India were derived of its benefits. This increases the regional inequalities in terms of crops.
3. Crop inequalities: Green Revolution resulted in tremendous growth of wheat and rice and other crops like oilseeds, pulses which were not produced in large quantities. This led to surplus of one food grain and shortage of the another.
(b) Various steps taken by Government that led to Green Revolution was a part of new agriculture strategy.
Following steps were taken :
(i) Land reforms: Measures concerning reforms in land tenure system and size of holding are termed as land reforms. It comprises of
1. Abolition of zamindari system
2. Land ceiling
3. Consolidation of land holdings.
(ii) Technologic measures: It includes various kinds of aid provided by government to adopt scientific cultivation and mechanization of agriculture like usage of HYV seeds, fertilizers, pesticides, etc.
(iii) Government also planned to provide cheap and affordable credit facilities along with storage and transportation facilities which was an added advantage to the farmers.