National Income and Related Aggregates
CHAPTER 7
EMPLOYMENT
EMPLOYMENT
It is an activity which enables a person to earn. When undertaken this activity, a person renders his services and get paid(wages/salaries) in returns.
If all those who are willing and able to work, are working at the existing wage rate, the situation is called full employment.
If some of these do not work, the situation is called unemployment.
ECONOMIC ACTIVITY
These are the activities which contribute to GDP of the country.
Example: a farmer grow wheat for sale, a doctor treats patients etc.
Economic activities can be classified into
a) Primary sector: Agriculture, forestry, mining, fishing (Basic production )
b) Secondary sector : Industries, construction, craft work(production of goods)
c) Tertiary sector: Trade, bank, transport, culture, education , health (services)
WORKERS
All those people (human resources) who are engaged in economic activities, in any capacity – high or low, are workers.
In other words a ’worker’, or an individual engaged in production activity, contributes to GDP by rendering his services.
Types of workers
There are two types of workers:
a) hired workers:
i) Regular workers
ii) Casual wage workers
b) Self employed
a) Hired workers: These are the workers who are employed by others and are paid wages or salaries in return of their services. These are of two types
i)Regular workers: These are hired on permanent/regular basis by their employers. They gets social security benefits like pensions etc. Eg. Government officials, teachers employed in a school etc. Regular workers are usually skilled workers like an engineer working in a factory.
ii)Casual wage workers: These are not hired on a permanent/regular basis by employers. They do not gets social security benefits. Eg. construction workers. It is often found that casual workers are unskilled workers, like a worker working at the construction site.
b) Self employed workers
These are the workers who use their own resources (land, labour, capital, enterprise) to earn their living. In other words, they are engaged in their own business or their own profession. They provide jobs to themselves to their own. More than 50% of workforce in India belongs to this category.
For Example, shop keepers, businessmen, a doctor running his own clinic etc.
LABOUR FORCE AND WORK FORCE
Labour force:- number of workers actually working or willing to work. It include all those who are working and those not working but are seeking work and are available for work. In other words, it includes employed and unemployed workers.
Work force:- It includes all those who are employed at a particular point of time. In other words, these refer to those persons who are working. It does not include unemployed persons even though they are willing and available for work.
Unemployed persons = Labour Force (-) Workforce .
WORKER POPULATION RATIO
It is the ratio of the total number of workers to the population.
Worker population ratio = total numbers of workerstotal population X 100
It is an indicator used for analysing the employment situation in the country.
If the ratio is higher, it means that engagement of people is greater, if the ratio is low, it means that a very high portion of its population is not involved directly in economic activities.
Participation of people in employment:
a) Participation of workforce residing in rural area (70%) is higher as compared to urban areas (30%). It is because:
i) People in rural area have limited resources to earn a higher income and participate more in the employment market.
ii) In rural areas, people cannot stay at home as their economic conditions may not allow them to do so. (Because they have lower productivity, lower level of income, larger size of the family and greater poverty in the rural India).
iii) Many people do not go to school, if they go they drop in the middle and join in the workforce.
b) Men posses greater share in total workforce than women. This is because
i) It is common to find that where men are able to earn high income, families discourage female member from taking jobs
ii) female education in India is still a far cry, implying low opportunities for jobs.
ii) Family customs and high income of male members doesn’t allow women to work.
iii) Many activities for the household engaged in by women are not recognised as productive work.
c) In rural areas female participation is more compared to urban areas. This is because
i) in rural India, poverty compels women to avoid education and seek employment.
ii) without education, people in rural areas find only less productive jobs and get low wages. Low wage rate is the principle reason why women look for sustainable jobs at an early age.
DISTRIBUTION OF WORFORCE BY GENDER
Self employment is a major source of livelihood for both men and women. It is because:
Literacy rate is low, implying low acquisition of skill for wage jobs.
Owing to diverse social environment across different regions, mobility of workforce is low.
Women in rural India find ample opportunity of self-employment , engaged themselves in traditional jobs like spinning, weaving, bleaching etc.
Regular salaried work is more popular among men as compared to women. It is because:
Regular salaried work required skill and higher level of literacy.
Women are less educated and have less level of literacy rate in India
Casual wage work is the second major source for both male and female workers.
Distribution of work force in rural and urban area
Self employed and casual workers are higher in rural areas than in urban areas.
In Urban areas, people look for skilled jobs in offices and factories while in rural areas, family farms are the most attractive means of employment.
In rural areas, non-farm job opportunities are limited. Accordingly people generally do not show preference to acquire skill and training for non-farm occupation. They prefer to stay on family farms and field as self employed.
In urban areas, hired employment is more as there is larger number of job opportunities are in factories and offices.
In urban areas 42% of workers are self-employed and 58% of workers are hired whereas in rural areas 56% are self –employed and 44% are hired.
Distribution of workforce among different sectors:
Primary sector is the main source of employment for majority of workers in India (41.6%)
Secondary sector provides employment to only 21.8% of workforce. About 32.1% of workers are in service sector. This sector provides employment to only about 22% of rural workers while 63.3% of urban workers are in this sector.
More than 57% of female workforce is engaged in primary sector, whereas 45% of male workers in this sector. Men get more opportunities in both secondary and service sector.
(Refer conclusions given in Page No: 215 to217 in VK)
Jobless Growth
In India, after 1990, the rate of growth of jobs is declining while growth rate of development is increasing. This means that in Indian Economy without generating employment, able to produce more goods and services. This phenomenon is known as jobless growth.
Casualisation of workforce
The process of moving from self-employment and regular salaried employment to casual wage work is known as casualisation of workforce. This makes the workers highly vulnerable.
Informalisation of Indian workforce
Indian workforce earn livelihood through formal and informal sectors.
Formal sector :- It is also known as organised sector consisting of all units which are registered by the government and follows rules are regulations.
This sector includes all public sector establishment, government departments and private sector establishments hiring 10 or more workers.
Formal sector employers have secured employment with social benefits (pension, paid holidays etc.)
They have better and regular earnings and higher standards of livings.
Informal sector: This is also known as unorganised sector. This consist of those units which are not under the direct control of the government. These are scattered units.
This sector do not follow rules and regulations because it is out of the control of the government.
They will not get any of the social security benefit such as paid leaves, pension, medical leaves etc. For them job is not secured. Their wages are irregular.
This sector includes farmers in rural areas, casual work labourers in urban areas etc.
UNEMPLOYMENT
It is a situation where the able bodied persons willing to work and fail to find a job that earn them living.
TYPES OF UNEMPLOYMENT
Involuntary unemployment:- It is a situation where workers are able and willing to do work at the prevailing wage rate, but they do not get employment. It is an open unemployment.
2. voluntary unemployment:- It is a situation where job opportunities are available in the economy but workers are not willing to do work because of lower wage rate, location, climate of organisation etc.
3. Seasonal unemployment:- This is one kind of rural unemployment in India. It occurs because agriculture is a seasonal occupation. During off season, often the farm workers are out of job, they have no work to do. The volume of seasonal unemployment depends upon the condition and methods of cultivation in different states.
4. Disguised unemployment:- It is also known as hidden unemployment. It is the phenomenon of where the number of workers engaged in a job is more than actually required to accomplish it. If some of them are withdrawn from that job, the total production will not fall. This type of unemployment is a common feature in agricultural section.
(Refer Page no.225-226 of VK on the topic “common types of unemployment”)
CAUSES OF UMEMPLOYMENT IN INDIA
Slow economic growth: Indian economy is underdeveloped and the rate of economic growth is very low. This slow growth fails to provide enough employment opportunities to the rising population.
Rapid growth of population:-Constant increase in population has been a great problem of India. It is one of the main causes of unemployment.
Agriculture- a seasonal occupation:- Agriculture is the primary occupation of our country and a large size of population depends on it. But its seasonal character does not provide work to the farmer all the year round. Most of the farmers remain idle for 3-4 months in a year.
Lack of irrigation facilities:- Despite the completion of the 12th five-year plans, irrigation facilities could be provided only to 34% of agriculture area. Consequently, the farmers remain unemployed for quite some time during the year.
Declain of cottage and small scale industries:- The industrial development policy adopted by the govt adversely affected the artisans working in small and cottage industries. The goods previously produced by these industries are now being produced by large scale industries.
Low saving and investment:- There is shortage of capital in India and even the scarce capital has not been wisely invested. Bulk of the capital has been invested in large scale industries where there is high capital per unit of labour.
Mobility of labour:- Mobility of labour in India is very low. Owing to a variety of families as well as social constrains people are reluctant to move to far off areas even when jobs are available. Factors like diversity like language, religion and custom in different states are the major hindrances to the mobility of labour.
GOVERNMENT AND EMPLOYMENT GENERATION
In order to create employment various efforts have been made by government. These are categorized as:-
Direct efforts: Government employees people in various departments for administrative purpose. Runs industries, hotels, transport companies to provide employment directly to workers. Eg: Indian Railway, IAS officers, etc.
Indirect efforts:- Production of basic raw materials and infrastructural development by government enterprise leads to increase in production and creation of employment opportunities in pvt enterprises. One large industry give birth to many dependent units which generate more employment.
All the poverty alleviation programmes that the government implemented aimed at alleviating poverty through employment generations. They are also known as employment generation programmes. Eg; NREGA, SGSY, SGRY etc.
Home work
NCERT Exercise questions
Why there is causualisation of work force in India
CHAPTER 3
ECONOMIC REFORMS SINCE 1991
ECONOMIC REFORMS (NEW Economic Policy) 1991
Economic policy adopted by the government of India since 1991 is known as New Economic Policy. It was introduced in July1991.
Need for Economic Reform
Mounting Fiscal deficit
(Fiscal deficit is the difference between government expenditure and government revenue. It is financed by rising loan).
Prior to 1991, Fiscal deficit of the government increased too much because of increase in non-development expenditure (like administration expenditure).
The government was not able to generate sufficient income from taxation. The income from the public sector undertakings was also not very high to meet the growing expenditure.
Due to persistent rise in fiscal deficit there was corresponding rise in public (govt) debt and interest payment liability. Indian economy was in debt-trap situation.
Adverse Balance of Payment and fall in Foreign Exchange reserve
When outflow of foreign exchange is more than inflow of foreign exchange, balance of payment becomes adverse.
Before 1991, exports were less due to poor quality of domestic goods and import were more despite of heavy tariffs and quotas.
Accordingly the burden of foreign debt increased tremendously . Resulting in adverse balance of payment.
Rise in prices/Inflation
Due to rise in prices of food grains there was pressure of inflation Prior to 1991. Which deepen the economic crisis from bad to worse. Such a high rate reduced the demand of Indian goods in domestic and foreign market.
Fall in Foreign exchange reserve
In 1990-91 India’s foreign exchange reserves fall to such a low level that there was not enough to pay for an import bill of even10 days. In such situation the government had to helplessly resort to policy of liberalization as suggested by the World Bank.
Poor performance of PSUs
Public sector continued to operate even in those areas which could be comfortably shifted to private sector.
Most of public sector undertakings were incurring loss and their performance was quiet satisfactory. But they have continue to function because it is difficult to close a government undertaking even if it is a drain on the nation’s limited resources.
The set of New Economic Policies can be classified into :
Stabilisation measures:- these are short term measures intended to
Correct the weaknesses that developed in balance of payments by maintaining sufficient foreign exchange reserve and
Bring inflation under control by keeping the rising prices under control
Structural reforms measures:- these are long term measures aimed at
Improving the efficiency of the economy
Increasing its international competitiveness by removing the rigidities in various sectors.
LIBERALISATION
Liberalisation was introduced to put an end to the restriction s and open up various sectors of the economy
The following reforms were initiated under Liberalisation:-
Industrial sector reforms:-
Abolition of industrial licensing:-
Prior to 1991, every entrepreneur had to get permission from government to start a firm, close a firm or to decide the amount of goods that could be produced.
According to NEP, Industrial licensing was abolished for almost all product except for some industries which are of strategic importance of a nation like alcohol, cigarettes, hazardous chemicals, drugs and pharmaceuticals etc.
Decrease in the role of public sector:-
Prior to 1991, pvt sector was not allowed in many industries as the major control was exercised by the government.
Now the only industries which was reserved for the public sector (number of industries reduced fro 17 to 3) are defence equipment, atomic energy generation and railway transport.
Dereservation of production by Small scale industries:-
Prior to 1991, some goods could be produced only in SSI
But now many goods produced by SSI have been dereserved.
The investment limit on plant and machinery for small scale industries has been increased to rupees 5 crore.
Price determination by the market forces:-
Prior to 1991, there were control on price fixation by the industry as per the directive policy of the government.
But now in many industries, the market has been allowed to determine the prices through the demand and supply forces.
Import of capital goods:-
Prior to 1991, there were restrictions on import of certain industrial goods.
But now there is freedom to import capital goods and technology in order to develop strong industrial basis.
Financial sector reforms:-
Role of RBI:- Reduced the role of RBI from regulator to facilitator of financial sector. This means that the financial sector may be allowed to take decisions on many financial matters without consulting RBI
Establishment of PVT sector banks:- The reform policies led to the establishment of PVT sector banks, Indian as well as foreign which increased the size of competition and provided better services to the consumers.
Foreign investment:- With the reform policies, Foreign investment limit in banks was raised to around 50 percent. Foreign Institutional Investors(FII) such as merchant bankers, mutual funds and pension funds are now allowed to invest in Indian financial market under guidelines of RBI
Setting up of new branches:- Those banks which fulfill certain conditions are given freedom to set up new branches without the approval of RBI and rationalize their existing branch network.
Fiscal/Tax reforms:-
Reduction in direct taxes:- With economic reforms, it was felt that high rates of income tax was responsible for tax evasion. It is now widely accepted that moderate rates of income tax encourage savings and voluntary disclosure of income. The rate of corporation tax has also been gradually reduced.
Reforms in Indirect taxes:- Efforts have been made to reform the indirect taxes i.e., taxes levied on commodities. This was initiated to facilitate the establishment of a common national market for goods and services.
Simplification of tax-paying procedure:- In order to encourage better compliance on the part of tax-payers many procedures have been simplified.
Foreign Exchange Reforms:-
Devaluation of rupee:- Devaluation refers to reduction in the value of domestic currency in relation to foreign currency by the government. This encourages exports and discourages imports. It led to an increase in the inflow of foreign exchange.
Determination of Foreign Exchange rate:- Earlier determination of foreign exchange rate was controlled by the government. Now the government allowed the market forces (demand and supply of FE) to determine the FER.
Treade and investment policy reforms
Dismantling of quantitative restrictions on import and exports:- Liberalisation aimed at removal of quantitative restrictions on imports and exports. Quantitative restrictions on import of manufactured consumer goods and agricultural products were also fully removed from April 2001.
Reduction of tariff rates:- Tariff on imports was reduced to enhance the domestic trade and achieve economic growth.
Removal of import license:- import license was abolished except in case of hazardous and environmentally sensitive industries.
Removal of export duties:- Export duties have been removed to increase the competitive position of Indian goods in the international markets.
PRIVATISATION
It refers to the transfer of ownership, management and control of government sector enterprises to the private sector.
Privatisation can be done in two ways:
By withdrawal of the government from ownership and management of public sector companies and
By outright sale of public sector companies
Privatisation of the public sector undertakings by selling off part of the equity of PSUs to the private sector is known as disinvestment.
The government has also made attempts to improve the efficiency of PSUs by giving them autonomy in taking managerial decisions. For instance, some PSUs have been granted special status as Maharatnas, navratnas and miniratnas.
Purpose of disinvestment:-
To Improve the efficiency of PSUs
To improve the financial discipline and facilitate moderniastion.
To effectively utilize the private capital and managerial abilities to improve the performance of the PSUs.
To provide strong impetus to the inflow of FDI (foreign Direct Investment).
GLOBALISATION
Globalization is defined as a system related to increasing interaction, growing economic interdependence and widening economic integration in the world economy.
It encourages integration of the economy with the world economy.
It involves creation of networks and activities transcending economic, social and geographical boundaries.
It is turning the world into one whole or creating a boarderless world.
Globalisation attempts to establish links in such a way that the happenings in one country can be influenced by events happening miles away.
POSITIVE IMPACTS OF GLOBALISATION
We are now exposed to advance technology and are able to develop indigenous production in the international market.
It is an opportunity in terms of greater access to global market and increased possibility of large industries of developing countries to become important players in the international arena.
It increase the choice of consumable goods for the consumers of India. Now good quality product at cheaper rates are available in the market. In turn this improved the standard of living of the people.
NEGATIVE IMPACT OF GLOBALISATION
Because of high competition from the international market, demand for the domestic goods had been decreased.
To stand in the global competition, many companies cut down the benefits given to workers. Jobs are no longer secure to the workers.
Many small scale industries have been hit hard due to competition and have shut down, rendering many workers jobless.
It has only benefited the skilled and professional persons in the urban areas, not the unskilled persons.
Globalisation compromised the welfare and identity of people belonging to poor countries.
OUTSOURCING
In outsourcing, a company hires regular services from external sources, mostly from other contries.
Most MNCs and even small companies are outsourcing their services to India because these can be availed at a cheaper cost with reasonable degree of skill and accuracy.
The main services which are being outsourced to India by the other countries are, voice-based business processes (known as BPO), record keeping, accountancy, banking services, film editing, book transcription, clinical advice or even teaching.
India has become a destination for global outsourcing in the post-reform period because of
Low wage rates
Availability of skilled manpower.
WORLD TRADE ORGANISATION (WTO)
The WTO was founded in 1995 as the successor organisation to the General Agreement on Trade and Tariff (GATT).
FUNCTIONS OF WTO
To facilitate ‘free and fair’ international trade (bilateral and multilateral) through removal of tariff as well as non-tariff barriers.
WTO aims at enlarging production and trade of services, to ensure optimum utilization of world resources and to protect environment.
It helps to providing greater market access to all member countries as it provides equal opportunities to all countries in the international market.
AN ASSESSMENT /APPRAISAL OF LPG POLICIES.
Favorable/positive effects
Increase in the growth rate of the economy:- Growth of the GDP increased from 5.6 percent during 1980-91 to 8.2 percent during 2007-2012. It shows that there has been increased
Structural changes:- structural change refers to shift of contribution from primary sector to secondary sector and tertiary sector. During the reform period, it was noticed that growth rte of about 8% is mainly driven by growth in service sector.
Increase in FDI and foreign exchange reserves:- In reform period, FDI and FII have increased from about 100 million US dollar in1990-91 to 400billion US dollar in2010-11. There has been increase in the foreign exchange reserve from about 6 billion dollar in 1990-91 to 300 billion US dollar in 2011-12. (At present, India is the 6th largest FE reserve holder in the world with 368231 million dollar in Nov.2016)
Promotion of export:- India is now seen as a successful exporter of autoparts, engineering goods, IT software and textiles etc.
Control of inflation:- Due to LPG policies ,inflation is brought under control. The annual rate of inflation reduced from nearly 16.7% in 1991 to around 5.7 % in 2015-16.
Control of fiscal deficit:- India had started recovering fiscal deficit after the economic reforms. It reduced from 8.5% in 1991 to nearly 4% in 2015-16.
Limitations/Criticism/Negative effects:
Contradiction between growth and employment:-
Reform-led growth has not generated sufficient employment opportunities in the country. Different sectors terminated employees because of modernization and technological advancement.
Adverse effect on agriculture:-
Public investment in agriculture infrastructure like irrigation, power, research etc. has been reduced in the reform period.
Removal of fertilizer subsidies increased the cost of production which severely affected the small and marginal farmers.
Farmers has to face the increased international competition.
There was most focus on production of cash crops instead of production of food grain because of export oriented policy strategies in agriculture. It result in increase in prices of food grains.
Low level of industrial growth:-
Industrial growth has also recorded a slow down because of decreasinf demand of industrial product due to various reasons such as cheaper imports, inadequate investment in infrastructure etc.
Cheaper imports replaced the demand for domestic goods
The infrastructure facilities including power supply have reminded inadequate due to lack of investment.
A developing country like India does not have access to developed country’s markets because of high non-tariff barriers.
Disinvestment:-
Disinvestment initiated by government policies was not of much success because assets of public sector undertaking were undervalued and sold to the private sector. It means there has been a substantial loss to the government.
Also the proceeds from disinvestment were used to offset the shortage of government revenues rather than using it for the development of the country.
Ineffectiveness of fiscal policies:-
The tax reduction was done to curb tax evasion and increase in government revenues but this policy did not actually result in increasing in tax revenue of the government.
Tax incentives were provided to foreign investors to attract foreign investment which reduced the scope for raising tax revenue.
Tariff reduction also reduced the scope of generating revenues through custom duties.
Increase in inequalities:-
Globalization had widened the economic disparities among nations and people.
The growth has been concentrated only in some select areas in the service sector such as IT, finance, travel, hospitality etc, rather that vital sector such as agriculture and industry.
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Prepare own notes on
Maharatnas, Navratnas and miniratnas companies (refer page no.44)
Debate on the usefulness of India being a member of WTO
CHAPTER 5
Human Capital formation in India
There are two types of capital used in production:-
PHYSICAL CAPITAL- refers to assets which themselves have been manufactured and are used for further production of other goods and services.
HUMAN CAPITAL- refers to the stock of skill, ability, expertise, education and knowledge of an individual that are used to produce economic value in a nation at a given point of time.
(Educationally qualified, trained and skilled workers engaged in the process of production are referred to as Human Capital. Eg;: doctors, engineers, workers ec)
Comparison between Physical and Human capital
Sorces of human capital formation
Expenditure on education:- Investment in education is considered as one of the main source of human capital. Expenditure on education is the most important way to enhancing and enlarging a productive workforce in the country.
Expenditure on health:- It is an important source of human capital formation. Preventive medicines (vaccinations), Curative medicine ( medical intervention during illness), social medicine (spread of health literacy) and provision of good drinking water & good sanitation are the various forms of health expenditure.
On-the-job training:- It is a source of HCF as the return of such expenditure in the form of enhanced labour productivity is more than the cost of it. This may take different forms:
Workers may be trained in the firm itself under the supervision of a skilled worker.
Workers may be sent for off campus training.
Expenditure on migration:- People migrate in search of jobs that fetch them higher salaries than what they may get in the native places. Expenditure on migration involves cost of transport, higher cost of living in a migrated place and psychic cost of living in a strange socio-cultural setup. The enhanced earning in the new place outweighed the cost of migration.
Expenditure incurred for acquiring information:- Expenditure incurred for acquiring information related to the labour market and other market like education, health, employment is also source of HCF. This information is necessary to make decisions regarding investment in human capital as well as for efficient utilization of the acquired human capital stock.
Importance of Human Capital formation
Enhancement of productivity of human capital:- HCF raises the productivity and production as skilled and efficient workers make better use of the given resources.
Efficient use of physical capital:- The physical capital can be utilized effectively only by skilled and intelligent work of human capital in the economy.
Innovations and technological improvement:- HCF stimulates innovations and creates ability to absorb new technology.
Key role in development strategies:- economic development of a country is possible only if its human capital is efficient.
Improvement in quality of life:- HCF enable them to enjoy a higher standard of living as they are able to generate better remuneration for them and for the nation.
Positive change in attitude:- HCF makes people more knowledgeable, skilled and modern in their thought and actions. It increase their outlook and attitude towards various aspects such as traditions, job markets, mobility etc.
Problems Facing Human Capital Formation
High growth rate of population:- continuous rise in population has reduced per capita availability of benefits of economic growth.
Migration:- Loss of resources in terms of “Brain Drain” is a serious outcome of migration when educated and skilled manpower moves to the other countries to work.
Lack of proper manpower planning:- in India, there exists imbalance between the demand for and supply of human resources required for different categories of work. In India, there is poor manpower planning which corresponds to wastage of scarce resources of the nation.
Low level of academic standards:- Educational facilities in India have not developed as required for economic growth.
Inefficient system:- There are widespread inefficiencies in arranging on-the-job training programme for human capital and utilizing scarce resources efficiently.
Poverty:- Due to the inability to get higher education, a large proportion of poor are not able to develop themselves as sound human capital.
Need for different forms of government intervention in education and health sector:
Governments need is to ensure that the private providers of thease services adhere to the standard stimulated by the government and charge the correct prices for these services.
Basic education and health care is the right of the citizen, then it is essential that the government should provide education and health services free of cost for the deserving citizen and those from the socially oppressed class.
Many of a large section of the population can’t afford to access basic education and health care facilities. Both the union and the state government have been stepping up expenditure in education sector over the years in order to fulfill the objective of attaining 100% literacy.
Education and importance of education
Education implies the process of teaching, training, and learning especially in schools or colleges to improve knowledge and develop skills.
Education is much wider concept than literacy. Literacy just refers to the ability to read and write. Education on the other hand include three parameters namely Primary, Secondary or middle and tertiary or higher education.
All educated people are literate while all literate people are not necessarily educated.
Importance of education:
Education produces good citizen.
It develops science and technology
It facilitate use of natural and human resources of all regions of the country.
It expands mental horizon of the people
It helps economic development through greater participation of the people in the process of growth and development.
It promote cultural standard of the citizen
It facilitate invention and innovation
It develops human personality
It provide knowledge to understand change in society and scientific advancement.
The regulatory authority of Education sector in India
The Ministry of Education at Union and State level
Department of Education
UGC (University Grand Commission)
NCERT (National Council of Educational Research and Tranining)
AICTE (All India Council of Technical Education )
Indicators of education level of the country
Educational level of a country is measured in terms of
Adult literacy rate (% of people aged 15+)
Primary Completion rate
Youth literacy rate (% of people aged 15-24)
Enrollment ratio and
Teacher-pupil ratio.
CHAPTER 4
POVERTY
MEANING OF POVERTY
Poverty is the inability to fulfill the minimum requirements of life. In other words, poverty refers to state in which an individual is unable to fulfill even the basic necessities of life. Basic necessities of life include food, clothing, housing, education and health facilities.
Who are Poor
Those who cannot fulfill the basic requirement of life are called poor. Basic necessities of life include food, clothing, housing, education and health facilities.
Characteristics of poor people
Hunger and starvation
Poor health
Weak bargaining power
Lack of facilities of electricity and water
Gender inequality
Migration to urban areas.
Urban and rural poor
Poverty in India has been viewed from two areas: Urban and Rural
Urban Poor:- In urban areas poor possess few assets. The urban poor are largely the over flow of the rural poor who had migrated to urban areas in search of alternative employment. They do a variety of casual jobs and self employed like push cart vendors, street cobblers, women who string flowers, rag pickers, vendors, and beggars etc. They lived in a katcha hutments with walls made of baked mud and roofs made of grass, thatch, bamboo and wood. The poorest of them do not have such dwellings.
Rural poor:- In rural areas, many of them are landless. Even if some of them possess land, it is only dry or waste land. Many rural people do not have even two meals a day. Rural poor work as landless agricultural labourers, cultivators with very small land-holdings, landless labourers engaged in a variety of non-agricultural jobs. They lack basic literacy and skill and have very limited economic opportunity.
MEASURES OF POVERTY
There are two measures to determine the extent of poverty:
Relative poverty
Absolute poverty
RELATIVE POVERTY
It refers to poverty of people, in relation to other people, religion or nations. It is the income position of the one group of people in comparison with the other classes.
Relative poverty compares the inequality of income and asset ownership. It helps in understanding the relative position of different group of the population.
The concepts of Lorenz curve is used to measure relative poverty.
ABSOLUTE POVERTY
Absolute poverty refers to the total number of people living below poverty line.
In defining poverty line, a standard is fixed in terms of minimum level of consumption. Absolute poverty refers to a situation when a person is unable to meet this minimum consumption level.
In India, nearly 20 percent of the country’s population is absolutely poor.
CATEGORISING POVERTY
There are many ways to categorise poverty.
Chronic poor:- It includes people who are always poor and those who are usually poor but may sometimes have a little more money (eg. Casual workers) are grouped together as the chronic poor.
Transient poor:- Churning poor who regularly move in and out of poverty (small farmers and seasonal workers) and occasionally poor who are rich most of the time but may sometimes have a patch of bad luck. They are called Transient poor.
Non-poor:- These are those who never poor.
POVERTY LINE
Government uses Monthly per capita Expenditure (MPCE) to determine the poverty line.
Poverty line is determined by the monetary value of minimum calorie intake that was estimated at 2400 calories for a rural person and 2100 calories for a person in the urban area.
Based on calorie consumption, in 2011-12, the poverty line was defined for rural areas as consumption worth of Rs.816 per person a month and for urban areas it was Rs. 1000.
LIMITATION OF POVERTY LINE
Major problem is that it groups all the poor together and does not differentiate between the very poor and other poor. Suitable for identifying the poor as a group to be taken care by the govt. but not suitable to identify who among the poor need help the most
To construct poverty line things such as access to basic education, healthcare, drinking water and sanitation are needed to be considered.
Poverty line doesn’t take consideration of social factors that trigger poverty such as illiteracy, ill health, lack of access to resources, discrimination, etc.
Economists raise the point that the way data are collected, items included in the consumption basket, methodology followed to estimate the poverty line and no. of poor are manipulated to arrive at the reduced figures.
CAUSES OF POVERTY
High growth rate of population: Growth rate of India has always been higher than economic growth rate of the nation. This lead to fall in per capita availability of goods and services.
Backwardness of agricultural sector/Underdeveloped economy: Under-developed state of Indian economy is clear from the backwardness of agricultural and industrial sectors. Poor state of infrastructural facilities also results in slow pace of development.
Widespread unemployment:- lack of job opportunities, lack of awareness, immobility of factors of production etc are the some of the causes of unemployment in India. It has resulted in low level of output , low level of income, low level of capital formation causing lower level of National income and per capita income.
Inequalities of income and wealth:- Income wealth and means to produce are concentrated in few hands and majority of the people live below the poverty line. Benefit of the economic development have been enjoyed by the richer classes and the poor have been deprived of them.
Low level of capital formation(low demand):- Capital formation in India is very low due to low level of income and savings. It has resulted in declined level of production, income, saving and investment. It resulted in low level of aggregate demand and production causing lack of job opportunity and hence poverty.
Social and Political factors:- India faces many social problems like illiteracy, ignorance, caste system, conservatism etc which prevent people from taking initiative and innovations. Even after independence, political scenario has adversely affected our economic progress. Corruption and inefficiency still prevail and economic policies favour rich.
Lower level of education:- education among the poor is very uncommon due to low income and lack of facilities. Due to illiteracy and limited skill they are forced to pick up low paid job.
Improper utilization of resources.:- due to underutilization of resources, we are not able to produce maximum causing less output and lower level of income resulting in poverty.
POLICIES AND PROGRAMMES TOWARDS POVERTY ALLEVIATION
The govt. approach to poverty to poverty reduction was of three dimensions.
Growth oriented approach.
It is based on the effects of economic growth, rapid increase in GDP and per capita income spreading to all sections of society. It was major focus of planning in 1950s and 1960.
It was felt that through rapid industrial development and transformation of agriculture through green revolution would benefit backward sections and undeveloped regions. But the outcome was not so as expected.
Population growth resulted in very low growth of per capita incomes. Gap between rich and poor widened. The green revolution resulted disparities regionally and between small and large farmers. Also that there was unwillingness and inability to distribute lands.
Specific Poverty Alleviation Programme
Rural Employment Generation Programme(REGP):- This program aims at creating self-employment opportunities in rural areas & small towns. Under this program, educated unemployed from low-income families in rural & urban areas can get financial assistance in the form of bank loan.
Prime ministers Rozgar Yojana(PMRY) :- The educated unemployed from low income families in rural and urban areas can get financial help to set up any kind of enterprise that generates employment. It attempted to generate employment by setting up seven lakh micro-enterprises during the eighth plan [1992-97]. By 2003-04, 3 million people got employment under the scheme of PMRY.
Swarna Jayanthi Shahri Rozgar Yojana (SJSRY):- SJSRY mainly aims at creating employment opportunities for both self-employment & wage-employment in urban areas. The cost of the programme is shared between the central and the state in the ratio of 75:25. Urban self-employment program& the urban wage employment programs were started under SJSRY.
Swarna Jayanthi Gram Swarozgar Yojana (SGSY):- SGSY is a self-employment program, launched with effect from April 1 1999. (as a result of restructuring & combining the earlier poverty eradication programmes like Integrated rural development programme (IRDP), development of women & children in rural areas (DWCRA), etc). It aims at encouraging micro enterprises and to bring the assisted poor families above the poverty line, by organizing them into Self Help Groups (SHGs).
Sampoorna Grameen Rozgar Yojana (SGRY):- The scheme was launched with effect from September 2001. The schemes aims at providing wage employment to poor unskilled workers in rural areas.
Mahatma Gandhi National Rural Employment Guarantee Act 2005:- The act was passed in 2005 & the scheme, i.e. National rural employment guarantee schemes or NREGS was launched in February 2006. The aim of the act is to provide guaranteed wages employment to every households in 600 selected districts. Under this programme, volunteer adults will be provided unskilled manual work for a minimum of 100 days in a year. Those cannot be employed employers under this scheme were given unemployment allowances for those 100 days. One third of the job is reserved for women.
Pradhan Mantri Jan Dhan Yojana:- Started in 2014, which encourage people to open a bank account to integrate them into financial economy. Beside promoting saving habit, this scheme intends to transfer benefits of government schemes and subsidies directly to the account holder.
Meeting the Minimum Need of the poor:- The third approach is to provide minimum basic amenities to the people. India was among the pioneers in the world to envisate that through public expenditures on social consumption needs like providing Food grains at subsidized rates, education, health, water supply& sanitation, peoples living standard could be improved. Three major programmes that aim at improving the food and nutritional status of the poor are:
Public Distribution System
Integrated Child development scheme and Mid-Day Meal Scheme
Pradhan Mantri Gramoday Jojana (PMGY)
Critical Appraisal
POSITIVE:
These programmes brought down percentage of persons below poverty line from 37.2% in 2004-05 to about 28% in 2011-12.
Wage rates have increased and std of living increased.
The percentage of absolute poor in some states is now well below the national average.
NEGATIVE:
Despite poverty alleviation strategies, hunger, malnourishment, literacy and lack of basic amenities continue to be a common feature.
Due to unequal distribution of land and other assets, benefits from direct poverty alleviation programmes have been appropriated by the poor.
The amount of resources allocated for these programmes is insufficient. Such programmes mainly depend upon govt. and bank officials for implementation. Hence due to ill-motivated, inadequately trained, corruption prone and vulnerable to pressure from local elites, resources are inefficiently used and wasted.
Govt. policies failed to address the vast majority of people who living on or just above the poverty line.
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Prepare own notes on
What is vicious circle of poverty?
Write a short note on Pradhan Mantri Gramodaya Yojana.(PMGY)
Exercises questions from NCERT Text Book
Chapter 1
INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
INTRODUCTION:
British rule over India about 200 years, and excessively exploited the Indian resources for their own interest and turned a prosperous nation into a backward, dependent and disintegrated economy.
Sole purpose of British colonial rule in India was to reduce the economy into a FEEDER ECONOMY for Great Britain’s rapidly expanding modern Industrial base.
LOW LEVEL OF ECONOMIC DEVELOPMENT UNDER THE COLONIAL RULE (reason)
The economic policies pursued by the colonial government in India were concerned more with the protection and promotion of the economic interests of their home country than with the development of the Indian economy.
Such policies brought about a fundamental change in the structure of the Indian economy-transforming the country into supplier of raw materials and consumer of finished industrial products from Britain.
During the first half of the twentieth century, aggregate real output was estimated to be around less than 2 % and per capita output was estimated to be around 0.5%.
STATE OF AGRICULTURAL SECTOR
About 85% of the country’s population was depending on agriculture directly or indirectly.
Indian agriculture showed a great sign of backwardness and stagnation on the eve of independence. Level of productivity of Indian agriculture was very low.
Stagnation in agricultural sector was caused mainly because of
Introduction of land settlement system:- Under this system there existed an intermediary class i.e Zamindar between the British government and the peasants or the actual tillers. The main aim of the Zamindars was only to collect rent or revenue regardless of the economic condition of the cultivators. Neither the Zamindars nor the colonial govt, did nothing to improve the condition of agriculture.
System of revenue settlement:- Dates for depositing specified sum of revenue by the Zamindars were fixed by the British government. If they fail in their duty they will lose their rights.
Primitive nature of agriculture:- lack of modern agricultural equipments, inputs, poor irrigation facilities, lack of HYV seeds, pesticides etc.
Commercialisation of agriculture:- British rule initiated commercialization of agriculture whereby the farmers were forced to grow cash crops instead of food crops, which were to be ultimately used by British industries back home.
Low investment in agriculture:- Indian agriculture was starved of investment in terracing, flood-control, drainage and disalinisation of soil as the Britishers spent very little on technological improvement.
INDUSTRIAL SECTOR ON THE EVE OF INDEPENDENCE.
India could not develop a sound industrial base under the colonial rule. The growth rate of industrial sector and its contribution towards GDP was estimated to be around 10%.
De-industrialisation of Indian economy:- Britishers systematically destroyed the India’s world famous handicraft industries and no modern industrial base was allowed to come up.
The primitive motive behind this was two fold;
To reduce India to the mere exporter of raw materials for the upcoming modern industries in Britain
To turn India to the market for the finished product coming from Britain Industry.
Decline of the indigenous handicraft industries:- which created not only the massive unemployment but also new demand in the Indian consumer market, which was now deprived of the supply of the locally made goods.
Existance of few consumer good industry:- During the second half of the 19th century, modern industry began to take root in India but its progress remained very slow. This development was confined to the setting up of cotton and jute textiles mills. After the second world war few industries also come up like paper, cement, sugar etc.
Lack of capital goods industry:- There was hardly any capital goods industry in India to promote industrialization. The country had to depend on the other nations for its requirement capital goods.
Limited oeperation of public sector:- Another significant drawback of the new industrial sector was the very limited area of operation of the public sector. This sector remained confined only to the railways, power generation, communication.
STATE OF FOREIGN TRADE
Restrictive policies of production, trade and tariff pursued by the colonial government adversely affected the structure, composition and volume of India’s foreign trade.
The opening of the Suez Canal in 1869 reduces the cost of transportation and made access to the Indian market easier, which further intensified British control over India’s foreign trade.
Composition of the foreign trade:- India became an exporter of primary product such as raw silk, cotton, wool sugar etc and importer of finished consumer goods like cotton, silk, and woolen clothes and capital goods like light machinery produced in Britain.
Direction of foreign trade:- Britain maintained monopoly control over India’s export and imports. As a result, more than half of India’s foreign trade was restricted to Britain while the rest was allowed with a few other countries like China, Sri Lanka and Iran.
Generation of export surplus:- firstly, because of more export of several commodities there was scarcity in the domestic market. Secondly this export surplus was used to make payment for the expenses incurred by the office set up by the British government in Britain, expenses on war and the import of invisible items(sevices). Thus export surplus led to the economic drain of Indian wealth.
DEMOGRAPHIC CONDITION OF THE INDIAN ECONOMY
The first official census was conducted India in 1881.
Before 1921, India was in the first stage of demographic transition. The second stage of transition began after 1921.
The overall literacy rate was less than 16 % and amo0ng women it was only 7%.
Public health facilities were highly inadequate to curb the communicable diseases which led to high mortality rate.
Infant mortality rate was quiet alarming, estimated to be around 218 per 1000 live birth.
Life Expectancy was also very low estimated to be around 32 years.
Extensive poverty prevailed in India during the colonial period.
OCCUPATIONAL STRUCTURE OF THE INDIAN ECONOMY
Occupational Structure means distribution of working persons across different industries and sectors.
During the colonial period the agricultural sector accounted the largest share of workforce, which usually remained at a high of 70-75 per cent while manufacturing and the service sector accounted for only 10 and 15-20 per cent respectively.
Another striking aspect was the growing regional variation. Part of Madras, Bombay and Bengal Presidency witness a decline the dependence of workforce on the agricultural sector with increase in the manufacturing and the service sector.
However there had been an increase in the share of workforce in agriculture during the same time in states such as Orissa, Rajasthan and Punjab.
STATE OF INFRASTRUCTURE
State of infrastructural facilities was very poor in India during the colonial period. However some effort have been made to develop basic infrastructure to serve the colonial interest but it was not meant for the common man.
Road ways
Condition of road was unsatisfactory but Britisher’s try to develop some roads with the prime objective of mobilization of army with in the country and transport raw material from the country-side to the nearest railway station or the port to sent these to far away England.
There always remained an acute shortage of all weather roads to reach out of the rural area during the rainy season.
Railways
British introduced railways in India in 1850. The railway affected the structure of Indian economy in the following way:
It provide cheap and rapid transportation specially for distant travels.
It promoted national unity and understanding by breaking geographical and cultural barriers.(social benefit)
It fostered commercialization of Indian agriculture which destroyed the self sufficiency of Indian village economies.(economic loss)
Thus the social benefits, which the Indian people gained owing to introduction of the railways, were outweighed by the country’s huge economic loss.
Water ways
The colonial government took measures for developing tehe inland trade and sea lanes.
However, these measures were far from satisfactory.
The inland water ways also proved uneconomical in our country.
Telegraph and Postal services
The introduction of the expensive system of electric telegraph in India served the purpose of maintaining law and order.
The postal services, on the other hand, despite serving a useful public purpose, remained inadequate.
Chapter 2
Indian Economy 1950-1990
Economic System:-
It refers to a system which solves the central problems of an economy. The central problems of an economy arise because of scarcity of resources. These problems are:
What to produce and how much
How to produce
For whom to produce
The solution to the above problems depends upon the type of economic system, the country follows. There are three types of economies
Capitalist economy:- In a market or capitalist economy, means of production are owned and controlled by the private sector and those goods are produced that are in demand i.e, the good that can be sold profitably either in the domestic market or in the foreign market.
In a socialist economy, means of production are owned and controlled by the government and the government decides what goods are to be produced in accordance with the need of the society.
In a mixed economy, the government and the market together answer the three questions of what to produce, how to produce and fro whom to produce.
Economic Planning:-
Economic planning is a system under which a set of targets is defined by the central authority of the country. These targets are to be achieved within a specified period of time, taking the resources of the country in consideration.
In 1950 Planning Commission was set up with the Prime Minister as its Chairperson.
In India plans are of five years and are called five year plans as adopted from the former Soviet Union.
The long term plan (period of twenty years) is called ‘Perspective plan’. The five year plan provide the basis for the perspective plan.
Different goals are emphasized in different five year plans in India though they all aim at achieving the long term objectives of overall growth equity.
THE GOALS OF FIVE YEAR PLAN
The goals of the five year plans are:-
Growth:- It refers to the increase in the country’s capacity to produce the output of goods and services within the country. It implies either a large 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 GDP. Increase in GDP indicates raising standard of living of the people.
Modernisation:- Modernisation refers to adoption of new technologies to increase the production of goods and services . It also refers to changes in the social outlook like gender empowerment.
Self –reliance:- The first seven five years plans gave importance to self-reliance which means reducing dependence on import of those goods which can be produced within the country itself. This policy was considered necessity in order to reduce our dependence on foreign countries, especially for food.
Further it was feared that foreign dependence on import may make India’s sovereignty vulnerable to foreign interference in our policies.
Equity:- Planning also aims at raising standard of living of all people and promoting social justice by reducing inequalities of income and wealth. It is important to ensure that the benefit of economic prosperity reach the poor sections as well instead of being enjoyed only by the rich.
So in addition to growth, modernization and self-reliance, equity also important. Every Indian should be able to meet his or her basic needs such as food, house, education, health care etc.
REFORMS IN AGRICULTURE
Agriculture is the backbone of Indian economy. Agriculture refers to all those processes which are related to production of food crops(rice, wheat, jowar) and non-food crops(jute, cotton etc.). Agriculre produces goods through exploitation of natural resources.
The reforms in agriculture in India are
Institutional reforms(Land reforms):- this refers to the change in the ownership of land holding. These were,
Abolition of intermediaries:- Just a year after independence, steps were taken to abolish intermediaries and to make the tillers the owners of land. The idea behind this move was that ownership of land would give incentive to the tillers to invest in making improvements provided, sufficient capital was made available to them.
Problems in abolition of intermediaries:-
The goal of equity was not fully served by abolition of intermediaries. In some areas the former zamindars continued to own large areas of land by making use of some loopholes in the legislation.
There were cases where tenants were evicted and the landowners claimed to be self-cultivators.
Poorest of the agricultural labourers (Landless Labourors) did not benefit from the land reforms.
Land Ceiling:- This means fixing the maximum size (specified limit) of land which could be owned by an individual and beyond that limit the land would be taken over by the government and would be allotted to the landless cultivators and small farmers. The purpose was to reduce the concentration of land ownership in a few hands and to promote equity.
Problems in land cealing:-
The big land lord challenged the legislation in the courts, delaying its implementation. They used this delay to register their lands in the name of close relatives, thereby escaping from the legislation.
(Conclusion:- Land reforms were successful in Kerala and West Bengal because these states had government committed to the policy of land to the tillers. Unfortunately other state did not have the same level of commitment and vast inequality in landholding continues to this day.)
Technical reforms (Green Revolution):-
Green Revolution means large increase in production of food grains resulting from the use of high Yielding Variety (HYV) seeds especially for wheat and rice. These seeds required the use of fertilizers, pesticide in the correct quantity as well as regular supply of water.
In the first phase during mid 1960s and 1970s, the use of HYV seeds were restricted to some states only like Punjab, Andhra Pradesh and Tamil Nadu. The use of HYV seeds were restricted to few crops like Wheat, Rice, Bajra, Jowar and Maize.
In the second phase during mid 1970s and 1980s this was spread to larger number of states and more variety of crops.
Benefits:-
India becomes self sufficiency in food grains. India no more was dependent on foreign countries in this regard.
The Green Revolution resulted in the multiple rise in food production. Agriculture became both subsistence farming and commercial farming. It resulted in marketed surplus. A proportion of food grains was sold by the farmers in the market. As a result, the price of food grains declined, which benefited the poor people who spent a large percentage of their income on food.
The green revolution enabled the government to procure sufficient amount of food grains to build a stock (buffer stock with FDI) which could be used in times of food shortage.
Many industries also established and started to producing chemicals, pesticides, fertilizers, machines etc.
Limitation:-
It increases the disparities between small and big farmers since only the big farmers could afford the required inputs, thereby reaping most of the benefits of the Green Revolution.
The HYV crops were more prone to pest attack. The small farmers who adopted this technology could lose everything in a pest attack.
The effect of Green Revolution is confined to limited crops like wheat , rice, bajra etc. It has limited effect on commercial crops like tea, rubber, jute etc.
Effect of green Revolution has been only in Punjab, Haryana, Tamil Nadu Maharashtra, Uttar Pradesh and Andhra Pradesh. Thus there were regional inequalities.
General Reforms:-
Credit reforms:- NABARD was established to provide credit facilities to the farmers at the national level in 1982. Co-operative credit societies and Rural development Bank have been established to meet the financial requirements of the farmers.
Irrigation facilities:- At present irrigational facilities cover 43% of India under cultivation as compared to 15% in 1950. Dry farming has been encouraged.
Organised marketing system:- There have been regular markets being established in all part of the country.
DEBATE OVER SUBSIDIES
Why subsidies should be given:-
The government should provide farmers with agricultural subsidies as farming in India needs to be encourage to adopt new technology.
Most of the farmers were very poor and will not be able to afford the cost of new technology if subsidies are not given.
Eliminating subsidies will increase the income inequalities between rich and poor farmers and violate the ultimate goal of equity.
Why subsidies should not be given?
Some economists believe that once the technology is found profitable and is widely adopted, subsidies should be phased out since their purpose have been served.
Subsidies are meant to benefits the farmers but a substantial amount of fertilizer subsidy also benefits the fertilizer industry; and among farmers it largely benefits the farmers in the most prosperous regions.
It is argued that there is no case for continuing with the fertilizer subsidies, it does not benefit the target group(Poor farmers) and it is a huge burden on the government’s finance.
CRITICAL APPRAISAL OF AGRICULTURAL DEVELOPMENT (1950-1990)
During this period, there had been substantial increase in the agricultural productivity. India became self-sufficient in food production. Land reforms resulted in abolition of Zamindari system. WE had marketable surplus for commercial farming.
The proportion of GDP between 1950 and 1990 contributed by agriculture declined significantly, but there was no decline in the population depending on it. 65% of the country’s population continued to be employed in agriculture even till 1990.
INDUSTRY
Role of Public sector (PSU) in Industrial development:-
Lack of capital to undertake investment:- Indian industrialist did not have the sufficient capital to undertake investment in industrial ventures required for the development of the economy.
Lack of incentive for the private sector:- The Indian market was not big enough to encourage industrialist to undertake major projects even if they had the capital to do so. There was low level of aggregate demand because of limited size of the market.
Social justice:- The decision to develop the Indian Economy on socialist lines led to the policy of “the state controlling the commanding heights of the economy”, as the second five year plan put it. (This means that the state would have complete control of those industries that were vital for the economy)
INDUSTRIAL POLICY RESOLUTION 1956 (IPR 1956)
The resolution formed the basis for the second five year plan, the plan which tried to build basis for a socialist pattern of society.
ELEMENTS of IPR 1956:-
Three fold classification of industries:- This resolution classified industries into three categories:
The first category (government) comprises industries which would be exclusively owned by the state. This category included 17 industries like atomic energy, oil, railway etc.
The second category (joint) consisted of industries in which the private sector could supplement the efforts of the state sector, with the state taking the sole responsibility for starting new units. It include 12 industries like fertilizer, machine tools aluminium etc.
The third category (Private) consisted of the remaining industries which were to be in the private sector. These industries were under the control of government through Industries Development and Regulation Act 1951.
Industrial license:-
Although there was a category of industries left to the private, these sector was kept under state control through a system of licenses. No new industry was allowed unless a license was obtained from the government.
This policy was used for promoting industrialization in backward region; it was easier to obtain a license if the industrial unit was established in an economically backward area to promote regional equality.
Even an existing industry had to obtain a license for expanding output or for diversifying production ( producing a new variety of goods). This was meant to ensure that quantity of goods produced was not more than what the economy required.
Industrial concessions:- Industrial units were given industrial concession such as tax benefits and electricity at a lower tariff to encourage establishing their units in the backward regions of the country. It was done to promote regional equality.
Small Scale industry
In 1955, the village and small-scale industries committee (Karve committee) noted the possibility of using small-scale industries for promoting rural development .
A small scale is defined with reference to the maximum investment allowed on the assets of a unit. This limit has changed over a period of time.
In 1950 a small scale industrial unit was one which invested a maximum of rupees five lakhs, at present the maximum investment allowed is rupees one crore.
The production of a number of product was reserved for the small-scale industry. They were also given concessions such as lower excise duty and bank loans at lower interest rates.
TRADE POLICY (IMPORT SUBSTITUTION) (Inward looking trade strategy)
In the first seven five year plan, trade was characterized by inward looking trade strategy(Import substitution) – replacing or substituting import with domestic production.
Nor was any serious thought given to promoting export until the mid-1980s.
Protection from import took two forms:
Tariff:- Tariff are a tax on imported goods, this makes imported goods more expensive and thus discourage imports.
Quotas:- it is the quantitative restriction over imports. It specify the quantity of goods which can be imported.
Reason for import substitution
To protect the domestic industries from foreign competition.
To safe guard the foreign exchange reserves
To be self sufficient.
CRITICAL APPRAISAL OF INDUSTRIAL DEVELOPMENT/REFORMS (1950-1990)
Positive impact
The Proportion of GDP contributed by the industrial sector increased in the period from 11.8% in 1950-51 to 24.6 percent in 1990-91.
Annual growth rate of industrial sector during this period was 6 percent.
Industrial sector become well diversified by 1990-91. We are not confined to production of basic goods like cotton, jute etc. rather variety of goods were being produced, e.g., engineering goods, electronic goods, automobiles etc.
The promotion of small scale industries gave opportunity to those people who did not have the capital to start large firms to get into business. Small Scale Industries help to achieve the objectives of employment equality and equity.
Negative impact
Inefficient public monopolies:- some economists criticize the performance of many public sector enterprises as these started turning into monopolies due to the absence of competition.
Some scholars argue that the state should get out of areas which the private sector can manage and the government may concentrate its resources on important services which the private sector cannot provide.
Many public sector firms incurred huge losses but continued to function because it is difficult to close a government undertaking even if it is a drain on the nation’s limited resources.
The Permit License Raj was also misused by the industrial houses- big industrialist would get a license not for starting a new firm but to prevent competitors from starting new firms. More time was spent by industrialists in trying to obtain license rather than on thinking about how to improve their product.
Due to the restriction on imports Indian consumers have to purchase whatever the Indian producers produced. The producer were aware that they had a captive market; so they have no incentive to improve the quality of their goods.
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Prepare your own note on
Distinguish between Three types of economy (refer any refresher)
Mahalanobis model (refer page no. 20)
CHAPTER 6
RURAL DEVEOPMENT
Rural Development:- It is a comprehensive term , which focus on action for the development of area that are lagging behind the overall development of the village economy.
KEY ISSUES OF RURAL DEVELOPMENT
Development of human resources:- it include focus on a) literacy, more specifically, female literacy, education and skill development.
Land Reforms:- land is very strategic in rural development. Land reforms are required for
a) improvement in agricultural productivity,
b) Abolition of intermediaries,
c) protection of the right of the tiller and
d) eliminating the exploitation of cultivators.
Development of infrastructure:- it refers to the development of
Electricity, irrigation, transport facilities
Credit marketing, financial assistance
Transport facilities
Facility for agricultural research
Information dissemination
Alleviation of poverty:- special measures for alleviation of poverty must be undertaken. Effort should be made to bring about significant improvement in the living conditions of the weaker sections.
Development of the productive resources:- we need to recognize and then develop productive resources of each locality so that available resources can be utilized to the optimum and raise the employment and income of the rural people.
RURAL CREDIT
Rural credit refers to credit for the farmers in rural area. Credit contributes to the growth in rural areas.
The need for rural credit are:
Most of the farming families in India are small and marginal holders producing just enough for subsistence. They seldom generate surplus for further investment. So they borrow from various sources to meet their initial investment on seed, fertilizers, implements and other family expenses lie marriage, religious ceremonies etc
The gestation lag between sowing and harvesting of the crop is quite long. This compounds the need for credit.
CLASSIFICATION OF CREDIT NEED
Credit need of the farmers can be classified in two categories:
According to time
According to purpose
According to time:- credit can be classified as
Short term credit:- the period of this loan ranges between 6 months to 15 months. It is required to meet short term needs like buy seeds, tools, manure etc.
Medium term credit:- the period of this loan ranges between 15 months to 5 years. It is required to meet medium term needs like buy machinery, equipments, digging well etc.
Long term credit:- the period of this loan ranges between 5 to 20 years. It is required to meet long term needs like buy assets like tractors, land, heavy machinery etc.
According to purpose:- can be classified as
Productive Purpose:- it is credit required to meet productive purpose which enhance agricultural production like to buy seeds, machines, fertiliser, digging well etc.
Unproductive purpose:- it is credit required to meet unproductive purpose i.e., to meet social obligations which do not enhances agricultural productivity such as religious ceremonies, marriages etc.
SOURCES OF RURAL CREDIT
The sources of rural credit can be classified as:
Non institutional sources and
Institutional sources
Non institutional sources:-
Traditional sources of rural credit in India
Not registered under the government and don’t follow the proper accounting system
Lending at high rate of interest
Manipulates the accounts and use illegal ways to get back the money
Majority of rural poor depends on these source (because of a) lack of collateral, b) illiteracy c) inadequate formal institutions in the rural area, and iv) can take fresh loan without repaying the existing loan)
These source includes Money lenders, Landlords, relatives and traders.
Institutional sources:-
registered and regulated under the government and follow the proper accounting system
Lending at low/reasonable rate of interest
No manipulations in the accounts and use legal ways to get back the money.
A major change occurred after 1969 when India adopted social banking and multi-agency approach to meet the need of rural credit.
Important institutional sources are Cooperative Credit Societies, Land Deveopment Banks, Regional Rural Bank (RRB), and commercial Bank.
Presently meet the 66 percent of the credit need of the farmers.
Cooperative Credit societies:- advance credit to the farmers at reasonable rate of interest. These contribute nearly 30% of the rural credit. These focus on following objectives:
To free the farmers from clutches of money lenders
To advance credit at low rate of interest
To spread credit facilities all over the country.
To ensure timely and continuous flow of credit to the rural India.
Land Development Banks:-
To provide long term credit. The credit is granted against the mortgage of their lands.
To provide credit for purchasing agricultural inputs, constructing permanent structure on land etc.
Regional Rural Bank:-
To cover the gap in credit structure of the available facilities in the rural areas.
To open branches in those areas where there is no banking facilities available.
To provide credit facilities to small and marginal farmers
Commercial Bank:- after the nationalization in 1969, commercial Bank played and major role in advancing credit. The objectives are
To directly help the farmers by expanding their branches in rural areas
To indirectly help the farmers through agents
To create awareness about existence of facilities being provided by them through newspapers, radio television etc.
National Bank for Agricultural and Rural Development (NABARD)
Set up in 1982 as an apex body to coordinate the activities all institutions involve in the rural financing system.
To promote the strength of the credit institution in credit delivery system.
To serve as an apex funding agency for the institutions providing credit in rural India.
To coordinate the rural financing activities of all credit institutions and maintain liaison with government of India, State government and RBI.
To undertake monitoring and evaluation of projects refinanced by it.
SELF HELP GROUPS (MICRO CREDIT PROGRAMME)
Self Help groups (SHGs) are an emerging phenomenon in the context of rural credit.
They promote thrift (saving-habit) among rural household.
Small savings are mobilized by the SHGs and offered as credit to its different members, depending on their nee, which is repayable in small installments at reasonable rate.
Credit offered without any security and at a moderate rate of interest.
Presently more than seven lakhs SHGs are operating across different rural areas.
RURAL BANKING CRITICAL EVALUATION.
Positive effects on rural farm and non-farm output, income and employment, especially after the green revolution.
It helped farmers to avail services and credit facilities and a variety of loans for meeting their production needs.
Famines become events of the past, we have now achieved food security which is reflected in the abundant buffer stocks of grains.
Deficiencies of rural banking system
Rural banking institutions have failed to develop a culture of deposit mobilization – lending to worthwhile borrowers and effective loan recovery. Agricultural loan default rate have been chronically high. It is alleged that farmers are deliberately refusing to pay back loans.
Owing to political populism, the government has not often shown laxity (lack of strictness) in the recovery of loans. As a result, default rate has tend to swell over time.
Banking credit has invariably been tied to collateral, because of which a large section of small and marginal holders are often left out.
Most financial institutions have failed to develop a culture of thrift among the farming families.
To improve the situation, it is suggested that banks need to change their approach from just being lenders to building up relationship banking with the borrowers. Inculcating the habit of thrift and efficient utilization of financial resources needs to be enhanced among the farmers too.
AGRICULTURAL (RURAL) MARKETING
Agricultural marketing is a process that involves the assembling, storage, processing, transportation, packing, grading and distribution of different agricultural commodities across the country.
PROBLEMS IN AGRICULTURAL MARKETING
Farmers were forced to sell their produce at low prices as they had weak bargaining power and due to lack of required information on prevailing prices.
They also did not have proper storage facilities to keep back their produce for selling later at a better price.
Farmers while selling their product to traders, suffered from faulty weighing and manipulation of account.
Lack of infrastructure facilities like roads, warehouses, godowns, cold storages etc.
MEASURES INITIATED BY GOVERNMNET TO IMPROVE AGICULTURAL MARKETING
Regulation of market:- Regulated markets have been established where sale and purchase of the produce is monitored by market Committee including representatives of government, farmers and traders. Market system is made transparent with a strict vigil on the use of proper scale and weight. The committee ensure that the farmers get appropriate price for their produce.
Provision of physical infrastructure:- this measure attempts to make provision of physical infrastructural facilities like roads, railways, warehouses, godowns, cold storages and processing units. Central and state warehousing corporations are the principal government agencies offering storage space to the farmers.
Cooperative marketing:- Cooperating marketing in realizing fair prices for farmer’s products, is the third aspect of government initiatives. Under this system, farmers get together and form marketing societies to sell the produce collectively and take benefit of collective bargaining to secure a better price of their products.
Assurance of policy instruments:- It is an important step initiated by the government to assurance of Minimum Support Prices(MSP) for agricultural products. Maintenance of buffer stock of wheat and rice by FCI and distribution of food grains and sugar through PDS.
DIVERSIFICATION IN AGRICULTURE:
Agricultural diversification refers to the re-allocation of some of farm’s productive resources into new activities or crops to reduces market risks.
Diversification has two aspects:
Diversification of crop production:- it implies production of a diverse variety of crops rather than one specialized crops. It refers to the shift from single cropping system to multi cropping system.
Diversification of production activity/Employment:- it implies a shift from crop farming to other areas of production activity/employment. It raises income as well as stabilizes it. Non-farm activities include agro-processing industries, food processing industries, leather industries, tourism etc.
Need for agricultural diversification:-
There is greater risks in depending exclusively on farming for lively hood. Diversification towards new areas is necessary not only to reduce the risk from agriculture sector but also to provide productive sustainable livelihood options to rural people.
Agriculture is a seasonal activity, so it is difficult find gainful employment in off season. Therefore expansion in other sector is essential to provide supplementary gainful employment and in realize higher levels of income to overcome poverty and other tribulations.
As agriculture is already overcrowded, a major proportion of the increasing labour force needs to find alternate employment opportunities in other non-farm sector.
Important non-farm areas of employment are
Animal husbandry
Fisheries
Horticulture
Other alternate livelihood options
ANIMAL HUSBANDRY
In India the farming community uses the ‘mixed crop-livestock farming system – cattle, goats, fowl are the widely held species.
Livestock production provides increased stability in income, food security, transport, fuel and nutrition for the family without disrupting other food-producing activities.
Today, livestock sector alone provides alternate livelihood options to over 70 million small and marginal farmers including landless labourers. A significant number of women also find employment in the livestock sector.
Poultry accounts for the largest share with 58%.
India had about 300 million cattle, including 108 million buffaloes, in 2012.
Performance of Indian diary sector over the last 3 decades has been quite impressive. Milk production in the country has increased by more than 8 times between 1951-2014.
This can be attributed mainly to the successful implementation of ‘Operation Flood’.
Operation Flood is a system whereby all the farmers can pool their milk produced according to different grading (based on quality) and the same is processed and marketed to urban centres through cooperatives. In this system, the farmers are assured of a fair price and income from the supply of milk to urban markets.
Problem related to livestock sectors are:
Low productivity owing to backward know-how.
Deficient veterinary care.
FISHERIES
Fish production from inland sources (river, ponds, lakes) contributes about 64 % to the total fish production and the balance 36% comes from the marine sector (sea and ocean).
Total fish production account for 0.8 % of the total GDP.
Among states, Kerala, Gujarat, Maharashtra and Tamil Nadu are the major producers of marine products.
A large share of fish worker families are poor. Increasing underemployment, low per capita earning, absence of mobility of labour to the other sectors and a high rate of illiteracy and indebtedness are some of the major problems fishing community face today.
Even though women are not involved in active fishing, about 60% of the work force in export marketing and 40 % in internal marketing are women.
There is a need to increase credit facilities through cooperatives and SHGs for fisher women to meet the working capital requirements for marketing.
HORTICULTURE
IT is another alternative source of employment in rural India. Horticulture crop includes fruits, vegetables and flowers besides several others.
Presently India is second largest producer of fruits and vegetables in the world. We are emerged as a leading producer of mangoes, bananas, coconuts, cashew nutsand variety of spices.
High crop productivity led to ‘Golden Revolution’ in horticulture farming, during the year 1991-2012.
It is emerging as an important means of sustainable living in the rural area. There is significant rise in the income of the farming families. It has open up the new avenue of employment.
Nearly 20%of rural employment is generated by horticulture.
Increasing role of Information technology(IT)
There is strong belief that IT can pay a critical role in achieving sustainable development and food security in the 21st century.
Government can predict areas of food insecurity and vulnerability using appropriate information and software tools so that action can be taken to prevent or reduce the likelihood of an emergency.
It also has positive impact on the agriculture as it can disseminate information regarding emerging technology and its application, prices, weather and soil conditions for growing different crops etc. Accordingly quality and quantity of crops can be increased manifold.
IT has potential of employment generation in rural areas. Experiments with IT and its application to rural development are carried out in different parts of India.
ORGANIC FARMING
Organic farming is a whole system of farming that restores, maintains and enhances the ecological balance. It is a technology which is eco friendly.
Benefits:-
Economical:- organic farming offers a means to substitute costlier agricultural inputs (such as HYV seeds, chemical fertilisers, pesticides etc) with locally produced organic inputs which are cheaper and generate profitable returns on investment.
Generation of income:- Organic agriculture also generate income through exports as the demand for organically grown crops is on a rise.
Healthy food:- studies have shown that organically grown food has more nutritional value than food grown by chemical farming.
Environment friendly:- the produce of organic farming is pesticide free and produced in an environmentally sustainable way it discards the use of chemical fertilizers. It restore and maintain the natural ecological balance.
Generate employment:- Organic farming requires more labour input than required in chemical farming. So it helps in solving the problem of unemployment to some extent.
Limitations
Shorter life span:- compare to conventional farm products, organic products have more blemishes and a shorter she fife than sprayed produce.
Limited choice in production:- the choice in production of off season crops is quite limited in organic farming due to huge cost and time involved in preparing soil.
Less output:- yield from organic farming are less from traditional agricultural farming. Therefore it may be difficult for the small and marginal farmers to opt for this technology on a large scale.
Needs popularization:- most of the farmers are not aware of organic farming. Popularising organic farming requires awareness and willingness on the part of farmers to adapt to new technology.
Inadequate infrastructure and marketing.
Prepare self notes on
Alternative marketing channels. (Page No: 105 in NCERT text book)
What are the major problems in animal husbandry and fisheries in India? Give some suggestions to improve the conditions.(Page No. 109 in NCERT Text book)
Write a short note on
TANWA (Page No.107)
Saansad Adarsh Gram Yojana (SAGY) (Page no. 110)
Paramparagath krishi vikas yojana
Kusum yojana
Rashtriya Gokul Mission
E-NAM (Electronic National Agricultural Marketing).
Chapter 1 INDIAN ECONOMY ON THE EVE OF INDEPENDENCE
Ques 1: What was the focus of the economic policies pursued by the colonial government in India? What were the impacts of these policies?
Ans: The focus of economic policies pursued by the colonial government in India was their self interest. These policies were concerned more with the protection and promotion of the economic interests of their home country than with the development of the Indian economy.
Impacts of these policies were as follows:
1. Stagnation of agriculture.
2. Decline in handicraft.
3. Drain of wealth.
4. Poor demographic indicators.
5. Such policies transformed the country into an exporter of raw materials and importer of finished industrial products from Britain.
Ques 2:Name some notable economists who estimated India’s per capita income during the colonial period.
Ans: DadabhaiNaoroji, William Digby, Findlay Shirras,V.K.R.V. Rao and R.C.Desai.
Ques 3: What were the main causes of India’s agricultural stagnation during the colonial period?
Ans: The main causes of India’s agricultural stagnation during the colonial period were as follows:
1. Land revenue system such as zamindari system.
2. Forced commercialization of agriculture.
3. Division of land holdings.
4. Exploitation of farmers.
5. Lack of irrigation facilities, pesticides, fertilizers, and agriculture machinery.
6. More dependence on agriculture due to decline of handicraft industries.
7. Most of the fertile land went to Pakistan due to partion of country.
Ques 4. Name some modern industries which were in operation in our country at the time of independence.
Ans: Cotton textile mills, jute mills, The Tata Iron and Steel Company (TISCO), sugar, cement, paper etc.
Ques 5. What was the two-fold motive behind the systematic deindustrialization effected by the British in pre-independent India?
Ans: The two-fold motive behind the systematic deindustrialization effected by the British in pre-independent India was as follows:
First, to make India an exporter of important raw materials for the upcoming modern industries in Britain.
Second, to make India an importer of the machine made goods of Britain to sell them in Indian markets.
Ques 6. The traditional handicrafts industries were ruined under the British rule. Do you agree with this view? Give reasons in support of your answer.
Ans: Yes, we agree that the traditional handicrafts industries were ruined under the British rule. The following reasons were responsible for it:
1. Disappearance of Nawabs, Princes etc. that causes decrease in demand for hand made goods because they were appreciated and supported their work.
2. Use of tariff and non tariff barriers for protecting their woolen and silk manufacturers.
3. Free imports of machine made goods in India which were cheaper than domestic goods.
4. Increase in demand of European goods as a result of foreign influence in India.
5. Exploitation of Indian handicrafts.
6. Development of railways increased competition among Indian hand made goods and British machine made goods.
Ques 7. What objectives did the British intend to achieve through their policies of infrastructure development in India?
Ans: British intend to achieve following objectives through their policies of infrastructure development in India?
1. Commercialsation of agriculture.
2. Mobilisation of army within India.
3. Drain of Wealth.
4. To Maintain law and order.
5. To Bring out raw material from countryside to nearest railway station or port to send them to Britain.
6. To spread or send the machine made finished goods all over the country.
Ques 8. Critically appraise some of the shortfalls of the industrial policy pursued by the British colonial administration.
Ans: Shortfalls of the industrial policy pursued by the British colonial administration were as follows:
1. Policy led to deindustrialization of Indian handicrafts by making India an exporting country of raw material and importing country of British machine made goods.
2. Increase in Unemployment.
3. Increase in dependence on agriculture.
4. Non establishment of capital goods industries in India.
5. Commercialsation of agriculture.
6. Limited area of operation of public sector.
Ques 9. What do you understand by the drain of Indian wealth during the colonial period?
Ans: Drain of wealth means flows on Indian capital to Britain. It happened in following ways:
1. By exporting raw material to Britain.
2. By selling their products in Indian markets.
3. By paying salaries and allowances to British administrative staff.
4. By developing infrastructure facilities.
5. By Commercialsation of agriculture.
6. Remittance to finance British wars.
Ques 10. Which is regarded as the defining year to mark the demographic transition from its first to the second decisive stage?
Ans: 1921.
Ques 11. Give a quantitative appraisal of India’s demographic profile during the colonial period.
Ans: Demographic indicators during the colonial period were as follows:
1. High birth and death rates due to inadequate medical facilities and sanitation facilities.
2. High infant mortality rate 218 per thousand.
3. Low life expectancy 32 years.
4. Over all literacy level was less than 16%.
5. Female literacy level was 7%.
6. Low standard of living.
7. Mass Poverty was prevalent.
Ques 12: Highlight the salient features of India’s pre-independence occupational structure.
Ans: Occupational structure means the distribution of work force among different sectors of the economy. India’s pre-independence occupational structure was as follows:
Agricultural sector accounted for the largest share of workforce, which usually remained at a high of 70-75 per cent.
Manufacturing accounted for only 10. Service sector accounted for only 15-20 per cent.
There was a decline in dependence of the workforce on the agricultural sector in then Madras Presidency (comprising areas of the present-day states of Tamil Nadu, Andhra Pradesh, Kerala and Karnataka), Maharashtra and West Bengal with a commensurate increase in the manufacturing and the services sectors. However, there had been an increase in the share of workforce in agriculture during the same time in states such as Orissa, Rajasthan and Punjab.
Ques 13. Underscore some of India’s most crucial economic challenges at the time of independence.
Ans: India’s most crucial economic challenges at the time of independence are as follows:
1. Agriculture sector was suffering with surplus labour and extremely low productivity.
2. Industrial sector was crying for modernization, diversification, capacity building and increased public investment.
3. Foreign trade was requiring diversification and new directions.
4. Infrastructure facilities needed upgradation, expansion and public orientation.
5. Mass poverty, unemployment and poor demographic indicators were requiring welfare orientation of public economic policy.
Ques 14: When was India’s first official census operation undertaken?
Ans : 1881.
Ques 15: Indicate the composition, volume and direction of trade at the time of independence.
Ans: Composition: India became an exporter of primary products such as raw silk, cotton, wool, sugar, indigo, jute etc. and an importer of finished consumer goods like cotton, silk and woollen clothes and capital goods like light machinery produced in the factories of Britain.
Volume: India’s export more than its imports. So there was a large export surplus.
Year Exports (Crore Rs) Imports (Crore Rs)
1938-39 169 152
1947-48 403 389
Direction: More than half of India’s foreign trade was restricted to Britain while the rest was allowed with a few other countries like China, Ceylon (Sri Lanka) and Persia(Iran).
Ques 16. Were there any positive contributions made by the British in India?Discuss.
Ans: Yes there were some positive contributions made by the British in India. These are as follows:
1. Development of infrastructure such as railway, telegraph, irrigation etc.
2. Commercialisation of agriculture.
3. Establishment of some large industries like TISCO, sugar, jute, cotton, paper industries.
4. Elimination of social evils like child marriage system, sati pratha etc.
5. Expansion of education system.
6. Introduction of modern banking system by establishing imperial Bank of India.
CHAPTER 2 INDIAN ECONOMY 1950-1990
Ques1. Define a plan.
Ans: A plan is a strategy that how to use the available resources in a best possible manner to achieve certain prespecified goals.
Ques 2. Why did India opt for planning?
Ans: India achieved independence in 1947 but political independence has no meaning without economic prosperity. The colonial government left India in a poor, backward and stagnant situation.
Therefore India opted for economic planning to sustain political independence and generate economic prosperity by developing agriculture, industries, infrastructure, foreign trade and social facilities in the country.
Ques 3. Why should plans have goals?
Ans: A plan should have goals because without goals a planner cannot decide that in which direction they have to move on priority basis and another reason is limited resources.
The goals of five year plans are growth, modernization, equity and self reliance.
Ques 4. What are miracle seeds?
Ans: High yielding variety seeds are miracle seeds. These seeds lead to tremendous increase in agriculture production and made India self reliant.
Ques 5. What is marketable surplus?
Ans: The portion of agricultural produce which is sold in the market by the farmer is called as marketable surplus.
Ques 6. Explain the need and type of land reforms implemented in the agriculture sector.
Ans: Need for land reforms: During the colonial rule there was neither growth nor equity in the agricultural sector. The low productivity of agriculture forced India to import food grains from U.S.A., which increased our foreign dependence. Therefore to (1) increase production, (2) bring equity, (3) reduce foreign dependence, (4) save tenants from exploitation and (5) to become self reliant the land reforms were introduced.
Types of land reforms:
1. Abolition of intermediates such as zaminder.
2. Consolidation of land.
3. Co-operative farming.
4. Redistribution of land.
5. Development of agriculture facilities such as irrigation, credit or loan, transport, storage etc.
6. Regulation of rent.
7. Ownership rights to tenants.
8. Land ceiling.
Ques 7. What is Green Revolution? Why was it implemented and how did it benefit the farmers? Explain in brief.
Ans: Green revolution (1967) means tremendous increase in agricultural production due to adoption of new agricultural methods such as HYVS, pesticides, fertilizers, agriculture machinery, irrigation facilities etc.
Green revolution was implemented due to following reasons:
1. Low productivity in agriculture.
2. Droughts in 1965-1966, 1966-67.
3. Absence of infrastructure facilities like irrigation, credit or loan, transport, storage etc.
4. Old technology.
5. Dependence on import for food grains.
Benefits of Green revolution to the farmers:
1. Rise in living standard of farmers due to increase in income.
2. Lead to marketable surplus for the farmers.
3. Lead to change in outlook towards farming. Farming was no longer considered merely/only as a mean of subsistence.
4. Green revolution made India self reliant in food grains.
5. India started maintaining buffer stock of food grains to be used during emergencies.
Ques 8. Explain ‘growth with equity’ as a planning objective.
Ans:Growth with equity mean the benefits of economic prosperity should reach to all the section of society (rich as well as poor) . Every Indian should be able to meet his basic needs such as food, house, education, health care etc. and the inequality in the distribution of income and wealth would be minimized. Only then growth brings development and prosperity.
Ques 9. Does modernisation as a planning objective create contradiction in the light of employment generation? Explain.
Ans: Modernisation as a planning objective means more use of advance technology. Advance technology requires less labour but it does not mean lesser employment because advance technology increases production as well as productivity .That leads to higher income. Rising income implies rising demand for goods and services and when demand for goods and services increases then the producer plan more output and new industries and companies will set up that increases the demand for labour and creates more employment .Thus there is a positive correlation between modernization and employment generation.
Ques 10. Why was it necessary for a developing country like India to follow self-reliance as a planning objective?
Ans: The first seven five year plans gave importance to self reliance which means avoiding imports of those things and services which could be produced in India itself. These policies were considered necessary in order to reduce our foreign dependence specially for food. Dependence on imported food supplies, foreign technology and capital might increase the interference of foreign countries in social and economic issues and create fear for our freedom.
Ques 11. What is sectoral composition of an economy? Is it necessary that the service sector should contribute maximum to GDP of an economy? Comment.
Ans: Structural composition refers to the contribution made by the three sectors (the agricultural sector, the industrial sector and the service sector) in the GDP of a country. No, it is not necessary that the service sector should contribute max. to GDP of an economy.
Usually, with development the share of agriculture declines and the share of industry become dominant. At higher levels of development, the service sector contributes more to the GDP than the other two sectors. But In India, the shift has been taken place from agriculture to service sector. In 2008-2009 the share of the service sector was 57%, industrial sector 25.9% and of agriculture sector 17.1%.
Ques 12. Why was public sector given a leading role in industrial development during the planning period?
Ans: Public sector was given a leading role in industrial development during the planning period due to following reasons:
1) Shortage of capital with private sector.
2) Private sector initially could not take the risk of opening new industries.
3) Large scale industries could not be handled by private sector.
4) To prevent concentration of economic power in few hands.
5) Development of infrastructure.
6) Balance development of country.
7) To provide basic facilities and necessary goods to all sections of society.
Ques 13. 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.
Ans: The spread of green revolution enabled India to achieve self sufficiency in food grains .We no longer had to be at the mercy of America or any other country for meeting our food requirement, it lead to market surplus for the farmers. Therefore now instead of importer of food grains, India became an exporter of food grains and India started maintaining buffer stock of food grain to be used during emergency.
Ques 14. While subsidies encourage farmers to use new technology, they are a huge burden on government finances. Discuss the usefulness of subsidies in the light of this fact.
Ans: Subsidies are the economic benefit (Example: fertilizer, electricity at less than market price) granted by the govt. to domestic producer due to following reasons:
1. To uplift them and to strengthen their competitive position against the foreign competitors.
2. To encourage farmers to test new technology
3. To bridge the gap between rich and poor farmers.
But rich farmers are enjoying more benefits of subsidies in comparison to small farmers. Subsidies beyond limit cause wasteful uses of resources Example: supply of free electricity to the farmers in Punjab to run tubewells has increased the use of electricity there even for non productive purpose like to fulfill household needs. So, subsidies in such cases create huge burden on govt. finance. Therefore govt.
should take steps to the insure proper use of subsidy
Ques 15. Why, despite the implementation of green revolution, 65 per cent of our population continued to be engaged in the agriculture sector till 1990?
Ans: Despite the implementation of green revolution, 65 per cent of our population continued to be engaged in the agriculture sector till 1990 because the industrial sector and service sector did not develop so much that they could absorb the people working in agricultural sector .Many economist call this an important failure of our policies during 1950 to 1990.
Ques 16. 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.
Ans: Public sector is not meant for earning profit but to promote welfare of the nation .Government has to provide welfare goods and services such as electricity, life saving medicines, railways, education etc. to all section of society particularly poor for their upliftment, inspite of losses.
On the other hand private sector cannot provide these goods and services at such low rates with losses that cause increase in social inequalities and decreases in social welfare of the society. This explains the usefulness of public sector undertaking.
Ques 17. Explain how import substitution can protect domestic industry.
Ans: Import substitution means replacing or substituting imports with domestic production. By these policies govt. protects domestic industries from foreign competition. This protection is of two types:
1) Traffis: Traffis are the taxes on import which makes imports more expensive and discourage their uses.
2) Quotas: Quotas refers to the specific quantity of imported goods.
Thus traffis and quotas restrict imports and protect domestic firms/producers from foreign competition.
Ques 18. Why and how was private sector regulated under the IPR 1956?
Ans: Private sector was regulated under the IPR 1956 due to following reasons:
1) To promote the regional equality or balance development.
2) To promote the industries in backward regions.
3) To ensure the quantity of goods produced was not more than the economy required.
4) To promote social welfare rather than industrial profits.
Private sector was regulated under the IPR 1956 in the following ways:
1) No new industries were allowed unless the license was not obtained from the govt.
2) Already existing industries had to obtain a license for expanding output or diversifying production.
Ques 19. Match the following:
1. Prime Minister C. Chairperson of the planning commission.
2. Gross Domestic Product D. The money value of all the final goods and services produced within the economy in one year.
3. Quota B. Quantity of goods that can be imported Product.
4. Land Reforms E. Improvements in the field of agriculture to increase its productivity.
5. HYV Seeds A. Seeds that give large proportion of output.
6. Subsidy F. The monetary assistance given by government for production activities.
CHAPTER 3 LIBERALISATION, PRIVATISATIONANDGLOBALISATION: AN APPRAISAL
Ques1. Why were reforms introduced in India?
Ans: Reforms were introduced in India due to following reasons:
i) Fall in foreign exchange reserves: In 1990-91 India’s foreign exchange reserves fell to such a low level that the same was not enough to pay for an import bill for even 15 days.
ii) Iran Iraq war: Due to Iran Iraq war in 1990-91, prices of petroleum products shot up.
iii) Rising prices of essential goods: In India prices of essential goods continued to rise rapidly due to rise in price of petroleum products.
iv) Poor performances of Public Sector Undertakings (PSUs): Income from PSUs was not enough to meet growing govt. expenditure.
v) Adverse Balance of Payments (BOP): It means our payments to rest of the world are more than our receipts from rest of the world.
vi) Rising fiscal deficit: It means govt. expenditure was more than govt. revenue.
Vii) Closed economy: Poor performance of Indian economy due adoption of closed economy concept in the lack of competition.
Ques 2 Why is it necessary to become a member of WTO?
Ans: World Trade Organization (WTO) is the international organization dealing with the global rules of trade between nations. It is important for any country to become a member of WTO (World Trade Organisation) for the following reasons:
1. WTO provides equal opportunities to all its member countries to trade in the international market.
2. It provides its member countries greater scope to utilise world resources and provides greater market accessibility.
3. It advocates for the removal of tariff and non-tariff barriers to promoting healthier competition among different nations.
4. It provides the platform to member countries to raise their voice to safeguards their interests.
5. WTO provides necessary assistance and guidance about the international trade to their member countries.
Ques 3. Why did RBI have to change its role from controller to facilitator of financial sector in India?
Ans: Financial sector includes financial institutions like commercial banks, stock exchange and foreign exchange market.
RBI has to change its role from controller to facilitator of financial sector in India due to following reasons:
To increase the participation of private sector.
To increase the efficiency of financial sector.
To increase the accessibility to financial sector.
To attract the foreign investors.
To increase the sense of competition in financial sector.
Ques 4. How is RBI controlling the commercial banks?
Ans: RBI is controlling the commercial banks through the following instruments:
Repo Rate: The interest rate at which central bank gives loans to commercial banks
Reverse Repo Rate: The interest rate at which commercial banks gives loans to central bank.
CRR(Cash Reserve Ratio): Minimum percentage of total deposits that the banks has to keep with central bank.
SLR(Statutory Liquidity Ratio): Minimum percentage of total deposits that the banks has to keep in cash form with themselves.
Margin requirement: It is the difference between the value of security offered for loans and value of loan granted.
Ques 5. What do you understand by devaluation of rupee?
Ans: Devaluaton of rupee means decrease in the value of rupee in comparison to the foreign currencies by the Government.
Ques 6. Distinguish between the following
(i) Strategic and Minority sale
Ans: In strategic sales the Govt. offers or sell more than 51% shares to the investors . It means govt. transfers the management control and ownership rights to the investors.
In Minority sales Govt. offers or sell only upto 49% shares of PSUs to the investors. It means management control and ownership rights do not transfers to the investors.
(ii) Bilateral and Multi-lateral trade
Ans : Bilateral trade means the trade(exchange of goods and services) between two countries.
Multilateral trade means the trade (exchange of goods and services) among more than two countries.
(iii) Tariff and Non-tariff barriers.
Ans: Tariff barriers are the taxes on imported goods to make them expensive and protect domestic industries from foreign competition.
Non-Tariff barriers are the quotas which mean the fixation of quantity of imported goods.
Ques 7. Why are tariffs imposed?
Ans: Tariffs (import tax) are imposed to increase the prices of imported goods, so that their demand decrease and domestically produced goods can be saved from the competition with imported goods of foreign industries.
Ques 8. What is the meaning of quantitative restrictions?
Ans: Quantitative restrictions are the quotas which mean the fixation of quantity of imported goods.
Quantitative restrictions are imposed to reduce the volume of imports, to promote the sale of domestically produced goods and to save the domestic producers from competition with foreign producers.
Ques 9. Those public sector undertakings which are making profits should be privatised. Do you agree with this view? Why?
Ans: No, public sector undertakings which are making profits should not be privatized because these are established for providing infrastructure, necessary goods and necessary services at an affordable price to all sections of the society especially poor for their upliftment.
Ques 10. Do you think outsourcing is good for India? Why are developed countries opposing it?
Ans: Outsourcing means hiring of regular services such as legal advice, computer service, advertisement, security etc. from external sources, mostly from other countries.
Yes, outsourcing is good for India due to following reasons:
i) It provides Indians better opportunities to earn more income and raise their standard of living.
ii) Outsourcing provides employment and leads the formation of more human capital i.e. educated and skilled workers.
Developed countries are opposing it due to following reasons:
i) It will narrow down the income disparities between them and India which causes the disappearance of dominant role of developed countries over developing countries like India.
ii) It causes the large flow of foreign currencies in India from developed countries.
iii) It causes decrease in employment opportunities in developed countries as skilled manpower is easily available in India at lesser wage rate.
Ques 11. India has certain advantages which makes it a favourite outsourcing destination. What are these advantages?
Ans: Most of the MNCs even small companies are outsourcing their services from India due to following reasons:
i) Low wage rates.
ii) Availability of skilled and technical manpower in India.
iii) Availability of English speaking persons.
iv) Reasonable degree of skill and accuracy at cheaper cost.
v) Trustworthy or honest people.
Ques 12. Do you think the navaratna policy of the government helps in improving the performance of public sector undertakings in India? How?
Ans: In 1996, the govt. choose nine PSUs and declared them as navaratnas and this navaratna policy of the government helps in improving the performance of public sector undertakings in India in the following ways:
i) It helped in improving efficiency of PSUs.
ii) It helped in infusing professionalism in PSUs.
iii) It helped PSUs to compete more effectively in the liberalised global environment.
Under this policy PSUs were given greater managerial and operational autonomy (freedom), in taking various decisions to run the company efficiently and thus increase their profits.
Ques13. What are the major factors responsible for the high growth of the service sector?
Ans: Major factors responsible for the high growth of the service sector are as follows:
i) Skilled manpower.
ii) Foreign direct investment.
iii) Outsourcing.
iv) Liberalisation and Globalisation.
v) Tax reforms.
vi) Peaceful environment.
vii) Big market
Ques14. Agriculture sector appears to be adversely affected by the reform process. Why?
Ans: Agriculture sector appears to be adversely affected by the reform process due to following reasons:
i) Govt. investment in agriculture infrastructure facilities such as irrigation, power, roads, market linkages and research has been reduced in the reform period.
ii) Removal of fertilizer subsidy has led to increase in the cost of production, which has adversely affected the farmers.
iii) Reduction in import duties on agricultural products, lifting of quantitative restrictions on agricultural products adversely affected Indian farmers as they now have to face increased international competition.
iv) Because of export oriented policy, In agriculture there has been a shift from production for the domestic market to production for the exports, focusing on cash crops in place of production of food grains. This puts pressure on prices of food grains.
Ques15. Why has the industrial sector performed poorly in the reform period?
Ans: Industrial sector has performed poorly in the reform period due to following reasons:
i) Inadequate investment in infrastructure.
ii) Decrease in demand of domestic industrial products due to cheaper imports etc.
iii) Free movement of goods and services from foreign countries increased competition and adversely affect the local industries and employment opportunities in India.
iv) Developing country like India still does not have the access to developed countries’ markets because of high non-tariff barriers.
Ques 16. Discuss economic reforms in India in the light of social justice and welfare.
Ans: New economic reforms in India brought advantages and disadvantages in the economy but economic reforms caused more disadvantages to social justice and welfare .The following points will explain this:
i) Due to undevelopment of agriculture sector in reform period the welfare of farmers decreased.
ii) Due to undevelopment in industrial sector in reform period the welfare of domestic industrialists and workers decreased.
iii) Globalisation destroyed the small scale industries therefore decreased the welfare of small industrialists.
iv) New economic reforms proved beneficial for rich, educated and skilled because only they take the benefits of opportunities created by new economic reforms which caused increase in income inequalities in the economy.
v) New economic reforms only developed the service sector activities such as telecommunication, information technology, entertainment, travel, real estate etc. and neglect the other sectors of the economy.
CHAPTER: 4 POVERTY
Poverty is the inability to fulfil the basic needs of life food, cloths & shelter.
Poverty line is a criteria to know whether a person is poor or non poor.
According to C. Rangarajan committee (2014)
Per Capita criteria:
Rural area: Per capita income Rs. 32 per day & Rs 972 per month.
Urban area: Per capita income Rs. 47 Rs per day & 1407 per month.
Per capita calorie intake (Energy requirement):
2,155 kcal per person per day in rural areas and 2,090 kcal per person per day in urban areas.
Population below poverty line: 29.5%
Rural Poverty: 30.9% & Urban Poverty: 26.4%
Poorest state : Chhattisgarh (47.9%) & least poor State :Goa(6.3%)
Ques 1. Why calorie -based norm is not adequate to identify the poor?
Ans: Calorie -based norm is not adequate to identify the poor due to following reasons:
1. It does not differentiate between the very poor and the other poor.
2. It does not include the factors like accessibility to basic education, healthcare, drinking water and sanitation. They need to be considered to develop Poverty Line.
3. It does not take into consideration factors like discrimination (inequality) & lack of civil and political freedoms.
Ques 2. What is meant by ‘Food for Work’ programme?
Ans: ‘Food for Work’ programme was launched in 1977-78 in which food grains were provided to labourers for works of development.
National Food For Work Programme (NFWP) was launched on 14th November 2004 in 150 most backwards districts of the country. This programme aims at providing food security through wage employment and creating income earning assets. The wages were paid partially in cash and partially in kind. Later on this programme was subsumed in National Rural Employment Guarantee Act 2005 (NREGA) which assurers 100 days employment to all rural unskilled labourers. If govt. fails to provide employment within 15 days then it gives unemployment allowances to the applicants. In this scheme there is a provision of 33% women reservation. Now this scheme is renamed as Mahatma Gandhi NREGA.
Ques 3. Why are employment generation programmes important in poverty alleviation in India?
Ans: Employment generation programmes like (MNREGA) and Swarna Jayanti Shahari Swarozgar Yojana (SJSRY) are helpful in poverty alleviation in the following ways:
1. Makes the man capable to earn income and fulfill his basic needs
2. Reduction in rural to urban migration by creating employment opportunities in rural areas.
3. Reduction in inequality of income and wealth.
4. Formation of human capital formation with the help of education, health and training
5. Increase in national income.
6. Develop growth oriented attitude
7. Spread awareness and reduction in social evils like theft, beggary, child labour etc.
Ques 4. How can creation of income earning assets address the problem of poverty?
Ans: Creation of income earning assets such as land, poultry farm, dairy farm, cottage industries, shops etc. in rural areas and industries, companies, markets, infrastructure facilities in urban areas by advancing or giving loans to needy persons encourage them for self employment and helps in reduction of poverty.
Ques 5. The three dimensional attack on poverty adopted by the government has not succeded in poverty alleviation in India. Comment.
Ans: Although there has been reduction in poverty due the three dimensional attack on poverty adopted by the government(Growth, Poverty alleviation programmes and Provision of basic needs) but still there is a mass of poverty in India due to following reasons:
1. Despite various strategies to alleviate poverty problems like hunger, malnourishment, illiteracy and lack of basic amenities are prevalent in India.
2 Due to unequal distribution of assets benefits of poverty alleviation programmes have not reached to poor.
3. Amount of resource allocated to poverty alleviation programmes are not sufficient.
4. Lack of awareness about govt. poverty alleviation programmes.
5. Improper implementation of poverty alleviation programmes due ill motivation, inadequate training and corruption in various deparments.
6. Lack of social infrastructure like school, hospital, training center.
7. Lack of support from local bodies.
Ques 6. What programmes has the government adopted to help the elderly people and poor and destitute women?
Ans: The government has adopted following programmes to help the elderly people and poor and destitute women:
National Social Assistance Programme: It was launched on 15 Aug 1995 for elderly people and poor destitute women .Under this programme, elderly people who do not have anyone to take care of them are given pension to sustain themselves.
Anna Purna Yojna: It was launched on 1 April 2000.Under this scheme 10 kg foodgrains are provided to senior citizens free of cost.
Ques 7. Is there any relationship between unemployment and poverty? Explain.
Ans: Unemployment is a situation when a person has no work to do. It means that he cannot earn money to fulfill basic requirements of his family such as food, cloths, shelter, education, health facilities etc. Therefore unemployment causes poverty in the economy. On the other hand if a person is poor then he will be unable to get education, skills, training and health facilities due to these reasons he will be unable to get job and remains unemployed. Thus there is a cause and effect relationship between unemployment and poverty.
Ques 8. 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?
Ans: The scheme under which one has to apply in rural areas is Swarna Jayanti Gram Swarozgar Yojana(SGSY). Under this scheme bank give loan to poor section to establish enterprises individually or on collective bases as SHG. This scheme is restructured as National rural livelihood Mission(NRLM) or Aajeevika in 2011-12.
If the shop is to opened in urban area then one should apply under Swarna Jayanti Shahari Swarozgar Yojana (SGSRY). This scheme aims to provide self employment to urban poor.
Ques 9. 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.
Ans: Yes, it is correct to say that that poverty has shifted from rural to urban areas because rural poor migrated to urban areas in search of employment but all of them are not able to get employment and remain unemployed and increase the poverty in urban areas. Trends also shows that poverty decreased more in rural areas in comparison to urban areas. Poverty in rural areas decreased from 27.1% in 1999-2000 to 21.8% in 2005 while in urban areas it decreased from 23.6% to 21.7% during the same period.
Ques 10. Suppose you are a resident of a village, suggest a few measures to tackle the problem of poverty.
Ans: Few measures to tackle the problem of poverty are as follows:
1. Control over population.
2. Creation of income earning assets.
3. Development of infrastructure.
4. Breaking up of social institutions such as joint family system, cast system, law of inheritance and succession.
5. Proper implementation of poverty alleviation and self employment programmes.
6. Promotion of rural youth for self employment.
7. Human capital formation.
8. Spread awareness among society about govt. schemes and measures to tackle with the problem of poverty.
CHAPTER: 5 HUMAN CAPITAL FORMATION
Human Capital: Stock of educated, skilled, experienced and healthy people of a nation at a point of time.
Human Capital Formation: Process of increasing the no. of educated, healthy, skilled & experienced people which are essential for economic and social development of a nation
Literate: As per Census, a person aged seven and above who can both read and write with understanding in any language, is treated as literate.
Literacy Rate (2011):73% (Male: 81% & Female: 65%)
World Literacy Rate: 84%
State with highest literacy rate: 93.9 %
State with lowest literacy rate: Bihar (63.8%)
Kerala’s Expenditure On Education Vs Bihar
Source: Kerala Budget 2012-13, Bihar Budget 2012-13, Census 2011
Ques 1. What are the two major sources of human capital in a country?
Ans: Health and Education.
Ques 2. What are the indicators of educational achievement in a country?
Ans: The indicators of educational achievement are adult (15+) literacy level (74%), primary education completion rate and youth (15-24) literacy rate (90%).
Ques 3. Why do we observe regional differences in educational attainment in India?
Ans: Regional differences in educational attainment in India are because of difference in educational expenditure, Political will, traditions, climate, awareness about the importance of education etc.
Ques 4. Bring out the differences between human capital and human development.
Ans:
Ques 5. How is human development a broader term as compared to human capital?
Ans: Human development is a broader term as compared to human capital because human capital prefers increase in income only while human development prefers increase in income as well as human well being.
Ques 6. What factors contribute to human capital formation?
Ans:
A. Education: Investment in education is considered as main sources of human capital because of following reasons:
1. Education helps in getting employment.
2. Education facilitates the full utilization of resources.
3. Education promotes inventions and innovations.
4. Education increases the productivity of a worker and hence income.
5. Education helps in understanding the cause and effect relationship.
6. Education raises the standard of living.
7. Education facilitates adaption according to new technology.
8. Education spreads awareness among society.
9. Education develops growth oriented attitude.
B. Health: Like education, health is also considered as an important input for human capital due to following reasons:
1. Efficient production requires healthy mind and healthy body.
2. Expenditure on health makes a man more efficient and productive.
3. A sick labourer can not be regular to his work.
4. Healthy person only can get education and training properly.
5. Develop positive and growth oriented attitude.
C. On-job-training: On the job training helps workers to acquire specialized skills. Expenditure regarding on-the-job training is a source of human capital formation as it increases labour productivity.
D. Migration: People migrate from one place to another for better education, training & job opportunities. Unemployment is the reason for the rural-urban migration in India. Technically qualified persons, like engineers and doctors, migrate to other countries because of higher salaries that they may get in such countries. Expenditure on migration is a source of human capital formation because it increases efficiency & earning of a human being.
E. Information: Appropriate information is necessary to make the best use of human resources. For example: Information about courses offered by various institutions and their cost ,scope, salaries, various treatments offered by medical institution and their cost, reputation of an institution etc. All this information is necessary to make decisions regarding investments in human capital and efficient utilisation of resources. Thus Expenditure incurred for acquiring information is also a source of human capital formation because it increases income.
Ques 7. How government organisations facilitate the functioning of schools and hospitals in India?
Ans: In India, the ministries of education at the union and state level, departments of education and various organisations like National Council of Educational Research and Training (NCERT), University Grants Commission (UGC) and All India Council of Technical Education (AICTE) regulate the education sector.
Similarly, the ministries of health at the union and state level, departments of health and various organisations like Medical council of India(MCI), Pharmacy Council of India (PCI) and Indian Council for Medical Research (ICMR) regulate the health sector.
Ques 8. Education is considered an important input for the development of a nation. How?
Ans: A part of Ans 6.
Ques 9. Discuss the following as a source of human capital formation
(i) Health infrastructure
(ii) Expenditure on migration.
Ans: B and D Part of Ans 6.
Ques 10. Establish the need for acquiring information relating to health and education expenditure for the effective utilisation of human resources.
Ans: E part of Ans 6.
Ques 11. How does investment in human capital contribute to growth?
Ans: Economic growth means the increase in national income of a country.
Education and health along with on-the-job training, information and migration increase individual’s income generating capacity, stimulates research & innovations, provide uninterrupted labour supply and develop growth oriented attitude and environment which leads to increase in national income and hence contributes to economic growth.
Ques 12. ‘There is a downward trend in inequality world-wide with a rise in the average education levels’. Comment.
Ans: Yes, there is a downward trend in inequality world-wide with a rise in the average education levels because education creates opportunities for employment and raises scope of inventions & innovations, living standard and income for all and brings equality.
Ques 13. Examine the role of education in the economic development of a nation.
Ans: A part of Ans 6.
Ques 14. Explain how investment in education stimulates economic growth.
Ans: A part of Ans 6.
Ques 15. Bring out the need for on-the-job-training for a person.
Ans: On the job training helps workers to acquire specialized skills, bring confidence and Increases productivity and hence income.
Ques 16. Trace the relationship between human capital and economic growth.
Ans: Human capital increase individual’s income generating capacity, stimulates research & innovations, provide uninterrupted labour supply and develop growth oriented attitude and environment which leads to increase in national income and hence contributes to economic growth.
Economic growth means increase in national income and per capita income which increases the expenditure on health, education, training and information and causes building of high level of human capital.
Thus human capital causes economic growth and economic growth causes formation of human capital .Therefore there is a cause and effect relationship between human capital and economic growth.
Ques 17. Discuss the need for promoting women’s education in India.
Ans: Need to promote women education in India is due to following reasons:
1. To make women economically independent.
2. To save them from exploitation and domestic violence
3. Educated women inculcate moral values in her children and facilitate their education.
4. To improve social status of women.
5. Favourable impact on fertility rate and control over population.
6. Spread awareness and helpful in implementation of govt. welfare programmes.
7. Increase in national income
Ques 18. Argue in favour of the need for different forms of government intervention in education and health sectors.
Ans: Yes there is a need for different forms of government intervention in education and health sectors due to following reasons:
1. In our country large section of the population living below the poverty line & they cannot afford education & health facilities.
2. Education and health care services create both private and social benefits.
3. To ensure private firms follow the standards and charge correct prices.
4. To prevent the monopoly of private sector in education and health sector.
5. Large section of people cannot afford to reach super specialty health care and higher education.
Ques 19. What are the main problems of human capital formation in India?
Ans: Main problems of human capital formation in India are as follows:
1. Large Population.
2. Lack of job oriented education.
3. Brain drain due to lack of good opportunities in India.
4. Low quality of education.
5. Improper implementation of government programmes.
6. Less expenditure on education, health, training and information.
Ques 20. In your view, is it essential for the government to regulate the fee structure in education and health care institutions? If so, why?
Ans: Ans 18.
CHAPTER 6 - RURAL DEVELOPMENT
Ques 1 What do you mean by rural development? Bring out the key issues in rural development.
Ans: Rural development refers to the steps taken for the social and economic upliftment of the rural or backward areas. The key issues in rural development are as follows:
1. Human Capital Formation - Investment in education, training, health care, information etc.
2. Development of income earning assets - Helps in generating employment opportunities and reduces excess burden on agriculture.
3. Development of Rural Infrastructure - It includes development of bank, electricity, transport, irrigation, markets etc.
4. Land reforms - Land reforms enable the use of modern techniques and methods, thereby increasing the productivity and production.
5. Lessening Poverty - Poverty alleviation and employment generation programmes for rural areas.
Ques 2 Discuss the importance of credit in rural development.
Ans: The importance of credit in rural development is as follows:
1. Helps the farmers to commercialise their farming i.e. to produce other than traditional crops like flowers, vegetables, cotton, fruits etc.
2. Credit is needed by the farmers for meeting their initial requirements of farm inputs like seeds, fertilizers etc.
3. Farmers require funds for meeting their expenses on marriage, death, religious ceremonies etc.
4. In the absence of good monsoon or crop failure, crop insurance and farm credit save farmers from such tragedy.
5. Credit is required for purchasing machinery, constructing fences, digging wells etc.
Ques 3 Explain the role of micro-credit in meeting credit requirements of the poor.
Ans: Micro credit refers to credit services provided to the poor through Self Help Groups (SHGs). The Self Help Groups inculcate or promote the saving habits among the rural households. The individual savings of many farmers are pooled together to meet the financial requirements of the needy members of the SHGs at reasonable rate of interest and without any security and less legal formalities. Beside this SHGs provides a platform to discuss the social issues like health, domestic violence etc.
Ques 4 Explain the steps taken by the government in developing rural markets.
Ans: The following are the various steps initiated by the Indian government to develop the rural markets:
1. Regulated Markets: Government regulated the market by the Market Committee to infuse greater transparency in the marketing system through the use of proper scales and weights.
2. Infrastructure Development: Indian government provided cold storages, transport facilities and warehouses that help the farmers to sell their product at the time when the price is attractive.
3. Co-operative Agricultural Marketing Societies: Help farmers to get fair/good prices for their produce. This is due to the better bargaining power of the farmers via collective sale in the market.
4. MSP Policy: Minimum Support Price saves the farmers in case of price fall.
Ques 5 Why is agricultural diversification essential for sustainable livelihoods?
Ans: The agricultural diversification implies change in crop pattern and shifting of agricultural workforce to other allied such as dairy , poultry, fisheries, etc. and non-agriculture sector. The importance of agricultural diversification is as follows:
1. Help to raise income.
2. Farming is uncertain and risky activity. Therefore diversification is required to enable the farmers to earn from non-farm occupations.
3. This lessens excess burden on agriculture.
4. Cash crops along with food crops may bring more income and prosperity for the farmers.
5. To maintain the fertility of land.
Ques 6 Critically evaluate the role of the rural banking system in the process of rural development in India.
Ans: The rural banking system had a positive effect on rural farm and non farm output, income and employment. But all is not well with our banking system .Some of the shortcomings of our banking system are as follows:
1. A number of farmers cannot avail credit in absence of security or collateral required.
2. The commercial banks failed to encourage the habit of thrift/saving among farmers.
3. Increased defaulter’s rate and financial unfeasibility of the rural banks due to not repaying of borrowed loans by the farmers.
4. Biasing by banks in lending loans.
Ques 7 What do you mean by agricultural marketing?
Ans: Agricultural marketing refers to all those processes that are involved from harvesting to final sales of the products by the farmers. These processes involve:
a) Gathering the product after harvesting.
b) Processing the product
c) Grading the product, according to different quality norms
d) Packaging the product
e) Storing the product for future use
f) Transportation of product
f) Selling the product at attractive prices
Ques 8 Mention some obstacles that hinder the mechanism of agricultural marketing.
Ans: Following are the some obstacles that hinder the mechanism of agricultural marketing:
i. Faulty weighing.
ii. Manipulation in accounts.
iii. Inadequate information of market prices and market conditions. Being ignorant, farmers sell their product at lower prices.
iv. Lack of adequate finance.
v. Inadequate means of transportation and communication.
vi. The farmers lack access to proper storage facilities to store their produce for future sell at better prices.
vii. The farmers cannot avail agricultural credit, leading to their exploitation by the moneylenders and mahajans.
viii. Multiplicity of middlemen.
Ques 9 What are the alternative channels available for agricultural marketing? Give some examples.
Ans: Alternative marketing channel save the farmers from the exploitation by middlemen and enables the farmers to sell their product directly to the consumers at higher price. Some of the examples of alternative agricultural marketing are:
1. ApniMandi in states like Punjab, Haryana and Rajasthan, Hadaspar Mandi in Pune.
2. Contract of direct sales between the farmers and the national and international companies. These companies offer advance payments to the farmers for supplying products at pre-determined rates.
Ques 10 Distinguish between ‘Green Revolution’ and ‘Golden Revolution’
Ques 11 Explain four measures taken by the government to improve agricultural marketing.
Ans: Ans No 4
Ques 12 Explain the role of non-farm employment in promoting rural diversification.
Ans: Ans 13
Ques 13 Bring out the importance of animal husbandry, fisheries and horticulture as a source of diversification.
Ans: Animal Husbandry (Livestock Farming): It is the most important non-farm activity in India. Poultry, cattle and goats/sheep are the important components of livestock farming in India. Most of the rural families carry out livestock farming together with crop farming in order to increase their income. Capital investment in livestock farming is comparatively less than that in crop farming. In addition, livestock farming is an important source of employment for rural women and arid areas. Besides providing employment, livestock farming has increased production of milk, eggs, meat, wool etc.
Fisheries: ‘Fisheries’ are an important source of livelihood in the coastal states such as Kerala, Maharashtra, Gujarat and Tamil Nadu. The fishing community in India depends on water bodies- both inland and marine water bodies. Inland sources include rivers, lakes, ponds, and streams, while, the marine sources include seas and oceans.
Horticulture:. Horticultural crops include fruits, vegetables, medicinal and aromatic plants and flowers. Presently, India is the second largest producer of fruits and vegetables that includes mangoes, bananas, coconuts, cashew nuts and variety of species. There has been a considerable rise in the income levels of families engaged in horticultural production. This has provided a gateway of opportunities for employment for women. Hence, horticulture must be promoted with sufficient investment and infrastructure.
Ques 14 ‘Information technology plays a very significant role in achieving sustainable development and food security’ -comment.
Ans: IT plays a very significant role in achieving sustainable development and food security. In the following ways:
1) With the help of IT, weather conditions can be forecast.
2) IT provides information on emerging technologies, soil conditions for growing various crops etc.
3) Now days, the farmers can consult Kisan Call Centres and various web sites providing valuable information regarding measures to improve farm productivity and quality of farm inputs, seeds, fertilizers and various modern techniques.
4) It has potential of employment generation in rural areas.
Ques 15 What is organic farming and how does it promote sustainable development?
Ans: This system of farming relies/depend upon the use of organic inputs such as animal manures and composts for cultivation and discard the use of chemical fertilisers, toxic pesticides,etc. that harms the eco system drastically.
It promotes sustainable development in the following ways:
1. Sustains Soil Fertility
2. Produce High quality nutritious food for future generations.
3. Prevents water and air pollution.
4. Discard the use of chemicals.
Ques 16 Identify the benefits and limitations of organic farming.
Ans: The advantages/benefits of the organic farming are as follows:
1. Environment friendly as it is free from the use of Chemicals
2. Sustains Soil Fertility because Organic farming discards the use of chemical fertilizers.
3. Healthier and Tastier Food
4. Inexpensive Technology.
5. Generates Income from Exports because of huge international demand for organic crops.
Limitations of Organic Farming:
1. In the initial years, Organic Farming offers lesser yield than the conventional farming.
2. Due to the low yield per hectare, this technique was not financially viable for the small farmers.
3 The products obtained from organic farming have shorter life and are quickly-perishable.
4 Choice in production during off-season is quite limited in Organic Farming.
Ques 17 Enlist some problems faced by farmers during the initial years of organic farming.
Ans: Limitations of Organic farming (Q. 16)
CHAPTER: 7 EMPLOYMENT: GROWTH, INFORMALISATION AND OTHER ISSUES
Ques1. Who is a worker?
Ans: Persons engaged in various economic activities and contribute to national product are workers.
Ques2. Define worker-population ratio.
Ans:
Worker-population ratio =Total number of workers Population x 100
Ques 8. Compared to urban women, more rural women are found working. Why?
Ans: In urban area 14 and in rural area 26 out of 100 women are found working. It is because in rural areas activities like agriculture or other allied services (diary, poultry, household industries etc.) are labour intensive and low income generating while in urban area men are able to earn high incomes and discourage female members from taking up jobs. Therefore compared to urban women, more rural women are found working.
Ques13. Why are regular salaried employees more in urban areas than in rural areas?
Ans: Regular salaried employees more in urban areas than in rural areas due to following reasons:
1. In rural areas regular salaried employment are generally not available.
2. In rural areas individuals are not much educated for regular salaried employment.
3. In rural areas activities like agriculture diary, poultry etc. are mainly of self employment nature.
4. In urban areas regular salaried employment are easily available like in factories, companies, offices etc.
5. In urban areas persons are more educated and skilled for regular salaried employment.
Ques14. Why are less women found in regular salaried employment?
Ans: Less women found in regular salaried employment because of following reasons:
1. Since regular salaried jobs require skills and a higher level of literacy and women might not have that skill and literacy.
2. Women have to be engaged in house hold workers and family responsibilities due to which they are less regular. Therefore employers prefer men instead of women.
3. Where men are able to earn high incomes, they discourage female members from taking up jobs.
4. Women prefer self employment.
5. Some family discourages women for taking up long distance jobs.
Ques15. Analyse the recent trends in sectoral distribution of workforce in India.
Ans: Ans 16.
Ques16. Compared to the 1970s, there has hardly been any change in the distribution of workforce across various sectors. Comment.
Ans: Distribution of workforce in various sectors shows substantial shift from farm work to non-farm work. In 1972-73, about 74 per cent of workforce was engaged in primary sector and in 2009-2010 this proportion has declined to 53 percent. Secondary and service sectors are showing promising future for the Indian workforce. You may notice that the shares of these sectors have increased from 11 to 22 per cent and 15 to 25 per cent respectively.
Ques17. Do you think that in the last 50 years, employment generated in the country is commensurate with the growth of GDP in India? How?
Ans: During the period 1960–2010, Gross Domestic Product (GDP) of India grew positively and was higher than the employment growth. During this period, employment grew at a stable rate of about 2 percent. In the late 1990s: employment growth started declining and reached the level of growth that India had in the early stages of planning. During these years, we also find a widening gap between the growth of GDP and employment. This means we have been able to produce more goods and services without generating employment, Scholars refer to this phenomenon as jobless growth.
Ques18. Is it necessary to generate employment in the formal sector rather than in the informal sector? Why?
Ans: Yes, it necessary to generate employment in the formal sector rather than in the informal sector due to following reasons:
1. Workers and enterprises in the formal sector get regular and higher income.
2. They have protection and regulation from the government.
3. Workers can not dismiss without any reason.
4. Technology used in the informal sector enterprises is up to date.
5. They maintain proper accounts.
6. Workers of this sector enjoy good living standards.
7. Workers in formal sector enjoys social security benefits, medical allowances facilities etc.
Ques19. 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 persons like Victor be doing?
Ans: He is under employed.
Ques20. 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.
Ans: Digging of wells, building of roads, cheap credit facilities for self employment.
Ques21. Who is a casual wage labourer?
Ans: Who do not get regular work. Example: Construction workers.
Ques22. How will you know whether a worker is working in the informal sector?
Ans: According to working situations.
CHAPTER 8 INFLATION: PROBLEM AND POLICIES
Inflation in ordinary language, mean a process of rising prices. OR Inflation is a situation of persistent (continuous) rise in prices, leading to fall in purchasing power of money.
Types of inflation
1) Demand pull inflation 2) Cost push inflation
Demand Pull Inflation: Demand -pull inflation arises when there is an excess of demand for goods over their supply. The main causes of demand pull inflation are :
Increase in public expenditure.
Increase in investment
Increase in money supply
Growth in black money
Increase in population
Cost push inflation: Cost push inflation occurs when rise in price is due to rise in the cost of production.
Main causes of cost-push inflation are:
Higher wage rate
Higher profit margin
Higher taxes
Fall in the availability of basic inputs.
Administered higher prices of inputs.
Causes of Inflation
1. Demand factors
Growth of population
Rise in employment and income
Increase in urbanisation.
2. Supply factors
Irregular agricultural supply
Hoarding of essential goods.
Rise in administered prices.
Agricultural price policy
Rising prices of imports
Inadequate growth of industrial production.
3. Monetary and fiscal factors
Rising levels of government expenditures.
Deficit financing.
Effect of Inflation
Real income declines
Hoarding and black marketing.
Speculation increases
Nominal pay increase
Higher tax .
Deterioration of quality of goods and standard of living.
Policy measures to control inflation
Monetary measures
Increase in bank rate
Increase in cash reserve ratio(CRR)
Increase in statutory liquidity ratio(SLR)
Sell of govt. securities in open market.
Fiscal Measures
Decrease in govt. expenditure.
Increase in tax rate.
Physical or non monetary measures
Increasing output or increasing inputs
Controlling money wages
Price control and rationing.
CHAPTER 9 INFRASTRUCTURE
Ques1. Explain the term ‘infrastructure’.
Ans: Infrastructure means the basic services like roads, railways, power stations, telecommunication facilities, schools, hospitals, banks etc. necessary for national development.
Ques 2. Explain the two categories into which infrastructure is divided. How are both interdependent?
Ans: Two categories of infrastructure are: Economic infrastructure and Social infrastructure.
1. Economic Infrastructure: It includes energy, transportation, communication, banking etc. which are directly related to increase in national product.
2. Social Infrastructure: It includes education, health, housing etc. These are related to social welfare.
Interdependence: Economic infrastructure aspects need educated and healthy persons that come from social infrastructure. In the same way social infrastructure is the result of higher income that comes from economic infrastructure.
Ques 3. How do infrastructure facilities boost production?
Ans: Infrastructure facilities boost production in the following ways:
1. Development of agriculture & industrial sector depends on infrastructural facilities such irrigation, transportation, banking etc.
2. Provide employment.
3. Induce foreign direct investment.
4. Facilitates outsourcing.
5. Raises productivity and efficiency.
6. Develop growth oriented attitude and environment.
Ques 4. Infrastructure contributes to the economic development of a country. Do you agree? Explain.
Ans: Points of Ques. No. 3.
Ques 5. What is the state of rural infrastructure in India?
Ans: State of rural infrastructure in India is as follows:
1. A majority of rural women are still using bio-fuels such as crop residues, dung and fuel wood for their energy requirement.
2. They walk long distances to fetch fuel, water and other basic needs.
3. The census 2001 shows that in rural India only 56 per cent households have electricity connection.
4. About 90 per cent of the rural households use bio-fuels for cooking.
5. Tap water availability is limited to only 24 per cent rural households.
6. Access to improved sanitation in rural areas was only 20 per cent.
Ques 6. What is the significance of ‘energy’? Differentiate between commercial and non-commercial sources of energy.
Ans: Significance of ‘energy’ is as follows:
1. Energy is a critical aspect for the development of industries.
2. It is used on a large scale in agriculture.
3. Areas like production and transportation depends on energy.
4. It is required in houses for cooking, household lighting and heating.
5. We can not think of producing a commodity or service without using energy.
Differentiate between commercial and non-commercial sources of energy.
Commercial sources are coal, petroleum and electricity as they are bought and sold in the market and command price.
Non-commercial sources of energy are firewood, agricultural waste and dried dung. These are non-commercial as they are not bought and sold in the market and also does not command price as they are found in nature/forests free of cost.
Ques 7. What are the three basic sources of generating power?
Ans: Three basic sources of generating power are coal, petroleum, water.
Ques 8. What do you mean by transmission and distribution losses? How can they be reduced?
Ans: Transmission and distribution losses refers to the losses which occur at the transmission and distribution of power because of technical reasons such as old and outdated transmission system ,theft of electricity, wrong pricing and non payment of electricity bills.
Transmission and distribution losses can be reduced by the following ways:
1. By using good and appropriate conductors.
2. By using modern energy saving technology. Example: LED lights, Star rating electrical appliances etc.
3. Supply by meter.
4. Privatisation where necessary.
5. Strict action against the person who are not paying bills.
6. Adequate pricing.
Ques 9. What are the various non-commercial sources of energy?
Ans: Sources of non-commercial sources of energy are firewood, agricultural waste and dried dung.
Ques 10. Justify that energy crisis can be overcome with the use of renewable sources of energy.
Ans: Energy crisis means the shortage of resources to produce energy as per the demand of economy. This crisis occurs when we make more use of non renewable sources of energy such as coal, petroleum etc. because these are exhaustible. This problem of energy crisis can be overcome by using more renewable sources of energy such as water, wind, solar, tidal, bio gas etc. because these are non exhaustible it means they can be regenerate.
Ques 11. How has the consumption pattern of energy changed over the years?
Ans: Consumption Pattern of Energy: At present, commercial energy consumption is about 65% of the total energy consumed in India. This includes coal with the largest share of 55% followed by oil at 31%, natural gas at 11% and hydro energy at 3%. Non-commercial energy sources consisting of firewood, cow dung and agricultural wastes account for over 30% of the total energy consumption. The sectoral pattern of consumption of commercial energy shows that the transport sector was the largest consumer of commercial energy in 1953-54 but now the share of industrial sector is highest. The share of oil and gas is highest among all commercial energy consumption.
Ques 12. How are the rates of consumption of energy and economic growth connected?
Ans: Economic growth of a country depends on growth of agriculture, industrial and service sector that further depends on use of energy to run tube wells, to produce fertilizers, pesticides and agriculture machinery, to produce and transport industrial goods, to run services like communication, banking etc. Thus all the spheres of economy needs energy for development .It is energy which is a dividing line between a poor economy and a developed economy. An American consumes nearly 40 times much energy as compared to an Indian. Thus Economic growth of a country positively connected with use of energy.
Ques 13. What problems are being faced by the power sector in India?
Ans: Problems faces by the power sector in India are as follows:
(i) India’s installed capacity to generate electricity is not sufficient to feed an annual economic growth of 7 per cent.
(ii) State Electricity Boards (SEBs), which distribute electricity, incur losses. This is due to transmission and distribution losses, wrong pricing of electricity and other inefficiencies.
(iii) Private sector power generators are yet to play their role in a major way; same is the case with foreign investors
(iv) There is general public unrest due to high power tariffs and power cuts.
(v) Thermal power plants are facing shortage of raw material and coal supplies outdated technique.
Ques 14. Discuss the reforms which have been initiated recently to meet the energy crisis in India.
Ans: The reforms initiated recently to meet the energy crisis in India are as follows :
1. More public investment.
2. Better research and development efforts.
3. Technological innovation.
4. Encourage participation of private sector.
5. Greater reliance on renewable energy resources.
6. Promote the use of CFLs to conserve energy.
Ques 15. What are the main characteristics of health of the people of our country?
Ans: The main characteristics of health of the people of our country can be expressed in terms of following indicators:
1. Decline in death rate to 8 per thousand.
2. Rise in life expectancy to 64 years.
3. Control over deadly diseases like cholera, small pox, malaria , polio etc.
4. Infant mortality rate 47 per thousand.
5. Poor health status of women.
Ques 16. What is a ‘global burden of disease’?
Ans: GBD indicator refers the number of people dying prematurely due to a particular disease as well as the number of years spent by them in a state of ‘disability’ due to the disease.
Ques 17. Discuss the main drawbacks of our health care system.
Ans: Main drawbacks of our health care system are as follows:
1. Expenditure on health sector is only 4% of GDP.
2. India bears a frightening 20 per cent of the global burden of diseases (GBD).
3. Insufficient stock of medicines.
4. Every year around five lakh children die due to water-borne diseases.
5. The danger of AIDS is also alarming.
6. Malnutrition and inadequate supply of vaccines lead to the death of 2.2 million children every year.
7. At present, less than 20 per cent of the population utilises public health facilities.
8. Insufficient no. of medical personnel (doctors, nurses etc.)
9. Lack of awareness, accessibility and affordability of health care system.
Ques 18. How has women’s health become a matter of great concern?
Ans: Women’s health has become a matter of great concern due to following reasons:
1. Inadequate sex ratio in the country 914 female per 1000, as per census 2011.
2. Growing incidence of female foeticide in the country.
3. Close to 3,00,000 girls under the age of 15 are not only married but have already borne children at least once.
4. More than 50 per cent of married women between the age group of 15 and 49 have anemia caused by iron deficiency, which has contributed to 19 per cent of maternal deaths.
5. Abortions are also a major cause of maternal morbidity and mortality in India.
Ques 19. Describe the meaning of public health. Discuss the major public health measures undertaken by the state in recent years to control diseases.
Ans: Health is a state of complete physical, mental and social well being. Public health refers to the health status of all the people of the country.
Major public health measures undertaken by the state in recent years to control diseases are as follow:.
1. Camps are being organized for the immunization of children against tetanus, polio, diphtheria etc.
2. National antimaleria eradication programme has been started to take care of malaria, kala azar etc.
3. Efforts are being made to increase coverage of safe drinking water.
4. There is also a National AIDS Central Organisation for prevention and treatment of sexually transmitted disease.
5. Expansion of health infrastructure i.e. no of hospitals, doctors, nurses etc.
Ques 20. List out the six systems of Indian medicine.
Ans: Ayurveda, Yoga, Unani, Siddha, Naturopathy and Homeopathy (AYUSH).
Ques 21. How can we increase the effectiveness of health care programmes?
Ans: We can increase the effectiveness of health care programmes by the following ways:
1. Decentralisation of public health services.
2. Improvement in education and health infrastructure.
3. Create awareness on health and hygiene.
4. The role of IT sector should be appreciated and increased in this process.
5. Primary healthcare should be improved.
6. Increase in Private-public partnership.
7. Accessibility and affordability of health care programmes.
8. Promotion to medical Tourism.
CHAPTER 10 ENVIRONMENT AND SUSTAINABLE DEVELOPMENT
Ques 1 What is meant by environment?
Ans: Environment refers to all our surroundings. It includes all the biotic (living elements) and abiotic factors (non living).
Ques 2 What happens when the rate of resource extraction exceeds that of their regeneration?
Ans: If the rate of resource extraction/utilisation exceeds that of their regeneration then carrying capacity of the environment reduces, leading to a failure in its life sustaining function. This results in environmental crises.
Ques 3 Classify the following into renewable and non-renewable resources
(i) trees (ii) fish (iii) petroleum (iv) coal (v) iron-ore (vi) water
Renewable resources are water, trees and fish.
Non-renewable resources are petroleum, coal and iron ore.
Ques 4 Two major environmental issues facing the world today are global warming and ozone depletion.
Ques 5 How do the following factors contribute to the environmental crisis in India? What problem do they pose for the government?
(i) Rising Population: Rising population causes excessive demand for housing, thereby resulting in widespread deforestation and fast depletion of other natural resources leading to ecological imbalances.
(ii) Air Pollution: Air consists of oxygen that supports life. Air pollution implies contamination of air i.e. absence of fresh air (oxygen) to breathe. Air pollution causes hypertension, asthma, respiratory and cardio-vascular problems.
(iii) Water Contamination: Contamination of water or pollution of water is posing a serious threat to human life. It is one of the principal cause of all deadly diseases such as diarrhea, hepatitis, cholera, etc.
(iv) Affluent Consumption Standards: Affluent Consumption Standards generates more waste (due to more consumption & production) which are beyond the absorptive capacity of the environment that leads to environmental crises.
(v) Illiteracy: Illiterate person will not use the resources wisely that will lead to overuse & misuse of the scarce resources.
(vi) Industrialisation: Industrialisation causes pollution, deforestation & depletion of natural resources.
(vii) Urbanisation: Urbanisation infuse modernisation but leads to deforestation and excess burden on the natural resources.
(viii) Reduction of forest coverage or deforestation: It means cutting of trees due to the growing demand for land, wood & rise in population. Deforestation leads to reduction in oxygen level and rise in the CO2 level that causes global warming.
(ix) Poaching: Poaching is the illegal capturing, killing and hunting of animals. Due to this, many animals are on the verge of extinction.
(x) Global warming: Global warming refers to the gradual increase in global temperature due to environmental pollution and deforestation. It is caused by the emission of Green House Gases that include particularly, carbon dioxide. Global warming causes incidences of natural calamities due to disturbed ecological balance, thereby posing a threat to human life.
Ques 6 What are the functions of the environment?
Ans: The environment performs the following four dynamic functions:
1. Provides Resources: Environment provides us with resources like minerals, water and soil.
2. Sustains Life: Environment provides us with vital ingredients like sun, soil, water and air that are necessary for the survival of life.
3. Assimilates Waste: Environment absorb the waste generated due to production and consumption activities.
4. Enhances Quality of Life: Environment includes surroundings such as rivers, oceans, mountains and deserts provide scenic beauty pleasure & peace to enhance the quality of human life.
Ques 7 Identify six factors contributing to land degradation in India.
Ans: Degradation of land means continuous loss in fertility of land. Following factors contribute to land degradation in India:
a. Soil Erosion: The removal of upper layer of the soil caused by agents like strong winds or floods is termed as soil erosion that causes loss of major and essential nutrients like nitrogen, phosphorous and potassium.
b. Alkalinity and Salinity of Soil: The salinity and alkalinity is caused by the problem of water logging. Water logged on the top layer of soil absorbs all the nutrients present in the soil, thereby, reducing its fertility.
c. Deforestation: The growing population along with their growing demand led to large scale destruction of forest cover.
d. Extraction of ground water beyond the rate of regeneration.
e. Excessive use of Fertilisers: The excessive use of chemical fertilisers and pesticides lowers the quality and fertility of soil.
f. Overgrazing by the animals.
g. Forest fires & fire of crop residue.
h. Improper Irrigation system.
Ques 8 Explain how the opportunity costs of negative environmental impact are high.
Ans: Opportunity cost is the cost in terms of foregone or given up alternative opportunities. The opportunity cost of negative environmental impacts means the negative environmental impacts like pollution, deforestation, global warming etc. causes decline in environmental quality i.e. decline in air and water quality that resulted in water borne and respiratory diseases and more health expenditure. Thus the opportunity cost of negative environmental impact is high in terms of given up good health and environment.
Ques 9 Outline the steps involved in attaining sustainable development in India.
Ans: The steps involved in attaining sustainable development in India are as follows:
1 Careful and wise utilisation of the natural resources.
2 Controls over Population.
3 Use of Environment friendly fuel like CNG and LPG.
4 Use of renewable sources of energy like Solar and Wind Energy.
5 Use of energy efficient electrical appliances like LED & star rating electrical appliances.
6 Pollution Tax and Fines.
7 Use of the Input Efficient Technology.
8. Ban on Plastic Bags.
Ques 10 India has abundant natural resources - substantiate the statement.
Ans: India is fortunate enough to have abundant natural resources. It comprises of rich and fertile soil, plenty of rivers, green forests, mineral deposits, mountains, etc. The black soil of the Deccan Plateau is suitable for the cultivation of cotton in the country. India holds more than 20 % of the world’s total iron ore reserves. There are mountain ranges that facilitate the operation of the mini hydel plants. It also has vast variety of flora of 15,000 species of plants. The country is also endowed with numerous minerals that are found under the earth’s surface like coal, natural gas, copper, diamonds, etc.
Ques 11 Is environmental crisis a recent phenomenon? If so, why?
Ans: Yes, the environmental crisis is a recent phenomenon, because in the early days when civilisation just began, or before this increase in population & industrialisation, the demand for environmental resources and services was much less than their supply. But with population explosion and industrial revolution the demand for resources both for production and consumption becomes more than their supply. Consequently, the mounting pressure on the carrying capacity of the environment causes the problem of environmental crises.
Ques 12 Give two instances of (a) Overuse of environmental resources (b) Misuse of environmental resources.
Ans: (a) i. Drying up of Rivers due to excessive irrigation ii. Excessive Deforestation
(b) i. Use of Rivers to Discharge the Waste ii. Use of Wood for Cooking Food
Ques 13 State any four pressing environmental concerns of India. Correction for environmental damages involves opportunity costs. Explain.
Ans: Air pollution, water contamination, soil erosion, deforestation, global warming, land degradation, ozone depletion are some of the most pressing environmental concerns for India.
Opportunity cost is the cost in terms of foregone or given up alternative opportunities. The opportunity cost of correction for environmental damages refers to the huge expenditure incurred on searching for new fuel efficient alternatives. The best example is the advent of CNG in order to reduce the rising problem of pollution in Delhi.
Ques 14 Explain the supply-demand reversal of environmental resources.
Ans: In the early days when civilisation just began, or before this increase in population & industrialisation, the demand for environmental resources and services was much less than their supply. But with population explosion and industrial revolution the demand for resources both for production and consumption becomes more than their supply. This reversal in the demand and supply is referred to as the supply-demand reversal of the environmental resources.
Ques 15 Account for the current environmental crisis.
Ans: The population explosion and affluent consumption resulting in following environmental crisis:
1 Global warming is the result of rising temperature globally due to the emission of green house gases, especially, carbon dioxide.
2 Ozone depletion due to the excessive use of chlorofluorocarbon (CFCs) in the air conditioners and refrigerators. As ozone layer depletes, the possibility of ultra violet radiations penetrating into earth surface increases, posing a threat to the living organisms.
3. Deforestation
4. Land degradation
5. Pollution
Ques 16 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?
Ans: The two serious issues or consequences of development in India are land degradation and deforestation.
Yes, the environmental problems points to the paradoxical situation in the country. Deforestation is a rapid consequence of population explosion and widespread poverty. The poor people in the rural areas are compelled to fell trees for their fuel requirement & Other needs. There are two different opinions on the effect of environmental activities. One opinion advocates for India’s prosperity by resorting to industrial production while the other opinion highlights the threat of pollution due to rapidly growing industrial sector.
Ques 17 What is sustainable development?
Ans: Sustainable development is the development that last for a long time by using environment and natural resources wisely and carefully so that we present generation as well as the future generations can also enjoy their benefits.
Ques 18 Keeping in view your locality, describe any four strategies of sustainable development.
Ans: Ans no 9.
Ques 19 Explain the relevance of intergenerational equity in the definition of sustainable development.
Ans: Sustainable development is the development that last for a long time by using environment and natural resources wisely and carefully so that we present generation as well as the future generations can also enjoy their benefits.
It is our moral responsibility to hand over the earth to the future generation in a good order that we have received from our forefathers. Sustainable development maximises the welfare of both present and future generations. It does not mean a check on the existing pace of economic growth. It only means a judicious or optimum utilisation of resources in such a manner that pace of economic growth sustains with inter generational equity.
CHAPTER 11 DEVELOPMENT EXPERIENCE OF INDIA –A COMPARISON WITH NEIGHBOURS
Ques 1 Why are regional and economic groupings formed?
Ans: Regional and economic groupings (Example: SAARC (South Asian Association for Regional Cooperation), European Union, ASEAN(The Association of South East Asian Nations etc.) are formed by different countries due to following reasons:
To strengthen/develop their economies.
To know the development strategies adopted by different countries.
To analyse/understand the strength and weakness of member countries and accordingly formulate policies for economic & social progress.
To maintain peace and stability among member countries.
These groups provide a common platform to raise their voice on common issues to safeguard their common interests.
To develop the spirit of friendship, help, truth, unity and understanding.
Ques 2 What are the various means by which countries are trying to strengthen their own domestic economies?
Ans: The following are the various means through which the nations are trying to strengthen their own domestic economies:
By introducing economic reforms like liberalisation, privatization and globalization etc.
By forming various regional and economic groupings like SAARC, ASEAN etc.
By understanding the development strategies followed by other countries.
By analyse the strengths and weaknesses of own and member countries and accordingly formulate policies for economic & social progress.
Ques 3 What similar developmental strategies have India and Pakistan followed for their respective developmental paths?
Ans: India and Pakistan both have followed following similar developmental strategies:
Five year plans (India in 1951 & Pakistan in 1956).
Both of them have followed the path of mixed economy.
Major role assigned to public sector for growth and development.
Import substitution.
Green revolution.
Shift from primary to service sector.
Both of them introduced economic reforms to strengthen their economies.(India in 1991 & Pakistan in 1988).
Ques 4 Explain the Great Leap Forward campaign of China as initiated in 1958.
Ans: The Great Leap Forward (GLF) was a campaign initiated in 1958 in China. The aim of this campaign was large scale industrialisation in the country not only in the urban areas but also in rural ones.
In the rural areas Commune System was implemented. Under this system, people were engaged in collective farming.
Ques 5 China’s rapid industrial growth can be traced back to its reforms in 1978. Do you agree? Elucidate.
Ans: Yes, China’s rapid industrial growth is due to the following economic reforms that were introduced since 1978.
In agriculture sectors Commune System was abolished and land was divided into small plots & allocated to the individual households.
Restrictions were removed from foreign trade and investment.
In the industrial sector private firms were allowed to produce goods and services.
Dual pricing: The dual pricing means the farmers and the industrial units were required to buy and sell a fixed quantity of inputs and output at the price fixed by the government and the remaining quantities were traded at the market price.
One child policy.
Setting up of Special Economic Zones to attract foreign investors.
Ques 6 Describe the path of developmental initiatives taken by Pakistan for its economic development.
Ans: Pakistan has followed following developmental strategies for its economic development:
Five year plans.
Mixed economy model.
Import substitution.
More dependence on the public sector for initiating the process of growth and development.
Green revolution.
Shift from primary to service sector.
Economic reforms in1988.
Ques 7 What is the important implication of the one child norm in China?
Ans: One child norm in china was introduced in 1979.Its implications are as follows:
Low population growth.
Fall in the sex ratio in China, i.e. the proportion of females per thousand males.
More elderly people in proportion to the young people in coming years.
Ques 8. Mention the salient demographic indicators of China, Pakistan and India.
Ans: The important demographic indicators of Indian, China and Pakistan are tabulated are as follows:
a) Total Population: China is the largest populated country in the world followed by India. China’s population was approximately 135 crore and that of India and Pakistan was 123 crore and 18 crore respectively in 2012.
b) Annual Growth Rate of Population: China’s annual growth rate of population is just 0.49% per annum while that of India and Pakistan is 1.26% and 1.68 % per annum.
c) Density of Population: In spite of the fact that China is highly populated and geographically occupying the largest area among the three nations, its density of population is the lowest. It is as low as 144 persons per square kilometer of area compared to 411 and 229 persons in India and Pakistan respectively.
d) Sex Ratio: This ratio counts the number of females per 1000 males. Sex ratio in Pakistan is better than India & China.
e) Fertility Rate: Highest in Pakistan and lowest in China.
f) Urbanisation: China is comparatively more urbanised than India and Pakistan.
Ques 9 Compare and contrast India and China’s sectoral contribution towards GDP. What does it indicate?
Ans: The comparison of India’s and China’s sectoral contribution towards their respective GDP can be done with the help of the data tabulated below:
Thus, above data helps us to conclude that a significant portion of India’s GDP is contributed by tertiary sector followed by its Industrial sector. On the contrary, the major contributor to China’s GDP is the secondary sector followed by its tertiary sector.
Ques 10 Mention the various indicators of human development.
Ans: The indicators of human development are:
Life Expectancy.
Adult Literacy Rate.
Infant Mortality Rate.
Percentage of the population below poverty line.
GDP per capita
Percentage of the population having access to improved sanitation
Percentage of the population having access to improved water sources.
Ques 11 Define liberty indicator. Give some examples of liberty indicators.
Ans: Liberty Indicator means people’s participation in the social and political decision making.
Example: Political liberty of participating in state administration & Social liberty of freedom and related human rights.
Some other examples of liberty indicators are the Constitutional Protection Rights given to the citizens and Constitutional Protection of the independence of the Judiciary and Laws.
Ques 12 Evaluate the various factors that led to the rapid growth in economic development in China.
Ans: The following are the various factors that led to the rapid growth in the economic development in China:
Statism (control of govt. over factor of production)
Five Year Plans in 1953.
Great Leap Forward in 1958.
One child policy in 1979.
Economic reforms in 1978.
Hard working people
Setting up of SEZs
Ques 13 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
Ans:
Ques 14 Give reasons for the slow growth and re-emergence of poverty in Pakistan.
Ans: The following are the main reasons for the slow growth and re-emergence of poverty in Pakistan:
More dependence on foreign loans.
Volatile performance of agriculture sector due to its dependence on climate conditions not technical advancement.
Devasting earthquake in 2005.
Political instability.
Undeveloped Manufacturing Sector.
Insufficient Foreign Investment.
Ques 15 Compare and contrast the development of India, China and Pakistan with respect to some salient human development indicators.
Ans: If we compare the HDI indices of three countries then we find that China (101th rank) is moving ahead of India(136th) and Pakistan(146th).This is true for many indicators —income indicator such as GDP per capita, proportion of population below poverty line or health indicators such as mortality rates, sanitation, literacy, life expectancy.
India is ahead of Pakistan in GDP per capita, mortality rates, literacy, life expectancy, education, access to improved water sources.
Pakistan is ahead of India in reducing proportion of people below the poverty line and access to improved sanitation.
Ques 16 Comment on the growth rate trends witnessed in China and India in the last two decades.
Ans: In the last two decades, the growth of agriculture sector, which employs the largest proportion of workforce in both the countries, has declined. In the industrial sector; China has maintained a double-digit growth rate and for India growth rate has increased. In the case of service sector, India has been able to raise its rate of growth in the 2000s while China reduced their service sector growth. Thus, China’s growth is mainly contributed by the manufacturing sector and India’s growth by service sector.
Ques 17 (a) First Five Year Plan of ____Pakistan___ commenced in the year 1956. (Pakistan/China)
(b) Maternal mortality rate is high in ____Pakistan___. (China/Pakistan)
(c) Proportion of people below poverty line is more in ____India___. (India/Pakistan)
(d) Reforms in ____China___ were introduced in 1978. (China/Pakistan)
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