Chapter 1:- Indian economy on the eve of Independence

Introduction:- Before the advent of British rule, Indian economy was flourishing.
Main source of livelihood:- Agriculture
India was well known for its Handicraft industries in the fields of cotton and silk textiles, metal and precious
stone works.
Colonial rule:- policies made by colonial government was such which focused on protection and promotion
of their own country rather than India.
Impact of policies:- transformed the country into supplier of raw material and consumer of finished goods.
Colonial government never made any attempt to estimate India‘s national income. Some economists such as
Dadabhai Naroji, William Digby, V.K.R.V.Rao and R.C Desai attempted the efforts to estimate national
income.
V.K.R.V.Rao’s estimation was considered as more significant.

A. Agriculture sector on the eve of independence:-

i. Low productivity:-
 Level of productivity was very low, therefore agriculture was in backward condition.
 Lack of technology and irrigational facilities resulted in low level of productivity.
 The British did not want to spend on technology. So farmers suffered from low productivity.
ii. Lack of means of irrigation:-
 British government did not take initiative to develop the means of irrigation.
 Agriculture continued to depend upon rainfall. It showed greater degree of vulnerability.
 Unpredictable rainfall led to fluctuations in agriculture output.
iii. A wedge between owners of soil and tillers of soil:-
 Owners of the soil were different from tillers of the soil.
 Tillers of the soil were those who worked on the land to grow crops where as owners of the soil were
those who had land from hereditary.
 Owners used to enjoy output but did not bear the cost involved in the process of agricultural
production.
 Tillers of soil were left with very less crops which were hardly enough for their survival.
iv. Small and fragmented land holdings:-
 At the time of independence due to subdivision, highly fertile land went to Pakistan due to partition.
 Subdivision of land made the task of management and supervision difficult.
 Efficiency and economy in agriculture could not be achieved.
Backwardness of Indian Agriculture:-
i. Land revenue system:-
 There were various systems of land settlement introduced by the colonial government.
 Zamindari system was implemented as a land settlement system.
 This system was first implemented in Bengal presidency area.
 The profit accruing out of agriculture sector went to zamindar in the form of rent instead of cultivators.
 They were free to collect as much rent they wanted.
 Those who were unable to pay, land was taken from them and they turned to landless labourers.
ii. Commercialization of agriculture:-
 Farmers were forced to do commercialized agriculture which means they were forced to grow cash
crops instead of food crops.
 These cash crops included cultivation of indigo which was required by the textile industry in Britain for
dying of textile.
 Now, for the purpose of food they needed cash to buy it from market.
iii. Impact of partition on agriculture:-
 India‘s agriculture was highly affected by partition at the time of independence, because most of the
fertile land went to Pakistan.
 It caused food crisis.
 iv. Low investment in agriculture:-
 There was very less investment in agriculture. British spent very little on technological improvements.
 Some farmers started growing commercial crops instead of food crops.
B. Industrial sector on the eve of Independence:-
The policy British government followed was the policy of systematic de-industrialization. It was two fold
policy that is decay in handicrafts and bleak growth of modern industry.
Decay of Handicrafts:-
i. Discriminatory tariff policy:-
 British required raw material for themselves as well as market for their final products. For this purpose
they target India.
 They used discriminatory tariff policy. This policy allowed free export of raw material from India and
free import of Britain made goods to India.
 They placed heavy export on Indian handicrafts.
 It led to decline of handicrafts both in domestic as well as in International markets.
ii. Competition from machine made products:-
 Machine made goods from Britain were low priced which gave competition to Indian handicrafts which
were costlier.
 Competition from Britain made goods declined the demand of handicrafts in India.
iii. New patterns of Demand:-
 Due to impact of British culture taste and preferences of people were shifting in favour of British
products in Indian markets.
 This led to fall in demand for Indian made goods which were mostly based on Indian handicrafts.
iv. Disappearance of princely courts:-
 Before the british rule, Indian handicrafts were supported by Indian emperors, princes, Nawabs etc.
which had given our handicrafts domestic and international recognition.
 Because of British rule, princely courts started disappearing and accordingly Indian handicrafts too
diasappeared.
v. Introduction of railways in India:-
 Advent of railways by British in India encouraged their trade all over the country.
 Size of the market of British goods increased at low rates. This reduced the market of Indian
handicrafts.
Bleak growth of modern industry:-
i. Lopsided growth of Industries:-
 During the second half of 19 century, modern industry began to start in India but progress was very
slow.
 The development was confined to cotton and jute textiles.
 Iron and steel industries started to set up and first company was set up in 1907.(TISCO)
ii. Lack of capital goods industries:-
 There were very less capital goods industries like machines, tools , equipments etc. to promote further
industrialization.
 Due to lack of capital goods industries, industrialization in India could not prosper.
iii. Lower contribution to GDP:-
 Due to slow progress of industries, its contribution to GDP was less.
 Level of overall production and income generation remained very low.
iv. Limited area of operation of public sector:-
 The public sector remained confined to railways, power generation, ports, communication etc.
 Participation of government was restricted to those areas only. They did not consider manufacturing
industries etc.
C. Foreign trade on the eve of independence:-
i. Net exporter of primary products and importer of finished goods:-
  India became an exporter of primary products such as raw material like silk, cotton, jute etc.
 An importer of finished consumer goods like cotton, silk and woollen clothes in Britain.
 The mixture of exports and imports of Indian economy made it backward.
ii. Monopoly control:-
 British maintained monopoly control over India‘s exports and imports.
 The opening of suez canal has made British control over India‘s foreign trade easy.
 More than 50% of India‘s trade was restricted to Britain, while the remaining was allowed with few
countries like China, Ceylon and Persia.
iii. Surplus trade:-
 India‘s foreign trade generated huge export surplus at high cost which led to drain of Indian wealth.
 Several essential commodities-food grains,cloths etc were rarely available in the domestic market.
 Surplus generated was used to complete the expenses of british government.
Suez canal opened in 1869 is an artificial waterway running from north to south across the
isthmus of suez in north-eastern Egypt. It reduced the cost of transportation and made access to
the Indian market Easier.

D. Demographic conditions:-
Various details about the population of India were first collected through a census in 1881. Such conditions
during British rule showed high death rate and high birth rate. This is a state of massive poverty.
Condition:-
i. High birth rate and Death rate:- Both these rates were high indicating poor health care and
backwardness of a country.
ii. Infant mortality rate:- It is number of infants dying before reaching one year of age. Higher of this
rate leads to poor health care. It was quite high-218 per thousand.
iii. Literacy rate:- No. of persons incapable to read and write. Overall was less than 16% and female
literacy rate was less then 7%. It indicates social backwardness.
iv. Life expectancy:-It shows average life of person which was very low -44 years.
Demographic transition:- It is the year of great divide in 1921. Before 1921, population growth
was not constant.
E. Occupational structure on the eve of independence:-
It refers to distribution of working population across primary, secondary and tertiary sectors.
 Primary sector:- Agriculture is the primary source of occupation. On the eve of independence about
72.7% of working population indulged in agriculture.
 Secondary sector:- Only 9% of working population in India indulged in industrial sector.
 Tertiary sector:- Trade and commerce includes in tertiary sector and it was on the path of
development.
Regional variations:-
 Agriculture sector was the major sector where total workforce was engaged but still there were
some regional variations.
 Workforce was more in Orissa and Punjab in agriculture sector as compared to Madras and
Bombay.
F. Infrastructure on the eve of independence:-
i. Roads:-
 Roads constructed in India during British rule. This was helpful in sending raw materials to the nearest
port.
 There was shortage of all- weather roads to which many people who lived in rural areas were adversely
affected during natural calamities.
ii. Railways:-
 The British introduced the railways in 1850.
  Indian people gained social benefits due to railways but there was huge economic loss to Indian
government.
iii. Air and water transport:-
 The British also developed inland trade and sea lanes which proved to be uneconomical as it involve
huge cost but failed to compete with railways.
iv. Communication:-
 British rule in India developed the modern system of communication.
 The first stamp was released in 1852 and first telegraph line was started in 1853.
 It was a very expensive system.
G. Positive impacts of British rule in India:-
i. Commercialization of agriculture:- Encouragement to commercialized agriculture proved boon for
India. Farming gradually became profitable by selling surplus produce.
ii. Development of Infrastructure:- Development of roads, railways, air and water transport was a very
good start by British. Communication services also brought new growth opportunities in the country.
iii. Check on famines:- Development of transportation helped in controlling the effects of famines. As
goods and services are supplied everywhere, it is required at the times of famines.
iv. Monetary system of exchange:- British rule helped in removing barter system due to its problems.
They introduced money as a medium of exchange.
v. Effective administration:- They followed effective and efficient administrative system which left
good work culture in India.
Sequence of events
Sequence Event Year
1 Introduction of railways 1850
2 First train 1853
3 First railway bridge 1854
4 Opening of Suez canal 1869
5 First census 1881
6 Tata Iron and Steel company 1907
7 Second stage of demographic transition 1921
 Chapter-2 Five year plans in India-Goals and Achievements.

Introduction:- On 15 August 1947, India woke up to a new dawn of freedom. The leaders of independent
India had to decide, among others things, the type of Economic system most suitable to our nation.
Five year Plan:- The central objective of planning in India is to initiate a process of development which will
raise the living standards and open up to the people new opportunities for a richer and more varied life.

A. Economic system:- It refers to the system which shows the central problem of an economy. It is a
system of production, resource allocation and distribution of goods and services within a society.
Types of system
Capitalism Socialism Mixed economy
1). This is the system where there 1). This is the system where 1). It is a system where
is no direct intervention of the government plays an active role government sector as well as
government. in an economy. private sector plays active role.
2). It is free economy where 2). Economic activities are 2). Law or various other
market forces of demand and regulated by government. important decisions are taken by
supply organise economic government and economic
activities. activities are conducted by
market forces.
3). MERITS:- It promote self 3). It promote social justice and 3). It enhances consumers choice
growth and economic growth. work to provide social equality. and their welfare.
4). DEMERITS:- It ignores poor 4). It lacks development activities 4). Lack of self interest in public
section of society because their and does not foster economic sector.
main motive is to earn profits. growth.
B. Economic planning:-

Plan:- A plan spells out how the resources of a nation should be put to use.
In India plans are of five years and are called five year plans.
In 1950, the planning commission was set up with the Prime Minister as its chairperson.
Mahalanobis:- Known as the architect of Indian planning.

 It is a system under which set of targets is defined by central authority of the country.
 It basically means utilization of resources in different development activities in accordance with national
priorities.
1.Long period goal of planning:-Plans in India were made for five years plan. First five year plan was
launched on April 1, 1951 ending March 31, 1956.
OBJECTIVES:-
a. Growth or increase in GDP:-
 Because of backward economy during British rule, during making of plans, government had to focus on
economic growth as its primary objective.
 Growth refers to increase in the country‘s capacity to produce the amount of goods and services within the
country.
 It refers to steady increase in the GDP.
 It is necessary to produce more goods and services if the people of India are to enjoy rich life.
 Innovative technology also enhances productivity or output per unit of inputs.
b. Full employment:-
 It is a situation when everyone who is able to work at existing wage rate is getting work.
 It implies that there should be higher rate of active participation of the working age group in economic
activities of the country in the process of growth.
 It is a common goal of five year plans and is directly related to economic growth of the country.
 It amounts to achieve growth with social justice.
c. Equitable distribution or Equity:-
 Along with growth it is important to ensure that economic development is shared by all citizens to promote
social justice.
 Benefits of growth should be provided to large sections of society, so that distribution of income becomes
equitable.
  Everyone should be able to meet his or her basic needs such as food, education, health etc. Inequality in the
distribution of wealth should be reduced.
d. Modernization:-
 During British rule, India was lacking in technical knowledge. They were not able to compete with Britain
goods.
 So, it was necessary to provide technical know-how and should be taken as goal.
 Adoption of technology is called modernization.
 It refers to those institutional changes in economic activities which make an economy progressive and
modern. For eg:- Green revolution.
 Modernization does not refer only to use of new technology but also to change in social outlook. Such as
women empowerment.
e. Self reliance:-
 It means dependence on domestically produced goods. This is another major objective which targets non-
interference by foreign countries.
 A nation can promote economic growth and modernization by using its own resources.
 The first seven year plans gave importance to self reliance which means avoiding import of those goods
which could be produced in India.
 This policy was considered necessary in order to reduce our dependence on foreign countries, especially
for food.
2.Short term goals:- It depends upon the current need of the country.
Plan 1 (1951-1956) Increase in agriculture production
Plan 2(1956-1961) Increase in industrial production
Plan 3(1961-1966) Self sufficiency in food grains
Plan 4(1969-1974) Focused on price stability
Plan 5(1974-1979) Alleviation of poverty
Plan 6(1980-1985) Alleviation of poverty
Plan 7(1985-1990) Employment opportunities
Plan 8(1992-1997) Full employment, universalization of education
Plan 9(1997-2002) Growth, price stability, and environmental
sustainability
Plan 10(2002-2007) Better quality of life
Plan 11(2007-2012) Poverty reduction, job creation
Plan 12(2012-2017) Inclusive growth
Agriculture
C. Agrarian reforms/Reforms in Indian agriculture:-
I. Institutional or Land Reforms:-
i. Abolition of intermediaries:-
 During British rule, Zamindari system was implemented which was the reason of backwardness in
agriculture.
 After independence, steps were taken to abolish intermediaries and make the tillers of the soil as the
owners of the soil.
 This has been done to stop the exploitation of cultivators by Zamindars.
ii. Regulation of rent:-
 Earlier intermediaries used to collect as much rent they want.
 To put an end to this exploitation, government has fixed the rent of cultivators.
 It should not exceed one third of crop value.
iii. Consolidation of holdings:-
 Consolidation process was undertaken by government to handle fragmented land.
 It is a process where farmers were allotted land at one place as a replacement of their scattered land.
 It saves cost of farming.
iv. Ceiling on land holdings:-
 It was another policy towards land reforms to promote equity in agriculture sector.
 This means fixing the maximum size of land which could be owned by an individual and beyond that
limit, the land would be taken over by the government.
  And the government would allot this land to landless cultivators and small farmers.
v. Cooperative farming:-
 This means farming done by more than one farmer on same land.
 It will encourage small farmers to do farming and earn profits.
 Together they can buy inputs at less price and sell their produce at higher rate.
II. General reforms:-
i. Irrigation facilities:-
 In order to increase the production, irrigation facilities have been provided to farmers to supply the
required quantity of water.
 At present irrigational facilities cover 45% of land under cultivation as compared to 15% in 1950.
 Due to construction of multipurpose projects and tubewells, larger areas have been covered.
ii. Provision of credit:-
 Cooperative credit societies and rural development banks have been established to meet the finance
requirements of the farmers.
 They provide funds at lower rate of interest. Commercial banks also meet the credit needs of farmers.
 NABARD was established to provide credit facilities to the farmers at the National level in 1982.
iii. Regulated markets and cooperative marketing scheme:-
 There have been regular markets being established in all parts of country.
 This was done to protect farmers from exploitation by the middlemen.
 Market committees were appointed by government which govern these markets and help farmers to get
remunerative price of their produce.
 Cooperative marketing societies have also been established which help farmers to value their produce and
also provide storage houses to keep their produce safely.
iv. Price support policy:-
 Government initiated a policy of minimum support price to encourage farmers to increase production.
 In this policy government fixes a price higher than the market price and if farmers are not able to sell
their entire production at increased price, then government buys this surplus at increased price.
 Government keeps this surplus in its buffer stock and uses it during the time of emergencies like flood,
earthquake, famines etc.
D. Green Revolution:-
The stagnation in Indian Agriculture was permanently broken by Green Revolution. This refers to
increase in production of food grains resulting from the use of High Yield Variety seeds especially
wheat and rice.

i. Use of HYV seeds:-

 High Yield Variety Seeds were adopted in India in 1966.
 It led to increase in production of food grains especially for wheat and rice. This strategy is known as
Green revolution.
 In 2015-2016. National Seed Corporation has distributed 304 lakh quintals of seeds among farmers in
different parts of country.
ii. Use of chemical fertilizers:-
 The use of HYV seeds required the use of fertilizers which contributed in enhancing the productivity.
 In 2015-16, 267.5 lakh tonnes of chemical fertilizers were used.
iii. Use of Insecticides and pesticides:-
 In order to protect the crops from diseases and insects, steps were taken by using insecticides and
pesticides.
 Integrated pest management programme was adopted for plant protection.
 This programme emphasized upon growth of healthy crops.
iv. Scientific farm management practices:-
 Various programmes were launched which promoted scientific way of cultivation instead of conventional
farming.
  They emphasized upon the use of fertilizers, crop rotation process, selection of seeds and their quality.
v. Mechanized means of cultivation:-
 Agriculture machines were introduced to cultivate the land.
 Credit facilities at less rate of interest were provided especially to small farmers. So that they can easily
afford these machines.
E. Achievements of agrarian reforms:- (Green Revolution)
i. Spurt in crop productivity:- The green revolution resulted in multiple rise in food production. It helped
in recovering the country from regular food shortages and end the stagnation period in Indian agriculture.
ii. Decrease in price of food grains:- The price of food grains declined relative to other items of
consumption. The low income groups who spend a large percentage of their income on food, benefited
from this decline in relative prices.
iii. Buffer stock:- The spread of green revolution technology enabled the government to procure sufficient
amount of food grains to build buffer stock which could be used in times of food shortage.
iv. Commercialization of Agriculture:- Agriculture became both subsistence farming and commercial
farming. Green revolution resulted in Marketable or marketable surplus. This is a sign of growth and
development.
v. Change in farmer’s outlook:- Now farmers have changed their view points. They do not consider
farming just to complete their basic needs rather it is considered as a commercial venture.
vi. Self – sufficiency in food grains:- The spread of green revolution technology enabled India to achieve
self-sufficiency in food grains. India no more was dependent on foreign countries in this regard.
F. Limitations of green revolution:-
i. Limited crops:- The effect of green revolution is confined to limited crops like wheat, rice, bazar, maize
etc. It has limited effect on commercial crops like tea, rubber, jute, etc.
ii. Un-even spread:- In the first phase of the Green revolution (approx. mid 1960 upto mid 1970), the use of
HYV seeds was restricted to states such as Punjab, Tamil Nadu, and Andhra Pradesh. Thus, there were
regional inequalities.
iii. Limited farming population:- Farming population consists of big and small farmers. Only big farmers
can afford HYV seeds, as it requires various other inputs which are beyond the reach of small farmers.
iv. Economic divide:- The farmers who could benefit from HYV seeds required reliable irrigation facilities
as well as the financial resources to purchase fertilizers and pesticides, which small farmers could not
afford. This increased the inequality between small and big farmers.
Role of government in ensuring that the green revolution benefitted small farmers as well.
1. The government provided loans at a low rate to small farmers.
2. The government also provided subsidized fertilizers so that small farmers could also have
access to the needed inputs.
G. Subsidies
Subsidies means the help given by government to small or marginal farmers.
Arguments against subsidies Arguments in favour of subsidies
1. Once the technology is found profitable and is 1. Any new technology is considered to be
widely adopted, subsidies should be eliminated risky. So subsidies encouraged the farmers
since their purpose has been served. to test new technology.
2. Subsidies are meant to benefit the farmer but a 2. The government should continue with
substantial amount of fertilizer subsidy also agriculture subsidy because farming in
benefits the fertilizer industry. India continues to be risky as it vitally
depends on the monsoon.
3. Among farmers the subsidy largely benefits the 3. Most farmers are very poor and they will
farmers in the more prosperous regions. So, not be able to afford the required input
there is no case for continuing with fertilizer without subsidies.
subsidies. It does not benefit the target group.
4. It is a huge burden on the government 4. Eliminating subsidies will increase the
finances. inequality between rich and poor farmers
and violate the goal of equity.
 Strategy of Industrial growth
H. Role of public sector in industrial development:-
i. Lack of capital:-
 Indian industrialists did not have the sufficient capital to undertake investment for the development of
industries.
 Because of lack of capital investments by the private entrepreneurs, government had to undertake capital
investment through public sector undertakings.
ii. Low inducement to invest:-
 The Indian market was not big enough to encourage industries 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 market.
 There was no inducement to invest because of low profitability.
 So, public sector had initiated the process of industrialization.
iii. Growth with social justice:-
 The objective of socialistic pattern of society could be achieved only through direct participation of the
government in the process of industrialization.
 Because it requires investment that generates employment rather than investment to maximize profits.

I. IPR-1956 (Industrial policy Resolution)

i. Three fold classification of industries:-
 The first category (A) comprises of industries which could be owned by the government. This category
included 17 industries like atomic energy, arms and ammunitions, oil, railways etc.
 The second category (B) consisted of industries which could be established both by private and public
sector. Public sector will take sole responsibility for starting new units. It included 12 industries such as
fertilisers, machines etc.
 The third category (C) consists of remaining industries which were to be established by private sector.
ii. Industrial licensing:-
 Although there was a category of industries left to the private sector, the sector was kept under state
control through a system of licenses.
 This policy was used for promoting industrialization in backward regions, it was easy to obtain a license
if industrial unit was established in a backward area as compared to developed area.
iii. Industrial concessions:-
 Though the government had major control over industries, private enterpreneurs were offered various
industrial concessions.
 In addition, industrial units were given concessions such as tax benefits, electricity at lower rate etc.
 It was done to promote regional equality.
J. Development of SSI:-
In 1955, the village and small scale industries committee, also called the KARVE COMMITTEE,
noted the possibility of using small scale industries for promoting rural development.
 A small scale industry is defined with reference to the maximum investment allowed on the
assets of a unit. In 1950, a small scale industrial unit was one which invested a maximum of
5 lakhs while at present the maximum investment allowed is 1 crore.
Characteristics:-
i. Labour intensive:-
 Small scale industries are labour intensive, therefore it is employment friendly.
 It uses more labour than the large scale industries and they generate more employment.
 These industries are good for our economy which is ―capital deficient‖ and a ―labour surplus‖ economy.
ii. Equality oriented:-
 Small scale industries show locational flexibility as they can be established anywhere.
 It contributes to balanced regional growth.
iii. Equity oriented:-
 It requires small scale investment.
 It avoids concentration of economic power.
 These can utilize small funds more efficiently and generate revenues to their investors.
India’s Foreign Trade
International trade:- International trade means export and import of goods and services across the country.
Every country exports their surplus output and essential goods for another country in the form of imports.
K. Inward looking trade strategy:-
 It refers to the policy of having reliance on import substitution and protection of domestic industries
through import restrictions and import duties.
 Import substitution implies domestic production of the goods which the country has been importing.
 This strategy was adopted to:- Save foreign exchange and Achieve self- reliance.
 In this policy the government protected the domestic industries from foreign competition. Protection
from imports are in two forms:- Tariffs and Quotas.
 Tariffs are tax on imported goods, these make imported goods more expensive and thus discourage
imports.
 Quotas specify the quantity of goods which can be imported.
 Tariffs and quotas protect domestic firm from foreign competition.
L. Positive impact of Inward looking trade strategy:-
i. High rate of industrial growth with structural transformation:-
 The rise in Industry‘s share of GDP is an important indicator of development.
 GDP share of industrial sector increased from 12% in 1951 to 25% in 1991.
 It is a sign of economic growth with structural transformation.
ii. Diversification of Industrial growth:-
 The industrial sector became well diversified by 1990 due to public sector, as they were given high
priority in the process of industrialization.
 Because of inward looking trade strategy, industries were not confined to basic goods like jute etc rather
variety of goods were produced such as engineering goods.
 There is growth of sunrise industry. 1950-1990 was an era of electronic goods in the global market.
 All this could be possible only because of policy protection.
iii. Opportunities of Investment:-
 Promotion of small scale industries gave opportunities to those people who did not have the capital to
start large firms.
 It also used the potential resources which remained idle.
 It promoted growth with equity.
M. Bad Impact:-
i. Growth of inefficient public monopolies:-
 Public sector in the view of industrialization developed their monopoly control over market .
 An example of this is the provision of telecommunication service which was under government.
 Due to absence of competition, one had to wait for a long time to get a telephone communication.
ii. Indiscriminate spread of public sector enterprises:-
 Everything was under public sector and it did not give the opportunities of investment for the private
sector.
 Indiscriminate spread of public sector enterprises in producing such goods as bread and shoes implied
indiscriminate and irrational use of public resource.
iii. Economical unviable state enterprises:-
 Many public sector firms incurred huge losses but continued to function because it is difficult to close a
government undertaking.
 It causes drain of nation‘s resources.
N. Features of Economic Policy:-
 a. Heavy Reliance on Public sector:-
 Prior to 1991, there was huge dependence on the public sector. The greater importance was given to
public sector than private sector.
 During 1956, there were 17 industries reserved for public sector but only 12 for private sector.
b. Regulated development of Private sector:-
 The state or government held complete control over the private sector through a system of licenses.
 No new industry was allowed unless a license was obtained from the government.
 Under MRTP act, 1969, several restrictions were imposed on the expansion of industries.
c. Protection to small scale Industries:-
 Large scale industries were regularized through MRTP act, so it is necessary to protect small scale
industries.
 Small scale industries were given benefits such as lower tax rate and low interest rate on bank loans.
 Also several boards were established to promote the products of small scale industries in global market.
d. Development of Heavy industries:-
 Heavy industries which are of special significance should be developed on priority basis.
 Industries which have special significance are those which serve as ―universal intermediaries‖, like
electricity power generation and engineering goods industry.
e. Thrust on savings and Industries:-
 Savings as well as investment both are considered as an important tool for economic growth.
 Therefore, savings as well as investment should be promoted. Savings can be promoted by giving high
rate of interest.
 Investments can be promoted by giving them subsidies.
f. Focus on Import substitution:-
 There should be more focus on import substitution.
 It can be achieved by increasing domestic production which also helps domestic industries to be away
from foreign competition.
g. Centralized planning:-
 Programmes of growth and development at the state level should be controlled by central level.
 This objective can be achieved when there is overall strategy of five year plans made by centre as well as
state.
O. Drawbacks of Industrial and Trade policy:-
a. Inefficient functioning of public sector:-
 Many public sector firms suffered from huge losses but continued to function because it is difficult to
close a government undertaking even if it is a drain of nation‘s limited resources.
b. Excessive regulation of industries:-
 The excessive regulation of what came to be called the permit license raj prevented certain firms from
becoming more efficient.
 More time was spent by industrialists in trying to obtain a license.
c. No incentive for producers:-
 Due to restriction on imports, Indian consumers had to purchase whatever the Indian producers produced.
 The producers were aware that they had a captive market, so they had no incentive to improve quality of
goods.
P. Achievement of Goals of planning:-
a. Increase in national income:-
 At the time of independence, India was a stagnant economy. During British rule, national income of India
was at 0.5%
 During the period of planning, national income increased from 2.1% in 1956 to 5.9% in 1990.
 Although this is less than what was estimated, it has broken the circle of economic stagnation.
b. Increase in per capita income:-
 It refers to per capita availability of national income. Prior to independence, it was very minimum.
 Increase in per capita income is a good indicator to assess economic growth. It increased from 1.8% in
1956 to nearly 3.6% in 1990.
 This shows that domestic output has increased and hence raised the standard of living of people.
c. Rise in the rate of capital formation:-
 Capital formation is very essential to increase the level of investment and income in the country.
 It depends upon rate of savings. The country in order to increase capital formation should be able to
channelize savings in right directions.
 Rate of capital formation increased from 10% in 1956 to 39% in 1990.
 d. Institutional and technical change in agriculture:-
 Five year plans have contributed to development in agriculture. They introduced many things:- Abolition
of intermediaries, moderation of rent, Redistribution of land etc.
 These changes have not contributed much but it has changed the working environment of farmers.
 Technological change was also introduced by the way of green revolution. This increased agriculture
productivity.
e. Growth and diversification of Industry:-
 During this period, industrial base became strong, industrial sector started growing and became
diversified.
 Capital goods industries such as iron and steel industry showed growth over time. In consumer goods
industries, country has also become self -sufficient.
 During this period growth rate of industrial production has been around 17% per annum.
f. Economic infrastructure:-
 Means of transport and communication, irrigation facilities and power are the key elements of
infrastructure.
 A revolutionary growth of IT sector has earned India the global player in international market.
g. Employment:-
 Due to innovation, new policies, agriculture reforms and diversification of industries increased and the
country was able to increase employment opportunity too.
Q. Failures of planning:-
a. Increase in poverty:-
 The number of people who fail to get the basic necessities of life is increasing.
 The policies adopted by the government till 1990 were very rigid and were not able to generate more
employment opportunities and more income.
b. High rate of inflation:-
 Despite some progress shown by policies undertaken by the government till 1991, it was observed that
government could not control persistent rise in prices.
 Price level increased from nearly 6% in 1956 to 16.7% in 1990.
c. Unemployment crisis:-
 Though the initiative taken by the government did generate more employment opportunities
unemployment did not subside.
 The major cause of this problem was higher growth rate of population.
 The number of unemployed increased from 54 lakh to 85 lakh persons in the year 1990.
d. Deficient infrastructure:-
 Development of infrastructure continues to be inadequate. Actual growth of infrastructure was not as per
targeted growth.
 Shortage of power has been a serious constraint in the overall process of growth and development.
 Chapter-6 Economic Reforms since -1991

The government was not able to generate sufficient revenues from internal sources such as taxation.
The income from public sector undertakings was also not very high. In late 1980s, government
expenditure began to exceed its revenue by such large margins that meeting the expenditure through
borrowings became unsustainable. India was facing huge financial crisis.
India approached the World Bank and International Monetary fund and received $7 billion as loan to
manage crisis. India had to agree on some conditions in order to avail the loan.
So, World bank and IMF announced New Economic Policy in 1991.

A. Economic reforms:-
 It is a set of economic policy adopted by government to increase the pace of growth and development.
 In 1991, the government of India adopted New Economic policy.
 Its components are LIBERALISATION, PRIVATISATION & GLOBALISATION.
B. Need for economic reforms:-
i. Fiscal deficit:-
 Fiscal deficit is the difference between government expenditure and government revenue.
 Prior to 1991, fiscal deficit was very high because of expenditure in non-development areas and non-
plan expenditure.
 The income of public sector was not high to meet the expenditure.
ii. Adverse balance of payments:-
 Balance of payment crisis is balance of payment deficit which means imports are greater than exports.
 Before 1991, exports were less due to poor quality of domestic goods and imports were more despite of
heavy tariff duty and quotas.
 In the wake of these facts, NEP was the only alternative.
iii. Fall in foreign exchange reserves:-
 These are the reserves of foreign assets like foreign currencies, foreign securities.
 Foreign exchange reserves were reduced because of high imports. There was also not sufficient foreign
exchange to pay the interest to international money lenders.
 The situation became so serious that the government had to mortgage country‘s gold reserves with
World Bank.
iv. Inflationary spiral:-
 Inflation is consistent rise in general price level.
 Before 1991, prices of essential goods have increased.
 Because of inflation, economic crisis got worse. Therefore, the need of NEP arises.
v. Poor performance of PSUs:-
 Several thousand crore rupees was spent in the growth and development of PSU‘s in India.
 But they were not performing well, they incurred huge losses.
 Public sector continued to operate even in those areas which could be comfortably shifted to private
sector.
C. Elements of New Economic policy:-
I. Liberalization: - Liberalization of the economy means freedom given to producing units from the rules
imposed by the government.
Reforms under liberalization:-
1) Industrial sector reforms: - Government introduced industrial policy in 1991. Various measures were
taken such as:-
i. Abolition of Industrial licensing:-
 Earlier industrialists had to get permission from the government to set up their industry.
 As per NEP, Industrialist licensing was abolished except industries— alcohol, cigarettes, hazardous
chemicals, industrial explosives, electronics, aerospace and drugs and pharmaceuticals.
 ii. Contraction of public sector:-
 It was felt that government cannot control everything. So private sector was allowed to participate in
growth object of the country.
 The number of industries which were reserved for public sector was reduced from 17 to 3. These were
defence equipment, atomic energy and railway transports.
iii. De-reservation of production areas:-
 Prior to 1991, some goods could be produced only in small scale industries.
 Now many goods produced by SSI have been dereserved.
 Market forces were allowed for allocation of resources.
iv. Expansion of production capacity:-
 Earlier there was restriction on the production of goods.
 But with economic policy, freedom for licensing was given. It now depends upon producer how to
produce and what to produce.
v. Freedom to import capital goods:-
 Liberalization policy gave freedom to import capital goods and technology in order to develop strong
infrastructural base of the country.
2) Financial sector reforms:-
i. Role of RBI:-
 Earlier the role of RBI was of regulator. As regulator RBI used to fix interest rate structure.
 But with NEP, RBI‘s role was converted from regulator to facilitator. Now RBI has given freedom to
commercial banks to decide upon interest rates.
ii. Establishment of private sector banks:-
 Earlier more importance was given to public sector banks.
 However, reform policies led to the establishment of private sector banks, Indian as well as foreign,
which increased the size of competition and provided better services to customers.
iii. Foreign investment:-
 Foreign institutional investors such as merchant bankers, mutual funds and pension funds are now
allowed to invest in Indian Financial markets.
 Foreign investment increased to 50%.
iv. Setting up new branches:-
 Full freedom is given to commercial banks to set up new branches all over the country, if they fulfill
the conditions of RBI.
3) Fiscal reforms: - (These are the reforms related to tax structure.)
i. Reduction in Direct taxes:-
 With economic reforms, income tax rate has been reduced. This reduction tries to ensure that
individuals do not evade the tax.
ii. Reforms in Indirect taxes:-
 Reforms were made in Indirect taxes. Now a days GST has been launched which generates additional
tax revenue, increases tax compliance and reduces tax evasion.
iii. Simplified taxpaying procedure:-
 In order to avoid confusion, the taxpaying procedure has been simplified.
4) External sector reforms:-
i. Devaluation of rupee:-
 Devaluation refers to reduction in the value of domestic currency. This increases exports and reduces
imports which in turn increase the inflow of foreign exchange.
ii. Foreign trade policy:-
 Tariff on imports was reduced to enhance the domestic trade and achieve economic growth.
 Import licensing was abolished.
 Export duty has been withdrawn to promote competition.
II. Privatization:-
  It refers to transfer of ownership, management and control of government sector enterprises to the
private sector.
 It means greater role to the private sector and reduced role of public sector.
 It can be done by two ways:-
 By withdrawal of the government ownership and management of public sector companies.
 By sale of public sector companies.
 Privatization of the public sector undertakings by selling part of the equity of PSU‘s to the private
sector is known as disinvestment.
 The purpose of privatization is to improve financial discipline and facilitate modernization by
encouraging private sector to invest and participate in economic development with their administrative
efficiency.
 It was also envisaged that private capital and managerial capabilities could be effectively utilized to
improve the performance of PSU‘s.
 Need for privatization:-
 The industrial policy resolution stated the importance of public sector for growth and social justice.
 Employment was shifted from agriculture to Industries and Nine public sector enterprises known as
NAVRATANS were contributing to GDP.
 But other public sector industries were not managed properly and turned into losses.
 So, it was decided to sell out public sector shares to private entrepreneurs but keeping Navratans into
public sector.
i. Impact of privatization:-
Positive impact:-
 Improves efficiency of management: - Privatization focused on self-interest that is profit
maximization, which increases the efficiency of work. Entrepreneurs work with full commitment and
as a result, they achieve higher production.
 Competitiveness: - Privatization focused upon improving the performance by utilizing the capital and
managerial capabilities in an effective way. This encourages competition in domestic and international
market which induces modernization.
 Diversification of products: - In order to generate more profit, production process was diversified and
expanded.
 Consumer’s sovereignty: - Goods produced by industrialists was according to the choice of
consumers, which resulted in wider choice and better quality of life.
 Reduces deficit: - Privatization reduces the financial burden of government by earning sufficient
profits and support government by paying taxes.
Negative impact:-
 Neglect social interest:-Private sector functions mainly with the objective of profit maximization,
which ignores the social welfare of people.
 High priced goods: - Privatization works according to demand and supply forces. It will increase the
price and it became a major problem of inflation.
 Monopolistic control: - If privatization continued to spread like this then soon there will be monopoly
control of private sector which will hamper the objective of growth with social justice.
III. Globalization:-
 It is the outcome of policies of liberalization and privatization.
 It refers to free interaction among all the countries of the world in various fields like trade, technology,
loans investment, outsourcing etc.
Policies:-
i. Increase in equity limit of foreign investment:-
 The foreign equity limit has been raised from 40% to 51%.
 Approvals, sanctions and constraints on foreign investments have been relaxed after economic reforms.
 Foreign exchange management act has been enforced.
 ii. Partial convertibility:-
 Partial convertibility of the currency was allowed by the government.
 It refers to purchase and sale of foreign currencies at a price determined by the market. It was allowed
for import and export of goods and services, payment of interest etc.
iii. Long term trade policy:-
 A new five year trade policy was announced to establish the framework of trade with rest of the world.
 It removed almost all the restrictions on external trade.
 Open competition has been encouraged. All sorts of goods can be traded except for some goods which
are of strategic importance to the nation.
iv. Reduction in Tariffs:-
 In conformity with new economic policy, custom duties and tariffs imposed on imports and exports
have been gradually reduced.
 The ones, which are still prevailing, have been modified to encourage competitiveness and promote
international trade.
v. Withdrawal of quantitative restrictions:-
 Because of policies of WTO the restriction on imports has been abolished.
 It ensures that all member countries should be given equal opportunity to trade in international market.
OUTSOURCING: - A company hires regular services from external sources, mostly from other countries,
which was previously provided internally or from within the country.
The low wage rates and availability of skilled manpower in India have made it a destination for global
outsourcing in the post reform period.
WTO: - Founded in 1995 as the successor of GATT. The objectives of WTO are:-
 To enlarge production and trade of services.
 To ensure optimum utilization of resources.
 To protect the environment.
Advantages of Outsourcing:-
a) Employment: For a developing country like India, employment generation is an important objective
and outsourcing proves to be a boon for creating more employment opportunities. It leads to
generation of newer and higher paying jobs.
b) Exchange of technical know-how: Outsourcing enables the exchange of ideas and technical know-
how of sophisticated and advanced technology from developed to developing countries.
c) International worthiness: Outsourcing to India also enhances India‘s international worthiness
credibility. This increases the inflow of investment to India.
d) Encourages other sectors: Outsourcing not only benefits the service sector but also affects other
related sectors like industrial and agricultural sector through various backward and forward linkages.
e) Contributes to human capital formation: Outsourcing helps in the development and formation of
human capital by training, imparting them with advanced skills, thereby, increasing their future scope
and their suitability for high ranked jobs.
f) Better standard of living and eradication of poverty: By creating more and higher paying jobs,
outsourcing improves the standard and quality of living of the people in the developing countries. It
also helps in reducing poverty.
D. An appraisal of LPG policy:-
MERITS:-
i. Vibrant economy:-
 There has been an increase in overall growth rate of the country.
 In twelfth plan (2012-17) the GDP rate increased.
 In order to achieve such high growth rate, the agriculture sector, industrial sector and service sector has
to be involved.
ii. Stimulant to industrial production:-
 LPG policy has shown structural changes and it was a great stimulant to industrial production.
 Because of such policies many industries came up and they have gained global recognition.
iii. Check on fiscal deficit:-
  Fiscal deficit, which adversely affected the Indian economy prior to 1991, now started recovering after
the economic reforms.
 It reduced from 8.5% in 1991 to nearly 4% in 2015-2016.
iv. A check on inflation:-
 Prior to 1991, general price level was rising. Gulf crisis hit the Indian economy adversely and there was
continuous increase in the price level.
 Due to LPG policies, inflation is brought under control. The annual rate of inflation reduced from
nearly 16.7% to 5.7%.
v. Consumer’s sovereignty:-
 Now, consumers have ample of goods to make choice because of diverse global markets.
 Products are as per the taste and preference of consumers.
 Overall consumption expenditure has risen which implies increase in status of people.
vi. Rise in foreign exchange reserves:-
 Due to rise in exports, the amount of forex reserves has also increased which contributes in the growth
rate of country.
DEMERITS:-
i. Neglect of agriculture:-
 Reforms have not been able to benefit agriculture. It is because public investment in agriculture sector
like irrigation, power, roads etc. has been reduced in the reform period.
 There was more focus on production of cash crops instead of food crops.
ii. Urban concentration of economic growth:-
 The entire industries were set up in the urban areas which will increase gap between rural and urban
area.
 The industries are set up in urban areas because the infrastructural facilities are available there.
iii. Economic colonialism:-
 MNC‘s are being set up in the country, therefore it affects the domestic industries.
 Domestic industries are unable to compete with foreign companies.
iv. Spread of consumerism:-
 Because of competition and setup of Multinational companies consumers are adopting themselves into
western culture.
v. Lopsided growth process:-
 Growth process was incomplete as it did not focus upon all sectors of the economy.
 Industrialization is being given more importance and farming sector is being neglected.
 Production of cash crops has increased supply in foreign markets whereas domestic supply has been
reduced.
Demonetization:- New initiative was taken by the Government of India on 8 November 2016 to tackle the
problem of corruption, black money, terrorism and circulation of fake currency in the economy. Old
currency notes of 500 and 1000 were no longer legal tenders. New currency notes in the denomination of
500 and 2000 were launched.
Positive impact:-
 Improved tax compliance as large number of people was brought in the tax ambit.
 It is a demonstration of state‘s decision to put a curb on black money.
 Tax compliance will improve and corruption will decrease.

GST: - This law came into effect from 1 July 2017.

Aim:-
 To generate additional revenue for the government
 To reduce tax evasion.
 To create ‗one nation, one tax and one market‘.
Features:-
 It is a destination based consumption tax with facility of Input Tax Credit in the supply chain.
 There are 5 standard rates applied i.e.0%, 5%, 12%, 18% and 28%.
 It has amalgamated a large number of central and state taxes and cesses.
a. Strategic sale Minority sale
i. Strategic sale refers to the sale of 51% or more Minority Sale refers to the sale of less than 49%
stake of a PSU to the private sector who bids stake of a PSU to the private sector.
the highest.
ii. The ownership of PSU is handed over to the The ownership of PSU still remains with the
private sector. government as it holds 51% of stakes.

b. Bilateral trade Multilateral trade

i. It is a trade agreement between two Countries. It is a trade agreement among more than two
countries.
ii. This is an agreement that provides equal This is an agreement that provides equal
opportunities to both the countries. opportunities to all the member countries in the
international market.
c. Tariff barriers Non-Tariff barriers
i. It refers to the tax imposed on the imports by It refers to the restrictions other than taxes,
the country to protect its domestic industries. imposed on imports by the country.
ii. It includes custom duties, export import duties It includes quotes and licenses.
iii. It is imposed on the physical units (like per It is imposed on the quantity and quality of the
tonne) or on value of the goods imported. goods imported.

Effect of Reform on Industrial sector Effect of reform on Agriculture sector

-- Decreasing demand of industrial products:- (i)
Cheaper imports have replaced the demand for
domestic goods. Domestic manufacturers are facing
competition from imports. (ii) The infrastructural
facilities, including power supply, have remained
inadequate due to lack of investment.
-- Non-access to developed country‘s markets:- A
developing country like India does not have access to
developed country‘s markets due to high non-tariff
barriers.
-- Fall in public investment in Agriculture:- In the
reform period the investment by government
reduced especially in area of irrigation, power
roads etc.
-- Removal of fertilizer subsidy:- Removal of
subsidy on fertilizers has adverse effect on small
and marginal farmers because their cost of
production has increased.
-- Increased International competition:- Indian
farmers had to face increased international
competition because of reduction of import duties
on food grains, removal of minimum support price
etc.
-- Export oriented policy:- Prices of food grains
increased because of attraction of agricultural
products toward exports and because of this,
production of cash crops increased.
 Chapter-7 Poverty
Two scholars, Shaheen Rafi Khan and Damian Killen, put the conditions of the poor in nutshell: poverty
is hunger. Poverty is being sick and not able to see a doctor. Poverty is not being able to go to school and
not knowing how to read. Poverty is not having a job. Poverty is fear for the future, having food once in
a day. Poverty is losing a child to illness, brought about by unclear water. Poverty is powerfulness, lack
of representation and freedom.

A. Poverty:-
 Poverty refers to a state in which an individual is unable to fulfill even the basic needs of life.
 The minimum requirements include food, clothing, housing, education and health facilities.
 In a developing country, most of the people do not have sufficient facilities and such nation lives in poverty
and remains in vicious circle of poverty.
B. Relative and Absolute poverty:-
i. Relative poverty:-
 It refers to poverty of people, in relation to other people, regions or countries. It is the income position of
one group of people in comparison with other classes.
 It compares the inequality of Income and assets ownership. It helps in understanding the relative position
of different groups of the population.
ii. Absolute poverty:-
 It refers to the total number of people living below poverty line.
 So, absolute poverty refers to a situation when a person is unable to meet this minimum consumption level.
C. Who are poor?
 Those who cannot fulfill the basic requirements of life are called poor.
 When minimum needs of life are not fulfilled, there will be a lot of discomfort, pain and sufferings among
people.
 Beggars, pushcart vendors, street cobblers, landless labourers.
 They live in kutcha hutments; many of them do not get even two meals a day.
 Unstable employment. They do not have electricity, and no access to safe drinking water. Malnutrition
among them is high.
Kinds of poor
Chronic poor Transient poor Non-poor
Always poor Churning poor (who moves in and Who are never poor
out of poverty)
Usually poor Occasionally poor (who are rich
most of the time)

D. Poverty line:-
 Dadabhai Naroji was the first person to discuss the concept of poverty line.
 It refers to a cut-off point which divides people of region as poor and non-poor.
 Percentage of population below poverty line is called ―Head Count Ratio‖
 Determination of poverty line
Monthly per capita expenditure Income method
 In this only private consumption expenditure is  Rural area- income should be 816 where
considered. as in urban area income should be 1000.
 In expenditure, food as well as non-food items are  More income is required in urban area as
to be taken.
things are costly in urban area as
 Consumption of food item is taken in terms of
calories. compared to rural area.
 Requirement for calories:-
Rural area:- 2435 calorie
Urban area:- 2045 calorie
 More calories are to be consumed in rural areas as
they perform more of the physical work.
 On the basis of this in 2011-12 government has
identified income method also.
Limitations of Monthly per capita expenditure:-
 This mechanism groups all the poor together and does not differentiate between the very poor and the other
poor.
 Also this mechanism takes into account expenditure on food and income but there are other factors also
which is ignored such as basic education, health care etc.
 This mechanism is helpful in identifying the poor as a group to be taken care of by the government, but it
would be difficult to identify who among the poor need help the most.
 Social factors are also ignored such as illiteracy, ill health and lack of access to resources.
E. Trends of poverty in India:-
 The two lines in the chart indicate the national poverty line. The first line below indicates poverty level
during 2011-12 and the other line indicates
the same for the year 1973-74. This means
proportion of poor in India during 1973-2012
has come down from 55 to 22 percent.
 The six states –Tamil Nadu, Uttar Pradesh,
Bihar, Madhya Pradesh, West Bengal and
Orissa- contained large section of poor in
1973-74.
 In 2012 poverty has been reduced in some of
the states but states like Odhisha, Madhya
Pradesh, Bihar and Uttar Pradesh are still far
above the national poverty line.
 West Bengal and Tamil Nadu reduced the
poverty level much better than other states.
F. Causes of poverty:-
i. Low level of national product:-
 The reason of poverty is low or poor level of national income in the country.
 The per capita income of the country falls in the category of poorest country.
 Less GDP implies less availability of goods and services among people, so they fall into the category of
poverty.
ii. High growth rate of population:-
 The growth rate of population in India has always been higher than economic growth rate of the nation.
 This leads to fall in per capita availability of goods and services.
 The combination of growing poverty and growing population has resulted in higher level of poverty.
iii. Inflationary spiral:-
 Because of low growth rate and high population in less developed countries, general price level tends to
rise.
 This rise in price is known as Inflation which is the reason of poverty.
 Combination of rise in prices and lower level of Income has decreased the purchasing power of people
resulting in poor quality of life.
iv. Unemployment:-
 Poverty is just a reflection of unemployment.
 Lack of job opportunities, lack of awareness, immobility of factors of production etc are responsible for
unemployment.
 It has become a chronic problem which causes a challenge to the country. It has resulted in low level of
output, low level of income etc.
 It is because of low level of income, people are unable to meet their basic needs.
v. Capital deficiency:-
 There is lack of capital in the country due to which it causes low level of economic development.
 Capital deficiency exists because of low level of income due to which there is low level of savings and low
level of capital formation.
 It has resulted in declined levels of production, income, savings investment and capital formation,
unemployment and hence poverty.
vi. Fragmentation of land holdings:-
 A large section of poor in India have very small lands and that too are less fertile as well as depends upon
rainfall.
 The income from these small land holdings is not sufficient for their survival and they do not have alternate
employment opportunities.
G. Measures to remove poverty:-
1. Three dimensional approach to poverty alleviation:-
i. Growth oriented approach:-
a) Combating poverty through GDP growth:-
 This is the most important measure to solve poverty by increasing the GDP.
 There is the need to develop infrastructure so that new job opportunities can be generated and extra labour
force could be indulged in producing goods and services.
 Greater employment results in higher growth rate and it implies less poverty
b) Combating poverty through population control:-
 Poverty can be eradicated to a large extent, if we are able to control population. It will help us to cover the
gap between availability of resources and demand of goods and services.
 If growth rate of population is moderated then there will be increase in GDP.
 Both at an individual level and at national level, the country is able to enjoy a better standard as there
would be decrease in the percentage of people below the poverty line.
ii. Poverty alleviation programmes/ Employment generation programmes:-
a) Rural employment generation programme:-
 This programme aims at creating self-employment opportunities in rural areas.
 It is implemented by khadi and village industries commission.
 In this programme, financial assistance is provided in the form of bank loan.
b) Swarnajayanti Gram Swarojgar Yojana:-
 It is for self-employment programme, launched from April 1, 1999.
 It aims to assist poor families by organizing them into self-help groups.
 Under this program, a large number of small enterprises were established in rural areas.
 It was restructured into National Rural Livelihood Mission.
c) National Rural Livelihood:-
 It is to provide self-employment to 90 lakh people. This mission is also known as Aajeevika.
 This was implemented in 150 districts  2012-13
 Later on expended to 150 districts  2014-15 .
d) Samporana Grameen Rojgar Yojana:-
  It was launched on 1 Sep, 2001. This scheme was launched to provide wage employment to poor workers.
 It focuses on the development of regional, economic and social conditions.
 It focused on the development of infrastructure.
 The cost of this program is to be shared between the center states.
e) Swarna jayanti Shahri Rojgar Yojana:-
 It was launched in 1997. It aims at creating employment opportunities for both self-employment and wage
employment in urban areas.
 It includes urban-self-employment program and urban wage employment program.
 The cost of this program is shared between the center and state in the ratio of 75:25.
f) Prime Minister’s Rojgar Yojana:-
 It aims to provide employment to educated unemployed by giving financial help, So that they can set up
their own enterprises.
 By 2003-05, 3.5 million people got employment under the scheme.
g) Mahatma Gandhi National Rural Employment Guarantee Act:-
 It was launched in August, 2005.
 The aim of the act is to provide guaranteed wage employment to every household for 100 minimum years.
 Under this act all those who are ready to work at the minimum wage can report for work in areas where this
program is implemented.
iii. Providing minimum basic amenities through public expenditure:-
a) The third approach to reducing poverty is to provide minimum basic amenities to the people through public
expenditure on social consumption needs- provision of food grains at subsidized rates, education, health,
water supply and sanitation.
b) Three major programmes that aim at improving the food and nutritional status of the poor are Public
distribution system, integrated child development scheme and Midday Meal scheme.
c) Pradhan Mantri Sadak Yojana, Pradhan Mantri Gramodya Yojana, Valmiki Ambedkar Awas Yojana are
also attempts in developing infrastructure and housing conditions.
d) The government has also introduced a few schemes to provide health insurance to poor people.
e) National social assistance programme initiated by central government is the programme for elderly people
who do not have anyone to take care of them. In this pension is given to sustain them. Poor women and
widows are also covered under this programme.
f) From 2014, a scheme called Pradhan Mantri Jan Dhan Yojana is available in which people are encouraged
to open bank accounts. This scheme transfers all the benefits of government schemes and subsidies to
account holders directly. Each bank account holder is entitled to 1 lakh accident insurance and 30,000 life
insurance cover.
I. Critical Evaluation of Poverty Alleviation Programs:-
Achievements of PAP
 Percentage of population who are under poverty reduced from 37.2 % in 2004-05 to 21.9 % in 2011-12.
 Wages rates have increased.
 Growth oriented approach, specific alleviation programs and meeting the minimum needs of the poor, have
been able to reduce poverty.
Failure of PAP:-
 Unequal distribution of land and other assets:- Due to unequal distribution of land and other assets, the
benefits from direct poverty alleviation programmes have been appropriated by the non-poor.
 Insufficient resources:- compared to the magnitude of poverty, the amount of resources allocated for
these programmes is not sufficient.
 Inefficient use and wastage of resources:- These programmes depend mainly on government and bank
officials for their implementation. Since such officials are ill motivated, inadequately trained and
corruption prone, the resources are inefficiently used and wasted.
 Chapter-8 Human capital Formation
Just as a country can turn physical resources like land into physical capital like factories, similarly, it
can also turn human resources like students into human capital like engineers and doctors. Societies
need sufficient good human capital out of human resources.

A. Concept:-
 Human capital refers to the stock of skill and expertise if human beings in the country.
 Human capital formation implies the addition to the stock of abilities and skills among the population of
the country.
 It is basically acquiring and increasing the number of people who have skills and expertise which are
important for overall development of the country.
B. Sources of human capital formation:-
i. Expenditure on education:-
 Investment in education is considered as one of the main sources of human capital.
 Expenditure on education increases the efficiency and skill of human capital.
 Education enhances mental horizon of human resources and helps in generating profits in future.
 Individuals invest in education to increase their skills and efficiency resulting in higher earning capacity.
ii. Expenditure on health:-
 Health is considered to be an important input for the development of nation as much as it is important for
the development of an individual.
 It directly increases the physical and mental ability of human beings and produces healthy labour force.
 Healthy person adds more to GDP of the nation than a sick person.
iii. On-the job training:-
 This type of training is required to enhance skills and expertise of human capital in order to increase the
productivity of workers.
 This is the training given to the individual at the time when he performs his job by skilled workers.
 Expenditure done on this training programme will enhance the labour productivity.
 This may take different forms:- the workers may be trained in the firm itself under the supervision of
skilled labour.
iv.Expenditure on migration:-
 Migration means movement from one place to another.
 People move from one place to another in search of jobs where they can utilize their skill in an efficient
way.
 Expenditure done on migration is also considered as source of human capital formation as the earnings are
much higher than cost.
 Migration involves cost of transportation, higher cost of living etc.
v. Expenditure on information:-
 People spend to acquire information relating to market and educational institutions.
 The information is necessary to make decisions regarding investment in human capital as well as for
efficient utilization of resources.
C. Role of human capital formation:-
i. Higher productivity of physical capital:-
 Physical capital formation depends upon human capital formation.
 The physical capital can be utilised effectively only by skilled and intelligent work of human capital in the
economy.
 Thus, human capital formation raises productivity of physical capital which is desired for economic
growth.
ii. Innovative skills:-
 The human capital formation not only increases the productivity of human resources but also stimulates
innovation.
  Education provides knowledge to understand changes in society and scientific advancements thus
facilitating inventions & innovation.
 Large the number of skilled and trained personnel, greater the possibilities of innovation.
iii. Higher rate of participation and equality:-
 Higher rate of participation means increase in employment.
 Human capital formation has increased the productivity of individuals which increases employment
opportunities and also provides economic and social equality.
iv. Improvement in quality of life:-
 The quality of life improves due to quality education, health and skill formation acquired by the people.
 Human capital formation enables them to enjoy a higher standard of living, they are able to generate better
remuneration for them and for the nation.
v. Change in emotional and material environment of growth:-
 Change in emotional growth means change in attitude level of individual. Individual will become more
growth oriented.
 Change in material environment means now society as a whole can grow as there are more skilled people
or workers who will implement the plans & policies in an effective way.
D. Problems facing human capital formation:-
i. Rising population:-
 Continuous rise in population will adversely affect the quality of human capital.
 Benefits of economic growth relating to housing, hospitals, education etc. have reduced due to rising
population.
 Rapidly rising population lowers the capacity to possess skill and expertise required for economic growth.
ii.Brain-drain:-
 Loss of resources in terms of ―Brain-Drain‖ is a serious outcome of migration when educated and skilled
manpower moves to other countries to work.
 The countries like India cannot afford migration of persons of high calibre and possessing high quality
education who choose to render their services abroad.
iii. Deficient manpower planning:-
 In India, there exists imbalance between the demand and supply of human resources required for different
categories of work.
 Because of poor manpower planning there is wastage of scarce resources of the country.
iv. Insufficient training in primary sector:-
 Primary sector is the most important sector but proper training is not provided to them in order to utilize
the resources effectively.
 There are widespread inefficiencies in arranging on-the job training programmes.
v. Low academic standards:-
 Educational facilities in India have not developed as required for economic growth.
 There is mismatch between the requirement of skills and available academic standards.
 The result of this is that skills, training and expertise obtained by human capital is insufficient to meet the
desired standards of economic growth.
E. Reports on the Indian Economy:-
Two independent reports on the Indian Economy, in recent times, have identified that India would grow
faster due to its strength in human capital formation.
 Deutsche Bank, a German bank in its report on ‗Global Growth Centers‘ identified that India will emerge
as one among four major growth centres in the world by the year 2020.
 With reference to India it states, ―Between 2005 and 2020 we expect a 40% rise in the average years of
education in India.
 World Bank, in its recent report, ‗India and the knowledge Economy- Leveraging strengths and
opportunities‘, states that India should make a transition to the knowledge economy and if it uses its
 knowledge as much as Ireland does then the per capita income of India will increase from US$1000 IN
2002 to US$3000 in 2020.
 It further states that the Indian economy has all the key ingredients for making this transition such as, a
critical mass of skilled workers, a well-functioning democracy and diversified science and technology
infrastructure.
F. Government intervention in Education and health sectors:-
 Expenditure on education and health makes substantial long term impact and they cannot be easily
reversed; hence, government intervention is essential.
 The role of government is to ensure that the private providers of these services adhere to the standards
stipulated by the government and charge the correct price.
 In a developing country like India, with a large section of the population living below the poverty line,
many of us cannot afford to access basic education and health care facilities.
 Basic health care and education is a right of the citizens. So it is essential that the government should
provide education and health services free of cost for the deserving citizens and those from the socially
oppressed classes.
G. Growth of education sector in India:-
 During 1952-2014, education expenditure as percentage of total government expenditure increased from
7.92 to 15.7 and as percentage of GDP increased from 0.64 to 4.13.
 In 2009, the Government of India enacted the Right to Education Act to make free education a fundamental
right of all children in the age group of 6-14 years.
 Government of India has also started levying a 2 % ‗Education Cess’ on all Union taxes. The revenues
from education cess have been earmarked for spending on elementary education.
 In addition to this, the government sanctions a large outlay for the promotion of higher education and new
loan schemes for students to pursue higher education.
H. Educational achievements in India:-
S. no Particulars 1990 2000 2015
1. Adult literacy rate (%) of people aged above 15
Male 61.9 68.4 81
Female 37.9 45.4 63
2 Primary education completion rate
Male 78 85 94
Female 61 69 99
3 Youth literacy rate
Male 76.6 79.7 92
Female 54.2 64.8 87

I. Growth of Education sector in India:-

1. Expansion of General education:- During the plans, the number of educational institutions providing
elementary education has increased roughly by five times and number of students increased ten-fold. In
1951, hardly 18.33 % of the total population was literate. In 2011, the percentage of literates has increased
to 74.4%.
2. Elementary education:- Elementary education covers students from class 1 to class 8 in the age-group of
6-14 years. The number of primary and middle school has considerably increased. But low percentage of
admission of children in primary class points to educational backwardness in the country.
3. Secondary and senior secondary education:- Navodaya Vidyalayas were established to impart modern
education of good standard to talented students of rural areas. These schools provide boarding facilities to
the students. Central government has established Kendriya Vidayalaya for the benefit of the children of
transferable employees.
4. Higher education:- After independence, higher education has shown a convincing growth overtime. The
total number of colleges for general education in the country is 39071. Higher education includes general
education as well as technical, managerial, medical and other forms of professional education.
5. Vocationalisation of secondary education:- In February 1988, the Central government launched a plan to
introduce vocational subjects in the education system of the country. Vocational courses have been
introduced in the areas of agriculture, trade and commerce, engineering, technology, health and medicines.
6. Technical, Medical and Agricultural education:- The number of institutions giving technical and
professional education has been increased after independence. Many research centres have also been set up
in the country, eg:- IIT, Agriculture Research Institutes, Indian Statistical Institutes, National Physical
Laboratory, etc.
7. Rural education:- National Rural Higher Education council has been set up for the purpose of increasing
rural education. Under this scheme children of scheduled castes and scheduled tribes get free education in
all the states.
8. Adult and female education:- In order to eradicate illiteracy among the adults, special arrangements have
been made for adult education. National literacy mission was set up in 1998.
9. Total literacy campaign:- National literacy mission was launched to render everybody literate in the
country. This programme has now been recast as ‗Saakshar Bharat‘ with a central focus on female
education.
10. Right to Education:- in the year 2009, the Government of India has brought about an Act , called RTE. It
promises free and compulsory education to all. It makes education a matter of right to all children in the
age of 6-14 years.

s. no Committee Year Objectives

1 Education commission
2 The Tapas
Committee
3 Right to Education Act
1964 It had recommended that
at least 6% of GDP be
spent on education so as
to make a noticeable rate
of growth in educational
achievements.
Majumdar 1998 It estimated an
expenditure of 1.37 lakh
crore over 10 years
(1998-99 to 2006-07) to
bring all Indian children
in the age group of 6-14
years under the purview
of school education.
2009 It was enacted by the
Government of India to
make free education a
fundamental right of all
children in the age group
of 6-14 years.
 Chapter -9 Rural development
Agriculture is the major source of livelihood in the rural sector. Mahatma Gandhi once said that the
real progress of India did not mean simply the growth and expansion of industrial urban centres but
mainly the development of the villages. This idea of village development being at the centre of the overall
development of the nation is relevant even today.

A. Rural development:-
 It is the process which targets betterment of rural areas.
 It focuses on the action plan for the development of rural areas that are lagging behind in the overall
development of the country.
 The key issues in Rural Development:-
 Development of human resources
 Land reforms
 Infrastructure development
 Finance for land reforms and agriculture marketing
B. The challenges of rural development:-
1) The lingering challenges:-
a) The challenge of rural credit:-
 Rural credit refers to the credit for farmers in rural areas. Credit facility /loan contribute to the growth of
rural areas.
 The need for credit arises because poor farmers do not have surplus to invest in the improvement of
agriculture.
 There is time difference between sowing and harvesting of the crops. Farmers borrow in between sowing
and harvesting of the crops. Farmers borrow in between to meet their requirements.
Need for credit:-
i. Short term credit:-
 It is the credit required to meet short term needs.
 The period of this loan ranges between 6-12 months.
 It is required to buy seeds, tools, manures, fertilizers etc.
ii. Medium term credit:-
 It is credit required to meet medium term needs.
 The period of this loan ranges from 12 months- 5 years.
 It is required to buy machinery, fences, digging wells, constructing cattle sheds etc.
iii. Long term credit:-
 It is credit required to meet long term needs.
 The period of this loan ranges between 5-20 years.
 It is required to buy lands, heavy machines and equipments.
Sources of Rural credit:-
i. Non-institutional sources:-
 These are traditional sources of rural credit in India. These sources include money-lenders, landlords, and
traders.
 They charge very high rate of interest and thus exploit farmers.
 They acquire land on failure to pay back the loan.
 They force farmers to sell their crops to them at low prices.
ii. Institutional sources:-
a. Cooperative credit societies:-
 These societies advance credit to the farmers at reasonable rate of interest. These contribute nearly 30% of
the rural credit.
 These focus on the following objectives:-
 To free the farmers from the hands of money lenders.
 To advance credit at low rates of interest.
 To spread credit facilities all over the country.
 To ensure timely and continuous flow of credit to the rural areas.
b. RRBs and land development bank:-
 RRBs are regional rural banks and land development banks set up to promote credit facilities.
 The credit is granted against the mortgage of their lands.
 These banks provide credit for purchasing agricultural inputs, construction etc.
c. State bank of India and other commercial banks:-
 The state bank of India was set up in 1955 with a focus on rural credit.
 After the nationalization in 1969, commercial banks played a major role in advancing credit.
 Commercial banks directly help the farmers by expanding their branches in rural areas.
 It also indirectly helps the farmers through agents.
d. NABARD:-
 NABARD means National bank for agriculture and rural development. It was set up in 1982 as an apex
body to coordinate the activities of other financial institutions.
 It promotes the strength of the credit institutions in credit delivery system.
 It provides assistance to non-farms sector also and evaluates the projects financed by it.
 It coordinates the functioning of different financial institutions involved in advancing rural credit.
e. Self-Help groups
 Formal sources are not inadequate and not able to meet their requirements.
 It promote saving habits by contribution from each member.
 From the pooled money, credit is given to needy members to be repayable in small installments at
reasonable rate of interest.
 SHGs have helped in the empowerment of women. It is also known as micro-credit programme.
 For eg:- Kudumbashree is a women oriented community based self help group implemented in kerala in
1955.
Stage I: SHG provides a new opportunity for women to come together, meet regularly, discuss, debate and
exchange views on important common issues.
Stage II: The emerging financial power through their association with SHG contributes to increase
women‘s influence on household decision making .
Stage III: Women start assuming a larger role in their communities like community work, monitoring and
implementation of government programmes and schemes and participation in community meetings. They
are now seen as active participants in village community.
Stage IV: Women graduate from being participant in social and political platforms to a more empowered
role where they could successfully contest elections, and assume political power

Rural banking-A critical evaluation:-

 Banking credit facility is available by keeping something as collateral security because of this poor and
marginal farmers are left out.
 There is relaxed policy relating to recovery of loans and because of this sometimes bank may fall in
problem.
 Farming families fail to save money properly due to which deposit funds are less in commercial banks.
b) The challenge of agriculture marketing:-
 It is a process that involves the assembling, storage processing, transportation, packaging, grading and
distribution of different agricultural commodities across the country.
Measures initiated by government to improve marketing system:-
i. Regulated markets:-
 These were created to create transparent marketing conditions which will benefit farmers as well as
consumers.
 This measure protects the farmers from exploitation by the middlemen.
 The market committees ensure that the farmers get reasonable price of their produce.
  There is strict vigil on the use of proper scales and weighs.
ii. Cooperative agricultural marketing societies:-
 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.
iii. Provision of warehousing facilities:-
 Government has provided storage facilities in the view to help farmers for storing the goods.
 This encourages the farmers to store their produce in the warehouse of central or state government and
sell their produce at a time when the price is attractive.

iv. Subsidized transport:-

 Railway authorities are providing subsidized tariff to the farmers, so that they can transport their
produce to urban areas.
v. Dissemination of information:-
 This refers to spread of market related information to the farmers through electronic media and print
media.
 It helps farmers in taking decisions as to what to produce, how much to produce, how much to sell,
when and where to sell etc.
 Spread of market information will help farmers getting fair price of their produce.
vi. Minimum support price:-
 It is an important step initiated by government to give assurance of MSP for agricultural products.
 The govt. fixes minimum support price to encourage the farmers to sell their produce.
 It is the assurance given by the government and farmers are free to sell their produce at price higher
than MSP.
C. Emerging alternate marketing channels for agricultural marketing:-
 It has been realized that if farmers directly sell their produce to consumers, it increases their incomes.
Some examples of these channels are:-
 Apni Mandi (Punjab, Haryana, Rajasthan)
 Hadaspur (Pune)
 Rythu Bazars ( vegetables and fruit markets in Andhra Pradesh and Telangana)
 Uzhavar Sandies (farmers market in Tamil nadu)
 Further, several national and multinational fast food chains are increasingly entering into
contracts/alliance with farmers to encourage them to cultivate farm products of the desired quality by
providing them with not only seeds and other inputs but also assured procurement of the produce at
pre-decided prices.
Benefits :-
 It will help in reducing the risks of farmers.
 It would also expand the markets for farm products.
 It would help in providing proper prices to farmers.
 It will help in protecting interest of consumers also.
D. Agriculture diversification:-
 Agricultural diversification is one of the essential components of economic growth. It is the stage
where traditional agriculture is transformed into a dynamic and commercial sector by shifting the
traditional agricultural product mix to high standard products, which has a high potential in stimulating
production rate. Here, agricultural diversification is supported by a change in technology or consumer
demand, trade or government policy, and by transportation, irrigation, and other developments of
infrastructure.
 It includes two aspects:- One relates to change in cropping pattern and other relates to a shift of
workforce from agriculture to other allied activities and non- agriculture sector.
 Why is agricultural diversification essential for sustainable livelihoods?
1. The need for diversification arises from the fact that there is greater risk in depending exclusively on
farming for livelihood.
2. 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.
3. Much of the agricultural employment activities are concentrated in the Kharif season. But during Rabi
season, in areas where there are inadequate irrigation facilities, it becomes difficult to find gainful
employment.
4. Therefore, expansion into other sectors is essential to provide supplementary gainful employment and
in realizing higher levels of income for rural people to overcome poverty.
i. 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.
 In most areas, especially in rural areas livestock farming is combined with crop farming to earn additional
income.
 Livestock farming is more in Arid or Semi-arid areas where irrigation facilities are less.
 Out of all the livestock farming, poultry farm accounts for the largest sale.
 Government implemented a system namely ―operation flood‖ In this all the farmers can pool their production
of milk according to different quality. It can be transported to milk cooperatives at fair price.
 Gujarat state is held as a success story in the efficient implementation of milk cooperatives which have been
emulated by many states.
ii. Fisheries:-
 The fishing communities regard the water body as ‗mother‘ or ‗provider‘. The water bodies consisting of sea,
oceans, rivers, lakes etc. are the source of income for fishing community.
 Kerala, Maharashtra, Gujarat and Tamil Nadu are the major areas who depend upon fisheries for their
livelihood.
 Unemployment, low earnings, illiteracy and indebtedness are some of the major problems which are being
faced by fishing communities.
 There is need to increase credit facilities through cooperative and self-help groups for the fishing community.
 Fishery technology can be updated and made available to the fishing community.
 Problems related to over-fishing and pollution need to be regulated and controlled. Welfare programmes for
the fishing community have to be re-oriented in a manner which can provide long-term gains and sustenance
of livelihoods.
iii. Horticulture:-
 It is an important sector for diversification in agriculture. Horticulture crops include fruits, vegetables,
flowers, species etc.
 It provides food and nutrition as well as employment opportunities.
 India has emerged as a world leader producer in variety of goods line mangoes, bananas, coconut, cashewnut
and various other species.
 There has been rise in the income level of farmers involved in horticulture.
 Horticulture has given employment opportunities to the women in rural areas.
 The period of 1991, 2003 was the period of Golden revolution because during this period, the planned
investment in horticulture has increased the production.
 The area under cultivation in horticulture was more as compared to area under pulses which reduces the
supply of pulses and price increases for essential goods.
 Horticulture has emerged as a successful sustainable livelihood option. It contributes nearly one-third of the
value of agriculture output and 6 % of GDP of India.
iv. Cottage and household industries:-
 It is the traditional occupation in rural areas other than farming.
 It involves the activities like spinning, weaving, dyeing and bleaching.
 These industries get little bit affected when large scale industries related to textile were set up.
 Workers have started making other things such as soaps, dolls, bee-keeping etc. which resulted generation of
extra income.
 It has given employment opportunities to the women.
a) Organic farming and sustainable development:-
 Organic farming is the farming done by using organic inputs such as animal manures and compost for
cultivation.
 It reduces the use of chemical fertilizers, insecticides; pesticides etc. and provide food grains free from
chemicals and toxic pesticides.
 It focuses on improving soil fertility along with an eco-friendly environment.
―Organic farming is a system which avoids or largely excludes the use of synthetic inputs (such as fertilizers,
pesticides, hormones, feed additives etc) and to the maximum extent, feasible rely upon crop rotations, crop
residues, animal manures, off-farm organic waste, mineral grade rock additives and biological system of
nutrient mobilization and plant protection.

Why organic farming?

i. Discard the use of renewable resources:-
 Conventional farming relies heavily on chemical fertilsers and pesticides and these chemicals are synthetic
chemicals made from petroleum.
 Organic farming does not use such chemicals and hence avoid the usage of non- renewable resources.
ii. Environmental friendly:-
 The produce of organic farming is pesticide free as they discard the use of chemical fertilizers.
 These fertilizers pollute the groundwater and hence organic farming is eco-friendly.
iii. Sustains soil fertility:-
 Conventional farming such as fertilizers erode the soil fertility whereas organic farming sustains soil fertility.
 Soil fertility is increased by use of animal manures and compost.
iv. Healthier and tastier food:-
 Organically grown food has more nutritional value than food grown by chemical farming. So organic
farming provides us with healthy foods.
 Present day trends show that demand for organic food is rising as it is more nutritious.
v. Inexpensive:-
 Organic farming acts as substitute for conventional farming.
 It substitutes costlier agricultural inputs such as HYV seeds chemical fertilizers, pesticides etc. with organic
inputs.
 Organic inputs are cheaper than those fertilizers.
Problems and Limitations of organic farming:-
 The yields from organic farming are less than modern agricultural farming in the initial years. Therefore,
small and marginal farmers may find it difficult to adapt to large-scale production.
 Organic produce may also have more blemishes and a shorter shelf life than sprayed produce.
 Choice in production of off-season crops is quite limited in organic farming.
 Marketing of organically produced goods is another major problem.
(i) Shortage of Biomass:-
 Many experts and well informed farmers are not sure whether all the nutrients with the required quantities
can be made available by the organic materials.
 Even if this problem can be surmounted, they are of the view that the available organic matter is not simply
enough to meet the requirements.
(ii) Disparity of Supply and Demand:-
 Non-perishable grains can be grown anywhere and transported to any location but this is not the case with
fruits and vegetables.
 It should be produced locally for which there should be willing companies, aggregators and farmers around
that particular area from where the demand is coming.
 But generally, the demand comes from metros where there are no farmlands to produce organic fruits and
vegetables.
 Smart transport and dedicated channels of supply are the solutions to this disparity.
(iii) Time Indeed:-
 Organic farming requires greater interaction between a farmer and his crop for observation, timely
intervention and weed control for instance.
 It is inherently more labor intensive than chemical/mechanical agriculture so that, naturally, a single farmer
can produce more crops using industrial methods than he or she could by solely organic methods.
(iv) High MRP:-
 It is almost obvious that due to the extreme care taken to go along with organic farming, the results would be
kept at a high price.
 The items sold in the market are half the price of non-organic products.
 So, we can say that organic items are expensive and not every consumer is willing to pay the price for it.
(v)Lack of special infrastructure:-
 Most large organic farms still operate in an industrialized agriculture style, including industrial transportation
of the food from field to plate.
 Unfortunately, this involves the adoption of the same environmentally harmful practices as those of factory
farms which are however hidden under the cover of being organic.
 Class-XII Chapter-10 Employment Subject:-
Economics
People do variety of work. Some work on farms, in factories, banks, shops and many other workplaces; yet a
few others work at home. Work at home includes not only traditional work like weaving, lacemaking or
variety of handicrafts but also modern jobs like programming work in the IT industry.

A. Who is a worker?
 All those persons who are engaged in various economic activities, in whatever capacity - high or low, and
hence contribute to gross national product are workers.
 Even if some of them temporarily abstain from work due to illness, injury or other physical disability, bad weather,
festivals, social or religious functions, they are also workers.
 Workers also include all those who help the main workers in these activities.
 We generally think of only those who are paid by an employer for their work as workers. This is not so. Those
who are self-employed are also workers.
B. What is Employment?
 The nature of employment in India varies. Some get employment throughout the year; some others get
employed for only a few months in a year.
 Many workers do not get fair wages for their work.
 While estimating the number of workers, all those who are engaged in economic activities are in
employment.
C. Participation of people in employment:-
 During 2011-12, India had about a 473 million strong workforce.
 Since majority of our people reside in rural areas, the proportion of workforce residing in rural areas is
higher. The rural workers constitute about three-fourth of this 473 million.
 Men form the majority of workforce in India. About 70 % of the workers are men and the rest are women.
 Women workers account for one-third of the rural workforce whereas in urban areas, they are just one-fifth
of the workforce.
D. Workforce participation rate:-
 It is defined as the percentage of population that is actively contributing to the production of goods and
services of a country.
 It is calculated as:- x100
 It is an indicator which is used for analyzing the employment situation in the country.
 If the ratio is higher, it means that the engagement of people is greater.
 If the ratio of country is medium, or low, it means that a very high proportion of its population is not
involved directly in economic activities.
SEX WORKER POPULATION RATIO
TOTAL RURAL URBAN
MEN 54.4 54.3 54.6
WOMEN 21.9 24.8 14.7
TOTAL 38.6 39.9 35.5
 In rural areas more people participate in employment as compared to urban areas, because in rural areas
they have limited resources to earn income and moreover people do not go to school or college as their
economic condition does not allow them. So they have to join one or other work to support their families.
 Urban people have variety of employment opportunities. They look for that job which is suitable for them
as per their skills.
 More women participate in work in rural areas as compared to urban areas, because women working in
farm in rural areas are considered as a part of the workforce.
 Whereas on the other hand men are able to earn high income in urban areas, so families discourage female
members for taking up jobs.
 E. Unemployment
 Unemployment refers to a situation where people are willing to work at existing wage rate but they are not
getting work.
Worker and its types:-
 All those people who are engaged in economic activities according to their capacity are known as workers.
Types:-
i. Self-employed workers:-
 These are those workers who use their own resources such as land, labour, capital etc.
 They are engaged in their own business and profession.
 They are not employed by others whereas they provide job to themselves.
ii. Hired workers:-
 These are those workers who are employed by others and are paid wages or salaries in return.
 This is also known as wage employment.
 They receive salaries for rendering their services.
iii. Casual workers:-
 These are not hired on permanent/ regular basis by employers.
 These do not get social security benefits such as Pension, Gratuity etc.
 These are daily wagers. For eg:- Construction workers.
iv. Regular workers:-
 These are hired on permanent/regular basis by their employers.
 These get social security benefits such as Pension, Gratuity fund etc.
 They can form their own trade unions.
F. Distribution of workforce:-
1. Distribution of work in different sectors:-
i. Primary sector:-
 Primary sector includes sector which involves natural resources such as agriculture, forestry, mining etc.
 As per 2015-16, near about 46% workforce is employed in primary sector.
 A large workforce depends on primary activities to make a living. But the productivity and wage rate is less
which shows backwardness of primary sector.
ii. Secondary sector:-
 Secondary sector includes manufacturing, construction etc.
 Only 21.8% of workforce is employed in secondary sector which shows the industrial sector is unable to
generate employment opportunities.
iii. Tertiary sector:-
 It includes service sector that is trade, transport, storage etc.
 It provides 32% of employment opportunities which is more than industrial sector.
 It is a major source of employment for people in urban areas as against employment in rural areas.
Industrial Place of residence Sex Total
category
Rural Urban Men Women
Primary sector 64.1 6.7 43.6 62.8 48.9
Secondary 20.4 35.0 25.9 20.0 24.3
sector
Tertiary sector 15.5 58.3 30.5 17.2 26.8
Total 100 100 100 100 100

2. Distribution of employment by gender:-

i. Male workforce:-
 Male workforce engaged in primary sector is only 45%, in secondary sector -19% and tertiary sector-25%.
 Male workforce can migrate from one area to another area, therefore in tertiary sector employment is greater
as compared to secondary sector.
ii. Female workforce:-
 Female workforce engaged in primary sector is 57%, whereas in secondary sector -15% and tertiary sector
19%.
 More of the female workforce is engaged in primary sector because women are unwilling to migrate for
outside jobs.
 They prefer to work at their place in order to generate extra income for their family.
G. Growth and changing structure of Employment:-
1. There are two main developmental indicators to expand an economy:-
 Growth of employment
 Growth of gross domestic product:- India‘s
planned development have been aimed at
expansion of the economy through increase in
GDP and employment.
 During the period 1950-2010, GDP of India grew
positively and was higher than the employment
growth.
 There is a widening gap between the growth of
GDP and employment during 1951-2012.
 This means that, India is experiencing more GDP
through technology than the employment . It is a situation of jobless growth.
 Therefore, jobless growth is a situation when the economy is able to produce more goods and services
without increase in level of employment.
2. Informalisation of Indian workforce:-
It is the situation where percentage of workforce in the formal sector tends to decline and that in the
informal sector tends to rise.
It is classified into Formal sector and Informal sector.
i. Formal sector:-
 All the public or private sector establishments which employ 10 or more workers are called formal sector.
 These workers are entitled to social security benefits such as provident fund, gratuity etc.
 These workers form trade unions and have strong bargaining power, as their rights are protected by various
labour laws.
ii. Informal sector:-
 All the private sector organisations which hire less than 10 employees together comprise informal sector.
 These workers are not entitled to social security benefits such as provident fund, gratuity etc.
 These workers cannot form trade unions and have weak bargaining power as their rights are protected by
various labour laws.
 This sector includes millions of farmers, agricultural labour, owners of small enterprises etc.
H. Rural and Urban Unemployment:-
1. Rural unemployment:-Degree of unemployment is more in rural areas as compared to urban areas. More of
the workforce is engaged in primary sector. This sector leads to two types of unemployment:-
i. Disguised unemployment:-
 It is a type of hidden unemployment which arises in agriculture sector.
 It is a situation when more than actually required numbers of workers are engaged in work. If some of them
are withdrawn from the job, the total output will remain unaffected.
 When all those who apparently seem working in agriculture are not able to contribute individually to total
output, would be counted in disguised unemployment.
 Lack of job opportunities outside agriculture compel the people to work on their family farm which causes
unemployment.
 ii. Seasonal unemployment:-
 This is another common form of unemployment which prevails in rural areas. It occurs because agriculture is
seasonal in nature. The farmers are unemployed in off season.
 It depends upon the method of cultivation, if farmer cultivates only one crop in a year then he remain
unemployed for 6-7 months.
 This unemployment occurs in many other seasonal activities too, such as brick making, sugarcane crushing,
ice cream making etc.
2. Urban unemployment:-
i. Industrial unemployment:-
 It includes those persons who want to work in industries, mining, transport but they do not get the work.
 It refers to the unemployment which occurs because of modern industrial development which is based on
adopting capital intensive technology.
 There is rapid increase in population in India and the industrial sector has not expanded so much so as to
create job opportunities.
 There has been tendency of migration of people from rural areas to urban areas which further add to the
problem of industrial unemployment.
ii. Educated unemployment:-
 It is that unemployment wherein people have education or a degree but they are not able to get the job.
 There has been tremendous expansion of educational facilities at school, college and university level. This
has led to an increase in the number of educated people in the country.
 But this education is degree oriented not job-oriented. Hence an educated person fails to get employment.
 There is no correlation between the number of educated people and amount of job opportunities. Job
opportunities have not increased as much as the number of educated persons.
3. Other types of unemployment:-
i. Open unemployment:-
 It refers to the unemployment in which people are able and willing to work, but fail to get work.
 They have necessary skills and are ready to work at existing rate, but they do not get a job.
 Such workforce remains unemployed throughout and totally depends upon others.
ii. Structural unemployment:-
 It arises due to mismatch between demand of specified type of workers and unemployed persons.
 It exists because of structural changes in the economy.
 This may be due to change in technology because of which persons who are trained to work with old
technologies are no longer required and considered unemployed.
 This may also be due to change in demand because of which new changes in the methods of production are
required and the persons who cannot match the requirement are thrown out.
iii. Underemployment:-
 It is a situation when worker does not work for full time or even if he is working for full time, he is paid less
than what he should get.
 Underemployment may be visible in nature. In this situation, persons get employed for less than normal
work hours. For eg:- if a person works for 5 hours a day which is less than normal working hours that is 8
hours, then he is underemployed.
 Underemployment may also be invisible in nature. In this situation, persons are employed in full time work
but they are paid less.
iv. Frictional unemployment:-
 It is temporary phenomenon. It happens due to some temporary changes taking place in the work place.
 It occurs when workers leave one job and need some time to wind up the previous job. In this process they
are not working for some time, and hence will be called frictionally unemployed.
 This may also happen due to installation of new equipment etc.
v. Cyclical unemployment:-
  This problem occurs due to cyclical fluctuations in trade cycle that is boom, recession , depression and
recovery.
 During the phases of recession and depression that is when the level of income falls it causes further fall in
demand of goods and services. The nation would then find cyclical unemployment.
I. Causes of unemployment:-
i. Slow economic growth:-
 Slow growth rate of economy is an important factor that has led to unemployment.
 Slow growth rate is unable to generate enough of job opportunities to absorb the available labour force.
 The actual growth rate of economy is always less than the required growth rate and as a result it arises
unemployment.
ii. Rapid growth of population:-
 A high rate of population growth in India is responsible for the unemployment in the country.
 A high growth rate of population keeps adding more persons every year to the existing labour force who are
seeking employment.
 Increase in population is at faster rate than the increase in number of job opportunities.
iii. Agriculture-A seasonal occupation:-
 There is heavy pressure of population on agriculture which offers seasonal employment.
 Because of which farmers remain idle for 3-4 months in a year.
 Irrigation facilities are very poor due to which farmers are not able to undertake multicropping system.
iv. Joint family system:-
 In India, there is still joint family system which prevails both in rural and urban areas.
 In large families, many family members depend on the joint income of the family.
 It gives rise to disguised unemployment.
v. Decay of cottage and small industries:-
 Decay of handicraft industry during British time caused unemployment.
 Large scale industries have taken place of small scale industries but they failed to give employment
opportunities.
vi. Low savings and investment:-
 There is lack of investment in the country. Lack of investment implies low production of goods and services
as a result of which there are less employment opportunities.
 Lack of investment Less Income Less savings results in lack of job opportunities and effects
unemployment.
vii. Limited mobility of labour:-
 There is low level of mobility of labour in India.
 There are many reasons such as lack of awareness about job markets, family circumstances, language
problem which hinders mobility of workers for new jobs.
J. Economic and social Consequences:-
1.Economic consequences:-
 Non-utilization of man power:-As people are unemployed, manpower resources are not fully utilized which
result in wastage of resources.
 Loss of output:- As human resources are not utilized to the full, there will be loss of output and income to
the extent of unemployment.
 Low capital formation:- It is because of low level of income that people are not able to save and invest
sufficiently causing decline in capital formation.
 Low productivity:- Because of disguised unemployment or cyclical unemployment the productivity is less.
2. Social consequences:-
 Low quality of life:- Unemployment means a state of low quality of life as the person is not earning and is
not able to maintain dignified standard of living.
 Greater inequality:- Unemployment corresponds to inequality as some are working and earning and some
are not. It widens the gap between haves and have nots.
  Social unrest:- Unemployment adversely affects the peace in the society. Being in the state of suffering,
unemployed person may resort to theft, dacoit, deception etc.
K. Suggestion to solve the problem of Unemployment:-
i. Increase in production:-
 If employment has to be increased it is necessary to increase the output in different sectors that is
industrial, agriculture etc.
 Greater the production, greater is the demand for labour.
ii. High rate of capital formation:-
 Rate of capital formation has been increased by increasing level of investment and savings.
 When investment rate increases then production capacity also increases creating more employment
opportunities.
iii. Help to self - employed persons:-
 There should be encouragement to self-employed workers in rural areas and urban areas to set up their
work areas.
 In rural areas, government should provide short term, middle term or long term loans to farmers to buy
seeds, equipment, manure etc.
 In urban areas, there should be financial assistance given to set up their own enterprises.
iv. Educational reforms:-
 As the existing education system is more degree oriented, efforts should be made to make it job-oriented.
 The system should include vocational and technical education at all levels of education.
 There should be more institutions providing information about special programmes of training or
enhancing skills for educated unemployed.
v. Technique of production:-
 In order to increase the employment in the country, it is essential to change the technology.
 The technique of production should be employment friendly that is more importance must be given to
Labour intensive technique.
vi. Direct generation of employment opportunities by the government:-
 The government employs people in various departments for administrative purposes.
 It also runs industries, hotels and transport companies and hence, provides employment opportunities
directly to workers.
 Chapter-11 Infrastructure
Why some states in India are performing much better than others in certain areas? Why Kerala has
excelled in literacy? Why Karnataka’s information technology industry does attract world attention? It
is all because these states have better infrastructure in the areas they excel than other states in India.

A. Infrastructure:-
 Infrastructure refers to those basic elements of economics and social aspects which provide support to the
production activity in the country.
 These services are very important for economic and social growth of the nation.
 These services help in promoting production directly and indirectly.
B. Types of infrastructure:-
1. Economic infrastructure:-
 It includes those basic aspects of economic system which provide support to the process of economic
development. For eg: - Energy, Transport and communication.
 It enhances the quality of economic resources and increases efficiency of physical capital.
 It improves the physical capital stock and promotes economic development.
2. Social infrastructure:-
 It includes those basic aspects of economic system which provide support to the process of social
development. For eg: - Education, health and housing.
 It enhances quality of human resources and increases efficiency of human capital.
 It improves human capital stock and promotes social development.
C. Infrastructure and development:-
i. Infrastructure promotes productivity:-
 It helps in promoting productivity in primary sector by promoting irrigation facilities.
 Industrial production also increases by increasing or developing various sources of energy like coal,
petroleum, electricity etc.
 By developing infrastructure such as transportation, communication etc, it helps in increasing productivity in
tertiary sector.
ii. Induces investment:-
 With the development of infrastructure, more of the investor will be ready to invest in the market as a result
productivity will increase.
 Increase in domestic investment would promote large scale production and wider markets may attract foreign
investors also to invest in the country.
iii. Generates linkages in production:-
 Linkages in production mean expansion of one industry facilitates expansion of another industry.
 Economic infrastructure and social infrastructure work in coordination.
 These together promote the benefit of being interdependent and cause linkages in producing goods and
services.
iv. Enhances size of market:-
 Creating new markets and expanding the existing ones is very important for increasing production.
 Strong support of transportation, communication etc. enhances the size of market.
 This facilitates enhancing the large scale production to meet the growing needs of bigger market size.
v. Enhances ability to work:-
 Production can be increased by producing good facilities to working force.
 Social infrastructure like education, health etc. enhances ability to work of human resources and as a result
overall production can be increased.
vi. Facilitates outsourcing:-
 India is emerging as a global destination for BPOs, call centers, study centers due to developed social
infrastructure.
  This encourages economic growth by promoting modernization, globalization and changed outlook towards
new areas of development.
D. The state of infrastructure in India:-
1. Public Private Partnership in Infrastructure Development
 The government was responsible for developing country‘s infrastructure. But government‘s investment in
infrastructure was inadequate.
 Therefore, today the private sector by itself and also in joint partnership with the public sector, has started
playing a very important role in infrastructure development.
2. State of Rural infrastructure in India:-
 Despite so much technical progress in the world, rural women are still using bio-fuels such as crop residues,
dung and fuel wood to meet their energy requirement.
 The census 2001 shows that in rural India only 56% household have an electricity connection and 43% still
use kerosene.
 Tap water availability is limited to only 24% rural households.
 Access to improved sanitation in rural areas was only 20%.
3. Energy as a critical component of Infrastructure:-
 It is the key component of economic infrastructure which is very basic element for economic development of
the nation.
 For primary sector energy is required for tube wells and to operate machines.
 For secondary sector energy is used to operate machines for production of goods and services.
 For tertiary sector energy is used for transportation services.
Sources of energy:-
a. Conventional source of energy:-
 These are those sources which are used from long time period. It is of two types:-
 Commercial: - This is the energy used for commercial purposes in industries, agriculture etc. which are
traded through market. For eg: - Coal, Petroleum, Natural gas etc.
 Non-commercial:- This is used by rural households for domestic consumption. It is available free of cost.
For eg: - Firewood, animal waste etc.
i. Coal:-
 It is the primary source of commercial energy in India.
 India produces favorably good amount of coal which accounts for 67% of commercial requirement of the
country.
 Coal is a very important element of energy as it can be converted into other forms of energy such as
electricity.
 The main coal users are steel plants, cement plants, railways, brick kilns etc.
 Indian coal is high ash coal therefore, India has to import low ash coal.
 High ash coal reduces the efficiency of thermal power station.
ii. Petroleum:-
 It is an important source of power which is used widely.
 India depends upon import of oil and petroleum because their production is less than what is required.
 It is used in railways, factories, automobile industry etc.
iii. Natural gas:-
 It is another important source of energy which becomes more popular in last few years.
 It is obtained in two ways:-Associated gas with petroleum products from oil fields.
Free gas obtained from gas fields. These are found in Gujarat, Andhra Pradesh, Tamil Nadu etc.
 It is used as raw-material for fertilizer plants, petrochemical plants and also as cooking gas for domestic
consumption.
iv. Electricity:-
 It is the most useful source of energy. It is used to develop industries for urbanisation, for modernising
agriculture, for electrification of villages etc.
 It can be produced from sources such as: - hydro- electricity, thermal electricity, nuclear electricity.
 Demand of electricity is increasing due to overall development of the economy.
b. Non- conventional sources of energy:-
i. Solar energy: - Solar energy is energy generated by controlling solar power. It is a renewable source of
energy and used for various purpose.
ii. Wind energy:-Wind energy is generated by controlling wind power India is 5th largest producer of wind
power in the world. It is used for agriculture such as irrigation.
iii. Bio energy:-It is generated by agriculture wastes, dried dung and other biological materials.
 Bio gas:- It is obtained by putting cow dung into plant.
 Bio mass:-It is source of producing energy through plants and trees.
Pattern of Energy consumption in India:-
 It refers to the percentage use of different sources of energy. It is studied only when different sources are
converted into common unit that is MTOE (million tonne of oil equivalent)
 Direct final consumption of coal has drastically reduced. Consumption of oil has been increased over time
for which India has to depend upon oil rich countries.
 Consumption of electricity in agriculture sector has substantially increased over time. Consumption of
electricity in the industrial sector continues to be highest compared to other sectors.
Sectoral share of energy consumption.:-
 Consumption of energy is more in secondary sector as compared to primary and tertiary sector.
 Industrial sector consumes 37% of energy whereas transport consumes 22%, agriculture sector consumes 21
and household consumes 24%.
 Consumption of energy is very low in agriculture which suggests that agriculture sector still depends upon
labours instead of using mechanized means of farming and hence it shows low productivity.
 Share of industrial sector has increased which shows expansion of more industries in the country.

Power generation:-

 Power / electricity are the most visible forms of energy, which is often identified with progress in modern
civilization.
 It is a very important component of infrastructure which influences the economic development of the
country.
 The growth rate of demand for power is generally higher than the GDP growth rate. Studies point out that in
order to have 8% GDP growth per annum, power supply needs to grow around 12 % annually.

Sources of power:-

Hydroelectric Nuclear or Atomic

Thermal power
power power
when power is When power is generated When power is generated
generated by using from the water of from radioactive elements
coal, oil is known as specially flowing rivers like uranium, thorium is
thermal power. and high dams, it is known known as nuclear or
Thermal power is the as hydro electric power. atomic power.
largest source of power
generation.

Challenges in power generation:-

i. Inadequate generation of electricity:-

 India‘s installed capacity to generate electricity is not sufficient to feed an annual economic growth.
 India is unable to meet the growing demand for electricity.
  Excess of demand over supply has given rise to many problems such as power cuts, voltage fluctuation etc.
ii. Less capacity utilization:-
 Plant capacity is not fully utilized which causes power crisis in the country.
 In India PLF (plant load factor) is very poor. Plant load factor is the capacity utilization.
iii. Transmission and distribution losses:-
 Because of backward technology government is suffering from transmission and distribution losses.
 Because of this loss, government is now going for privatization of distribution of electricity.
iv. Loss of electricity boards:-
 All state electricity boards present are running into huge losses.
 Many reasons for the losses are (a) theft of electricity (b) transmission and distribution losses (c) wrong
pricing of electricity.
 These losses are because of poor performance of state electricity boards.
Coping with challenge of power generation:-
i. Increase in production capacity:-Production or installed capacity should be increased to improve the
supply of electricity throughout the country.
ii. Improve plant load factor:-It is very important to improve plant load factor, so that production capacity of
thermal power stations can be fully utilized and their operational efficiency can be enhanced.
iii. Minimize the transmission and distribution losses:-This is one of the major factors of power crisis in the
country. Measures should be taken to control these losses so that availability of electricity can increase.
iv. Improve supply of inputs to power plants:-The existing plant capacity should be improved by improving
supply of inputs such as coal to power plants.
v. Encourage privatization and FDI in power generation:-Though private sector is participating in
generation of power, much needs to be done. There should beincrease in investment by private sector and
foreign investor.
Privatisation of the Power sector:-
Instead of investing in the power sector by adding to the installed capacity, the government has gone for
privatization of the power sector, and particularly, distribution, and allowed much higher prices for electricity
that have impacted certain sectors very badly.
Power distribution- The case of Delhi:-
The Delhi state electricity board was set up in 1951. This was succeeded by the Delhi Electric supply
undertaking in 1958. The Delhi Vidyut Board came into existence as SEB in February 1997. Now, the
distribution of electricity vests with two leading private sector companies:-
(i) Reliance Energy Limited (BSES power limited and BSES Yamuna power limited)
(ii) Tata Power Limited (NDPL)
4. Health:-
 Health means a state of complete physical, mental and social soundness.
 Health is the holistic process related to overall growth and development of the country.
 Health also increases the productivity of labour.
 It is the responsibility of the government to ensure the right to healthy living.
 Health infrastructure includes hospitals, doctors, nurses and other para-medical professionals, beds,
equipment required in hospitals and a well-developed pharmaceutical industry.
 Development of health infrastructure ensures a country of healthy manpower for the production of goods and
services.
Development of health services after Independence:-
 Decline in Death rate:- Death rate falls from 27 per trhousand 1n 1951 to 6 per thousand in 2016.
 Decline in Infant mortality rate:- Reduced from 146 per th. in 1951 to 34 per th. in 2016.
 Rise in expectancy of life:- It increased from 32 years to 68 years from 1951-2016.
 Control over deadly diseases:- Deadly diseases like malaria, TB, smallpox, cholera etc have controlled.
 Decline in under-5 mortality rate:- Decrease from 248 per th. to 245 per th. in 2014.
 Health care system In India:-
These are small hospital These are fully equipped
centres

Tier-2 Secondary

care centres
Healthcare Institutions
Tier-1 PHC,CHC and Sub

Tier-3 Tertiary Health

These are upgraded
set up in small towns and and have facilities for medical centres which
managed by doctor and provide special facilities.
ANM.
surgery and are set up
in big cities. These are like AIIMS,PGI
It also educates people etc.
about health care &
provide immunisation
facilities.
It offer preliminary
treatment.

State of health infrastructure in India

Public Health Infrastructure Private Health Infrastructure ISM
The government has the More than 70% of the hospitals It includes six sytems:-
responsibility to guide and in India are run by the private Ayurveda, Yogs, Unani, Siddha,
regulate all health-related issues. sector. They control nearly two- Naturopathy and homeopathy.
fifth of the beds available in the
hospitals.
The union government evolves In recent times, private sector At present there are 3943
broad health policies and plans has been playing a dominant role AYUSH hospitals.
through the central council of in medical education and
health and family welfare. training, medical technology and
diagnostics.
Over the years, India has built a In 2001-02, there were more Very little has been done to set
vast health infrastructure and than 13 lakh medical enterprises up a framework to standardize
manpower at different levels. employing 22 lakh people. education or to promote
research.
India also has large number of Scholars point out that the ISMs have huge potential and
hospitals run by voluntary private sector in India has grown can solve large part of our health
agencies and the private sector. independently without any care problems because they are
major regulation. effective, safe and inexpensive.
During 1951-2017, the number NRI’s have set up state-of-the-
of government hospitals and art super speciality hospitals to
dispensaries increased from 9300 attract India’s rich and medical
to 51,300. tourists.

Women’s Health:-
 Women suffer many disadvantages as compared to men in the areas of education, participation in economic
activities and health care.
 The deterioration in the child sex ratio in the country from 927 in 2001 to 914 in 2011 points to the growing
incidence of female foeticide.
 Close to 3,00,000 girls aged below 15 years are not only married but have already borne children at least
once.
 More than 50% of married women in the age group of 15-49 years have anaemia and nutritional anaemia
caused by iron deficiency, which has contributed to 19% of maternal deaths.
 Abortions are also major cause of maternal morbidity and mortality in India.
Health as an emerging challenge:-
i. Unequal distribution of health care center:-Distribution of health care facilities is very inequitable across
different parts of the country. Most of health care facilities are in urban areas.
ii. Communicable diseases:-There is urgent requirement to identify, prevent and make people aware of some
communicable diseases which are threat to society such as AIDS, HIV, and SARS etc.
iii. Poor management:-There is huge shortage of health personal as per the requirement to provide health care
facilities. Health personal are inefficient to meet the growing need to provide medical assistance, especially
in rural areas.
iv. Privatization:-Private sector has grown by leaps & bounds in providing health care facilities. This health
care provides services which are very expensive and cannot be affordable by everyone.
v. Poor upkeep and maintenance:-Maintenance of public sector health care centers is very poor. The quality
difference in terms of cleanliness is so huge between private & public health care that people are forced to
depend upon private treatment.
vi. Poor sanitation level:-Level in sanitation is very poor in India. We will not be able to maintain the required
standard of keeping our surrounding clean and making people aware of benefits of clean surrounding.
Suggestions to improve health care facilities:-
i. Decentralization of public health services:- Health is a vital public good and a basic human right. All
citizens can get better health facilities if public health services are decentralized.
ii. Sound health infrastructure:- Success in the long-term battle against diseases depends on education and
efficient health infrastructure. It is, therefore, critical to create awareness on health and hygiene and provide
efficient systems. The role of telecom and IT sectors cannot be neglected in this process.
iii. Primary health care:- The effectiveness of healthcare programmes also rests on primary healthcare. The
ultimate goal should be to help people move towards a better quality of life.
iv. Reducing the gap between urban and rural healthcare:- There is a sharp divide between urban and rural
healthcare in India. If we continue to ignore this deepening divide, we run the risk of destabilizing the socio-
economic fabric of our country.
v. Accessibility and affordability of basic healthcare:- In order to provide basic healthcare to all,
accessibility and affordability need to be integrated in our basic health infrastructure.
 CH-12 Environment and Sustainable Development

The economic development that we have achieved so far has come at a very high price- at the cost of
environmental quality. As we step into an era of globalization that promises higher economic growth, we
have to bear in mind the adverse consequences of the past development on our environment and
consciously choose a path of sustainable development.

A. Concept of environment:-
 Environment is the condition which influences human life.
 It includes living and non-living elements such as birds, animals, forest etc. and air, water, land etc.
 It includes all the biotic and abiotic factors that influence each other.
 Environment includes water, air and land and the inter-relationship which exists among and between water,
air, land and human beings and other creatures, plants, micro-organisms and property.
B. Significance of environment:-
i. Environment offers resources for production:-
 Environment supplies resources which are important for production.
 Resources include renewable and non- renewable resources such as-trees, plants, fossil fuels etc.
 These are natural resources and are used as inputs for producing goods and services.
ii. Environment sustains life:-
 It includes the basic element required for survival. For eg:- Air, water, soil, sun etc.
 Environment has that capacity which supports life.
 Absence of elements such as air, water etc. implies end of life.
iii. Environment assimilates (absorbs) waste:-
 During the production process lots of waste is generated.
 Generation of waste occurs in the form of garbage. Environment absorbs this waste created by the activities
of production and consumption.
 The wastes generated should be within the carrying capacity of the environment.
 Carrying capacity or absorptive capacity means the ability of the environment to absorb degradation.
iv. Environment enhances quality of life:-
 Environment includes all those elements which improve quality of human life. For eg:-land, seas, ocean
etc.
 All these elements make our surroundings beautiful and refreshing.
 Human being would cherish and enjoy these surroundings which will help in improving their quality of
life.
C. Current environmental crisis:-
Opportunity cost of negative environmental impacts is high.
 Many resources have become extinct and the wastes generated are beyond the absorptive capacity of the
environment.
 The industrial development has polluted and dried up rivers and other aquifers making water an economic
good.
 The intensive and extensive extraction of both renewable and non-renewable resources has exhausted some
of these vital resources and we are compelled to spend huge amounts on technology and research to explore
new resources.
 Added to these are the health costs of degraded environmental quality- decline in air and water quality has
resulted in increased incidence of respiratory and water-borne diseases. Hence the expenditure on health is
also rising.
 Global environment issues such as the global warming and ozone depletion also contribute to increased
financial commitments for the government.
D. Supply-demand reversal of environmental resources:-
 In the early days when civilization just began, or before this phenomenal increase in population, or before
countries took to industrialization, the demand for environmental resources and services was much less
than their supply.
 This meant that pollution was within the absorptive capacity of the environment and the rate of resource
extraction was less than the rate of regeneration of these resources.
 Hence environmental problems did not arise.
 But with the population explosion and with the advent of industrial revolution to meet the growing needs of
the expanding population, things changed.
 The result was that the demand for resources for both production and consumption went beyond the rate of
regeneration of the resources.
 The pressure on the absorptive capacity of the environment increased tremendously.
 This has resulted in a reversal of supply-demand relationship of environmental resources.
E. Challenges to India’s environment:-
 The threat to India‘s environment poses a dichotomy:-
o Threat of poverty-induced environmental degradation
o Threat of pollution from affluence and a rapidly growing industrial sector.
 The priority issues identified are:
1) Land degradation:-
 It refers to a decline in fertility of land and quality of the soil.
 It occurs because of soil erosion, unstable use and inappropriate management practices.
 Some other factors responsible for land degradation are:-
 Shifting cultivation.
 Forest fires and over grazing.
 Improper crop rotation etc.
 Unsustainable fuel wood and fodder extraction.
2) Soil erosion:-
 It means loss of upper layer of the soil which contains major nutrients for growth of plants.
 Excessive water logging on the top of soil reduces its fertility.
 Estimates of soil erosion show that soil is being eroded at a rate of 5.3 billion tonnes a year for the entire
country.
 According to the Government of India, the quantity of nutrients lost due to erosion each year ranges from
5.8 to 8.4 million tonnes.
3) Deforestation:-
 It is a continuous and regular decrease in forest area. Forest cover indicates the quality of land.
 It is because of cutting trees to meet the need of raw- materials for growing industrialization.
 Deforestation arises because of urbanization. More and more forests are cleared for development of towns.
 Multi-purpose river projects like (Bhakra dam) are another factor, contributing to deforestation.
 The consequences of deforestation are:-
 Negative effect on wild life and plant life.
 Deterioration in the quality of land resources.
 Harm to the natural environment of the country.
4) Pollution:-
It refers to those chemical substances which contaminate the environment.
The CPCB (Central Pollution Control Board) has identified seventeen categories of industries as
significantly polluting.
i. Air pollution:-
 Air pollution means presence of air pollutants in the air which are harmful to human beings, animals and
vegetation.
 The causes of increase in air pollution are rapid industrialization, urbanization, thermal power plants.
 Following factors contribute to air pollution:-
  Smoke emitted by the industries due to use of fossil fuels.
 Vehicular emissions due to the use of liquid fuels.
 Smoke emitted by consumption of energy in rural households.
 It causes various diseases like asthma, hypertension, respiratory problems etc.
ii. Water pollution:-
 Water pollution means presence of water pollutants in the water which contaminate or degrade the quality
of water.
 The cause of increasing water pollution is rapid industrialization, refineries etc.
 Major concern is rapid growth of industries like textiles, chemicals, refineries etc.
 Soil erosion, decay of organic matter mixed with pesticides and insecticides runs into streams and rivers
which contaminates water.
 Thus the major sources of water pollution are:-domestic sewage, industrial waste, agricultural waste etc.
 Water being very basic element of life, if polluted, creates health problems like hepatitis, diarrhoea etc.
iii. Noise pollution:-
 Noise pollution means discomfort and irritation caused by loud sound.
 Noise created by loudspeaker, vehicles, animals, machines cause noise pollution.
 Thus the major sources of noise pollution are:-
 Sound produced by heavy machines.
 Sound produced by automobiles.
 Sound produced by the industrial machines.
 Sound produced by household appliances like mixer-grinders, water boosters and washing machines.
F. Sustainable development:-
 It refers to the development strategy to meet the needs of present generation without compromising the
needs of future generations.
 It enables all generations to make best use of resources.
 Development that will allow all future generations to have a potential average quality of life that is at least
as high as that which is being enjoyed by the current generation.
 The Brundtland Commission emphasises on protecting the future generations.
 To achieve sustainable development, the following steps must be taken:-
 Limiting the human population to a level within carrying capacity of the environment.
 The carrying capacity of the environment is like a ‗plimsoll line‘ of the ship which is its load limit
mark.
 In the absence of plimsoll line for the economy, human activities grow beyond the carrying capacity
of the Earth and prevents sustainable development.
 Technological progress should be input efficient and not input consuming.
 Renewable resources should be extracted on a sustainable basis, that is, rate of extraction should not
exceed rate of regeneration.
 For non-renewable resources, rate of depletion should not exceed the rate of creation of renewable
substitutes.
 Inefficiencies arising from pollution should be corrected.
Strategies for sustainable development:-
i. Solar energy:-
 India is naturally endowed with a large quantity of solar energy in the form of sunlight.
 With the help of photovoltaic cells, solar energy can be converted into electricity.
 These cells use special kind of materials to capture solar energy and then convert the energy into
electricity.
 This technique is totally free from pollution.
 Sunlight is non-exhaustible source of energy which will solve economic problems and also achieve
sustainable development.
 ii. Wind power:-
 In areas where speed of wind is usually high, windmills can provide electricity without any adverse effect
on environment.
 Wind turbines move with wind and electricity is generated.
 No doubt, the initial cost is high.
 But the benefits are such that the high costs get easily absorbed.
iii. Mini-hydel plants:-
 In mountainous regions, streams can be found almost everywhere. A large percentage of such streams are
perennial.
 Mini-hydel plants use the energy of such streams to move small turbines.
 The turbines generate electricity which can be used locally.
 They generate enough power to meet local demands.
 They can also do away with the need for large scale transmission towers and cables and avoid transmission
loss.
iv. Organic farming:-
 Organic farming can be used as substitute to chemical fertilizers etc. then chemical fertilizer reduce soil
fertility and loss of production capacity of soil for future generations.
 Organic farming focuses on soil health and prevents water pollution.
 In certain parts of country, cattle is maintained only because it produces dung which is an important
fertilizer.
 Biopest control:- Several types of pest controlling chemicals have been isolated from neem and these are
being used.
v. LPG, Gobar Gas in rural areas:-
 Households in rural areas generally use wood, dung cake or other biomass as fuel.
 LPG is a clean fuel. It reduces household pollution to a large extent. Also, energy waste is minimized.
 In addition , gobar gas plants are being provided through easy loans and subsidy.
 For the gobar gas plant to function, cattle dung is fed to the plant and gas is produced which is used as fuel
while the slurry which is left over is a very good organic fertilizer and soil conditioner.
vi. Strict law on the disposal of chemical effluents:-
 There should be strict vigil on implementation of law made for chemical disposal.
 Strict actions should be taken against those who violate the law by disposing of chemical residuals in
water.
vii. Awareness to conserve natural resources:-
 Natural resources should be conserved for inter- generation equity. It means equal opportunities for present
and future generations.
 Awareness programmes will help in conserving natural resources.
 Ch-13 Development experience of India, Pakistan and China- A comparative study

India, China and Pakistan have similar physical endowments and are neigbouring countries with totally
different political systems. India has the largest democracy of the world whereas Pakistan has militarist
political power structure and China has the command economy.

A. Strategy of growth of India, Pakistan and China:-

 India, Pakistan and China have similarities in their development strategies.
 All the three nations started towards their developmental path at the same time.
 While India and Pakistan became independent nations in 1947, People‘s Republic of China was
established in 1949.
 All the three countries had started planning their development strategies in similar ways- while India
announced its first five year plan in 1951, Pakistan announced its first five year plan now called medium
term developmental plan in 1956. China announced its first five year plan in 1953.
 Indian and Pakistan adopted similar strategies, such as creating a large public sector and raising
expenditure on social development.
 Till the 1980‘s, all the three countries had similar growth rates and per capita incomes.
B. Growth story of China:-
 People‘s Republic of China was established and the country was regulated by government. All the
enterprises and land owned by individuals are brought under the control of government.
 The economy was agrarian, but the Great Leap Forward campaign was initiated in 1958 to foster
industrialization.
 It encouraged people to set up industries in their backyard.
 In rural areas, communes were started. Under the commune system, people collectively cultivated lands. In
1958 there were 26000 communes covering almost all the farm population.
GLF campaign met with many problems:-
 A severe drought caused havoc in China killing about 30 million people.
 When Russia had conflicts with China, it withdrew its professionals who had earlier been sent to
China to help in the industrialization process.

 In 1965, Mao introduced the Great Proletarian Cultural Revolution (1966-76) under which students and
professionals were sent to work and learn from country side.
 China‘s present rapid industrial growth can be traced back to its reforms in 1978.
 China introduced reforms in phases.
Initial phase Later phase
 Reforms were initiated in agriculture,  Reforms were initiated in industrial sector.
foreign trade and investment sectors.  Private sectors were allowed to produce goods.
 For example:- in agriculture , commune  At this stage enterprises owned by government
lands were divided into small plots, were allowed to face competition.
which were allocated to individual  The reform process also involved dual pricing.
households. Producers were supposed to sell fixed amount of
 They were allowed to keep all income quantity at fixed price decided by government
from the land after paying stipulated whereas rest of the quantities could be sold at
taxes. market price.
 SEZ were set up to attract foreign investors.

 However, in recent past, GDP growth in China has slowed down. some of the reasons are:-
 Demand of Chinese products has reduced in global economies.
 Chinese economy slowed down because of less domestic investment.
 Chinese people were migrating to other countries in search of skilled job opportunities.
 Environmental degradation was a concern in China because more industries were set up and were
causing serious challenge of sustainable development.
C. Growth story of Pakistan:-
 Pakistan adopted various economic policies similar to those adopted by India.
 Pakistan also followed mixed economy model with co-existence of public and private sectors.
 In the late 1950‘s and 1960‘s Pakistan introduced various policies. Such as tariff protection for
manufacturing of consumer goods together with direct import controls on competing imports.
 The introduction of Green Revolution changed the agrarian sector. It led to increase in public investments
in infrastructure which finally led to a rise in the production of food grains.
 In the 1970‘s nationalization of capital goods industries took place. Pakistan then shifted its policy and
introduced denationalization on encouragement of private sector.
 They received financial support from western countries and also financial support to private sector from
government.
 In 1988 Pakistan introduced economic reforms.
 In Pakistan the reform process led to worsening of all the economic situations.
The reasons for slow down of growth and reemergence of Poverty in Pakistan‘s economy are:-
 Agricultural growth and food supply situation were based not on an institutionalized process of
technical change but on good harvest. When there was a good harvest, the economy was in good
condition, when it was not, the economic indicators showed stagnation or negative trends.
 If a country is able to build up its foreign exchange earnings by sustainable export of manufactured
goods, it need not worry. In Pakistan, most foreign exchange earnings came from remittances from
Pakistani workers in the Middle-East and the exports of highly volatile agricultural products.
 There was also growing dependence on foreign loans on one hand and increasing difficulty in paying
back the loans on the other.

D. Economic Development Indicators of India, China and Pakistan:-

1. Salient Demographic Indicators of India, China and Pakistan:-
Select Demographic Indicators, 2015
Country Population Density Annual Sex ratio Fertility rate urbanisation
Growth of
population
India 1311 441 1.2 929 2.3 33
China 1371 146 0.5 941 1.6 56
Pakistan 188 245 2.1 947 3.7 39

 China has the highest population followed by India. If we look at the global population, out of every six
persons in the world one is Indian and another is Chinese. The population of Pakistan is very small
accounts for roughly about one-tenth of China or India.
 China is the largest nation and geographically occupies largest area but its population density is the lowest.
 The population growth is highest in Pakistan followed by India and China. Major reason for low population
growth in China was ‗One Child Policy‘ norm initiated in late 1970‘s.
 Sex ratio is low in all the three countries. Preference for sons, in all these countries is the reason for low
sex ratio.
 The fertility rate is also low in China and very high in Pakistan.
 Urbanization is high in China with India having 33% of its people living in urban areas.
2. GDP growth rate trends in India, China and Pakistan:-
Annual growth of GDP (in %), 1980-2017
Country 1980-90 2015-17
India 5.7 7.3
China 10.3 6.8
Pakistan 6.3 5.3

 China has the second largest GDP of $ 19.8 trillion whereas India and Pakistan‘s GDP is $8.07 and $0.97
trillion.
 When many countries were finding it difficult to maintain a growth rate of even 5%, China was able to
maintain near double digit growth rate for one decade.
 In the 1980‘s, Pakistan was ahead of India, China was having double-digit growth and India was at the
bottom.
 In 2011-15, there has been a decline in China‘s growth rates whereas, Pakistan met with drastic decline at
4%. Some scholars hold economic reforms in 1988 and political instability responsible behind the trend.
3. Sectoral contribution towards GDP in India, China and Pakistan
Sector India China Pakistan
Agriculture 17 9 25
Industry 30 43 21
Services 53 48 54
Total 100 100 100
 Share of agriculture sector:- In China, the contribution of agriculture to GDP was 9% in 2015-17, in India it
was 17% and in Pakistan, it was 25%.
 Share of Manufacturing and service sector:- In all three economies, the industry and service sectors
contribute more in terms of output. In China, manufacturing and service sectors contribute the highest to
GDP at 43% and 48% respectively whereas in India and Pakistan, it is the service sector which contributes
the highest by more than 50% of GDP. The contribution of Industries to GDP is at 30% in India and 21 %
in Pakistan.
4. Sectoral share of employment in India, China and Pakistan
Sector India China Pakistan
Agriculture 42.7 17.5 42
Industry 23.8 26.5 3.7
Services 33.5 56 54.3
Total 100 100 100
 In China, only 17.5% of the workforce was engaged in agriculture in 2015-17.
 But the proportion of workforce that works in this sector is more in India.
 In Pakistan, 42 % of people work in agriculture sector whereas in India it is 42.7%
 In all three countries workforce in Industry and Services sectors is less.
 In China, workforce in service sector is high as compared to India and Pakistan.
5. Development of India, China and Pakistan with respect to indicators of human development:-
Item India China Pakistan
HDI 0.64 0.75 0.56
Rank 130 86 150
Life expectancy 68.8 76.4 66.6
Years of schooling 6.4 7.8 8.6
GDP per capita 6427 15309 5035
BPL 60.4 23.5 46.4
Infant mortality rate 34.6 8.5 64.2
Maternal mortality rate 174 27 178
Improved sanitation 44.2 75 58.3
Improved water sources 94 96 91
Undernourished children 37.9 8.1 46.4
 China is moving ahead of India and Pakistan. Two indicators are there that is Income indicator and
Health indicator.
 Pakistan is ahead of India in reducing BPL and also in sanitation. India has largest share of poor among
three countries.
 Neither of these two countries-India and Pakistan have been able to save women from maternal
mortality.
Liberty indicator:- It represents the degree of social and political freedom to individual in a country.
 Ch-1 Indian Economy on the Eve of Independence Day
Objective type questions:-
1. During British period, Indian economy was:-
(a) semi-feudal income (b) disintegrated economy
(c) colonial economy (d) all of the above
2. First attempt to estimate national income in India during British period was made by:-
(a) Findlay Shirras (b) Dadabhai Naroji (c) William Digbey (d) V.K.R.V.Rao
3. In livelihood agriculture, farmers:-
(a) exchange all their products with other products
(b) produce goods for market only
(c) depend on market-conditions
(d) mainly produce food crops only
4. In British India, cloth industry was concentrated at:-
(a) Ahmedabad (b) Bengaluru (c) Hyderabad (d) Ghaziabad
5. During British regime which one of the following work was not performed:-
(a) establishment of railways (b) establishment of telephone system
(c) establishment of wireless system (d) establishment of metro in Delhi
6. An economy which is made to serve the interest of its rulers is called:-
(a) colonial economy (b) agricultural economy
(c) industrial economy (d) all of the above
7. Major contribution to GDP of the country on the eve of Independence was from:-
(a) agriculture (b) trade (c) modern industries (d) none of these
8. Which among the following is the cause of agricultural stagnation during the British colonial rule?
(a) System of land settlement (b) Limited public sector
(c) Mass illiteracy (d) All of the above
9. In which year, railways was introduced in India?
(a) 1850 (b) 1853 (c) 1890 (d) 1892
10. The first railways in India was operated between which of the following two stations:-
(a) Delhi and Bombay (b) Bombay and Kolkata
(c) Bombay and Thane (d) Bombay and Pune
11. Which industry of India suffered the most due to British rules?
(a) Paper (b) Cement (c) Capital (d) Handicraft
12. Which of the following factor further caused decline of jute textile after partition of the country?
(a) British policies (b) Famines
(c) Lack of raw materials (d) All of the above
13. Which of the following statement is true for British period in India?
(a) India attained self-sufficiency in food grain production
(b) There were check over famines
(c) Effective administrative setup
(d) All of the above are true
14. Which one of the following was high during British rule in India?
(a) Literacy rate (b) Female literacy
(c)Infant mortality rate (d) Life Expectancy
15. Britishers created a monopoly over India‘s foreign trade, from which of the following ways?
(a) Full control over foreign trade (b) Discriminatory tariff rates
(c) Opening of Suez Canal (d) All of the above
16. The second stage of demographic transition began after _______.(1921/1930)
17. Growth rate of ________ sector was very small in GDP. (agriculture/industrial)
18. The Tata iron and steel company was incorporated in _________ .(1910/1907)
19. First Indian census of population during British rule took place in the year___.
20. The share of workforce engaged in agriculture during British rule was______.
21. Before independence, the India‘s jute industries concentrated in ________ part of the country.
22. Under colonial rule, the cotton textile industries were dominated by________.
23. During colonial period, India had a_______ balance of trade.
24. During British rule in India about ______ of population was living in rural areas.
25. Literacy rate during British rule was approximately__________.
26. Occupational structure refers to the distribution of __________ population into various sectors of economic
activity.
27. First train in Indian railways began its operation in 1953. (True/False)
28. Infant mortality rate refers to the number of infants living per 1000 live birth. (True/False)
29. Commercialization of agriculture means production of crops for self-consumption. (True/False)
30. During colonial period, India‘s export trade was export surplus. (True/False)
31. Indian economy was source of raw material for British industries. (True/False)
32. First census was conducted in 1881 during British India period. (True/False)
33. Capital goods industry produced machine tools which in turn, used for producing articles for current
consumption. (True/False)
34. During the colonial rule, there always remained an acute shortage of all-weather roads. (True/False)
35. Match the following:-
Group I Group II
1. Railway services in India 1853
2. First Indian census 1850
3. Second stage of demographic transition 1881
4. First train in India 1921

Short answer type questions: - (3 Marks)

1. At the time of independence, agricultural production in India received a major setback. Discuss the main
reasons of the setback.
2. What was twofold motive behind the systematic de-industrialization imposed by the British in pre-
independence India?
3. Explain the state of industries in India on the eve of independence.
4. Indicate the volume and direction of trade at the time of independence.
5. ―Composition of foreign trade of any country tells us about the nature of commodities that are exported and
imported.‖ What can you state about the composition of foreign trade at the time of independence?
6. Which year is regarded as the defining year to mark the demographic transition from its first to the second
decisive stage?
7. What was the position of basic infrastructure during British rule?
8. How did the construction of railways affect the structure of the Indian economy?
9. ―During colonial period, India was semi-feudal economy.‖ Justify.
10. What do you understand by the drain of Indian wealth during colonial period?
11. ―The most important characteristic of India‘s foreign trade throughout the colonial period was the
generation of a large export surplus. But this surplus came of a huge cost to the country‘s economy.‖ Do
you agree with the above statement? Give valid reasons in support of your answer.
Short answer type questions: - (4 Marks)
1. What were the main causes of India‘s agricultural stagnation during the colonial period?
2. Critically appraise some of the shortfalls of the industrial policy pursued by the British colonial
administration?
3. Give a quantity appraisal of India‘s demographic profile during the colonial period?
4. What objectives did the British intend to achieve through policies of infrastructural development in India?
5. ―The traditional handicraft industries were ruined under the British rule.‖ Do you agree with this view?
Give reasons in support of your answer.
6. Highlight the salient features of India‘s pre-independence occupational structure.
 Long answer type questions: - (6 Marks)
1. ―During the British colonial rule, despite being the occupation of about 85% of India‘s population, the
agriculture sector continued to experience stagnation and, not infrequently, unusual deterioration.
Agricultural productivity became low.‖ Do you agree with the above statement? Give valid reasons in
support of your answer.
2. ―The social and economic challenges before India at the time of independence were enormous.‖ Do you
agree with the statement? Give reasons.
3. What was the focus of the economic policies pursued by the colonial government in India? What was the
impact of these policies?
4. Explain positive contributions made by Britishers in India.

Ch-2 Indian Economy (1950-1990)

Objective type questions:-

1. Indian planning commission was constituted in:-
(a) 1947 (b) 1951 (c) 1950 (d) 1971
2. National development council has been constituted in:-
(a) 1950 (b) 1951 (c) 1947 (d) 1952
3. First five year plan was started on:-
(a) 15 August 1947 (b) 2 Oct. 1956 (c) 1 April 1951 (d) 1 July 1962
4. Plan holiday period was from:-
(a) 1961-64 (b) 1966-69 (c) 1972-75 (d) 1978-81
5. Chairman of planning commission in India is ex-officio:-
(a) Prime minister (b) Finance minister (c) Chief minister (d) President
6. Duration of second five year plan in India was:-
(a) 1950-55 (b) 1956-61 (c) 1951-56 (d) 1953-58
7. Mahalanobis model was adopted in Indian planning in:-
(a) first plan (b) third plan (c) second plan (d) fourth plan
8. Under which economy, the goods are distributed among people on the basis of demand and not on what
people need?
(a) Capitalist economy (b) Socialist economy
(c) Mixed economy (d) Dual economy
9. _________ is an economy having elements of both capitalist and socialist economy.
(a) Capitalist economy (b) Socialist economy
(c) Mixed economy (d) Dual economy
10. In the post –independence period, India adopted ________ economy model.
(a) capitalist economy (b) socialist economy
(c) mixed economy (d) dual economy
11. ___________ is known as the architect of Indian Planning.
12. Plans were formulated by _________ in India.
13. __________ finally approves the draft of Indian plans.
14. ____________ means reducing dependence on imports of those goods which can be produced within the
country itself.
15. ____________ means adoption of new technology, new methods of production and changes in social
outlook.
16. First plan of India began on________.
17. ____________ was the central objective of Indian planning.

Agriculture, Industrial and Foreign trade

18. Green revolution implies:-
(a) increase in area under rice crops
 (b) increase in area under all crops
(c) increase in area under food grain crops
(d) increase in production of food grains in short period
19. Among the following one element is not related with green revolution:-
(a) improved seed (b) fertilizers
(c) new strategy for agriculture (d) increase in population.
20. Which crop was benefitted most by green revolution?
(a) Wheat (b) Cotton (c) Tea (d) Oil seeds
21. Green revolution increased the use of:-
(a) improved seed (b) irrigation (c) fertilizers (d) all of these
22. Main element of green revolution is:-
(a) HYV seeds (b) use of fertilizers
(c) extension of irrigation facilities (d) all of the above
23. As a result of green revolution:-
(a) production has increased (b) crop per hectare increased
(c) increase in regional disparity (d) all of the above
24. Founder of green revolution is:-
(a) Norman E. Borlang (b) Gerri Baker (c) M.S.Swaminathan (d)None of these
25. Proportion of population earn their living from agriculture in India is:-
(a) half (b) two third (c) one third (d) three fourth
26. Green revolution includes:-
(a) HYV seeds (b) mechanization of agriculture
(c) chemical fertilizers (d) all of the above
27. Fixation of maximum land ceiling is one type of:-
(a) Technical reform (b) Institutional reform
(c) Structural reform (d) Market reform
28. In India green revolution was started in the:-
(a) decade of 1960 (b) decade of 1980
(c) decade of 1970 (d) decade of 1990
29. The most benefitted state due to green revolution is:-
(a) Odisha (b) Kerala (c) Bihar (d) Punjab
30. __________ refers to maximum size of landholding that an agricultural household can own.
(a) Land reforms (b) Land ceiling
(c) Land holding (d) Land disintegeration
31. After Independence the number of industrial policies declared till now are:-
(a) 5 (b) 7 (c) 6 (d) 8
32. In how many categories industries were divided in Industrial policy, 1956?
(a) 3 (b) 5 (c) 2 (d) 4
33. Liberalized Industrial policy was announced in:-
(a) April 1, 1991 (b) June 24, 1991 (c) May 1, 1991 (d) July 24, 1991
34. First Industrial policy of independent India was declared in:-
(a) 1948 (b) 1977 (c) 1956 (d) 1991
35. Process of industrialization was started in India in the:-
(a) First plan (b) Second plan (c) Third plan (d) Fourth plan
36. To increase the annual growth rate of industries, efforts should be made for:-
(a) full utilization of production capacity (b) use of modern technology
(c) industrial peace (d) all of the above
37. In which year Industrial policy was launched in India:-
(a) 1948 (b) 1977 (c) 1956 (d) 1991
38. Industries (Development and Regulation) act was implemented in:-
 (a) 1951 (b) 1953 (c) 1952 (d) none of the above
39. Industrial licensing policy was made liberal particularly in:-
(a) 1990 (b) 1992 (c) 1991 (d) 1985
40. Problem of small scale industries is:-
(a) shortage of raw material (b) inadequate use of capacity
(c) shortage of capital and credit (d) all of the above
41. After independence India had favourable balance of trade situation for:-
(a) two times (b) four times (c) three times (d) always
42. What percentage of India‘s share in world trade has been targeted in Foreign trade policy,2004-2009:-
(a) 1% (b) 2% (c) 1.5% (d) 2.5%
43. Trade policy was made liberal in India in:-
(a) 1990 (b) 1992 (c) 1991 (d) 1993
44. Import-Export policy 2009-2014 was declared on:-
(a) 27 Aug 2009 (b) 28 March 2002
(c) 1 April 2002 (d) 1 April 2004
45. Declaration of India‘s Exim policy 2004-09 was on:-
(a) 31 Aug 2004 (b) 31 Dec 2004
(c) 31 March 2003 (d) 31 March 2004
46. Need for import substitution policy is due to:-
(a) shortage of foreign exchange (b) adverse balance of trade
(c) devaluation of money (d) all of the above
47. The portion of agricultural produce which is sold in the market by the farmers is called_______.
48. _________ refers to maximum size of land holdings that an agricultural household can hold.
49. Green revolution mainly remains confined to______.
50. Use of _______ seeds were promoted in green revolution.
51. Defective tenure system is a/an_______ problem of agriculture.
52. The enterprises on which control and ownership of government exist are called________.
53. Karve Committee was constituted in the year _________ for the development of small-scale industries.
54. Disinvestment of public sector enterprises means, to hand over public sector in the hands of _________.
55. Small scale industries are those industries in which investment in the fixed capital can be upto_________.
56. Regional equality was the main purpose of_________.
57. Match the following and choose the correct alternative:-
1. Prime minister The money value of all the final goods and services produced
within a year.
2. Gross domestic product Adoption of new technology
3. Modernization Chairperson of the planning commission
4. Self-sufficiency Avoiding imports of those goods which could be produced in
India itself.

58. Match the following:-

1. Quota Quantity of goods that can be imported
2. Land reforms Seeds that give large proportion of output
3. HYV seeds Improvements in the field of agriculture to increase its productivity
4. Subsidy The monetary assistance given by government for production
activities.

59. Match the following economic indicators with their appropriate description:-
1. Gross domestic product Avoiding imports of those goods which can be produced in
India
2. Modernization Adoption of new technology
The money value of all final goods and services produced
within the economy in a year.
60. Match the following terms with their appropriate description:-
Quota Quantity of goods that can be imported
High yielding variety seeds Improvement in the field of agriculture to increase
productivity
Seeds that give large proportion of output
Short answer type questions: - (3 Marks)
1. What are the main objectives of 11th five year plan?
2. What were the two main land reforms undertaken in India?
3. What is Green Revolution? When and why was it implemented?
4. Explain the statement that green revolution enabled the government to procure sufficient food grains to
build its stocks that could be used during time of shortage.
5. Explain land ceiling as a policy to promote equity in agriculture.
6. What is cooperative farming?
7. Why small scale industries need protection from government?

Short answer type questions: - (4 Marks)

1. Green revolution in the agricultural sector in India was actually green in results. Throw some light.
2. Critically appraise the need for subsidies for the farmers, when it actually creates a huge financial burden
on the public money.
3. Industrial development in India has accelerated the rate of economic development in India. How?
4. ―While the nation had immensely benefitted from the green revolution, the technology involved was not
free from risks.‖ Do you agree with the given statement? Give valid reasons in support of your answer.
5. ―The green revolution would have favoured the rich farmers only if the state did not play an extensive role
in ensuring that the small farmer also gains from the new technology.‖ Do you agree with the above
statement? Give valid reason in support of your answer.
6. The economic justification of subsidies in agriculture is, at present, a hotly debated question. Some
economists believe that subsidies should be phased out. What arguments do these economists give against
giving subsidies?
7. ―The achievements of India‘s industrial sector during the first seven plans are impressive indeed.‖ Do you
agree with the above statement? Give valid reasons in support of your answer.
Long answer type questions: - (6 Marks)
1. Briefly explain the goals of five year plans.
2. Does modernization as a planning objective create contradiction in the light of employment generation?
Explain.
3. What is green revolution? Why was it implemented and how did it benefit the farmers? Explain in brief.
4. Cottage and small scale industries are the backbone of Indian economy. Justify the statements giving
suitable reasons.
5. Explain, how import substitution can protect domestic industry?
6. ―The progress of the Indian economy during the first seven plans was impressive indeed.‖ Do you agree
with the above statement? Give valid reasons in support of your answer.
7. Explain in detail agrarian reforms in agriculture.
8. Explain Industrial policy resolution in detail.

CH-3 Economic Reforms in India

Objective type questions:-
1. To accelerate the rate of growth, the reform programmes were initiated in the year:-
(a) 1990 (b) 1993 (c) 1991 (d) 1994
2. Liberal economic reforms were initiated in the year:-
(a) 1990 (b) 1993 (c) 1991 (d) 1994
3. New economic policy 1991 is also called:-
 (a) L-Turn policy (b) U-Turn policy (c) S-Turn policy (d) none of these
4. New economic policy includes:-
(a) liberalization (b) globalization (c) privatization (d) all of these
5. What kind of tax is GST?
(a) Direct tax (b) Indirect tax
(c) Depends on the type of goods and services (d) None of the above
6. ______ means the excess of anticipated expenditure over estimated revenue.
(a) Surplus (b) Deficit (c) Loss (d) Profit
7. Public sector did not perform as much as it was expected under economic reforms due to:-
(a) lack of competition (b) huge losses of PSU
(c) managerial inefficiency (d) all of the above
8. Deregulation of the economy and to introduce the policy of laissez-faire can be achieved through:-
(a) liberalization (b) globalization
(c) privatization (d) none of these
9. _______ refers to an electronic device that allows an individual to make financial transactions
electronically.
(a) E-wallets (b) Plastic cards
(c) Cheques (d) All of the above
10. The pre-condition of privatization to be successful requires:-
(a) Liberalization and deregulation of the economy
(b) Capital market should be sufficiently developed
(c) Both (a) & (b)
(d) None of these
11. __________ refers to the sale of equity of public sector units in the market.
(a) Liberalization (b) Globalization
(c) Privatization (d) Disinvestment
12. Which of the following is not a method of privatization?
(a) Disinvestment (b) Sale of PSU‘s to private sector
(c) Contraction of PSU (d) Sale of PSU to government
13. As a part of globalization process, tariff rates were _______ in India.
(a) raised (b) not changed (c) lowered (d) abolished
14. The WTO was founded in:-
(a) 1948 (b) 1995 (c) 1985 (d) 1975
15. International body which deals with multilateral trade agreement between nations is:-
(a) UNO (b) WTO (c) OPEC (d) IBRD
16. _________ means removing all unnecessary controls and restrictions imposed by the government like
quotas, licenses, etc.
17. _________ transfer of ownership and control from public sector to private sector.
18. __________ refers to growing inter-dependence among countries in the world with respect to technology,
capital goods, services, etc.
19. All restrictions on imports by the government in the form of other than taxes are called________.
20. The only industries which are now reserved for the public sector are a part of___________.
21. ___________ implies shedding of the ownership or management of a government owned enterprise.
22. Privatization of the public sector enterprises by selling off part of the equity of PSEs to the public is known
as ________________.
23. __________ and ___________ in India have made it a destination for global outsourcing in the post-reform
period.
24. GST is effectively a tax on ______ at each stage of supply of goods and / or services.
25. _____________ is the process of detaching a currency from its status as legal tender in the country.
26. International Bank for Reconstruction and Development, popularly known as ___________.
27. India received amount of __________ as loan to manage crisis.
28. The last demonetization of currency was undertaken by the Government of India on November 8, 2016 to
tackle the problem of _________.
29. _________ and __________ in India have made it a destination for global outsourcing in the post-reform
period.
30. WTO is replaced by __________.

Short answer type questions:- (3)

1. What is the meaning of quantitative restrictions?
2. How is RBI controlling the commercial banks?
3. ―Foreign exchange crisis was the basis of economic policies of liberalization, privatization and
globalization.‖ Justify.
4. ‗Promoting privatization is the objective of NEP.‘ State the measures taken to promote privatization in
India.
5. What are fiscal reforms introduced in 1991?
6. What are the objectives of WTO?
7. Why is it necessary to become a member of WTO?
8. Explain how goods and services tax has simplified the multiplicity of taxes on goods and services.
9. Besides privatization and disinvestment what attempts have been made by the government to improve the
efficiency of PSUs?
10. India has certain advantages which makes it a favourite outsourcing destination. What are these
advantages?
Short answer type questions:- (4)
1. In your opinion, what are the advantages of privatization to the economy?
2. Those public sector undertakings which are making profits should be privatized. Do you agree with this
view? Why?
3. Explain the major failures of economic reforms in industry.
4. Distinguish between strategic and minority sale.
5. Differentiate between Tariff and Non-Tariff barriers.
6. Compare bilateral and multi-lateral trade.
7. ―Liberalization was introduced to put an end to those restrictions which became major hindrances in
growth and development, and open various sectors of the economy.‖ In the light of the above statement,
explain the various liberalization measures introduced in 1991.
8. ―As a form of economic activity, outsourcing has intensified in recent times. Most MNCs, and even small
companies, are outsourcing their services to India.‖ Defend or refute the above statement.
Long answer type questions: - (6)
1. Why did India adopt New Economic Policy in 1991?
2. Why did RBI have to change its role from controller to facilitator of financial sector in India?
3. Agriculture sector appears to be adversely affected by the reform process. Why?
4. Why has the Industrial Sector performed poorly in the reform period?
5. Do you think that the Navaratna policy of the government helps in improving the performance of public
sector undertakings in India? How?
6. ―The process of globalization through liberalization and privatization policies has produced positive, as
well as, negative results for India and other countries.‖ Defend or refute.

CH 4- Poverty
Objective type questions:-
1. With which disparity of income and its distribution are associated?
(a) absolute poverty (b) relative poverty
(c) chronic poverty (d) all of the above
2. Relative poverty is prevalent in:-
 (a) capitalist countries (b) socialist countries
(c) communist countries (d) developed countries
3. Absolute poverty is prevalent in:-
(a) capitalist countries (b) socialist countries
(c) communist countries (d) developed countries
4. Estimation of poverty in rural economies is as per day consumption of calories:-
(a) less than 2200 (b) less than 2100
(c) less than 2400 (d) less than 2000
5. Estimation of poverty in urban areas is as per day consumption of calories:-
(a) less than 2200 (b) less than 2100
(c) less than 2400 (d) less than 2000
6. What is the main reason of poverty in India in urban areas:-
(a) Lack of professional education (b) unequal distribution
(c) lack of planning facilities (d) money inflation
7. Which kind of poverty is related to the distribution of income:-
(a) low line poverty (b) absolute poverty
(c) relative poverty (d) none of these
8. People who do not usually have sufficient money to fulfill their basic needs are referred to as:-
(a) Usually poor (b) always poor (c) occasionally poor (d) churning poor
9. Poverty ratio has_____ for both urban and rural areas.
(a) Increased (b) decreased
(c) remains constant (d) none of these
10. Which one of the following groups is vulnerable to poverty?
(a) Scheduled caste (b) Landless agricultural labourer
(c) Urban agricultural household (d) All of the above
11. Which of the following programme has been merged with MGNREGA?
(a) Food for work programme (b) National food for work programme
(c) Rural employment generation programme (d) None of the above
12. Who was the first person to define poverty line in terms of Jail Cost of Living?
(a) Dadabai Naroji (b) V.K.R.V. Rao (c) William Digbey (d) R.C.Desai
13. Economist identifies the poor on the basis of their ownership of assets________.
(a) Income (b) Occupation (c) Expenditure (d) Living standard
14. Small farmers and seasonal workers are categorized as:-
(a) Chronic poor (b) Churning poor
(c) Occasionally poor (d)Both (b) and (c)
15. Following is not a part of poverty alleviation programme:-
(a) Desert development plan (b) Minimum need programme
(c) Employment exchange (d) Jawahar yojana
16. Which of these is not a cause of low productivity?
(a) General factors (b) Institutional factors
(c) Social factors (d) Technological factors
17. Which projects have been launched to provide self-employment?
(a) Rural Employment Generation programme (b)Prime Minister rozgar yojana
(c) Swarna Jayanti shahri rozgar yojana (d) All of the above
18. ___________ was the first person to discuss the concept of poverty line.
19. Percentage of population below poverty line is called __________.
20. ___________, noted Laureate, has developed an Index to estimate poverty, known as Sen Index.
21. Three major programmes that aim at improving the food and nutritional status of the poor are___________.
22. _______ are attempts in developing infrastructure and housing conditions.
23. From 2014, a scheme called_________ is available in which people in India are encouraged to open bank
accounts.
24. Under ________ scheme each bank account holder is entitled to 1 lakh accident insurance and 30,000 life
insurance cover.
25. The government‘s approach to poverty reduction was of three dimensions. (True/False)
26. The fruits of development have not reached all sections of the population in India. (True/False)
27. Casual workers are grouped as the chronic poor. (True/False)
28. The minimum calorie intake in rural area is 2100 calories. (True/False)
29. Casual labourers are among the most vulnerable in society. (True/False)
30. Poverty is closely related to nature of employment. (True/False)

Short answer type questions:- (3)

1. How are poor and non-poor classified?
2. What is head count ratio?
3. What do you mean by self-help groups?
4. What is meant by food for work programme?
5. Is accelerated growth a sufficient condition to ensure removal of poverty within a reasonable period?
6. Explain Prime Minister Employment Generation Programme (PMEGP) for poverty eradication.
7. ―Government policies have failed to address the vast majority of vulnerable people who are living on or
just above the poverty line. It reveals that high growth alone is not sufficient to reduce poverty.‖ Suggest
few measures to tackle the problem of poverty.
8. What is ‗Mahatma Gandhi National Rural Employment Guarantee Act‘? How did it provide wage
employment opportunities to the poor unskilled people living in rural areas?
9. Explain ‗Growth –oriented approach‘ to poverty reduction. Was it successful to eradicate poverty in India?
Explain giving reasons.
Short answer type questions:- (4)
1. Distinguish between absolute and relative poverty.
2. Study the following chart showing population below poverty line in some large states and analyse the state
level trends in poverty in India during 1973-2012.

3. How does the government claim that there is a decline in poverty levels? Why do economists raise doubts
about the government‘s claim?
Long answer type questions:- (6)
1. Write the measures to remove poverty.
2. Why are employment generation programmes important in poverty alleviation in India?
3. Define poverty line. How does it categorise poverty? Why is calorie-based norm not adequate to identify
the poor households in our country? Explain.
4. ―Though the policy towards poverty alleviation has evolved in a progressive manner, over the last six and a
half decades, it has not undergone any radical transformation.‖ Comment.

CH-5 Human Capital Formation

Objective type questions:-
1. Active factor in production is:-
(a) Physical capital (b) human capital
(c) both (a)&(b) (d) none of the above
2. Human development is:-
(a) an end (b) a mean
(c) both (a) & (b) (d) none of the above
3. Sources of human capital formation:-
(a) only internal (b) only external
(c) both (a) & (b) (d) none of the above
4. Human capital formation includes:-
(a) expenditure on education (b) expenditure on health
(c) expenditure on training (d) all of the above
5. A man remains absent from work due to illness. It will affect:-
(a) safety of work (b) salary/income (c) productivity (d) all of these
6. Education increases people‘s:-
(a) productivity (b) skill (c) income (d) all of these
7. Human capital includes:-
(a) health (b) education (c) professional skill (d) all of these
8. ______ is the process of adding to the stock of human capital over time.
(a) physical capital (b) human capital
(c) human capital formation (d) none of the above
9. Expenditure regarding on-the-job training is a source of human capital formation as __________.
10. ____________ is the reason for the rural-urban migration in India.
11. The two forms of capital formation are___________.
12. Human capital considers_________ as a means to increase labour productivity.
13. Investments in education convert human beings into ____________.
14. Technically qualified persons, like engineers and doctors, migrate to other countries
because_______________. (complete the sentence)
15. In both cases rural-urban migration and migration to other countries-involve cost of transport, higher cost
of living in the migrated places and __________.

Short answer type questions:- (3)

1. Empirical evidence to prove that increase in human capital causes economic growth is rather nebulous.
Comment.
2. What are the different forms in which firms spend on giving on-the-job training to their workers? How is
the expenditure regarding on-the-job training a source of human capital formation?
3. Differentiate between physical capital and human capital.
4. What are two major sources of human capital in a country?
5. Describe any three causes of poor health in India.
6. A skilled worker like software professional generates more income than an unskilled worker. Why?
Short answer type questions: - (4)
1. What are the main problems of human capital formation in India?
2. How do the two independent reports in the Indian economy, in recent times, have identified that India
would grow faster due to its strength in human capital formation? Explain.
3. Trace the relationship between human capital and economic growth.

CH-6 Rural Development

Objective type question:-
1. In which year regional rural banks were established_________
2. When was NABARD constituted______.
3. Which of the following activities are not included in agricultural marketing?
(a) Assembling of agricultural products (b) Grading of agricultural products
(c) Processing of agricultural products (d) None of the above
4. Farmer is forced for sale of his products at low price, because:-
 (a) ignorance about market information (b) financial problems
(c) both (a) & (b) (d) none of the above
5. AGMARK is related with:-
(a) agricultural production in government farms
(b) standard quality of agricultural produce
(c) for sale
(d) none of the above
6. Which of the following is not an institutional credit agency?
(a) Co-operative societies (b) Commercial and regional rural banks
(c) NABARD (d) Desi banker
7. Farmers need credit for consumption purpose such as on birth and death, etc. called:-
(a) productive credit (b) unproductive credit
(c) both (a) & (b) (d) none of the above
8. TRYSEM is a programme made for the:-
(a) employment to retired government employees (b) employment to rural youths
(c) employment to urban youths (d) credit to rural people
9. The union government announce KUSUM scheme for promoting solar farming. In the term KUSUM the
letter ‗S‘ stands for:-
(a) solar (b) suraksha (c) samvidhaan (d) sarvopari
10. NABARD was set up in ________
(a) 1981 (b) 1982 (c) 1983 (d) 1984
11. The main objective of RRB is to provide credit to:-
(a) weaker sections in rural areas (b) weaker sections
(c) industrial areas (d) agriculture areas
12. Agriculture marketing is a process that involves functions of:-
(a) storage (b) distribution (c) processing (d) all of these
13. The growth of real India is possible only by the development of _______.
14. Kudumbashree is a women oriented community based self-help group implemented in Kerala in the
year_____.
15. The state bank of India was set up in the year _________ with a focus on rural credit.
16. At the time of independence_________ exploited the small and marginal farmers.
17. _________________ was set up in 1982 as an apex body to coordinate the activities of all institutions
involved in the rural financing system.
18. ___________ is a process that involves the assembling, storage, processing, transportation, packaging,
grading and distribution of different agricultural commodities across the country.
19. By March end 2003, more than ________SHGs had reportedly been credit linked.
20. ___________is a women oriented community based self -help group.

Short answer type questions: - (3)

1. Why is it important to develop proper storage facilities in rural areas?
2. Discuss the importance of credit in rural development.
3. Even today, more than 10% of goods produced in farms are wasted. Why?
4. Explain the role of micro-credit in meeting credit requirement of the poor.
Short answer type questions: - (4)
1. State the drawback of credit provisions through micro-credit programmes.
2. Critically evaluate the role of the rural banking system in the process of rural development in India.
3. Explain the steps taken by the government in rural markets.
Long answer type questions: - (6)
1. Write down the causes of rural indebtedness in India?
2. Write about the government efforts to improve agricultural marketing?
3. What is rural development? Why is rural development essential for Indian economic development? Bring
out the key issues in rural development.
4. What is ‗Agricultural marketing‘? Discuss the measures initiated by the government in developing rural
marketing aspects. Do you think various measures taken by the government to improve agricultural
marketing are sufficient? Discuss.
CH-7 Employment
Objective type questions:-
1. The difference between labour force and work force is:-
(a) total employed labour (b) disguised unemployed labour
(c) unemployed labour (d) seasonal unemployed labour
2. The measurement of real labour force is:-
(a) work force (b) labour force (c) both a &b (d) none of the above
3. In economy labour force and work force are equal in a situation, when:-
(a) Population growth is at slower rate
(b) There is no growth in population
(c) There is no unemployment
(d) Growth rate of population is greater than growth rate of employment
4. According to nature of employment, large part of labour is _____type in India:-
(a) casual worker (b) self-employed worker
(c) regular wage earner (d) none of the above
5. Unemployment is a situation in which labour force and opportunities to work is:-
(a) equal (b) different (c) both (a) & (b) (d) none of the above
6. A kind of unemployment in which workers seem to be working but its contribution to production is
negligible is called:-
(a) seasonal unemployment (b) industrial unemployment
(c) disguised unemployment (d) educated unemployment
7. In disguised unemployment, marginal productivity of labour is:-
(a) negative (b) zero (c) positive (d) none of these
8. Disguised unemployment is characteristic of:-
(a) industry (b) agriculture (c) trade (d) transport
9. Workers who own and operate an enterprise to earn their livelihood are called:-
(a) ministers (b) self-employed (c) public servants (d) government doctors
10. Urban people are mainly engaged in the:-
(a) primary sector (b) training (c) service sector (d) agriculture
11. India is an:-
(a) industrial country (b) scientifically developed country
(c) agrarian nation (d) service developed country
12. Those who are working in the formal sector enjoy:-
(a) economic benefits (b) social security benefits
(c) education advantages (d) cultural benefits
13. In work force, participation rate for women is ____ in rural areas as compared with urban areas.
(a) lower (b) higher (c) maximum (d) minimum
14. Presently, ___________ sector is the biggest employment provider in the country.
(a) primary (b) secondary (c) tertiary (d) none of these
15. Employment in India is facing the problems related to:-
(a) informalisation of workforce (b) jobless growth
(c) casualization of workforce (d) all of the above
16. ____ insisted upon education and training through variety of works including craft.
17. Majority of workforce resides in ______ area in our country.
18. The construction workers are known as_______.
19. When a worker is engaged by someone and paid his/her wages on regular basis is known as________.
20. ________ is the main source of employment for majority of workers in India.
21. The government protects the right of workers through__________.
22. In India, disguised unemployment can be seen more in _______ sector.
23. The newly emerging jobs are found mostly in the _______ sector.
24. An establishment with four hired workers is known as________.
Short answer type questions: - (3)
1. Define worker-population ratio.
2. Why are children not included in working population?
3. Why are fewer women found in regular salaried employment?
4. Why are regular salaried employees more in urban areas than in rural areas?
5. Do you think that in the last 50 years, employment generated in the country is commensurate with the
growth of GDP in India? How?
6. Compared to 1970s, there has hardly been any change in the distribution of workforce across various
industries. Comment.
7. Why employment is considered so important in the Indian development policy?
8. Victor is able to get work only for two hours in a day. Rest of the day, he is looking for work. What kind of
job could persons like victor do?
9. ‗Unemployment is related to poverty‘. Comment.
10. ―Since the late 1970s, many developing countries, including India started paying attention to enterprises
and workers in the formal sector.‖ Comment.
Short answer type questions: - (4)
1. What are the causes of difference in Rural and Urban workers ratio?
2. Analyze the recent trends in sectorial distribution of workforce in India.
3. Besides various schemes and policies, the government takes initiatives to generate employment directly
and indirectly. Explain.
4. How far has the industrialization strategy succeeded in achieving the goal? Explain.
5. Is it necessary to generate employment in the formal sector? Why?
6. How is unemployment an economic as well as social problem?
7. Answer the following questions on the basis of the following data:-
Workforce Participation Rate in India (2011-12)
Sex Rural Urban Total
Men 54.3 54.6 54.4
Women 24.8 14.7 21.9
Total 39.9 35.5 38.6
a) Why is there difference in the workforce participation rate between rural and urban areas?
b) Compared to females, more males are found to be working. The difference in participation rate is very
large in urban areas. Give reasons.
Long answer type question: - (6)
1. Write down various types of unemployment in India.
2. What role does the government play in generating employment opportunities?
3. Compared to urban women, more rural women are found working. Why?
4. You are residing in a village. If you are asked to advice the village panchayat, what kind of activities would
you suggest for the improvement of your village which would also generate employment.
5. Study the following chart and analyse the trends of the two variables from 1951-2012.
 CH-8 Infrastructure
Objective type questions:-
1. To which type of infrastructure, transport is related:-
(a) Economic (b) Social (c) Both (a) & (b) (d) None of these
2. Social infrastructure helps in production and distribution:-
(a) in direct form (b) in indirect form (c) in no way (d) both (a) & (b)
3. National rural health mission was established for the period of:-
(a) 2005-2010 (b) 2005-2015 (c) 2005-2012 (d) 2005-2020
4. AYUSH is a part of Indian system of medicine. It does not include:-
(a) Allopathy (b) Ayurveda
(c) Naturopathy (d) Homeopathy
5. _________ is the indicator used by experts to grade the number of people dying prematurely.
6. Indian system of medicine includes _________ system.
7. Health infrastructure includes____________.
8. Some private practitioners are not even registered doctors and are known as_____________.
9. Out of about 6.3 lakh beds in government hospitals, roughly _______________ are available in rural areas.
10. Match the following:-
Global burden of diseases Infant mortality rate, life expectancy and nutritional levels.
Indian system of medicines A variety of hospitals at the village level
Primary health centres Ayurveda, Yoga, Unani, Siddha, Naturopathy and Homeopathy
Health indicators An indicator to gauge the number of people dying prematurely
due to a particular disease.

Short answer type questions:- (3&4 marks)

1. Explain the term infrastructure.
2. How do infrastructure facilities boost production?
3. What are the main characteristics of the health of the people of our country?
4. ―Health infrastructure is vital public goods and a basic human right.‖ How can all citizens get better health
facilities? Give few suggestions.
5. Infrastructure contributes to the economic development of a country. Do you agree? Explain.
6. Discuss the main drawbacks of health care systems.
7. How has women‘s health become a matter of concern?
8. Differentiate the six systems of Indian medicine.
9. Critically evaluate the role of Indian systems of Medicine.
10. What is the state of rural infrastructure in India?

CH-9 Environment and Sustainable development

Objective type questions:-
1. The essential condition for sustainable growth is:-
(a) protection of natural resources (b) pollution free growth
 (c) quality of life (d) all of the above
2. Physical environment includes:-
(a) land (b) air (c) water (d) all of these
3. To check water pollution following methods can be adopted:-
(a) commerce (b) better engine for cars
(c) re-use of industrial waste (d) use of nonpolluting source of energy
4. Out of the following, one is a non-renewable resource:-
(a) forest (b) sunrays (c) water (d) coal
5. Following are included in strategies for sustained development:-
(a) wind energy (b) bio-compost (c) solar energy (d) all of these
6. Following are renewable resources except:-
(a) trees (b) coal (c) fish (d) water
7. India heavily depends on ______ and ______ power plants.
(a) solar, gobar gas (b) thermal and hydro
(c) CNG, solar (d) none of the above
8. In Delhi, the use of ______ as fuel in public transport system has significantly lowered air pollution:-
(a) CNG (b) LPG (c) petrol (d) none of these
9. _______ is a clean fuel. It reduces household pollution to a large extent.
(a) CNG (b) LPG (c) gobar gas (d) none of these
10. Which animals/birds help in bio composting?
(a) cattles (b) snakes (c) owls (d) peacock
11. Environment and economy are ______ and need of each other.
(a) Interdependent (b) independent
(c) dependent (d) complimentary
12. Forests are_________ resources.
13. Thermal power emits large quantities of __________.
14. In __________ at Kyoto, Japan a U.N. conference on climate change was held.
15. The government set up Central Pollution Control Board (CPCB) in __________.
16. Two major environmental issues facing the world today are ________ and ____________.
17. In Delhi, the use of _____________ as fuel in public transport system has significantly lowered air
pollution and the air has become cleaner in the last few years.
18. The concept of sustainable development was emphasized by_____________.
19. The use of ________ as fuel in public transport system may reduce air pollution.
20. Match the following:-
Birds, animals and plants forests, fisheries, etc. Biotic elements
Air, water, land etc. Abiotic elements

Short answer type questions: - (3)

1. What are the functions of the environment?
2. ‗India has abundant natural resources.‘ Substantiate the statement.
3. How population growth is the cause of depletion of natural resources?
4. Explain the term ‗affluence trap‘.
5. What is National Forestry Action Plan 1992?
6. Explain how, adopting the traditional practices can be helpful in achieving the objective of sustainable
development.
7. ―The opportunity costs of negative environmental impacts are high.‖ Do you agree with the given
statement? Give valued reasons in support of your answer.
8. Explain how according to the Brundtland commission the present generation can promote sustainable
development.
9. Explain the supply-demand reversal of environmental resources.
10. What does ‗plimsoll line‘ refer to in the context of sustainable development?
Short answer type questions:- (4)
1. How has population explosion and the advent of industrial revolution resulted in environmental crisis?
2. Differentiate between Economic development and sustainable development.
3. ‗Sustainable development is a paradigm shift in development thinking.‘ Comment.
4. Explain how ‗Bio-composting and ‗Bio-pest control‘ can be helpful in achieving the objective of
sustainable development.
5. Is environmental crisis a recent phenomenon? If so, why?
6. The threat to India‘s environment poses a dichotomy. Name these.
Long answer type questions:- (6)
1. Identify any six factors contributing to land degradation in India
2. Explain carrying capacity of environment with examples.
3. Correction for environment damages involves opportunity costs. Explain.
4. The threat to India‘s environment poses a dichotomy- threat of poverty-induced environmental degradation
and at the same time, threat of pollution from affluence and a rapidly growing industrial sector.‖ Defend or
refute the given statement.
5. Explain briefly any five strategies of sustainable development.

CH-10 Comparative development experiences of India and its neighbours

Objective type questions:-
1. The nature of Pakistan‘s economy is:-
(a) capitalist (b) mixed (c) socialist (d) communist
2. The country having maximum population of the world is:-
(a) India (b) Pakistan (c) China (d) none of these
3. In China, the great leap forward campaign was launched in:-
(a) 1940 (b) 1960 (c) 1950 (d) 1970
4. The GLF campaign focused on:
(a) widespread industrialization (b) new agricultural strategy
(c) privatization (d) economic reforms
5. In terms of sectoral contribution to GDP, economies of India and Pakistan are now relying more on:-
(a) primary sector (b) secondary sector
(c) tertiary sector (d) none of these
6. In terms of sectoral contribution to GDP, the economy of china is relying more on:-
(a) primary sector (b) secondary sector
(c) tertiary sector (d) none of these
7. Which of the following countries has adopted one child policy?
(a) India (b) Pakistan (c) China (d) None of these
8. Growth rate of population is the highest in which of the following countries?
(a) India (b) Pakistan (c) China (d) None of these
9. Which of the following countries has the lowest density of population?
(a) India (b) Pakistan (c) China (d) None of these
10. Which of the following countries has the least urbanized population?
(a) India (b) Pakistan (c) China (d) None of these
11. When did India and Pakistan become independent?
(a) 1948 (b) 1947 (c) 1950 (d) 1951
12. Human development index measures_______ of economy.
(a) quality of life (b) death rate (c) birth rate (d) quality of education
13. The largest democratic economy of the world is:-
(a) India (b) Pakistan (c) China (d) None of these
14. People‘s Republic of China was established in:-
(a) 1946 (b) 1948 (c) 1949 (d) 1950
15. When was one-child norm introduced in China?
(a) Late 1970 (b) Late 1980 (c) Late 1960 (d) none of these
16. Maternal mortality rate is high in______.
17. Reforms in_____ were introduced in 1978.
18. People below poverty line are more in_______.
19. Match the following:-
 1. Regional and global economic grouping‘s such
as the SAARC,G-8,ASEAN etc.
2. The Great Leap Forward campaign initiated by
china in 1958
3. The commune system in china
4. The Great Proletarian Cultural Revolution
introduced by Mao in 1965.
Students and professionals sent to work and learn
from the country side
Means to strengthen their own domestic economies.
People collectively cultivated lands.
Industrializing the country on a massive scale

20. Match the column:-

Introduction of economic reforms in China 1949
Establishment of People‘s Republic of China 1953
China announced its first five year plan 1958
The Great Leap Forward Campaign initiated in China 1978

Short answer type questions: - (3)

1. Give any three reasons for the slow growth and re-emergence of poverty in Pakistan.
2. China‘s rapid industrial growth can be traced back to its reforms in 1978. Do you agree? Elucidate.
3. State the various factors that led to the rapid growth in economic development in China.
4. Special economic zones increase foreign investment. Explain.
5. Study the following table and analyse the share of employment and GDP (%) in 2015-2017.
Sector Contribution to GDP Distribution of Workforce
Agriculture 17 9 25 42.7 17.5 42
Industry 30 43 21 23.8 26.5 3.7
Service 53 48 54 33.5 56 54.3
Total 100 100 100 100 100 100

Short answer type questions:- (4)

1. Why are regional and economic groupings formed?
2. ―The present day fast industrial growth in China can be traced back to the reforms introduced in 1978.‖
Defend or refute the above statement.
3. Explain the great leap forward campaign of China as initiated in 1958. Also, state the problems which GLF
campaign met with.
4. Describe the path of developmental initiatives taken by Pakistan for its economic development.
5. ―Till the late 1970‘s, India, China and Pakistan- all the three countries were maintaining the same level of
low development. The last three decades have taken these countries to different levels.‖ Do you agree with
the given statement? Give valid reason in support of your answer.

Assertion and Reason based questions:-

Mark the option which is most suitable:-

(a) If both assertion and reason are true, and reason is the correct explanation of assertion
(b) If both assertion and reason are true, but reason is not the correct explanation of assertion.
(c) Assertion is true, but reason is false.
(d) Both reason and assertion are false.
1. A:- The progress of the modern industry remained very slow.
R:- There was hardly any capital goods industry to help promote industrialization in India.
2. A:- India became an exporter of primary products and an importer of finished consumer and capital goods
produced in Britain.
R:- Restrictive policies of commodity production, trade and tariff pursued by the colonial government
adversely affected the structure , composition and volume of India‘s foreign trade.
3. A:- Britain maintained a monopoly control over India‘s exports and imports.
R:- The opening of Suez Canal further intensified British control over India‘s foreign trade.
4. A:- Suppose the literacy rate in a state is 78% and the net attendance ratio in secondary stage is 47%.
R:- More than half of the students are going to other states for elementary education.
5. A:- A good indicator of economic growth is steady increase in GDP.
 R:- The GDP is market value of final goods and services produced in the domestic territory of the country.
6. A:- Adoption of new technology is the production of goods and services to increase the output is called
modernization.
R:- Modernisation does not refer only to the use of technology but also to change in social outlook.
7. A:- The first seven five year plans gave importance to self-reliance.
R:- Self-reliance means avoiding imports of those goods which could be produced in India itself.
8. A:- Land ceiling means fixing the maximum size of land which could be owned by an individual.
R:- The purpose of land ceiling was to reduce the concentration of land ownership in a few hands.
9. A:- The major policy initiatives that is land reforms and green revolution helped India to become self-
sufficient in food grains production.
R:- The proportion of people depending on agriculture did not decline as expected.
10. A:- During the colonial rule there was neither growth nor equity in the agriculture sector.
R:- The policy makers of independent India had to solve the issues related to agriculture which they did
through land reforms.
11. A:- Just a year after independence, steps were taken to abolish intermediaries and to make the tillers the
owners of land.
R:- The idea behind this move was that ownership of land would give incentives to the tillers to invest in
making improvements.
12. A:- The stagnation in agriculture during colonial rule was permanently broken by the Green revolution.
R:- This refers to the large increase in production of food grains, especially wheat and rice resulting from
the use of HYV seeds.
13. A:- In accordance with the goal of the state controlling the commanding heights of the economy, IPR 1956
was adopted.
R:- This resolution formed the basis of the second five year plan, the plan which tried to build the basis for
a socialist pattern.
14. A:- Under the IPR 1956, the private sector was kept under state control through licensing system. No new
industry was allowed unless a license was obtained from the government.
R:- The objective of such policy was to ensure that the private sector enterprises do not grow at a faster
pace than public sector enterprises.
15. A:- When calculating total value of goods and services produced in a country, the value of all goods and
services at each stage of production should be calculated.
R:- At each stage of production some value is added to the goods and services, therefore , the value added
at each stage of production is added to derive the total value of goods and services in an economy.
16. A:- Under IPR 1956, even an existing industry had to obtain a license for expanding output or for
diversifying production.
R:- This was meant to ensure that the quantity of goods produced was not more than what the economy
required.
17. A:- The excessive regulation of what came to be called the Permit license raj prevented certain firms from
becoming more efficient.
R:- More time was spent by industrialists in trying to obtain license or lobby with concerned ministers
rather than or thinking about how to improve their products.
18. A:- While the nation had immensely benefited from the green revolution, the technology involved was not
free from risks.
R:- The green revolution would have favoured the rich farmers only if the state did not play an extensive
role in ensuring that the small farmers also gain from the new technology.
19. A:- There are several goods and services that the society needs; however , the private sector does not
produce all of them.
R:- Private sector is profit driven.
20. A:- Every year government fixes a target for disinvestment of Public Sector Enterprises.
R:- Disinvestment is an excellent tool for discarding the loss incurring Public Sector Enterprises.
21. A:- Rapid improvement in technology has been one major factor that has stimulated the globalization
process.
R:- Developing countries are likely to become at par with developed countries in terms of technological
development due to globalization.
22. A:- India approached the IBRD, popularly known as World bank and the IMF, and received $ 7 billion as
loan to manage the crisis.
R:- India announced its NEP in 1991.
23. A:- A tax on imports makes the market for imported goods lucrative in terms of earning higher profits.
R:- Taxes are imposed to ensure smooth trade between nations and higher tax revenues for the
governments of the countries.
24. A:- GDP shows how big an economy is.
R:- GDP is the value of all goods and services produced within domestic territory of a country in the year.
25. A:- The removal of barriers to trade is known as liberalization.
R:- Federalization of trade allows businesses to freely decide which goods to import and export.
26. A:- Privatization means giving greater role to the private sector in the nation building process and a
reduced role to the public sector.
R:- The government has also made attempts to improve the efficiency of PSU‘s by giving them autonomy
in taking managerial decisions.
27. A:- Foreign trade creates an opportunity for the producers to reach beyond the domestic markets.
R:- Foreign trade expands the choice of goods beyond what is domestically produced.
28. A:- Globalization leads to increased competition in international and domestic markets.
R:- Globalization also makes the consumer better off as they have a wider variety of goods to choose from
at lower prices.
29. A:- Owing to globalization, many Indian companies have expanded their wings to many other countries.
R:- It is an outcome of the set of various policies that are aimed at transforming the world towards greater
interdependence and integration.
30. A:- Reliance industry is a privately-owned firm.
R:- Government is a major stakeholder in reliance industries.
31. A:- An individual who manufactures flour from wheat is engaged in primary sector.
R:- When some process of manufacturing is used the product is a part of secondary sector.
32. A:- Many of the services such as voice-based business processes, record keeping, accountancy are being
outsourced by multinational companies to India.
R:- The low wage rates and availability of skilled manpower in India have made it a destination for global
outsourcing in the post-reform period.
33. A:- The growth of GDP increased from 5.6% during 1980-91 to 8.2 % during 2007-12.
R:- GDP growth rate has increased in the reform period, it has not generated sufficient employment
opportunities in the country.
34. A:- Demonetization was a new initiative taken by the Government of India on 8 November 2016.
R:- Demonetization tackled the problem of corruption, black money, terrorism and circulation of fake
currency in the economy.
35. A:- Even with expanded employment opportunities, the poor will not be able to buy for themselves all the
essential goods and services.
R:- Three major programmes that aim at improving the food and nutritional status of the poor are Public
Distribution System, Integrated Child Development Scheme and Midday Meal Scheme.
36. A:- Pradhan Mantri Jan-Dhan Yojana encourages people in India to open bank accounts.
R:- Besides promoting saving habits, this scheme tends to transfer all the benefits of government schemes
and subsidies to account holders directly.
37. A:- If India, is to solve the problem of poverty, it has to find viable and sustainable strategies to address the
causes of poverty.
 R:- To identify poor government has to design schemes and also have to help the poor to come out of their
situation.
38. A:- High growth alone is not sufficient to reduce poverty.
R:- Government policies have failed to address the vast majority of vulnerable people who are living on or
just above the poverty line.
39. A:- Rakesh is an educated and skilled worker who earns a high monthly salary as he is employed in private
bank in a city.
R:- All service sectors in India are growing extremely well and each individual engaged in any kind of
tertiary activity earns a high income.
40. A:- Reena works five days a week , receives her income on the last day of each month and gets medical
facilities from her firm.
R:- Reena is working in organized sector.
41. A:- Mohan is a shopkeeper who pays his taxes on time. He has employed two workers Rakesh and Raghu
in his shop. He pays them well, however, none of the workers get any paid leaves in the year.
R:- Rakesh and Raghu are employed in an unorganized sector.
42. A:- ‗Kudumbashree‘ is a women –oriented community-based poverty reduction programme being
implemented in kerala.
R:- The SHGs promote thrift in small proportions by a minimum contribution from each member.
43. A:- As agriculture is already overcrowded, a major proportion of the increasing labour force needs to find
alternative employment opportunities in other non-farm sectors.
R:- Non-farm economy has several segments in it; some possess dynamic linkages that permit healthy
growth while others are in subsistence, low productivity propositions.
44. A:- A state has per capita income of 25,000 per annum. The infant mortality rate of state is 2%. So the state
cannot be considered as developed state.
R:- There are medical facilities in the state , but people fail to take their children to hospital in time.
45. A:- Sustainable development is essential for economic growth of the countries.
R:- Sustainable development ensures that environment friendly measures are adopted for carrying out
production process.
46. A:- Absorption capacity means the ability of the environment to absorb degradation.
R:- Many resources have become extinct and the wastages generated are beyond the absorptive capacity of
the environment.
47. A:- With the help of photovoltaic cells, solar energy can be converted into electricity.
R:- India is naturally endowed with a large quantity of solar energy in the form of sunlight.
48. A:- GLF campaign initiated in 1958 aimed at industrializing the country on a massive scale.
R:- Under the commune system, people collectively cultivated lands.
49. A:- In 1978, economic reforms were initiated in China.
R:- The reform process involved dual pricing.
50. A :- There was significant decline in overall population of the China.
R:- Scholars point out the ‗one child norm‘ introduced in China in the late 1970‘s as the major reason for
low population growth.